6-K 1 f94097e6vk.htm FORM 6-K Infosys Technologies Limited, Form 6-K 9/30/2003
 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 6-K

Report of Foreign Issuer
Pursuant to Section 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended September 30, 2003

Commission File Number 333-72195

Infosys Technologies Limited

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Bangalore, Karnataka, India
(Jurisdiction of incorporation or organization)

Electronics City, Hosur Road, Bangalore, Karnataka, India 561 100. +91-80-852-0261
(Address of principal executive offices)

     Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F:

       Form 20-F x   Form 40-F o

     Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934.

       Yes o   No x

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 2g 3-2(b).

Not applicable.



 


 

          This Form 6-K contains our Quarterly Report for the quarter ended September 30, 2003 that we mailed to our equity shareholders on or about November 01, 2003. The information contained in this Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

 


 

Infosys Technologies Limited
Report for the second quarter ended September 30, 2003

(INFOSYS LOGO)

 


 

At a glance – Indian GAAP (Non-consolidated financials)

                                           
      in Rs. crores, except per share data
     
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
For the period
                                       
Total revenue
    1,134.75       879.57       2,216.73       1,644.19       3,622.69  
Export revenue
    1,115.98       857.23       2,174.63       1,607.75       3,543.51  
Operating profit (PBIDTA)
    378.43       323.24       726.73       598.17       1,272.04  
PBIDTA/revenues (%)
    33.35 %     36.75 %     32.78 %     36.38 %     35.11 %
Profit after tax (PAT)
    300.16       225.77       578.28       442.62       957.93  
PAT/revenues (%)
    26.45 %     25.67 %     26.09 %     26.92 %     26.44 %
Earnings per share* (par value of Rs.5 each, fully paid)
                                       
 
Basic
    45.30       34.10       87.29       66.87       144.68  
 
Diluted
    44.92       33.90       86.76       66.41       143.37  
Dividend per share
  NA   NA     14.50       12.50       27.00  
Dividend amount
  NA   NA     96.09       82.76       178.81  
Capital expenditure
    68.83       44.02       127.21       97.80       219.26  
At the end of the period
                                       
Total assets
                    3,335.61       2,443.32       2,860.65  
Fixed assets – net
                    793.26       753.53       772.72  
Cash and cash equivalents
                    1,689.86       1,289.34       1,638.51  
Working capital
                    2,031.49       1,623.01       2,017.92  
Total debt
                                 
Net worth
                    3,335.61       2,443.32       2,860.65  
Equity
                    33.13       33.10       33.12  
Market capitalization
                    30,006.92       22,552.46       26,847.33  
 
                   
     
     
 

Note:
Market capitalization is calculated by considering the share price at National Stock Exchange on the shares outstanding at the period/ year end.
*EPS figures have been calculated for the period and have not been annualized.

(BAR CHART)

2


 

Letter to the shareholder

Dear shareholder,

Your company is delighted to report another quarter of robust growth. It has increased its guidance for revenue and EPS for this fiscal. Thanks to the dedicated efforts of all Infoscions, your company expects to grow into a billion dollar company, by the end of this fiscal.

Indian GAAP revenues grew by 4.88% over Q1 FY2004 while net profits from ordinary activities witnessed an increase of 7.92%. Revenues in US$ terms grew by 7.51% for the quarter as compared to the quarter ended June 30, 2003. Cash flows continue to be strong. Free cash flows during the quarter amounted to Rs. 313.62 crore which includes investment in liquid mutual funds.

Business opportunities continue to grow. Pricing is showing signs of stability. Margins have stabilized due to several proactive measures taken earlier. In fact, our initiatives to increase offshore revenue are yielding results. During the quarter, there was an increase of 10.9% in offshore effort as against 2.4% in onsite effort as compared to the previous quarter first service revenue. We continue to hedge our forex exposure, but the appreciating rupee may impact margins.

Your company added 29 new clients during the quarter. Significant wins include a Fortune 500 on-line shopping giant, one of the largest apparel manufacturers in the US, the second largest electronics entertainment software retailer, the world’s leading provider of information, technology and services to the pharma industry in Europe, one of the largest automakers in Japan and the European arm of one of the world’s leading suppliers of automotive components. In addition, Infosys completed an end-to-end package implementation for a women’s specialty apparel retailer.

In Australia, one of the largest electricity utilities relies on Infosys for technology solutions that will streamline and improve its systems and processes. Infosys’ consulting group is advising this Australian giant on strategies to grow its BPO business.

Global corporations are leveraging Infosys’ expertise in business consulting to maintain competitive advantage. The company is working with one of the largest electric utilities firms in the US, to develop a framework and to redefine tools for rationalizing the company’s enterprise portfolio. Infosys advised a global marketing information services corporation on defining its data architecture as well as on the selection of a package solution. During the quarter, Infosys also provided consulting services to an international provider of credit enhancement products and lender services based in the US.

Infosys’ Banking Business Unit (BBU) bagged its seventeenth client in India with one of the top public sector banks deploying FINACLE® suite of products. Other significant wins in this sector include a leading bank headquartered in Saudi Arabia and a leading private sector bank headquartered in Mumbai, India. FINACLE® has emerged as the world’s most scalable open systems based core-banking solution. In the recently concluded rigorous benchmarking exercise on HP Superdome server at the HP Capacity Planning Centre in Atlanta, USA, FINACLE® broke all hitherto published benchmark results for core banking transaction processing.

Your company is making investments in order to enhance its end-to-end solution capability. It is also increasing capital spending on its global infrastructure. Infosys proposes to establish a software development center for 200 professionals in Shanghai. The China subsidiary will be offering software services to domestic companies in China and multinational companies operating in China. It will also serve as a hub for software services in Asia Pacific.

Your company is strengthening its client relationship management framework. Further, during the quarter, your company held its annual client forum – Milan – in the US. In fact, there was increased participation overall as well as increase in the number of high profile attendees (VP and above).

As a result of several proactive measures taken earlier, your company has increased its productivity and efficiency across all activities. Global corporations are increasingly accepting the outsourcing model and your company continues to focus on providing enhanced customer value. Your company has added several strategic clients which have the potential to grow into multi-million dollar accounts. We continue to demonstrate the scalability of our operations by adding a net of 2,025 employees without compromising on operational excellence. In fact, your company’s net employee addition for this quarter has been the highest ever.

As in the past, Infoscions continue to help global corporations transform their business leveraging technology. Our growth has been made possible through their unstinting commitment. On your behalf, we salute them for contributing to yet another successful quarter.

