INFOSYS TECHNOLOGIES LIMITED
ANNUAL REPORT 2010-2011
NOTES ON ACCOUNTS
Company overview:
Infosys Technologies Limited ('Infosys' or 'the Company') along with its
majority-owned and controlled subsidiary, Infosys BPO Limited ('Infosys
BPO') and wholly-owned and controlled subsidiaries, Infosys Technologies
(Australia) Pty. Limited ('Infosys Australia'), Infosys Technologies
(China) Co. Limited ('Infosys China'), Infosys Consulting Inc. ('Infosys
Consulting'), Infosys Technologies S. de R. L. de C. V. ('Infosys Mexico'),
Infosys Technologies (Sweden) AB. ('Infosys Sweden'), Infosys Tecnologia DO
Brasil LTDA. ('Infosys Brasil'), Infosys Public Services, Inc, USA
('Infosys Public Services') and Infosys Technologies (Shanghai) Company
Limited ('Infosys Shanghai') is a leading global technology services
corporation. The Company provides end-to-end business solutions that
leverage cutting-edge technology, thereby enabling clients to enhance
business performance. The Company provides solutions that span the entire
software lifecycle encompassing technical consulting, design, development,
re-engineering, maintenance, systems integration, package evaluation and
implementation, testing and infrastructure management services. In
addition, the Company offers software products for the banking industry.
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 by the Companies (Accounting Standards) Rules, 2006, the
provisions of the Companies Act, 1956 and guidelines issued by the
Securities and Exchange Board of India (SEBI). Accounting policies have
been consistently applied except where a newly issued accounting standard
is initially adopted or a revision to an existing accounting standard
requires a change in the accounting policy hitherto in use.
1.2. Use of estimates:
The preparation of the financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the
reported balances of assets and liabilities and disclosures relating to
contingent liabilities as at the date of the financial statements and
reported amounts of income and expenses during the period. Examples of such
estimates include computation of percentage of completion which requires
the Company to estimate the efforts expended to date as a proportion of the
total efforts to be expended, provisions for doubtful debts, future
obligations under employee retirement benefit plans, income taxes, post-
sales customer support and the useful lives of fixed assets and intangible
assets.
Accounting estimates could change from period to period. Actual results
could differ from those estimates. Appropriate changes in estimates are
made as the Management becomes aware of changes in circumstances
surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if
material, their effects are disclosed in the notes to the financial
statements.
The Management periodically assesses using, external and internal sources,
whether there is an indication that an asset may be impaired. An impairment
loss is recognized wherever the carrying value of an asset exceeds its
recoverable amount. The recoverable amount is higher of the asset's net
selling price and value in use, which means the present value of future
cash flows expected to arise from the continuing use of the asset and its
eventual disposal. An impairment loss for an asset is reversed if, and only
if, the reversal can be related objectively to an event occurring after the
impairment loss was recognized. The carrying amount of an asset is
increased to its revised recoverable amount, provided that this amount does
not exceed the carrying amount that would have been determined (net of any
accumulated amortization or depreciation) had no impairment loss been
recognized for the asset in prior years.
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-time frame 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-time-frame contracts, where there is no uncertainty as to
measurement or collectability of consideration, is recognized based upon
the percentage of completion method. When there is uncertainty as to
measurement or ultimate collectability revenue recognition is postponed
until such uncertainty is resolved. Cost and earnings in excess of billings
are classified as unbilled revenue while billings in excess of cost and
earnings is classified as unearned revenue. Provision for estimated losses,
if any, on uncompleted contracts are recorded in the period in which such
losses become probable based on the current estimates.
Annual Technical Services revenue and revenue from fixed-price maintenance
contracts are recognized ratably over the period in which services are
rendered. Revenue from the sale of user licenses for software applications
is recognized on transfer of the title in the user license, except in case
of multiple element contracts, which require significant implementation
services, where revenue for the entire arrangement is recognized over the
implementation period based upon the percentage-of-completion. Revenue from
client training, support and other services arising due to the sale of
software products is recognized as the related services are performed. The
Company accounts for volume discounts and pricing incentives to customers
as a reduction of revenue based on the ratable allocation of the discount /
incentive amount to each of the underlying revenue transactions that result
in progress by the customer towards earning the discount / incentive. Also,
when the level of discount varies with increases in levels of revenue
transactions, the Company recognizes the liability based on its estimate of
the customer's future purchases. If it is probable that the criteria for
the discount will not be met, or if the amount thereof cannot be estimated
reliably, then discount is not recognized until the payment is probable and
the amount can be estimated reliably. The Company recognizes changes in the
estimated amount of obligations for discounts using a cumulative catchup
approach. The discounts are passed on to the customer either as direct
payments or as a reduction of payments due from the customer.
The Company presents revenues net of value-added taxes in its Profit and
Loss account.
Profit on sale of investments is recorded on transfer of title from the
Company and is determined as the difference between the sale price and
carrying value of the investment. Lease rentals are recognized ratably on a
straight line basis over the lease term. Interest is recognized using the
time-proportion method, based on rates implicit in the transaction.
Dividend income is recognized when the Company's right to receive dividend
is established.
1.4. Provisions and contingent liabilities:
A provision is recognized if, as a result of a past event, the Company has
a present legal obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle
the obligation. Provisions are determined by the best estimate of the
outflow of economic benefits required to settle the obligation at the
reporting date. Where no reliable estimate can be made, a disclosure is
made as contingent liability. A disclosure for a contingent liability is
also made when there is a possible obligation or a present obligation that
may, but probably will not, require an outflow of resources. Where there is
a possible obligation or a present obligation in respect of which the
likelihood of outflow of resources is remote, no provision or disclosure is
made.
1.4.a. Post-sales client support and warranties:
The Company provides its clients with a fixed-period warranty for
corrections of errors and telephone support on all its fixed-price, fixed-
time-frame contracts. Costs associated with such support services are
accrued at the time when related revenues are recorded and included in cost
of sales. The Company estimates such costs based on historical experience
and the estimates are reviewed annually for any material changes in
assumptions.
1.4.b. Onerous contracts:
Provisions for onerous contracts are recognized when the expected benefits
to be derived by the Company from a contract are lower than the unavoidable
costs of meeting the future obligations under the contract. The provision
is measured at lower of the expected cost of terminating the contract and
the expected net cost of fulfilling the contract.
1.5. Fixed assets, intangible assets and capital work-in-progress:
Fixed assets are stated at cost, less accumulated depreciation and
impairment, if any. Direct costs are capitalized until fixed assets are
ready for use. Capital work-in-progress comprises outstanding advances paid
to acquire fixed assets, and the cost of fixed assets that are not yet
ready for their intended use at the reporting date. Intangible assets are
recorded at the consideration paid for acquisition of such assets and are
carried at cost less accumulated amortization and impairment.
1.6. Depreciation and amortization:
Depreciation on fixed assets is provided on the straight-line method over
the useful lives of assets estimated by the Management. Depreciation for
assets purchased / sold during a period is proportionately charged.
Individual low cost assets (acquired for less than Rs.5,000/-) are
depreciated over a period of one year from the date of acquisition.
Intangible assets are amortized over their respective individual estimated
useful lives on a straight-line basis, commencing from the date the asset
is available to the Company for its use. The Management estimates the
useful lives for the other fixed assets as follows :
Buildings : 15 years
Plant and machinery : 5 years
Computer equipment : 2-5 years
Furniture and fixtures : 5 years
Vehicles : 5 years
Depreciation methods, useful lives and residual values are reviewed at each
reporting date.
1.7. Retirement benefits to employees:
1.7.a. Gratuity:
In accordance with the Payment of Gratuity Act, 1972, the Company provides
for gratuity, a defined benefit retirement plan ('the Gratuity Plan')
covering eligible employees. The Gratuity Plan provides a lump-sum payment
to vested employees at retirement, death, incapacitation or termination of
employment, of an amount based on the respective employee's salary and the
tenure of employment with the Company.
Liabilities with regard to the Gratuity Plan are determined by actuarial
valuation at each Balance Sheet date using the projected unit credit
method. The Company fully contributes all ascertained liabilities to the
Infosys Technologies Limited Employees' Gratuity Fund Trust (the Trust).