         
    (SIGNATURES)
         
    Nandan M. Nilekani   S. Gopalakrishnan
Bangalore   Chief Executive Officer, President   Chief Operating Officer
October 10, 2003   and Managing Director   and Deputy Managing Director

3


 

Auditors’ report to the members of Infosys Technologies Limited

We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at September 30, 2003, the Profit and Loss Accounts and Cash Flow Statements of the Company for the quarter and half-year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that:

(a)   we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit;
 
(b)   in our opinion, proper books of account have been kept by the Company so far as appears from our examination of the books;
 
(c)   the Balance Sheet, the Profit and Loss Accounts and the Cash Flow Statements dealt with by this report are in agreement with the books of account;
 
(d)   in our opinion, the Balance Sheet, the Profit and Loss Accounts and the Cash Flow Statements dealt with by this report comply with the Accounting Standards issued by the Institute of Chartered Accountants of India, to the extent applicable; and
 
(e)   in our opinion and to the best of our information and according to the explanations given to us, the said accounts give a true and fair view in conformity with the accounting principles generally accepted in India;

  (i)   in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2003;
 
  (ii)   in the case of the Profit and Loss Accounts, of the profit of the Company for the quarter and half year ended on that date; and
 
  (iii)   in the case of the Cash Flow Statements, of the cash flows of the Company for the quarter and half year ended on that date.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
October 10, 2003

4


 

Balance Sheet as at

                           
      in Rs. crore
     
      September 30, 2003   September 30, 2002   March 31, 2003
     
 
 
SOURCES OF FUNDS
                       
SHAREHOLDERS’ FUNDS
                       
Share capital
    33.13       33.10       33.12  
Reserves and surplus
    3,302.48       2,410.22       2,827.53  
 
   
     
     
 
 
    3,335.61       2,443.32       2,860.65  
 
   
     
     
 
APPLICATION OF FUNDS
                       
FIXED ASSETS
                       
Original cost
    1,414.53       1,137.72       1,273.32  
Less: Depreciation and amortization
    683.27       476.54       577.15  
 
   
     
     
 
Net book value
    731.26       661.18       696.17  
Add: Capital work-in-progress
    62.00       92.35       76.55  
 
   
     
     
 
 
    793.26       753.53       772.72  
INVESTMENTS
    476.99       33.20       33.20  
DEFERRED TAX ASSETS
    33.87       33.58       36.81  
CURRENT ASSETS, LOANS AND ADVANCES
                       
Sundry debtors
    577.26       458.25       512.14  
Cash and bank balances
    1,382.71       986.85       1,336.23  
Loans and advances
    937.64       870.16       872.78  
 
   
     
     
 
 
    2,897.61       2,315.26       2,721.15  
Less: Current liabilities
    370.99       262.36       315.25  
 
Provisions
    495.13       429.89       387.98  
 
   
     
     
 
NET CURRENT ASSETS
    2,031.49       1,623.01       2,017.92  
 
   
     
     
 
 
    3,335.61       2,443.32       2,860.65  
 
   
     
     
 

This is the Balance Sheet referred to in our report of even date.

             
for Bharat S. Raut & Co.        
Chartered Accountants            
             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President   Chief Operating Officer and
        and Managing Director   Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and   Director   Company Secretary and
    Chief Financial Officer       Vice President – Finance
             
Bangalore            
October 10, 2003            

5


 

Profit and Loss Account for the

                                           
      in Rs. crore, except per share data
     
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
INCOME
                                       
Software services and products
                                       
 
Overseas
    1,115.98       857.23       2,174.63       1,607.75       3,543.51  
 
Domestic
    18.77       22.34       42.10       36.44       79.18  
 
 
   
     
     
     
     
 
 
    1,134.75       879.57       2,216.73       1,644.19       3,622.69  
SOFTWARE DEVELOPMENT EXPENSES
    587.16       424.49       1,159.94       801.88       1,813.30  
 
 
   
     
     
     
     
 
GROSS PROFIT
    547.59       455.08       1,056.79       842.31       1,809.39  
SELLING AND MARKETING EXPENSES
    80.44       69.33       160.16       124.42       266.98  
GENERAL AND ADMINISTRATION EXPENSES
    88.72       62.51       169.90       119.72       270.37  
 
 
   
     
     
     
     
 
 
    169.16       131.84       330.06       244.14       537.35  
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION
    378.43       323.24       726.73       598.17       1,272.04  
Interest
                             
Depreciation and amortization
    62.33       46.24       106.59       86.71       188.95  
 
 
   
     
     
     
     
 
OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION
    316.10       277.00       620.14       511.46       1,083.09  
Other income
    44.28       17.53       76.73       42.42       99.61  
Provision for investments
    0.22       23.76       6.59       23.76       23.77  
 
 
   
     
     
     
     
 
NET PROFIT BEFORE TAX
    360.16       270.77       690.28       530.12       1,158.93  
Provision for taxation
    60.00       45.00       112.00       87.50       201.00  
 
 
   
     
     
     
     
 
NET PROFIT AFTER TAX
    300.16       225.77       578.28       442.62       957.93  
AMOUNT AVAILABLE FOR APPROPRIATION
    300.16       225.77       578.28       442.62       957.93  
 
 
   
     
     
     
     
 
DIVIDEND
                                       
 
Interim
    96.09       82.76       96.09       82.76       82.76  
 
Final
                            96.05  
 
Dividend Tax
    12.31             12.31             12.30  
Amount transferred – general reserve
                            766.82  
Balance in Profit and Loss Account
    191.76       143.01       469.88       359.86        
 
 
   
     
     
     
     
 
 
    300.16       225.77       578.28       442.62       957.93  
 
 
   
     
     
     
     
 
EARNINGS PER SHARE (equity shares, par value Rs. 5/- each)
                                       
 
Basic
    45.30       34.10       87.29       66.87       144.68  
 
Diluted
    44.92       33.90       86.76       66.41       143.37  
Number of shares used in computing earnings per share
                                       
 
Basic
    6,62,57,028       6,61,98,735       6,62,51,101       6,61,93,632       6,62,11,068  
 
Diluted
    6,68,24,404       6,65,96,469       6,66,51,085       6,66,51,932       6,68,16,821  
 
 
   
     
     
     
     
 

These are the Profit and Loss Accounts referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants

             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President   Chief Operating Officer and
        and Managing Director   Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and   Director   Company Secretary and
    Chief Financial Officer       Vice President – Finance
             
Bangalore            
October 10, 2003            

6


 

Cash Flow Statement for the

                                           
      in Rs. crore
     
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
                                       
Profit before tax
    360.16       270.77       690.28       530.12       1,158.93  
Adjustments to reconcile profit before tax to cash provided by operating activities
                                       
 
(Profit)/Loss on disposal of fixed assets
          0.14       (0.01 )     0.13        
 
Depreciation and amortization
    62.33       46.24       106.59       86.72       188.95  
 
Interest and dividend income
    (23.43 )     (18.69 )     (46.18 )     (36.37 )     (78.05 )
 
Provision on long-term investments
    0.22       23.76       6.59       23.76       23.77  
 
Exchange differences on translation of foreign currency cash and cash equivalents
    1.59       2.13       3.16       1.36       (2.06 )
Changes in current assets and liabilities
                                       
 
Sundry debtors
    (19.96 )     (44.96 )     (65.12 )     (121.52 )     (175.41 )
 
Loans and advances
    8.33       (22.05 )     (1.52 )     (73.64 )     (127.63 )
 
Current liabilities and provisions
    16.58       46.38       55.59       111.45       158.46  
 
Income taxes paid during the period/year
    (49.22 )     (78.94 )     (60.28 )     (104.90 )     (232.09 )
 
   
     
     
     
     
 
NET CASH GENERATED BY OPERATING ACTIVITIES
    356.60       224.78       689.10       417.11       914.87  
 
   
     
     
     
     
 
CASH FLOWS FROM FINANCING ACTIVITIES
                                       
Proceeds on exercise of stock options
    4.01       2.75       5.08       3.15       13.52  
Dividends paid during the period/year, including dividend tax
                (108.35 )     (82.73 )     (165.49 )
 
   
     
     
     
     
 
NET CASH USED IN FINANCING ACTIVITIES
    4.01       2.75       (103.27 )     (79.58 )     (151.97 )
 
   
     
     
     
     
 
CASH FLOWS FROM INVESTING ACTIVITIES
                                       
Purchases of fixed assets and change in capital work-in-progress
    (68.83 )     (44.02 )     (127.21 )     (97.80 )     (219.26 )
Proceeds on disposal of fixed assets
          0.04       0.09       0.16       0.33  
Investments in securities
    (349.83 )           (450.38 )     (12.52 )     (12.53 )
Interest and dividend income
    23.43       18.69       46.18       36.37       78.05  
 
   
     
     
     
     
 
NET CASH USED IN INVESTING ACTIVITIES
    (395.23 )     (25.29 )     (531.32 )     (73.79 )     (153.41 )
 
   
     
     
     
     
 
Exchange differences on translation of foreign currency cash and cash equivalents
    (1.59 )     (2.13 )     (3.16 )     (1.36 )     2.06  
 
   
     
     
     
     
 
Net (decrease)/increase in cash and cash equivalents during the period/year
    (36.21 )     200.11       51.35       262.38       611.55  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR
    1,726.07       1,089.23       1,638.51       1,026.96       1,026.96  
 
   
     
     
     
     
 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
    1,689.86       1,289.34       1,689.86       1,289.34       1,638.51  
 
   
     
     
     
     
 

These are the Cash Flow Statements referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants

             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President   Chief Operating Officer and
        and Managing Director   Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and   Director   Company Secretary and
    Chief Financial Officer       Vice President – Finance
             
Bangalore            
October 10, 2003            

7


 

Schedules to the Profit and Loss Account for the

                                           
      in Rs. crore
     
      Quarter ended September 30,   Half-year ended September 30,   Year ended March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
SOFTWARE DEVELOPMENT EXPENSES
                                       
Salaries and bonus including overseas staff expenses
    482.59       343.27       937.37       640.92       1,433.85  
Staff welfare
    2.86       1.60       5.99       3.29       7.91  
Contribution to provident and other funds
    12.99       6.81       23.74       13.27       31.94  
Overseas travel expenses
    43.07       41.22       84.68       78.28       162.66  
Consumables
    2.05       1.26       3.77       2.42       6.25  
Cost of software packages
                                       
 
for own use
    21.47       11.30       35.07       21.06       54.75  
 
for service delivery to clients
    2.48       0.74       12.34       7.62       12.99  
Computer maintenance
    3.14       2.52       5.44       4.38       9.33  
Communication expenses
    7.75       5.09       15.93       12.26       23.94  
Provision for post-sales client support
    (0.32 )     (2.27 )     (0.15 )     (0.30 )     (6.18 )
Consultancy charges
    7.61       12.95       34.29       18.68       75.86  
Rent
    1.47             1.47              
 
   
     
     
     
     
 
 
    587.16       424.49       1,159.94       801.88       1,813.30  
 
   
     
     
     
     
 
SELLING AND MARKETING EXPENSES
                                       
Salaries and bonus including overseas staff expenses
    49.36       32.96       99.20       63.01       141.73  
Staff welfare
    0.15       0.18       0.23       0.31       0.62  
Contribution to provident and other funds
    0.79       0.15       1.17       0.24       1.34  
Overseas travel expenses
    9.26       9.90       18.04       18.59       45.16  
Consumables
    0.02       0.05       0.08       0.07       0.21  
Cost of software packages for own use
          0.02       0.01       0.03       0.21  
Computer maintenance
    0.01             0.02             0.01  
Communication expenses
          0.18             0.24       0.50  
Traveling and conveyance
    0.28       0.30       0.60       0.45       1.19  
Rent
    3.94       1.20       6.90       2.11       4.79  
Telephone charges
    1.19       1.46       2.29       2.52       5.35  
Professional charges
    0.78       2.97       2.74       5.24       10.63  
Printing and stationery
    0.25       0.40       0.52       0.77       1.43  
Advertisements
    0.12       0.24       0.24       0.40       1.04  
Brand building
    9.42       9.37       15.14       17.36       29.05  
Office maintenance
    0.07       0.35       0.11       0.50       2.72  
Repairs to plant and machinery
                            0.02  
Power and fuel
    0.01       0.07       0.03       0.11       0.22  
Insurance charges
    0.01       0.01       0.04       0.03       0.20  
Rates and taxes
          0.12       0.03       0.23       0.27  
Bank charges and commission
          0.03       0.01       0.04       0.09  
Commission charges
    0.64       4.70       2.91       6.22       10.58  
Marketing expenses
    1.76       2.20       2.61       3.31       6.72  
Sales promotion expenses
    0.09       0.05       0.20       0.20       0.46  
Other miscellaneous expenses
    2.29       2.42       7.04       2.44       2.44  
 
   
     
     
     
     
 
 
    80.44       69.33       160.16       124.42       266.98  
 
   
     
     
     
     
 
GENERAL AND ADMINISTRATION EXPENSES
                                       
Salaries and bonus including overseas staff expenses
    17.36       14.17       34.26       26.38       56.24  
Contribution to provident and other funds
    1.15       0.75       2.29       1.54       3.49  
Overseas travel expenses
    1.87       2.15       3.57       3.95       7.78  
Traveling and conveyance
    5.18       3.74       9.51       6.66       16.76  
Rent
    3.66       5.52       10.77       10.75       24.51  
Telephone charges
    7.47       5.37       14.76       9.01       21.34  
Professional charges
    9.79       7.98       16.28       14.51       37.99  
Printing and stationery
    1.05       1.01       3.39       2.66       4.80  
Advertisements
    0.37       1.02       1.36       1.67       5.15  
Office maintenance
    6.32       3.98       12.55       7.91       20.13  
Repairs to building
    1.49       1.15       3.39       3.02       7.27  
Repairs to plant and machinery
    1.51       0.93       2.60       2.09       4.75  
Power and fuel
    7.19       5.32       14.39       10.98       22.38  
Insurance charges
    6.06       2.48       11.19       4.46       9.83  
Rates and taxes
    0.94       1.10       2.15       2.27       5.14  
Donations
    3.52       1.37       7.02       3.04       6.09  
Auditor’s remuneration
                                       
 
audit fees
    0.08       0.07       0.15       0.13       0.27  
 
certification charges
                            0.03  
 
out-of-pocket expenses
                0.01       0.01       0.02  
Provision for bad and doubtful debts
    10.73       0.11       14.02       0.18       0.73  
Provision for doubtful loans and advances
    0.12       (0.01 )     0.13       (0.05 )     (0.07 )
Bank charges and commission
    0.16       0.16       0.35       0.32       0.66  
Commission to non-whole time directors
    0.39       0.24       0.78       0.48       1.12  
Postage and courier
    0.70       0.72       1.94       1.97       3.99  
Books and periodicals
    0.34       0.40       0.58       0.65       1.42  
Research grants
    0.12             0.18              
Freight charges
    0.15       0.16       0.30       0.27       0.58  
Professional membership and seminar participation fees
    0.65       0.83       1.27       1.65       3.55  
Other miscellaneous expenses
    0.35       1.79       0.71       3.21       4.42  
 
   
     
     
     
     
 
 
    88.72       62.51       169.90       119.72       270.37  
 
   
     
     
     
     
 

8


 