Trustees administer contributions made to the Trust and contributions are
invested in specific investments as permitted by the law. The Company
recognizes the net obligation of the gratuity plan in the Balance Sheet as
an asset or liability, respectively in accordance with Accounting Standard
(AS) 15, 'Employee Benefits'. The Company's overall expected long-term
rate-of-return on assets has been determined based on consideration of
available market information, current provisions of Indian law specifying
the instruments in which investments can be made, and historical returns.
The discount rate is based on the Government securities yield. Actuarial
gains and losses arising from experience adjustments and changes in
actuarial assumptions are recognized in the Profit and Loss account in the
period in which they arise.
1.7.b. Superannuation:
Certain employees of Infosys 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.
1.7.c. Provident fund:
Eligible employees receive benefits from a provident fund, which is a
defined benefit plan. Both the employee and the Company make monthly
contributions to the provident fund plan equal to a specified percentage of
the covered employee's salary. The Company contributes a part of the
contributions to the Infosys Technologies Limited Employees' Provident Fund
Trust. The remaining portion is contributed to the government administered
pension fund. The rate at which the annual interest is payable to the
beneficiaries by the trust is being administered by the government. The
Company has an obligation to make good the shortfall, if any, between the
return from the investments of the Trust and the notified interest rate.
1.7.d. Compensated absences:
The employees of the Company are entitled to compensated absences which are
both accumulating and non-accumulating in nature. The expected cost of
accumulating compensated absences is determined by actuarial valuation
based on the additional amount expected to be paid as a result of the
unused entitlement that has accumulated at the Balance Sheet date. Expense
on non-accumulating compensated absences is recognized in the period in
which the absences occur.
1.8. Research and development:
Research costs are expensed as incurred. Software product development costs
are expensed as incurred unless technical and commercial feasibility of the
project is demonstrated, future economic benefits are probable, the Company
has an intention and ability to complete and use or sell the software and
the costs can be measured reliably.
1.9. Foreign currency transactions:
Foreign-currency denominated monetary assets and liabilities are translated
at exchange rates in effect at the Balance Sheet date. The gains or losses
resulting from such translations are included in the profit or loss
account. Non-monetary assets and non-monetary liabilities denominated in a
foreign currency and measured at fair value are translated at the exchange
rate prevalent at the date when the fair value was determined. Non-monetary
assets and non-monetary liabilities denominated in a foreign currency and
measured at historical cost are translated at the exchange rate prevalent
at the date of transaction.
Revenue, expense and cash-flow items denominated in foreign currencies are
translated using the exchange rate in effect on the date of the
transaction. Transaction gains or losses realized upon settlement of
foreign currency transactions are included in determining net profit for
the period in which the transaction is settled.
1.10. Forward and options contracts in foreign currencies:
The Company uses foreign exchange forward and options contracts to hedge
its exposure to movements in foreign exchange rates. The use of these
foreign exchange forward and options contracts reduce the risk or cost to
the Company and the Company does not use those for trading or speculation
purposes.
Effective April 1, 2008, the Company adopted AS 30, 'Financial Instruments:
Recognition and Measurement', to the extent that the adoption did not
conflict with existing accounting standards and other authoritative
pronouncements of the Company Law and other regulatory requirements.
Forward and options contracts are fair valued at each reporting date. The
resultant gain or loss from these transactions are recognized in the profit
or loss account. The Company records the gain or loss on effective hedges,
if any, in the foreign currency fluctuation reserve until the transactions
are complete. On completion, the gain or loss is transferred to the Profit
and Loss account of that period. To designate a forward or options contract
as an effective hedge, the Management objectively evaluates and evidences
with appropriate supporting documents at the inception of each contract
whether the contract is effective in achieving offsetting cash flows
attributable to the hedged risk. In the absence of a designation as
effective hedge, a gain or loss is recognized in the Profit and Loss
account. Currently hedges undertaken by the Company are all ineffective in
nature and the resultant gain or loss consequent to fair valuation is
recognized in the Profit and Loss account at each reporting date.
1.11. Income taxes:
Income taxes are accrued in the same period that the related revenue and
expenses arise. A provision is made for income tax annually, based on the
tax liability computed, after considering tax allowances and exemptions.
Provisions are recorded when it is estimated that a liability due to
disallowances or other matters is probable. Minimum alternate tax (MAT)
paid in accordance with the tax laws, which gives rise to future economic
benefits in the form of tax credit against future income tax liability, is
recognized as an asset in the Balance Sheet if there is convincing evidence
that the Company will pay normal tax after the tax holiday period and the
resultant asset can be measured reliably. The Company offsets, on a year on
year basis, the current tax assets and liabilities, where it has a legally
enforceable right and where it intends to settle such assets and
liabilities on a net basis.
The differences that result between the profit considered for income taxes
and the profit as per the financial statements are identified, and
thereafter a deferred tax asset or deferred tax liability is recorded for
timing differences, namely the differences that originate in one accounting
period and reverse in another, based on the tax effect of the aggregate
amount of timing difference. The tax effect is calculated on the
accumulated timing differences at the end of an accounting period based on
enacted or substantively enacted regulations. Deferred tax assets in
situation where unabsorbed depreciation and carry forward business loss
exists, are recognized only if there is virtual certainty supported by
convincing evidence that sufficient future taxable income will be available
against which such deferred tax asset can be realized. Deferred tax assets,
other than in situation of unabsorbed depreciation and carry forward
business loss, are recognized only if there is reasonable certainty that
they will be realized. Deferred tax assets are reviewed for the
appropriateness of their respective carrying values at each reporting date.
Tax benefits of deductions earned on exercise of employee share options in
excess of compensation charged to Profit and Loss account are credited to
the share premium account.
1.12. Earnings per share:
Basic earnings per share is computed by dividing the net profit after tax
by the weighted average number of equity shares outstanding during the
period. Diluted earnings per share is computed by dividing the net profit
after tax by the weighted average number of equity shares considered for
deriving basic earnings per share and also the weighted average number of
equity shares that could have been issued upon conversion of all dilutive
potential equity shares. The diluted potential equity shares are adjusted
for the proceeds receivable had the shares been actually issued at fair
value which is the average market value of the outstanding shares. Dilutive
potential equity shares are deemed converted as of the beginning of the
period, unless issued at a later date. Dilutive potential equity shares are
determined independently for each period presented.
The number of shares and potentially dilutive equity shares are adjusted
retrospectively for all periods presented for any share splits and bonus
shares issues including for changes effected prior to the approval of the
financial statements by the Board of Directors.
1.13. Investments:
Trade investments are the investments made to enhance the Company's
business interests. Investments are either classified as current or long-
term based on Management's intention at the time of purchase. Current
investments are carried at the lower of cost and fair value of each
investment individually. Cost for overseas investments comprises the Indian
Rupee value of the consideration paid for the investment translated at the
exchange rate prevalent at the date of investment. Long-term investments
are carried at cost less provisions recorded to recognize any decline,
other than temporary, in the carrying value of each investment.
1.14. Cash and cash equivalents:
Cash and cash equivalents comprise cash and cash on deposit with banks and
corporations. The Company considers all highly liquid investments with a
remaining maturity at the date of purchase of three months or less and that
are readily convertible to known amounts of cash to be cash equivalents.
1.15. Cash flow statement:
Cash flows are reported using the indirect method, whereby net profit
before tax is adjusted for the effects of transactions of a non-cash
nature, any deferrals or accruals of past or future operating cash receipts
or payments and item of income or expenses associated with investing or
financing cash flows. The cash flows from operating, investing and
financing activities of the Company are segregated.
1.16. Leases:
Lease under which the company assumes substantially all the risks and
rewards of ownership are classified as finance leases. Such assets acquired
are capitalized at fair value of the asset or present value of the minimum
lease payments at the inception of the lease, whichever is lower. Lease
payments under operating leases are recognised as an expense on a straight
line basis in the profit and loss account over the lease term.
2. Notes on accounts:
Amounts in the financial statements are presented in Rupees crore, except
for per share data and as otherwise stated. Certain amounts that are
required to be disclosed and do not appear due to rounding off are detailed
in note 3. All exact amounts are stated with the suffix '/-'. One crore
equals 10 million.
The previous year figures have been regrouped / reclassified, wherever
necessary to conform to the current presentation.