Schedules to the Statement of Cash Flows for the

                                             
in Rs. crore
       
        Quarter ended   Half-year ended   Year ended
        September 30,   September 30,   March 31,
        2003   2002   2003   2002   2003
       
 
 
 
 
CHANGE IN LOANS AND ADVANCES
                                       
As per the Balance Sheet
    937.64       870.16       937.64       870.16       872.78  
Less: Deposits with financial institutions and body corporate, included in cash and cash equivalents
    (307.15 )     (302.49 )     (307.15 )     (302.49 )     (302.28 )
   
Advance income taxes separately considered
    (348.46 )     (341.15 )     (348.46 )     (341.15 )     (289.99 )
 
   
     
     
     
     
 
 
    282.03       226.52       282.03       226.52       280.51  
Less: Opening balance considered
    (290.36 )     (204.47 )     (280.51 )     (152.88 )     (152.88 )
 
   
     
     
     
     
 
 
    (8.33 )     22.05       1.52       73.64       127.63  
 
   
     
     
     
     
 
CHANGE IN CURRENT LIABILITIES AND PROVISIONS
                                       
As per the Balance Sheet
    866.12       692.25       866.12       692.25       703.23  
Add/(Less): Provisions separately considered in the cash flow Statement
                                       
 
Income taxes
    (382.06 )     (336.43 )     (382.06 )     (336.43 )     (274.81 )
 
Dividends
    (96.09 )     (82.76 )     (96.09 )     (82.76 )     (96.05 )
 
Dividend tax
    (12.31 )           (12.31 )           (12.30 )
 
Non Cash transactions
                      (24.50 )     (24.50 )
Less: Opening balance considered
    (359.08 )     (226.68 )     (320.07 )     (137.11 )     (137.11 )
 
   
     
     
     
     
 
 
    16.58       46.38       55.59       111.45       158.46  
 
   
     
     
     
     
 
INCOME TAXES PAID
                                       
Charge as per the Profit and Loss Account
    60.00       45.00       112.00       87.50       201.00  
Add: Increase in advance income taxes
    49.22       78.94       58.47       104.90       53.74  
Add: Increase/(Decrease) in Deferred taxes
    (4.47 )     8.74       (2.94 )     9.36       12.59  
Less: (Increase)/Decrease in income tax provision
    (55.53 )     (53.74 )     (107.25 )     (96.86 )     (35.24 )
 
   
     
     
     
     
 
 
    49.22       78.94       60.28       104.90       232.09  
 
   
     
     
     
     
 
PURCHASES OF FIXED ASSETS AND CHANGE IN CAPITAL WORK-IN-PROGRESS
                                       
As per the Balance Sheet
    51.06       40.64       141.76       180.62       317.87  
Less: Opening Capital work-in-progress
    (44.23 )     (88.97 )     (76.55 )     (150.67 )     (150.67 )
Less: Non Cash transaction
                      (24.50 )     (24.50 )
Add: Closing Capital work-in-progress
    62.00       92.35       62.00       92.35       76.56  
 
   
     
     
     
     
 
 
    68.83       44.02       127.21       97.80       219.26  
 
   
     
     
     
     
 
INVESTMENTS IN SECURITIES
                                       
As per the Balance Sheet
    476.99       33.20       476.99       33.20       33.20  
Add: Provisions on investments
    0.22       23.76       6.59       23.76       23.77  
 
   
     
     
     
     
 
 
    477.21       56.96       483.58       56.96       56.97  
Less: Opening balance considered
    (127.38 )     (56.96 )     (33.20 )     (44.44 )     (44.44 )
 
   
     
     
     
     
 
 
    349.83             450.38       12.52       12.53  
 
   
     
     
     
     
 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
                                       
As per the Balance Sheet
    1,382.71       986.85       1,382.71       986.85       1,336.23  
Add: Deposits with financial institutions and body corporate, included herein
    307.15       302.49       307.15       302.49       302.28  
 
   
     
     
     
     
 
 
    1,689.86       1,289.34       1,689.86       1,289.34       1,638.51  
 
   
     
     
     
     
 

9


 

1.   Extracts of significant accounting policies and notes on accounts

Company overview

Infosys Technologies Limited (“Infosys”) along with its majority owned and controlled subsidiary, Progeon Limited (“Progeon”), is a global technology and services organization engaged in delivering a comprehensive range of end-to-end solutions to customers. Infosys provides solutions across the entire software and process life-cycles including design, development, implementation, maintenance and management using its Global Delivery Model. Infosys offers the following services: consulting, software development, software re-engineering, systems integration, package evaluation and implementation, software maintenance, and business process management services (“BPM”). Infosys also provides proprietary software products for the banking industry.

Management’s Statement on significant accounting policies contained in the audited financial statements.

There are no changes in the accounting policies during the quarter ended September 30, 2003. The significant accounting policies of the company relate to revenue recognition, expenditure, fixed asset and capital work in progress, depreciation, retirement benefits to employees – principally gratuity, superannuation and provident fund benefits, research and development, income tax, earning per share, foreign currency transactions and investments.

1.1   Significant accounting policies
 
1.1.1.   Basis of preparation of financial statements

The accompanying financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (“GAAP”) under the historical cost convention on the accruals basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India (“ICAI”), the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. These accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on an on-going basis and ensures they are adopted as mandated by the ICAI. There are no recently issued accounting standards that management believes have a material impact on the financial statements of the company.

1.2   Notes on accounts

All amounts in the financial statements are presented in Rupees crore, except for per share data and as otherwise stated. All exact amounts are stated with the suffix “/-”. One crore equals 10 million.

The previous period’s / year’s figures have been regrouped / reclassified, wherever necessary to conform to the current period’s/year’s presentation.

1.2.1.   Aggregate expenses

The following are the aggregate amounts incurred on certain specific expenses that are required to be disclosed under Schedule VI to the Companies Act, 1956.

                                             
in Rs. crore
       
        Quarter ended September 30,   Half-year ended September 30,   Year ended March 31,
        2003   2002   2003   2002   2003
       
 
 
 
 
Salaries and bonus including overseas staff expenses
    549.31       390.40       1,070.83       730.31       1,631.82  
Contribution to provident and other funds
    14.93       7.71       27.20       15.05       36.77  
Staff welfare
    3.01       1.78       6.22       3.60       8.53  
Overseas travel expenses
    54.20       53.27       106.29       100.82       215.60  
Consumables
    2.07       1.31       3.85       2.49       6.46  
Cost of software packages
                                       
 
for own use
    21.47       11.32       35.08       21.09       54.96  
 
for service delivery to clients
    2.48       0.74       12.34       7.62       12.99  
Computer maintenance
    3.15       2.52       5.46       4.38       9.34  
Communication expenses
    7.75       5.27       15.93       12.50       24.44  
Consultancy charges
    7.61       12.95       34.29       18.68       75.86  
Provision for post-sales client support
    (0.32 )     (2.27 )     (0.15 )     (0.30 )     (6.18 )
Traveling and conveyance
    5.46       4.04       10.11       7.11       17.95  
Rent
    9.07       6.72       19.14       12.86       29.30  
Telephone charges
    8.66       6.83       17.05       11.53       26.69  
Professional charges
    10.57       10.95       19.02       19.75       48.62  
Printing and stationery
    1.30       1.41       3.91       3.43       6.23  
Advertisements
    0.49       1.26       1.60       2.07       6.19  
Office maintenance
    6.39       4.33       12.66       8.41       22.85  
Repairs to building
    1.49       1.15       3.39       3.02       7.27  
Repairs to plant and machinery
    1.51       0.93       2.60       2.09       4.77  
Power and fuel
    7.20       5.39       14.42       11.09       22.60  
Brand building
    9.42       9.37       15.14       17.36       29.05  
Insurance charges
    6.07       2.49       11.23       4.49       10.03  
Rates and taxes
    0.94       1.22       2.18       2.50       5.41  
Commission charges
    0.64       4.70       2.91       6.22       10.58  
Donations
    3.52       1.37       7.02       3.04       6.09  
Auditor’s remuneration – audit fees
    0.08       0.07       0.15       0.13       0.27  
   