2.1. Aggregate expenses:
The aggregate amounts incurred on expenses are as follows:
in Rs. crore
Year ended March 31,
2011 2010
Salaries and bonus including overseas
staff expenses 12,459 10,350
Overseas travel expenses 688 493
Traveling and conveyance 83 61
Technical sub-contractors - subsidiaries 1,568 1,210
Technical sub-contractors - others 476 269
Software packages for own use 320 309
Third party items bought for service
delivery to clients 139 17
Professional charges 299 242
Telephone charges 130 117
Communication expenses 40 46
Power and fuel 142 122
Office maintenance expenses 188 136
Commission charges 12 16
Brand building 70 55
Rent 68 62
Insurance charges 24 23
Computer maintenance 33 22
Printing and stationery 11 9
Consumables 23 22
Donations 1 43
Advertisements 6 3
Marketing expenses 14 12
Repairs to building 44 33
Repairs to plant and machinery 33 31
Rates and taxes 48 26
Professional membership and
seminar participation fees 10 8
Postage and courier 9 8
Provision for post-sales client
support and warranties 5 (2)
Freight charges 1 1
Books and periodicals 3 3
Provision for bad and doubtful
debts and advances 3 (1)
Commission to non-whole time directors 5 6
Bank charges and commission 1 2
Auditor's remuneration - -
Statutory audit fees 1 1
Research grants 14 25
16,971 13,780
2.2. Capital commitments and contingent liabilities:
in Rs. crore
As at
Particulars March 31, 2011 March 31, 2010
Estimated amount of unexecuted
capital contracts
(net of advances and deposits) 742 267
Outstanding guarantees and counter
guarantees to various banks, in
respect of the guarantees given by
those banks in favour of various 3 3
government authorities and others
Claims against the Company, not
acknowledged as debts(1) 271 28
[Net of amount paid to statutory
authorities Rs.469 crore
(Rs. 241 crore)]
As at
Particulars March 31, 2011 March 31, 2010
in million in Rs. in million in Rs.
crore crore
Forward contracts
outstanding:
In USD 500 2,230 228 1,024
In Euro 20 127 16 97
In GBP 10 72 7 48
In AUD 10 46 3 12
Options contracts
outstanding:
In USD - - 200 898
2,475 2,079
(1) Claims against the Company not acknowledged as debts include demand
from the Indian tax authorities for payment of additional tax of Rs.671
crore (Rs. 214 crore), including interest of Rs. 177 crore (Rs. 39 crore)
upon completion of their tax review for fiscal 2005, fiscal 2006 and fiscal
2007. The tax demands are mainly on account of disallowance of a portion of
the deduction claimed by the Company under Section 10A of the Income tax
Act. The deductible amount is determined by the ratio of export turnover to
total turnover. The disallowance arose from certain expenses incurred in
foreign currency being reduced from export turnover but not reduced from
total turnover. The tax demand for fiscal 2007 also includes disallowance
of portion of profit earned outside India from the STP units and
disallowance of profits earned from SEZ units . The matter for fiscal 2005,
2006 and 2007 is pending before the Commissioner of Income tax (Appeals),
Bangalore.
The Company is contesting the demands and the Management, including its tax
advisors, believes that its position will likely be upheld in the appellate
process. No tax expense has been accrued in the financial statements for
the tax demand raised. The Management believes that the ultimate outcome of
this proceeding will not have a material adverse effect on the Company's
financial position and results of operations.
As of the Balance Sheet date, the company's net foreign currency exposures
that are not hedged by a derivative instrument or otherwise is Rs. 1,196
crore. (Rs. 891 crore as at March 31, 2010).
The foreign exchange forward and option contracts mature between 1 to 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 Rs. Crore
Particulars As of March 31,
2011 2010
Not later than one month 413 242
Later than one month and not later than three months 590 746
Later than three months and not later than one year 1,472 1,091
2,475 2,079
The company recognized a net gain on derivative financials instruments of
Rs.53 crore and 276 crore during the year ended March 31, 2011 March 31,
2010, respectively, which are included in other income.
2.3. Quantitative details:
The Company is primarily engaged in the development and maintenance of
computer software. The production and sale of such software cannot be
expressed in any generic unit. Hence, it is not possible to give the
quantitative details of sales and certain information as required under
paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act,
1956.
2.4. Imports (valued on the cost, insurance and freight basis):
in Rs. crore
Particulars Year ended March 31,
2011 2010
Capital goods 161 91
Software packages 4 10
165 101
in Rs. crore
Particulars Year ended March 31,
2011 2010
Earnings in foreign currency
(on receipts basis):
Income from software services and products 23,954 21,072
Interest received from banks and others 6 3
Expenditure in foreign currency
(on payments basis):
Overseas travel expenses
(including visa charges) 535 404
Professional charges 159 150
Technical sub-contractors - subsidiaries 1,568 1,210
Overseas salaries and incentives 6,907 5,950
Other expenditure incurred overseas
for software development 1,431 675
Net earnings in foreign currency 13,360 12,686
2.6. Obligations on long-term, non-cancelable operating leases:
The lease rentals charged during the year and the maximum obligations on
long-term, non-cancelable operating leases payable as per the rentals
stated in the respective agreements are as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Lease rentals recognized during the year 68 62
in Rs. crore
As at
Lease obligations payable March 31, 2011 March 31, 2010
Within one year of the
balance sheet date 63 48
Due in a period between one
year and five years 152 149
Due after five years 30 24
The operating lease arrangements, are renewable on a periodic basis and
extend upto a maximum of ten years from their respective dates of inception
and relates to rented overseas premises. Some of these lease agreements
have price escalation clause.
Fixed assets provided on operating lease to Infosys BPO, a subsidiary
company, as at March 31, 2011 and March 31, 2010 are as follows:
in Rs. crore
Accumulated
Particulars Cost depreciation Net book value
Buildings 60 25 35
59 21 38
Plant and machinery 3 2 1
18 15 3
Computer equipment 1 1 -
1 1 -
Furniture and fixtures 1 1 -
3 2 1
Total 65 29 36
81 39 42
The aggregate depreciation charged on the above assets during the year
ended March 31, 2011 amounted to Rs.6 crore. (Rs.7 crore for the year ended
March 31, 2010).
The rental income from Infosys BPO for the year ended March 31, 2011
amounted to Rs.17 crore. (Rs.16 crore for the year ended March 31, 2010).
2.7. Related party transactions:
List of related parties:
Name of subsidiaries Country Holding as at
March 31, 2011 March 31, 2010
Infosys BPO India 99.98% 99.98%
Infosys Australia Australia 100% 100%
Infosys China (1) China 100% 100%
Infosys Consulting USA 100% 100%
Infosys Mexico (2) Mexico 100% 100%
Infosys Sweden Sweden 100% 100%
Infosys Shanghai (3) China 100% -
Infosys Brasil (4) Brazil 100% 100%
Infosys Public USA 100% 100%
Services, Inc.
Infosys BPO s.r.o (5) Czech Republic 99.98% 99.98%
Infosys BPO
(Poland) Sp Z.o.o (5) Poland 99.98% 99.98%
Infosys BPO (Thailand)
Limited (5) Thailand - 99.98%
Infosys Consulting
India Limited (6) India 100% 100%
McCamish Systems
LLC (5)(7) USA 99.98% 99.98%
(1) During the year ended March 31, 2011 the Company made an additional
investment of Rs.42 crore (USD 9 million) in Infosys China, which is a
wholly owned subsidiary. As of March 31, 2011 and March 31, 2010, the
Company has invested an aggregate of Rs.107 crore (USD 23 million) and
Rs.65 crore (USD 14 million), respectively, in the subsidiary.
(2) During the year ended March 31, 2011 the Company made an additional
investment of Rs. 14 crore (Mexican Peso 40 million) in Infosys Mexico,
which is a wholly owned subsidiary. As of March 31, 2011 and March 31,
2010, the Company has invested an aggregate of Rs.54 crore (Mexican Peso
150 million) and Rs.40 crore (Mexican Peso 110 million), respectively, in
the subsidiary.
(3) On February 21, 2011 the Company incorporated a wholly-owned
subsidiary, Infosys Technologies (Shanghai) Company Limited and invested
Rs.11 crore (USD 3 million) in the subsidiary. As of March 31, 2011 the
Company has invested an aggregate of Rs. 11 crore (USD 3 million) in the
subsidiary.