– certification charges      
                            0.03  
   
– out-of-pocket expenses
                0.01       0.01       0.02  
Provision for bad and doubtful debts
    10.73       0.11       14.02       0.18       0.73  
Provision for doubtful loans and advances
    0.12       (0.01 )     0.13       (0.05 )     (0.07 )
Bank charges and commission
    0.16       0.19       0.36       0.36       0.75  
Commission to non-whole time directors
    0.39       0.24       0.78       0.48       1.12  
Postage and courier
    0.70       0.72       1.94       1.97       3.99  
Books and periodicals
    0.34       0.40       0.58       0.65       1.42  
Research grants
    0.12             0.18              
Freight charges
    0.15       0.16       0.30       0.27       0.58  
Professional membership and seminar participation fees
    0.65       0.83       1.27       1.65       3.55  
Marketing expenses
    1.76       2.20       2.61       3.31       6.72  
Sales promotion expenses
    0.09       0.05       0.20       0.20       0.46  
Other miscellaneous expenses
    2.64       4.21       7.75       5.65       6.86  
 
   
     
     
     
     
 
 
    756.32       556.33       1,490.00       1,046.02       2,350.65  
 
   
     
     
     
     
 

10

 


 

1.2.2.   Obligations on long-term, non-cancelable operating leases

The lease rentals charged during the period and maximum obligations on long-term non-cancelable operating leases payable as per the rentals stated in the respective agreements are as follows:

                                         
    Quarter ended   Half-year ended   Year ended
    September 30,   September 30,   March 31,
    2003   2002   2003   2002   2003
   
 
 
 
 
Lease rentals recognized during the period/year
    9.07       6.72       19.14       12.86       29.30  
                         
    As at   As at
Lease obligations   September 30, 2003   September 30, 2002   March 31, 2003

 
 
 
Within one year of the balance sheet date
    27.49       16.83       17.93  
Due in a period between one year and five years
    59.16       39.00       36.00  
Due after five years
    7.39       5.98       7.00  
 
   
     
     
 
 
    94.04       61.81       60.93  
 
   
     
     
 

The operating lease arrangements extend for a maximum of ten years from their respective dates of inception and relates to rented overseas premises and car rentals.

Lease rental commitments on a contract with Progeon Limited (“Progeon”), a subsidiary company, as at September 30, 2003 due to Infosys within one year of the balance sheet date amounted to Rs. 8.02 and due in the period between one and three years amounted to Rs. 9.29. The lease for premises extends for a maximum period of three years from quarter ended June 30, 2002 (the period of inception).

The Sub-lease rentals received from Progeon during the quarter and half year ended September 30, 2003 amounted to Rs. 0.13 and Rs. 0.13.

Fixed assets stated below have been provided on operating lease to Progeon, a subsidiary company under the same management, as at September 30, 2003 and September 30, 2002 and March 31, 2003.

                         
            Accumulated        
Particulars   Cost   depreciation   Net book value

 
 
 
Building
    10.24       0.96       9.28  
 
    9.59       0.27       9.32  
 
    10.21       0.62       9.59  
Plant and machinery
    3.70       1.12       2.58  
 
    2.42       0.27       2.15  
 
    2.94       0.70       2.24  
Computers
    1.23       0.76       0.47  
 
    0.78       0.12       0.66  
 
    0.85       0.49       0.36  
Furniture & fixtures
    5.60       1.59       4.01  
 
    1.74       0.26       1.48  
 
    2.64       0.88       1.76  
 
   
     
     
 
Total
    20.77       4.43       16.34  
 
    14.53       0.92       13.61  
 
    16.64       2.69       13.95  
 
   
     
     
 

The aggregate depreciation charged on the above during the quarter and half year ended September 30, 2003 amounted to Rs. 1.08 and Rs. 1.74 respectively (for the quarter and half year ended September 30, 2002 was Rs. 0.69 and Rs. 0.92 and for the year ended March 31, 2003 was Rs. 2.69). The rental income from Progeon for the quarter and half-year ended September 30, 2003 amounted to Rs. 1.61 and Rs. 2.82 (for the quarter and half year ended September 30, 2002 was Rs. 0.41 and Rs. 0.55 and for the year ended March 31, 2003 was Rs. 1.95).

1.2.3.   Related party transactions

The company entered into related party transactions during the year ended March 31, 2002 with Yantra Corporation, USA, the subsidiary of the company until February 27, 2002, and key management personnel.

The outstanding dues from Yantra Corporation as at September 30, 2003 were Rs. Nil. Such dues as at September 30, 2002 were Rs. 0.45 and as at March 31, 2003 were Rs. 0.07.

The company entered into related party transactions during the period ended September 30, 2003 with Progeon, the subsidiary company, under the same management. The transactions are set out below.

                                           
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
Capital transactions:
                                       
 
Financing transactions – amount paid to Progeon for issue of 1,22,49,993 fully paid equity shares of Rs.10/- each at par
                      12.25       12.25  
 
Rental deposit placed
    1.61             1.61              
 
 
   
     
     
     
     
 
Revenue transactions:
                                       
 
Purchase of services
          1.87       0.14       2.08       2.07  
 
 
   
     
     
     
     
 
 
          1.87       0.14       2.08       2.07  
Sale of services
                                       
 
Business consulting services
    0.03       0.99       0.03       1.11       3.56  
 
Shared services including facilities and personnel
    3.40       1.64       6.41       2.37       9.61  
 
 
   
     
     
     
     
 
 
    3.43       2.63       6.44       3.48       13.17  
 
 
   
     
     
     
     
 

11

 


 

The company has an alliance with SupplyChainge Inc., USA to jointly market and deliver lead-time optimization solutions. Prof. Marti G. Subrahmanyam, an external director of the company, is also a director on the board of SupplyChainge Inc. During the quarter and half-year ended September 30, 2003 and year ended March 31, 2003, the company paid Rs. Nil, Rs 0.71 and Rs. Nil respectively to SupplyChainge Inc. towards marketing services under this alliance. Additionally, amount receivable from SupplyChainge Inc. as at September 30, 2003 amounted to Rs.Nil (as at September 30, 2002 Rs. 0.03 and March 31, 2003 Rs. 0.03) an amount that has been outstanding for a period exceeding six months and fully provided.

During the quarter and half-year ended September 30, 2003 an amount of Rs. 3.50 and Rs. 7.00 respectively has been donated to Infosys Foundation a not-for- profit trust, in which certain directors of the company are trustees. Donation to the Foundation for the quarter and half-year ended September 30, 2002 and year ended March 31, 2003 were Rs. 1.28, Rs. 2.53 and Rs. 5.53 respectively.

1.2.4.   Transactions with key management personnel

Key management personnel comprise our directors and statutory officers.

Particulars of remuneration and other benefits provided to key management personnel

Particulars of remuneration and other benefits provided to key management personnel during the quarters ended September 30, 2003, 2002, half-year ended September 30, 2003, 2002 and the year ended March 31, 2003, are set out below.

                                   
              Contributions to                
              provident and   Perquisites and   Total
      Salary   other funds   incentives   remuneration
     
 
 
 
Executive directors
                               
 
Quarter ended September 30, 2003
    0.42       0.06       0.08       0.56  
 
Quarter ended September 30, 2002
    1.12       0.06       0.54       1.72  
 
Half-year ended September 30, 2003
    0.71       0.10       0.41       1.22  
 
Half-year ended September 30, 2002
    1.77       0.11       1.34       3.22  
 
Year ended March 31, 2003
    2.60       0.17       3.30       6.07  
                                   
                      Reimbursement   Total
      Commission   Sitting fees   of expenses   remuneration
     
 
 
 
Independent directors
                               
 
Quarter ended September 30, 2003
                0.09       0.09  
 
Quarter ended September 30, 2002
                0.10       0.10  
 
Half-year ended September 30, 2003
                0.21       0.21  
 
Half-year ended September 30, 2002
                0.31       0.31  
 
Year ended March 31, 2003
    1.12       0.04       0.48       1.64  
                                                   
              Contributions to   Perquisites           Total   Outstanding
              provident and   and   Total   loans   loans and
      Salary   other funds   incentives   remuneration   granted   advances
     
 
 
 
 
 
Other key managerial personnel
                                               
 
Quarter ended September 30, 2003
    0.03       0.01       0.03       0.07              
 
Quarter ended September 30, 2002
    0.01       0.01       0.02       0.04              
 
Half-year ended September 30, 2003
    0.05       0.02       0.10       0.17              
 
Half-year ended September 30, 2002
    0.03       0.01       0.04       0.08              
 
Year ended March 31, 2003
    0.06       0.02       0.09       0.17              

In addition, the details of the options granted to non-wholetime directors and other senior officers during the quarters ended September 30, 2003, 2002, half-year ended September 30, 2003, 2002 and the year ended March 31, 2003 are as follows:

                                           
              Option plan   Number of   Exercise price        
Name   Date of Grant   options granted   (in Rs.)   options   Expiration of

 
 
 
 
 
Non-wholetime directors
                                       
 
Claude Smadja
  July 10, 2002     1999       2,000       3,333.65     July 09, 2012
 
Sridar A. Iyengar
  April 10, 2003     1999       2,000       3,049.75     April 09, 2013

1.2.5.   Pro forma disclosures relating to the Employee Stock Option Plans (“ESOPs”)

The company’s 1994 stock option plan was established prior to the SEBI guidelines on stock options.

Had the stock compensation costs for this stock option plan been determined as per the guidelines issued by SEBI, the company’s reported net profit would have been reduced to the pro forma amounts indicated below.

                                           
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
Net profit:
                                       
 
– As reported
    300.16       225.77       578.28       442.62       957.93  
 
– Adjusted pro forma
    295.24       219.73       568.33       430.50       934.76  

1.2.6.   Fixed assets

The company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of these agreements, the company has the option to purchase the properties on expiry of the lease period. The company has already paid 99% of the value of the properties at the time of entering into the lease-cum-sale agreements. These amounts are disclosed as “Land - leasehold” under “Fixed assets” in the financial statements.Additionally, certain land has been purchased for which the company has possession certificate for which sale deeds are yet to be executed as at September 30, 2003.

12

 


 

During the year ended March 31, 2003, the company entered into several arrangements to purchase Intellectual Property Rights (“IPR”). These primarily included:

The purchase of IPR in the Trade IQ, a treasury management product, from IQ Financial Systems Inc., USA (“IQFS”) for a consideration of Rs. 16.97 (US$ 3.47 million).

An agreement to purchase IPR in AUTOLAY, a commercial software application product, with the Aeronautical Development Agency, India (“ADA”). The company has a firm commitment to share revenues with ADA for a maximum of US$ 5 million (Rs. 24.50) payable by 10 years from the contract date after which the ownership of intellectual property in AUTOLAY will transfer to the company.

Purchase of a non-exclusive global license in ILink, a signature display software, from Integra Microsystems Private Limited, for Rs. 0.65.

During the quarter ended September 30, 2003, management reduced the remaining estimated useful life of the intellectual property in a commercial software application product to three months effective August 2003. The revised estimation represents management’s present evaluation of the expected future commercial benefits from the product. The revision has resulted in an increased charge to the profit and loss account of Rs. 11.71 crore in the quarter and half year ended September 30, 2003.

1.2.7.   Investment activity

                                           
      Quarter ended September 30,   Half-year ended September 30,   Year ended March 31,
Particulars of investee companies
    2003       2002       2003       2002       2003  

   
     
     
     
     
 
Net profit:
                                       
 
Progeon Limited, India
                      12.25       12.25  
 
M-Commerce Ventures Pte. Limited, Singapore *
                0.19       0.27       0.27  
 
   
     
     
     
     
 
 
                0.19       12.52       12.52  
 
   
     
     
     
     
 

*Net of redemptions

Progeon was incorporated on April 3, 2002, and is a majority owned and controlled subsidiary, established to provide business process management and transitioning services. As at the balance sheet date, the company has invested Rs. 12.25 in 1,22,49,993 fully paid equity shares in Progeon of face value Rs 10/- each, at par. Progeon seeks to leverage the benefits of service delivery globalization, process redesign and technology to drive efficiency and cost effectiveness in customer business processes. Progeon obtained its financial closure by securing funding of Rs. 49.00 from Citicorp International Finance Corporation, USA (“CIFC”) in exchange for 43,75,000 cumulative, convertible, redeemable preferred shares of face value Rs 100/- at a premium of Rs 12/- per share. The preference shares are convertible to an equal number of equity shares based on certain events as agreed between the company and CIFC.

The company received Rs. 0.35 towards return of premium of S$ 1,110 /- each on 126 redeemable preference shares of face value of S$ 1/- each during the quarter ended September 30, 2003. Accordingly, the aggregate investment in M-Commerce as at September 30, 2003 amounts to Rs. 2.30.

Current liabilities include an amount of Rs. 3.27 received from Workadia Inc. and Rs. 0.46 from Stratify Inc. towards recovery of investment that is pending clearance from regulatory authorities for setting off against the investment.

1.2.8.   Contingent liability

Ms. Jennifer Griffith, a former employee, has filed a lawsuit against the company and its former director, Mr. Phaneesh Murthy. The lawsuit has not yet been served on the company. Management is reviewing the allegations. Based on its present knowledge of facts, management estimates that the lawsuit will not have material impact on the result of operation or financial position of the company.

1.2.9.   Segment reporting

The company’s operations predominantly relate to providing IT services, devlivered to customers globally operating in various industry segments. Accordingly, IT service 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 note on 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 comprises 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.