(4) During the year ended March 31, 2011 the company made an additional
investment of Rs.10 crore (BRL 4 million) in the subsidiary. As of March
31, 2011 and March 31, 2010 the Company has invested an aggregate of Rs. 38
crore (BRL 15 million) and Rs. 28 crore (BRL 11 million), respectively, in
the subsidiary.
(5) Infosys BPO s.r.o, Infosys BPO (Poland) Sp Z.o.o, Infosys BPO
(Thailand) Limited and McCamish Systems LLC are wholly owned subsidiaries
of Infosys BPO. During the year ended March 31, 2011 Infosys BPO (Thailand)
Limited was liquidated.
(6) During the year ended March 31, 2010, Infosys Consulting incorporated a
wholly-owned subsidiary, Infosys Consulting India Limited. As of March 31,
2011 and March 31, 2010 Infosys Consulting has invested an aggregate of
Rs.1 crore in the subsidiary.
(7) During the year ended March 31, 2010, Infosys BPO acquired 100% of the
voting interests in McCamish Systems LLC (McCamish), a business process
solutions provider based in Atlanta, Georgia, in the United States. The
business acquisition was conducted by entering into Membership Interest
Purchase Agreement for a cash consideration of 173 crore and a contingent
consideration of Rs. 67 crore. The acquisition was accounted as a business
combination which resulted in goodwill of Rs. 227 crore.
Infosys guarantees the performance of certain contracts entered into by its
subsidiaries.
The details of amounts due to or due from as at March 31, 2011 and March
31, 2010 are as follows:
in Rs. crore
Particulars As at
March 31, 2011 March 31, 2010
Loans and advances:
Infosys China 23 46
Infosys Brazil 9 -
Sundry debtors:
Infosys China 39 19
Infosys Australia 5 7
Infosys Mexico 1 1
Infosys Consulting 24 26
Infosys Brazil - 1
Infosys BPO (Including subsidiaries) 3 2
Sundry creditors:
Infosys China 32 18
Infosys Australia - 20
Infosys BPO (Including subsidiaries) 3 7
Infosys Brazil - -
Infosys Consulting 17 43
Infosys Consulting India 1 1
Infosys Mexico 1 5
Infosys Sweden 1 1
Deposit taken for shared services:
Infosys BPO 7 7
The details of the related party transactions entered into by the company
and maximum dues from subsidiaries, in addition to the lease commitments
described in note 2.6, for the year ended March 31, 2011 and March 31, 2010
are as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Capital transactions:
Financing transactions:
Infosys Mexico 14 18
Infosys China 42 -
Infosys Shanghai 11 -
Infosys Brasil 10 28
Infosys Public services - 24
Infosys Consulting - 50
Loans/Advances:
Infosys Brasil 9 -
Infosys China (23) -
Revenue transactions:
Purchase of services
Infosys Australia 889 634
Infosys China 240 134
Infosys Consulting 353 378
Infosys Consulting India 5 -
Infosys BPO (Including subsidiaries) 17 3
Infosys Sweden 12 11
Infosys Mexico 49 45
Infosys Brazil 3 5
Purchase of shared services including
facilities and personnel:
Infosys BPO (Including subsidiaries) 114 53
Interest income:
Infosys China 2 3
Sale of services:
Infosys Australia 33 25
Infosys China 6 10
Infosys BPO (Including subsidiaries) 21 -
Infosys Consulting 73 25
Sale of shared services including
facilities and personnel:
Infosys BPO (Including subsidiaries) 78 71
Infosys Consulting 4 4
Maximum balances of loans and advances:
Infosys Australia 81 51
Infosys China 48 48
Infosys Brasil 9 -
Infosys BPO (Including subsidiaries) - 4
Infosys Mexico 4 4
Infosys Consulting 35 35
During the year ended March 31, 2011, an amount of Nil (Rs.34 crore for the
year ended March 31, 2010) was donated to Infosys Foundation, a not-for-
profit foundation, in which certain directors of the Company are trustees.
During the year ended March 31, 2011, an amount of Rs.12 crore (Rs.23 crore
for the year ended March 31, 2010) has been granted to Infosys Science
Foundation, a not-for-profit foundation, in which certain directors and
officers of the Company are trustees.
2.8. Transactions with key management personnel:
Key management personnel comprise directors and members of executive
council.
Particulars of remuneration and other benefits paid to key management
personnel during the year ended March 31, 2011 and March 31, 2010 have been
detailed in Schedule 4.
The aggregate managerial remuneration under Section 198 of the Companies
Act 1956, to the directors (including managing director) is as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Whole-time directors:
Salary 2 2
Contribution to provident and other funds 1 -
Perquisites and incentives 6 7
Total remuneration 9 9
Non-Whole-time directors:
Commission 6 6
Reimbursement of expenses 1 1
Total remuneration 7 7
Computation of net profit in accordance with Section 349 of the Companies
Act, 1956, and calculation of commission payable to non-whole-time
directors are as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Net profit after tax before exceptional item 6,443 5,755
Add:
Whole-time director's remuneration 9 9
Commission to non-whole time-directors 6 6
Provision for bad and doubtful debts
and advances 3 (1)
Depreciation as per books of accounts 740 807
Provision for taxation 2,378 1,717
9,579 8,293
Less:
Depreciation as envisaged under Section
350 of the Companies Act (1) 740 807
Net profit on which commission is payable 8,839 7,486
Commission payable to non-whole-time
directors:
Maximum allowed as per the Companies
Act, 1956 at 1% 88 75
Maximum approved by the share holders
at 1% (1%) 88 75
Commission approved by the Board 6 6
(1) The company depreciates fixed assets based on estimated useful lives
that are lower than those prescribed in Schedule XIV of the Companies Act,
1956. Accordingly the rates of depreciation used by the company are higher
than the minimum prescribed by Schedule XIV.
During the year ended March 31, 2011 and March 31, 2010 Infosys BPO has
provided for commission of Rs.0.12 crore and Rs.0.12 crore to a non-whole-
time director of Infosys.
2.9. Research and development expenditure:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Capital 6 3
Revenue 521 437
2.10. Stock option plans:
The Company has two Stock Option Plans.
1998 Stock Option Plan ('the 1998 Plan'):
The 1998 Plan was approved by the Board of Directors in December 1997 and
by the shareholders in January 1998, and is for issue of 1,17,60,000 ADSs
representing 1,17,60,000 equity shares. All options under the 1998 Plan are
exercisable for ADSs representing equity shares. A compensation committee
comprising independent members of the Board of Directors administers the
1998 Plan. All options had been granted at 100% of fair market value. The
1998 Plan lapsed on January 6, 2008, and consequently no further shares
will be issued to employees under this plan.
1999 Stock Option Plan ('the 1999 Plan'):
In fiscal 2000, the company instituted the 1999 Plan. The shareholders and
the Board of Directors approved the plan in September 1999, which provides
for the issue of 5,28,00,000 equity shares to the employees. The
compensation committee administers the 1999 Plan. Options were issued to
employees at an exercise price that is not less than the fair market value.
The 1999 Plan lapsed on June 11, 2009, and consequently no further shares
will be issued to employees under this plan.
The activity in the 1998 Plan and 1999 Plan during the year ended March 31,
2011 and March 31, 2010 are set out below:
Particulars Year ended March 31,
2011 2010
The 1998 Plan:
Options outstanding, beginning of the year 2,42,264 9,16,759
Less: Exercised 1,88,675 6,14,071
Forfeited 3,519 60,424
Options outstanding, end of the year 50,070 2,42,264
The 1999 Plan:
Options outstanding, beginning of the year 2,04,464 9,25,806
Less: Exercised 1,37,692 3,81,078
Forfeited 18,052 3,40,264
Options outstanding, end of the year 48,720 2,04,464
The weighted average share price of options exercised under the 1998 Plan
during the year ended March 31, 2011 and March 31, 2010 was Rs.2,950 and
Rs.2,266 respectively. The weighted average share price of options
exercised under the 1999 Plan during the year ended March 31, 2011 and
March 31, 2010 was Rs.2,902 and Rs.2,221 respectively.