13

 


 

Industry segments

Quarter ended September 30, 2003 and September 30, 2002

                                                 
    Financial services   Manufacturing   Telecom   Retail   Others   Total
   
 
 
 
 
 
Revenues
    436.26       172.89       171.61       134.34       219.65       1,134.75  
 
    339.61       150.46       128.45       99.21       161.84       879.57  
Identifiable operating expenses
    178.37       74.86       63.81       51.11       90.39       458.54  
 
    139.84       61.38       44.87       30.74       62.17       339.00  
Allocated expenses
    114.48       45.37       45.04       35.25       57.64       297.78  
 
    84.92       36.90       31.50       24.33       39.68       217.33  
 
   
     
     
     
     
     
 
Segmental operating income
    143.41       52.66       62.76       47.98       71.62       378.43  
 
    114.85       52.18       52.08       44.14       59.99       323.24  
Unallocable expenses
                                            62.33  
 
                                            46.24  
 
                                           
 
Operating income
                                            316.10  
 
                                            277.00  
Other income (expense), net
                                            44.06  
 
                                            (6.23 )
 
                                           
 
Net profit before taxes
                                            360.16  
 
                                            270.77  
Income taxes
                                            60.00  
 
                                            45.00  
Net profit after taxes
                                            300.16  
 
                                            225.77  
 
                                           
 

Half-year ended September 30, 2003 and September 30, 2002

                                                 
    Financial services   Manufacturing   Telecom   Retail   Others   Total
   
 
 
 
 
 
Revenues
    837.23       343.43       327.75       261.72       446.60       2,216.73  
 
    621.46       276.13       244.59       187.77       314.24       1,644.19  
Identifiable operating expenses
    356.61       147.62       130.75       96.62       182.88       914.48  
 
    256.91       115.45       83.50       59.97       116.27       632.10  
Allocated expenses
    217.40       89.15       85.12       67.95       115.90       575.52  
 
    162.30       67.93       60.18       46.20       77.31       413.92  
 
   
     
     
     
     
     
 
Segmental operating income
    263.22       106.66       111.88       97.15       147.82       726.73  
 
    202.25       92.75       100.91       81.60       120.66       598.17  
Unallocable expenses
                                            106.59  
 
                                            86.71  
 
                                           
 
Operating income
                                            620.14  
 
                                            511.46  
Other income (expense), net
                                            70.14  
 
                                            18.66  
 
                                           
 
Net profit before taxes
                                            690.28  
 
                                            530.12  
Income taxes
                                            112.00  
 
                                            87.50  
 
                                           
 
Net profit after taxes
                                            578.28  
 
                                            442.62  
 
                                           
 

Year ended March 31, 2003

                                                 
    Financial services   Manufacturing   Telecom   Retail   Others   Total
   
 
 
 
 
 
Revenues
    1,355.94       597.84       543.19       414.54       711.18       3,622.69  
Identified operating expenses
    546.77       243.93       186.18       132.45       264.64       1,373.97  
Allocated expenses
    377.31       157.77       143.72       109.56       188.32       976.68  
 
   
     
     
     
     
     
 
Segmental operating income
    431.86       196.14       213.29       172.53       258.22       1,272.04  
Unallocable expenses
                                            188.95  
 
                                           
 
Operating income
                                            1,083.09  
Other income (expense), net
                                            75.84  
 
                                           
 
Net profit before taxes
                                            1,158.93  
Income taxes
                                            201.00  
 
                                           
 
Net profit after taxes
                                            957.93  
 
                                           
 

14

 


 

Geographic segments

Quarter ended September 30, 2003 and September 30, 2002

                                         
    North America   Europe   India   Rest of the World   Total
   
 
 
 
 
Revenues
    837.30       203.64       18.77       75.04       1,134.75  
 
    648.01       144.94       22.35       64.27       879.57  
Identifiable operating expenses
    346.76       81.63       2.55       27.60       458.54  
 
    260.29       48.76       6.72       23.23       339.00  
Allocated expenses
    219.73       53.44       4.93       19.68       297.78  
 
    161.04       36.02       5.00       15.27       217.33  
 
   
     
     
     
     
 
Segmental operating income
    270.81       68.57       11.29       27.76       378.43  
 
    226.68       60.16       10.63       25.77       323.24  
Unallocable expenses
                                    62.33  
 
                                    46.24  
 
                                   
 
Operating income
                                    316.10  
 
                                    277.00  
Other income (expense), net
                                    44.06  
 
                                    (6.23 )
 
                                   
 
Net profit before taxes
                                    360.16  
 
                                    270.77  
Income taxes
                                    60.00  
 
                                    45.00  
 
                                   
 
Net profit after taxes
                                    300.16  
 
                                    225.77  
 
                                   
 

Half-year ended September 30, 2003 and September 30, 2002

                                         
    North America   Europe   India   Rest of the World   Total
   
 
 
 
 
Revenues
    1,643.25       393.75       42.10       137.63       2,216.73  
 
    1,200.57       292.44       36.45       114.73       1,644.19  
Identifiable operating expenses
    694.79       158.46       12.90       48.33       914.48  
 
    476.70       103.17       12.60       39.63       632.10  
Allocated expenses
    426.62       102.24       10.92       35.74       575.52  
 
    298.84       72.80       11.04       31.24       413.92  
 
   
     
     
     
     
 
Segmental operating income
    521.84       133.05       18.28       53.56       726.73  
 
    425.03       116.47       12.81       43.86       598.17  
Unallocable expenses
                                    106.59  
 
                                    86.71  
 
                                   
 
Operating income
                                    620.14  
 
                                    511.46  
Other income (expense), net
                                    70.14  
 
                                    18.66  
 
                                   
 
Net profit before taxes
                                    690.28  
 
                                    530.12  
Income taxes
                                    112.00  
 
                                    87.50  
 
                                   
 
Net profit after taxes
                                    578.28  
 
                                    442.62  
 
                                   
 

Year ended March 31, 2003

                                         
    North America   Europe   India   Rest of the World   Total
   
 
 
 
 
Revenues
    2,637.51       641.58       79.18       264.42       3,622.69  
Identifiable operating expenses
    1,052.82       224.82       19.79       76.54       1,373.97  
Allocated expenses
    704.20       169.21       30.01       73.26       976.68  
 
   
     
     
     
     
 
Segmental operating income
    880.49       247.55       29.38       114.62       1,272.04  
Unallocable expenses
                                    188.95  
 
                                   
 
Operating income
                                    1,083.09  
Other income (expense), net
                                    75.84  
 
                                   
 
Net profit before taxes
                                    1,158.93  
Income taxes
                                    201.00  
 
                                   
 
Net profit after taxes
                                    957.93  
 
                                   
 

1.2.10.   Reconciliation of basic and diluted shares used in computing earnings per share

                                         
    Quarter ended   Half-year ended   Year ended
    September 30,   September 30,   March 31,
    2003   2002   2003   2002   2003
   
 
 
 
 
Number of shares considered as basic weighted average shares outstanding
    6,62,57,028       6,61,98,735       6,62,51,101       6,61,93,632       6,62,11,068  
Add: Effect of dilutive issues of shares/stock options
    5,67,376       3,97,734       3,99,984       4,58,300       6,05,753  
 
   
     
     
     
     
 
Number of shares considered as weighted average shares and potential shares outstanding
    6,68,24,404       6,65,96,469       6,66,51,085       6,66,51,932       6,68,16,821  
 
   
     
     
     
     
 

15

 


 

Consolidated financial statement of Infosys Technologies Limited and its subsidiary

Principles of consolidation

The financial statements are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as laid down under the accounting standards on Consolidated Financial Statements issued by the ICAI. The financial statements of the parent company, Infosys and Progeon have been combined on a line-by-line basis by adding together book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and transactions and resulting unrealized gain/loss. The consolidated financial statements are prepared applying uniform accounting policies in use at Infosys and Progeon.