The following tables summarize information about the 1998 and 1999 share
options outstanding as at March 31, 2011 and March 31, 2010:
Range of exercise prices per share (Rs.):
As at March 31, 2011
Number of shares Weighted average Weighted average
arising out of remaining exercise price
options contractual life
The 1998 Plan:
300-700 24,680 0.73 587
701-1,400 25,390 0.56 777
50,070 0.65 683
The 1999 Plan:
300-700 33,759 0.65 448
701-2,500 14,961 1.71 2,121
48,720 0.97 962
Range of exercise prices per share (Rs.):
As at March 31, 2010
Number of shares Weighted average Weighted average
arising out of remaining exercise price
options contractual life
The 1998 Plan:
300-700 1,74,404 0.94 551
701-1,400 67,860 1.27 773
2,42,264 1.03 613
The 1999 Plan:
300-700 1,52,171 0.91 439
701-2,500 52,293 1.44 2,121
2,04,464 1.05 869
The aggregate options considered for dilution are set out in note 2.19.
2.11. Income taxes:
The provision for taxation includes tax liabilities in India on the
company's global income as reduced by exempt incomes and any tax
liabilities arising overseas on income sourced from those countries.
Infosys' operations are conducted through Software Technology Parks
('STPs') and Special Economic Zones ('SEZs'). Income from STPs are tax
exempt for the earlier of 10 years commencing from the fiscal year in which
the unit commences software development, or March 31, 2011. Income from
SEZs is fully tax exempt for the first 5 years, 50% exempt for the next 5
years and 50% exempt for another 5 years subject to fulfilling certain
conditions. For Fiscal 2008 and 2009, the company had calculated its tax
liability under Minimum Alternate Tax (MAT). The MAT credit can be carried
forward and set off against the future tax payable. In fiscal 2010, the
Company calculated its tax liability under normal provisions of the Income
Tax Act and utilised the brought forward MAT Credit.
As at March 31, 2011, the company has provided for branch profit tax of
Rs.176 crore for its overseas branches, as the company estimates that these
branch profits would be distributed in the foreseeable future.
2.12. Cash and bank balances:
The details of balances as on Balance Sheet dates with non-scheduled banks
are as follows:
in Rs. crore
Balances with non-scheduled banks As at
March 31, 2011 March 31, 2010
In current accounts:
ANZ Bank, Taiwan 3 2
Bank of America, USA 274 644
Citibank NA, Australia 61 24
Citibank N.A, New Zealand - -
Citibank NA, Thailand 1 1
Citibank NA, Japan 17 2
Deutsche Bank, Belgium 5 18
Deutsche Bank, Germany 5 12
Deutsche Bank, Moscow (U.S. Dollar account) - 1
Deutsche Bank, Netherlands 2 7
Deutsche Bank, France 3 1
Deutsche Bank, Switzerland 1 10
Deutsche Bank, Switzerland
(U.S. Dollar account) - 1
Deutsche Bank, Singapore 3 1
Deutsche Bank, UK 40 29
Deutsche Bank, Spain 1 2
HSBC Bank, UK 1 1
Nordbanken, Sweden 4 -
Royal Bank of Canada, Canada 23 20
444 776
The details of balances as on Balance Sheet dates with scheduled banks are
as follows:
in Rs. crore
Balances with scheduled banks in India As at
March 31, 2011 March 31, 2010
In current accounts:
Citibank - Unclaimed dividend account 1 -
Deustche Bank 11 12
Deustche Bank-EEFC (Euro account) 8 3
Deustche Bank-EEFC (U.S. Dollar account) 141 8
Deutsche Bank-EEFC account in Swiss Franc 2 -
HDFC Bank - Unclaimed dividend account 1 1
ICICI Bank 18 121
ICICI Bank-EEFC (U.S. Dollar account) 14 7
ICICI bank-Unclaimed dividend account 1 1
197 153
in Rs. crore
Balances with scheduled banks in India As at
March 31, 2011 March 31, 2010
In deposit accounts:
Allahabad Bank 500 100
Andhra Bank 399 99
Axis Bank 476 -
BOB - Bank of Baroda 1,100 299
BOI - Bank of India 1,197 881
BOM - Bank of Maharashtra 488 500
Barclays Bank - 100
Canara Bank 1,254 958
CBI - Central Bank of India 354 100
Corporation Bank 295 276
DBS - DBS Bank - 49
HDFC Bank 646 -
HSBC Bank - 483
ICICI - ICICI Bank 689 1,370
IDBI - IDBI Bank 716 900
ING Vysya Bank - 25
IOB - Indian Overseas Bank 500 131
J&K - Jammu and Kashmir Bank 12 10
Kotak Mahindra Bank 25 25
OBC - Oriental Bank of commerce 578 100
PNB - Punjab National Bank 1,493 994
SBH - State Bank of Hyderabad 225 200
SBI - State Bank of India 449 126
SBM - State Bank of Mysore 354 496
South Indian Bank 25 -
Syndicate Bank 500 458
Union Bank of India 631 93
Vijaya Bank 95 95
Yes Bank 23 -
13,024 8,868
Total cash and bank balances as
per balance sheet 13,665 9,797
The details of maximum balances during the year with non-scheduled banks
are as follows:
in Rs. crore
Maximum balance with non-scheduled banks during Year ended March 31,
the year 2011 2010
In current accounts:
ANZ Bank, Taiwan 3 -
ABN Amro Bank , Taiwan - 4
Bank of America, USA 927 694
BNP Paribas Bank, Norway 1 -
Citibank NA, Australia 156 134
Citibank NA, New Zealand 7 5
Citibank NA, Singapore - 45
Citibank NA, Japan 21 17
Citibank NA, Thailand 4 1
Deutsche Bank, Belgium 23 47
Deutsche Bank, Germany 36 31
Deutsche Bank, Netherlands 19 20
Deutsche Bank, France 9 6
Deutsche Bank, Moscow (RUB account) 2 -
Deutsche Bank, Moscow (U.S. Dollar account) 1 1
Deutsche Bank, Spain 4 5
Deutsche Bank, Singapore 18 15
Deutsche Bank, Switzerland 93 39
Deutsche Bank, Switzerland
(U.S. Dollar account) 11 14
Deutsche Bank, UK 125 183
HSBC Bank, UK 2 8
Morgan Stanley Bank, USA 6 8
Nordbanken, Sweden 4 -
Royal Bank of Canada, Canada 47 28
Standard Chartered Bank, UAE 5 4
Svenska Handelsbanken, Sweden 3 3
The Bank of Tokyo - Mitsubishi
UFJ Ltd., Japan 4 2
2.13. Loans and advances:
Deposits with financial institutions:
in Rs. crore
Particulars As at
March 31, 2011 March 31, 2010
HDFC Limited 1,500 1,500
Life Insurance Corporation of
India (LIC) 344 281
1,844 1,781
The maximum balance (including accrued interest) held as deposits with
financial institutions is as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Deposits with financial institutions:
HDFC Limited 1,619 1,550
Life Insurance Corporation of India 431 281
Deposit with LIC represents amount deposited to settle employee benefit
obligations as and when they arise during the normal course of business.
(refer to note 2.23.b.)
2.14. Fixed assets:
Profit / (loss) on disposal of fixed assets during the year ended March 31,
2011 and March 31, 2010 is less than 1 crore and accordingly disclosed
under note 3.
Depreciation charged to the profit and loss account includes a charge
relating to assets costing less than Rs.5,000/- each and other low value
assets.
Particulars Year ended March 31,
2011 2010
Depreciation charged during the year 33 86
The Company has entered into lease-cum-sale agreements to acquire certain
properties. In accordance with the terms of these agreements, the Company
has the option to purchase the properties on expiry of the lease period.
The Company has already paid 99% of the value of the properties at the time
of entering into the lease-cum-sale agreements. These amounts are disclosed
as 'Land - leasehold' under 'Fixed assets' in the financial statements.
Additionally, certain land has been purchased for which though the company
has possession certificate, the sale deeds are yet to be executed as at
March 31, 2011.
2.15. Details of Investments:
in Rs. crore
Particulars As at
March 31, 2011 March 31, 2010
Long-term investments:
OnMobile Systems Inc.,
(formerly Onscan Inc.) USA:
21,54,100 (21,54,100) common
stock at USD 0.4348 each,
fully paid, par 4 4
value USD 0.001 each
Merasport Technologies Private
Limited:
2,420 (2,420) equity shares
at Rs. 8,052 each, fully paid,
par value Rs. 10 each 2 2
6 6
Less: Provision for investment 2 2
4 4
The details of liquid mutual fund units as at March 31, 2010 is as follows:
Particulars Number of units Amount (in Rs.
Crore)
Tata Floater Fund - Weekly Dividend 27,28,06,768 275
Kotak Floater Long Term Plan
- Weekly Dividend 20,93,66,402 211
Reliance Medium Term Fund -
Weekly Dividend Plan D 13,68,30,703 234
Birla Sunlife Savings Fund -
Institutional - Weekly 26,71,60,366 267
Dividend Payout
ICICI Prudential Flexible
Income Plan Premium - 2,93,92,648 310
Weekly Dividend Payout
IDFC Money Manager Fund -
Treasury Plan - Super 38,95,22,783 390
Institutional Plan C -
Weekly Dividend
UTI Treasury Advantage Fund
- Institutional Weekly 38,86,168 389
Dividend Plan - Payout
HDFC Floating Rate Income Fund
- Short Term Plan - 12,03,96,040 122
Dividend Weekly
DWS Ultra Short Term Fund
- Institutional Weekly 3,96,85,983 40
SBI - SHF - Ultra Short Term
Fund - Institutional Plan - 3,47,73,535 35
Weekly Dividend Payout
Franklin Templeton India
Ultra Short Bond Fund Super 1,09,36,513 11
Institutional Plan - Weekly
Dividend Payout
DSP Blackrock Floating Rate Fund
- Institutional - 99,866 10
Weekly Dividend
Religare Ultra Short Term Fund
- Institutional Weekly 2,25,53,650 23
Dividend
153,74,11,425 2,317
At cost 1,413
At fair value 904
2,317
The balances held in Certificates of deposit as at March 31, 2011 is as
follows:
Particulars Units Amount (in Rs.
Face Value Rs. Crore)
State Bank of Hyderabad 1,00,000 7,500 71
Union Bank of India 1,00,000 5,000 48
12,500 119
The balances held in Certificates of deposit as at March 31, 2010 is as
follows:
Particulars Units Amount (in Rs.
Face Value Rs. Crore)
Punjab National Bank 1,00,000 50,000 480
Bank of Baroda 1,00,000 27,500 265
HDFC Bank 1,00,000 25,000 236
Corporation Bank 1,00,000 20,000 189
Jammu and Kashmir Bank 1,00,000 1,000 10
1,23,500 1,180
The details of investments and disposal of securities during the year ended
March 31, 2011 and March 31, 2010 are as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Investment in securities:
Subsidiary - Infosys Consulting - 50
Subsidiary - Infosys China 42 -
Subsidiary - Infosys Mexico 14 18
Subsidiary - Infosys Brasil 10 28
Subsidiary - Infosys Public Services - 24
Subsidiary - Infosys Shanghai 11 -
Certificates of deposit 840 1,180
Liquid mutual fund units 1,583 9,016
2,500 10,316
Redemption/disposal of investment
in securities:
Long term investments - 5
Certificates of deposit 1,901 -
Liquid mutual fund units 3,900 6,699
5,801 6,704
Net movement in investments (3,301) 3,612
The details of investment purchased and sold during the year ended March
31, 2011 is as follows:
Name of the fund Face Value Rs. Units Cost (in Rs.
Crore)
Birla Sun Life Cash 10 17,46,98,810 175
Plus - Instl. Prem.
- Daily Dividend -
Reinvestment
Birla Sunlife Savings 10 9,19,03,006 92
Fund - Institutional
- Weekly Dividend Payout
ICICI Prudential 100 2,84,44,817 300
Flexible Income Plan
Premium - Weekly
Dividend
ICICI Prudential Liquid 100 3,67,95,966 368
Super Institutional
Plan - Div - Daily
IDFC Money Manager Fund 10 4,29,06,464 43
- Investment Plan -
Inst Plan B - Weekly Div
Kotak Floater Long Term 10 33,23,89,222 335
- Weekly Dividend
Kotak Liquid - 10 6,38,19,533 78
Institutional Premium
- Daily Dividend
Tata Floater Fund - 10 8,42,88,604 85
Weekly Dividend
Reliance Medium Term 10 2,16,35,163 37
Fund - Weekly
Dividend Plan
Birla Sun Life Short 10 6,85,47,384 70
Term Fund - Institutional
Fortnightly Dividend
- Payout
The details of investments purchased and sold during the year ended March
31, 2010 is as follows:
Name of the fund Face Value Rs. Units Cost (in Rs.
Crore)
Birla Sunlife Short 10 30,69,30,245 312
Term Fund - Institutional
- Fortnightly Dividend
Birla Sunlife Savings 10 44,96,87,618 450
Fund - Institutional
- Weekly Dividend
DSP Blackrock Strategic 1,000 4,90,830 50
Bond Fund - Institutional
Plan - Monthly Dividend
DBS Chola Freedom Income 10 8,19,67,368 86
- Short Term Fund -
Weekly Dividend
HDFC Floating Rate Income 10 50,78,57,424 515
Fund - Short Term
ICICI Prudential Floating 10 23,88,35,963 239
Rate Plan - D -
Weekly Dividend
ICICI Prudential Flexible 100 4,17,36,593 440
Income Plan Premium -
Weekly Dividend
IDFC Money Manager Fund 10 61,62,18,874 617
- Treasury Plan - Super
Institutional Plan C
Reliance Medium Term Fund
- Weekly Dividend Plan - D 10 30,23,62,955 517
UTI Treasury Advantage
Fund - Institutional
Weekly Dividend Payout 1,000 43,48,966 435
HSBC Floating Rate Long
Term Institutional
Weekly Dividend Payout 10 13,43,20,855 151
DWS Ultra Short Term Fund
- Institutional
Weekly Dividend 10 100,27,38,474 1,011
Religare Ultra Short
Term Fund - Institutional
Weedly Dividend 10 50,89,85,841 510
Principal Floating Rate 10 11,11,37,088 111
Fund FMP - Institutional
Option - Dividend
Payout Weekly
Tata Floater Fund - 10 25,78,43,865 260
Weekly Dividend
Kotak Floater Long Term
Plan - Weekly Dividend 10 44,64,32,595 450
SBI - SHF - Ultra
Short Term Fund -
Institutional Plan -
Weekly Dividend Payout 10 41,66,63,413 420
Franklin Templeton India 10 12,37,59,926 125
Ultra Short Bond Fund
Super Institutional
Plan - Weekly
Dividend Payout
2.16. Segment reporting:
The Company's operations predominantly relate to providing end-to-end
business solutions that leverage technology thereby enabling clients to
enhance business performance, delivered to customers globally operating in
various industry segments. Accordingly, revenues represented along industry
classes comprise the primary basis of segmental information set out in
these financial statements. Secondary segmental reporting is performed on
the basis of the geographical location of customers.
The accounting principles consistently used in the preparation of the
financial statements are also consistently applied to record income and
expenditure in individual segments. These are as set out in the significant
accounting policies.
Industry segments at the Company are primarily financial services
comprising customers providing banking, finance and insurance services;
manufacturing companies; companies in the telecommunications and the retail
industries; and others such as utilities, transportation and logistics
companies.
Income and direct expenses in relation to segments is categorized based on
items that are individually identifiable to that segment, while the
remainder of the costs are categorized in relation to the associated
turnover of the segment. Certain expenses such as depreciation, which form
a significant component of total expenses, are not specifically allocable
to specific segments as the underlying services are used interchangeably.
The Company believes that it is not practical to provide segment
disclosures relating to those costs and expenses, and accordingly these
expenses are separately disclosed as 'unallocated' and directly charged
against total income.
Fixed assets used in the Company's business or liabilities contracted have
not been identified to any of the reportable segments, as the fixed assets
and services are used interchangeably between segments. Accordingly, no
disclosure relating to total segment assets and liabilities are made.
Customer relationships are driven based on the location of the respective
client. North America comprises the United States of America, Canada and
Mexico; Europe includes continental Europe (both the east and the west),
Ireland and the United Kingdom; and the Rest of the World comprising all
other places except, those mentioned above and India.
Geographical revenues are segregated based on the location of the customer
who is invoiced or in relation to which the revenue is otherwise
recognized.
Industry Segments:
Year ended March 31, 2011 and March 31, 2010:
in Rs. crore
Particulars A B C D E F
Revenues 9,293 4,686 3,134 3,757 4,515 25,385
7,354 3,988 3,234 2,989 3,575 21,140
Identifiable 4,210 2,107 1,471 1,643 2,115 11,546
operating 3,095 1,853 1,355 1,267 1,564 9,134
expenses
Allocated 1,970 1,007 673 807 968 5,425
expenses 1,615 877 712 657 785 4,646
Segmental 3,113 1,572 990 1,307 1,432 8,414
operating income 2,644 1,258 1,167 1,065 1,226 7,360
Unallocable 740
expenses 807
Operating income 7,674
6,553
Other income, 1,147
net 910
Provision for -
investments (9)
Net profit 8,821
before taxes 7,472
and exceptional
item
Income taxes 2,378
1,717
Net profit 6,443
after taxes 5,755
before
exceptional
item
Exceptional -
item - Income 48
on sale of
investments,
net of taxes
Net profit 6,443
after taxes 5,803
and
exceptional
item
A = Financial services
B = Manufacturing
C = Telecom
D = Retail
E = Others
F = Total
Geographic Segments:
Year ended March 31, 2011 and March 31, 2010:
in Rs. crore
Particulars North Europe India Rest of Total
America the World
Revenues 16,815 5,252 594 2,724 25,385
14,170 4,633 269 2,068 21,140
Identifiable
operating expenses 7,521 2,311 286 1,428 11,546
6,028 1,963 77 1,066 9,134
Allocated expenses 3,610 1,120 122 573 5,425
3,114 1,020 59 453 4,646
Segmental operating 5,684 1,821 186 723 8,414
income 5,028 1,650 133 549 7,360
Unallocable expenses 740
807
Operating income 7,674
6,553
Other income, net 1,147
910
Provision for
investments -
(9)
Net profit before
taxes and
exceptional item 8,821
7,472
Income taxes 2,378
1,717
Net profit after
taxes before
exceptional item 6,443
5,755
Exceptional item
- Income on sale
of investments,
net of taxes -
48
Net profit after
taxes and
exceptional item 6,443
5,803
2.17. Provision for doubtful debts:
Periodically, the Company evaluates all customer dues to the Company for
collectability. The need for provisions is assessed based on various
factors including collectability of specific dues, risk perceptions of the
industry in which the customer operates, general economic factors, which
could affect the customer's ability to settle. The Company normally
provides for debtor dues outstanding for 180 days or longer as at the
Balance Sheet date. As at March 31, 2011 the Company has provided for
doubtful debts of Rs.19 crore (Rs. 21 crore as at March 31, 2010) on dues
from certain customers although the outstanding amounts were less than 180
days old, since the amounts were considered doubtful of recovery. The
company pursues the recovery of the dues, in part or full.
2.18. Dividends remitted in foreign currencies:
The Company remits the equivalent of the dividends payable to equity
shareholders and holders of ADS. For ADS holders the dividend is remitted
in Indian rupees to the depository bank, which is the registered
shareholder on record for all owners of the Company's ADSs. The depositary
bank purchases the foreign currencies and remits dividends to the ADS
holders.
The particulars of dividends remitted are as follows:
in Rs. crore
Particulars Number of shares Year ended March 31,
to which the
dividends relate
2011 2010
Interim and 30th year
special dividend for
fiscal 2011 10,87,18,147 435 -
Interim dividend for
fiscal 2010 10,70,15,201 - 107
Final dividend for
fiscal 2010 10,68,22,614 160 -
Final dividend for
fiscal 2009 10,73,97,313 - 145
2.19. Reconciliation of basic and diluted shares used in computing earnings
per share:
Particulars Year ended March 31,
2011 2010
Number of shares considered as basic
weighted average shares outstanding 57,40,13,650 57,33,09,523
Add: Effect of dilutive issues of
shares/stock options 1,88,308 6,40,108
Number of shares considered as weighted
average shares and potential 57,42,01,958 57,39,49,631
shares outstanding
2.20. Provision for post-sales client support and warranties:
The movement in the provision for post-sales client support and warranties
is as follows:
in Rs. crore
Particulars Year ended March 31,
2011 2010
Balance at the beginning 73 75
Provision recognized/(reversed) 5 (2)
Provision utilised - -
Exchange difference during the year - -
Balance at the end 78 73
Provision for post-sales client support is expected to be utilized over a
period of 6 months to 1 year.
2.21. Gratuity Plan:
The following table set out the status of the Gratuity Plan as required
under AS 15.
Reconciliation of opening and closing balances of the present value of the
defined benefit obligation and plan assets:
in Rs. crore
Particulars As at
March 31 March 31 March 31, March 31, March 31,
2011 2010 2009 2008 2007
Obligations at
year beginning 308 256 217 221 180
Transfer of
obligation - (2) - - -
Service cost 171 72 47 47 44
Interest cost 24 19 15 16 14
Actuarial
(gain)/loss 15 (4) - (9) -
Benefits paid (59) (33) (23) (21) (17)
Amendment in
benefit plans - - - (37) -
Obligations at
year end 459 308 256 217 221
Defined benefit obligation liability as at the balance sheet date is fully
funded by the Company:
in Rs. crore
Particulars As at
March 31 March 31 March 31, March 31, March 31,
2011 2010 2009 2008 2007
Change in
plan assets:
Plans assets at
year beginning,
at fair value 310 256 229 221 167
Expected return
on plan assets 34 24 16 18 16
Actuarial
gain/(loss) 1 1 5 2 3
Contributions 173 62 29 9 52
Benefits paid (59) (33) (23) (21) (17)
Plans assets
at year end, at
fair value 459 310 256 229 221
Reconciliation of
present value of
the obligation
and the fair
value of the
plan assets:
Fair value of
plan assets at
the end of the 459 310 256 229 221
year
Present value of
the defined benefit 459 308 256 217 221
obligations at the
end of the year
Asset recognized
in the balance sheet - 2 - 12 -
Assumptions:
Interest rate 7.98% 7.82% 7.01% 7.92% 7.99%
Estimated rate of
return on plan assets 9.36% 9.00% 7.01% 7.92% 7.99%
Weighted expected
rate of salary
increase 7.27% 7.27% 5.10% 5.10% 5.10%
Net gratuity cost for the year ended March 31, 2011 and March 31, 2010
comprises of the following components:
in Rs. crore
Year ended March 31,
Particulars 2011 2010
Gratuity cost for the year:
Service cost 171 72
Interest cost 24 19
Expected return on plan assets (34) (24)
Actuarial (gain)/loss 14 (5)
Plan amendment amortization (4) (3)
Net gratuity cost 171 59
Actual return on plan assets 35 25
Gratuity cost, as disclosed above, is included under salaries and bonus and
is segregated between software development expenses, selling and marketing
expenses and general and administration expenses on the basis of number of
employees.
During the year ended March 31, 2010, a reimbursement obligation of Rs.2
crore has been recognized towards settlement of gratuity liability of
Infosys Consulting India Limited.
As at March 31, 2011 and March 31, 2010, the plan assets have been
primarily invested in government securities. The estimates of future salary
increases, considered in actuarial valuation, take account of inflation,
seniority, promotion and other relevant factors such as supply and demand
factors in the employment market. The company expects to contribute
approximately Rs.100 crore to the gratuity trust during the fiscal 2012.
Effective July 1, 2007, the Company revised the employee death benefits
provided under the gratuity plan, and included all eligible employees under
a consolidated term insurance cover. Accordingly, the obligations under the
gratuity plan reduced by Rs. 37 crore, which is being amortised on a
straight line basis to the net profit and loss account over 10 years
representing the average future service period of the employees. The
unamortized liability as at March 31, 2011 and March 31, 2010 amounted to
Rs.22 crore and Rs. 26 crore, respectively and disclosed under 'Current
Liabilities'.
2.22.a Provident Fund:
The Guidance on Implementing AS 15, Employee Benefits (revised 2005) issued
by Accounting Standards Board (ASB) states that benefits involving employer
established provident funds, which require interest shortfalls to be
recompensed are to be considered as defined benefit plans. Pending the
issuance of the final guidance note from the Actuarial Society of India,
the Company's actuary has expressed an inability to reliably measure
provident fund liabilities. Accordingly the Company is unable to exhibit
the related information.
The company contributed Rs.179 crore crore towards Provident Fund during
the year ended March 31, 2011. (Rs.150 crore during the year ended March
31, 2010).
2.22.b Superannuation:
The company contributed Rs.57 crore to the Superannuation Trust during the
year ended March 31, 2011. (Rs.54 crore during the year ended March 31,
2010).
2.23 Cashflow statement:
2.23.a Unclaimed dividend:
The balance of cash and cash equivalents includes Rs.3 crore as at March
31, 2011 (Rs.2 crore as at March 31, 2010) set aside for payment of
dividends.
2.23.b Restricted deposits:
Deposits with financial institutions as at March 31, 2011 include Rs.344
crore (Rs. 281 crore as at March 31, 2010) deposited with Life Insurance
Corporation of India to settle employee-related obligations as and when
they arise during the normal course of business. This amount is considered
as restricted cash and is hence not considered 'cash and cash equivalents'.
2.24 Dues to micro and small enterprises:
The company has no dues to micro and small enterprises during the year
ended March 31, 2011 and March 31, 2010 and as at March 31, 2011 and March
31, 2010.
2.25 Exceptional item:
During the year ended March 31, 2010, the company sold 32,31,151 shares of
OnMobile Systems Inc, USA (OMSI) at a price of Rs.166.58 per share
amounting to a total consideration of Rs.53 crore, net of taxes and
transactions costs. The resultant income of Rs.48 crore has been
appropriated to capital reserve.
3. Details of rounded off amounts:
The financial statements are represented in Rs.crore as per the approval
received from Department of Company Affairs (DCA) earlier. Those items
which were not represented in the financial statement due to rounding off
to the nearest Rs. crore are given as follows:
Balance Sheet Items: in Rs. cror
Schedue Description As at
March 31, 2011 March 31, 2010
3 Fixed assets:
Vehicles:
Addition during the year - 0.04
Depreciation on deletions - 0.04
Deletion during the year 0.08 -
Depreciation on deletions 0.08 -
4 Investments:
Investment in Infosys Sweden 0.06 0.06
2.7 Related party transactions:
Debtors:
Infosys BPO s.r.o. - 0.04
Infosys Thailand - 0.04
Infosys Consulting India 0.29 -
Infosys Public Services 0.11 -
Infosys Sweden - 0.08
Infosys Technologia do
Brasil Ltda - 0.62
Creditors:
Infosys BPO s.r.o. - 0.16
Infosys Technologia do
Brasil Ltda 0.14 -
Infosys Mexico 0.31 -
Infosys Thailand - 0.02
2.12 Balances with non-scheduled
banks:
- ABN Amro Bank, Denmark 0.27 0.21
- Bank of Baroda, Mauritius 0.02 0.02
- Citibank N.A, New Zealand 0.20 0.26
- Deutsche Bank, Moscow 0.10 0.34
- Deutsche Bank, Moscow, USD 0.11 1.21
- Deutsche Bank, Singapore - 0.66
- Deutsche Bank, Zurich,
Switzerland USD account 0.01 1.40
- Nordbanken, Sweden - 0.06
- Standard Chartered Bank, UAE 0.17 0.09
- The Bank of Tokyo-Mitsubishi
UFJ, Ltd., Japan 0.41 0.16
2.12 Maximum Balances with
non-scheduled banks:
- ABN Amro Bank, Denmark 0.27 0.21
- Deutsche Bank Russia - 0.37
- Nordbanken, Sweden - 0.48
- Deutsche Bank, Russia
(U.S. dollar account) - 0.21
Profit & Loss Items:
in Rs. crore
Schedul Description Year ended March 31,
2011 2010
Profit & Provision for investment - 9.00
Loss
Additional dividend tax - 0.04
2.1 Aggregate expenses:
Provision for doubtful loans
and advances - 0.28
Auditor's remuneration:
Statutory audit fees - 0.69
Certification charges 0.06 0.05
Out-of-pocket expenses 0.04 0.03
Freight charges - 1.01
Sales promotion expenses 0.28 1.00
Bank charges and commission - 1.75
2.7 Related party transactions:
Revenue transactions:
Purchase of services -
Infosys BPO Poland 0.41 0.03
Purchase of services -
Infosys BPO s.r.o - 0.44
Purchase of services -
Infosys Brasil 0.35 -
4. Transactions with key management personnel:
Key management personnel comprise directors and members of executive
council.:
Particulars of remuneration and other benefits paid to whole-time directors
and members of executive council during the year ended March 31, 2011 and
March 31, 2010 are as follows:
in Rs. crore
Name A B C D
Co-Chairman (1):
Nandan M. Nilekani - - - -
0.09 0.02 0.23 0.34
Chief Executive Officer
and Managing Director:
S. Gopalakrishnan 0.34 0.08 0.69 1.11
0.32 0.08 0.61 1.01
Chief Operating Officer
and Director:
S.D. Shibulal 0.34 0.08 0.66 1.08
0.31 0.08 0.56 0.95
Whole-time directors:
K. Dinesh 0.34 0.08 0.68 1.10
0.32 0.08 0.61 1.01
T.V. Mohandas Pai 0.43 0.10 2.56 3.09
0.36 0.08 2.69 3.13
Srinath Batni 0.43 0.10 1.76 2.29
0.36 0.07 1.98 2.41
Chief Financial Officer:
V. Balakrishnan 0.38 0.08 2.15 2.61
0.30 0.08 2.06 2.44
Executive Council Members:
Ashok Vemuri 2.22 - 3.10 5.32
2.09 - 2.79 4.88
Chandra Shekar Kakal 0.34 0.08 2.16 2.58
0.28 0.06 1.73 2.07
B.G. Srinivas 1.94 - 2.99 4.93
1.81 - 2.75 4.56
Subhash B. Dhar 0.30 0.08 1.69 2.07
0.24 0.07 1.42 1.73
A = Salary
B = Contributions to provident and other funds
C = Perquisities and incentives
D = Total Remuneration
(1) Effective July 9, 2009, Nandan M Nilekani relinquished the positions of
Co-Chairman and Member of the Board.
Particulars of remuneration and other benefits of non-executive/independent
directors for the year ended March 31, 2011 and March 31, 2010:
Name Commission Sitting Reimbursement Total
fees of expenses Remuneration
Independent
directors:
Deepak M.
Satwalekar 0.59 - 0.01 0.60
0.60 - - 0.60
Prof. Marti G.
Subrahmanyam 0.79 - 0.23 1.02
0.65 - 0.20 0.85
Dr. Omkar Goswami 0.51 - 0.03 0.54
0.52 - 0.03 0.55
Claude Smadja (1) 0.23 - 0.09 0.32
0.59 - 0.25 0.84
Rama Bijapurkar (2) 0.04 - - 0.04
0.49 - 0.02 0.51
Sridar A. Iyengar 0.69 - 0.24 0.93
0.62 - 0.21 0.83
David L. Boyles 0.65 - 0.34 0.99
0.59 - 0.15 0.74
Prof. Jeffrey 0.67 - 0.13 0.80
S. Lehman 0.61 - 0.24 0.85
K.V. Kamath 0.56 - 0.01 0.57
0.39 - 0.02 0.41
R. Seshasayee (3) 0.10 - - 0.10
- - - -
Non-executive director
and Chief mentor:
N.R. Narayana Murthy 0.61 - - 0.61
0.57 - - 0.57
(1) Retired from the board effective August 30, 2010
(2) Resigned from the board effective April 13, 2010
(3) Joined the board effective January 13, 2011
As per our report attached
for BSR & Co.
Chartered Accountants
Firm Reg No : 101248W
Natrajh Ramakrishna N.R. Narayana Murthy S. Gopalakrishnan
Partner Chairman Chief Executive Officer
Membership No. 32815 and Chief Mentor and Managing Director
S.D. Shibulal Deepak M. Satwalekar
Chief Operating Director
Officer and Director
Prof. Marti G. Subrahmanyam Dr. Omkar Goswami Sridar A. Iyengar
Director Director Director
David L. Boyles Prof. Jeffrey S. Lehman K.V. Kamath
Director Director Director
R.Seshasayee K. Dinesh T.V. Mohandas Pai
Director Director Director
Srinath Batni V. Balakrishnan K. Parvatheesam
Director Chief Financial Officer Company Secretary
Place : Bangalore
Date : April 15, 2011
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