Management’s Statement on significant accounting policies contained in the audited financial statements.

There are no changes in the accounting policies during the quarter ended September 30, 2003. The significant accounting policies of the company relate to revenue recognition, expenditure, fixed assets and capital work-in-progress, depreciation, retirement benefits to employees – principally gratuity, superannuation and provident fund benefits, research and development, income tax, earning per share, foreign currency transactions and investments.

A complete set of the audited consolidated financial statements is available at www.infosys.com

Auditors’ report to the Board of Directors on the Consolidated Financial Statements of Infosys Technologies Limited and its subsidiary

We have examined the attached Consolidated Balance Sheet of Infosys Technologies Limited (the Company) and its subsidiary Progeon Limited (subsidiary) as at September 30, 2003, the Consolidated Profit and Loss Accounts and the Consolidated Cash Flow Statements for the quarter and half-year then ended. These financial statements are the responsibility of the Infosys Technologies Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with the financial reporting framework generally accepted in India and are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis of separate audited financial statements of Infosys Technologies Limited and its subsidiary included in the consolidated financial statements.

On the basis of the information and explanation given to us, and on consideration of separate audit reports on individual audited financial statements of Infosys Technologies Limited and its subsidiary, we are of the opinion that:

  (i)   the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of the Infosys Technologies Limited and its subsidiary as at September 30, 2003;
 
  (ii)   the Consolidated Profit and Loss Accounts gives a true and fair view of the consolidated results of operations of Infosys Technologies Limited and its subsidiary for the quarter and half-year then ended; and
 
  (iii)   the Consolidated Cash Flow Statements gives a true and fair view of the consolidated cash flows of Infosys Technologies Limited and its subsidiary for the quarter and half-year then ended.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
October 10, 2003

16

 


 

Consolidated Balance Sheet as at

                         
in Rs. crore
   
    September 30, 2003   September 30, 2002   March 31, 2003
   
 
 
SOURCES OF FUNDS
                       
SHAREHOLDERS’ FUNDS
                       
Share capital
    33.13       33.10       33.12  
Reserves and surplus
    3,300.93       2,407.73       2,824.37  
 
   
     
     
 
 
    3,334.06       2,440.83       2,857.49  
Preference shares issued by subsidiary
    49.00       49.00       49.00  
 
   
     
     
 
 
    3,383.06       2,489.83       2,906.49  
 
   
     
     
 
APPLICATION OF FUNDS
                       
FIXED ASSETS
                       
Original cost
    1,423.85       1,140.87       1,279.04  
Less: Depreciation and amortization
    686.63       476.70       578.54  
 
   
     
     
 
Net book value
    737.22       664.17       700.50  
Add: Capital work-in-progress
    65.63       92.59       77.39  
 
   
     
     
 
 
    802.85       756.76       777.89  
INVESTMENTS
    464.74       20.95       20.95  
DEFERRED TAX ASSETS
    33.87       33.58       36.81  
CURRENT ASSETS, LOANS AND ADVANCES
                       
Sundry debtors
    592.59       459.73       518.65  
Cash and bank balances
    1,387.26       1,004.11       1,346.54  
Loans and advances
    973.75       912.20       913.46  
 
   
     
     
 
 
    2,953.60       2,376.04       2,778.65  
Less: Current liabilities
    376.30       267.58       319.60  
Provisions
    495.70       429.92       388.21  
 
   
     
     
 
NET CURRENT ASSETS
    2,081.60       1,678.54       2,070.84  
 
   
     
     
 
 
    3,383.06       2,489.83       2,906.49  
 
   
     
     
 

This is the Consolidated Balance Sheet referred to in our report of even date.

             
for Bharat S. Raut & Co.            
Chartered Accountants            
             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President and Managing Director   Chief Operating Officer and Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and Chief Financial Officer   Director   Company Secretary and Vice President – Finance
             
Bangalore
October 10, 2003
           

17

 


 

Consolidated Profit and Loss Account for the

                                           
in Rs. crore, except per share data
     
      Quarter ended   Half-year ended   Year ended
      September 30,   September 30,   March 31,
      2003   2002   2003   2002   2003
     
 
 
 
 
INCOME – Software services, products and business process management
                                       
 
Overseas
    1,133.06       858.24       2,204.43       1,608.86       3,564.36  
 
Domestic
    18.74       22.34       42.07       36.44       75.62  
 
 
   
     
     
     
     
 
 
    1,151.80       880.58       2,246.50       1,645.30       3,639.98  
Software development and business process management expenses
    595.28       425.50       1,174.87       803.24       1,822.96  
 
 
   
     
     
     
     
 
GROSS PROFIT
    556.52       455.08       1,071.63       842.06       1,817.02  
SELLING AND MARKETING EXPENSES
    82.69       70.26       164.34       125.53       271.73  
GENERAL AND ADMINISTRATION EXPENSES
    92.37       63.38       175.35       121.27       275.67  
 
 
   
     
     
     
     
 
 
    175.06       133.64       339.69       246.80       547.40  
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION
    381.46       321.44       731.94       595.26       1,269.62  
Interest
                             
Depreciation and amortization
    63.42       46.39       108.56       86.88       190.34  
 
 
   
     
     
     
     
 
OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION
    318.04       275.05       623.38       508.38       1,079.28  
Other income
    43.16       18.21       75.10       43.01       100.26  
Provision for investments
    0.22       23.76       6.59       23.76       23.77  
 
 
   
     
     
     
     
 
NET PROFIT BEFORE TAX
    360.98       269.50       691.89       527.63       1,155.77  
 
 
   
     
     
     
     
 
Provision for taxation
    60.00       45.00       112.00       87.50       201.00  
 
 
   
     
     
     
     
 
NET PROFIT AFTER TAX
    300.98       224.50       579.89       440.13       954.77  
 
 
   
     
     
     
     
 
AMOUNT AVAILABLE FOR APPROPRIATION
    300.98       224.50       579.89       440.13       954.77  
DIVIDEND
                                       
 
Interim
    96.09       82.76       96.09       82.76       82.76  
 
Final (Subject to deduction of tax, if any)
                            96.05  
 
Dividend tax
    12.31             12.31             12.30  
 
Amount transferred – general reserve
                            763.66  
Balance in Profit and Loss Account
    192.58       141.74       471.49       357.37        
 
 
   
     
     
     
     
 
 
    300.98       224.50       579.89       440.13       954.77  
 
 
   
     
     
     
     
 
EARNINGS PER SHARE (Equity shares, par value Rs. 5/- each)
                                       
 
Basic
    45.43       33.91       87.53       66.49       144.20  
 
Diluted
    45.04       33.71       87.00       66.03       142.89  
Number of shares used in computing earnings per share
                                       
 
Basic
    6,62,57,028       6,61,98,735       6,62,51,101       6,61,93,632       6,62,11,068  
 
Diluted
    6,68,24,404       6,65,96,469       6,66,51,085       6,66,51,932       6,68,16,821  
 
 
   
     
     
     
     
 

These are the Consolidated Profit and Loss Accounts referred to in our report of even date.

             
for Bharat S. Raut & Co.            
Chartered Accountants            
             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President and Managing Director   Chief Operating Officer and Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and Chief Financial Officer   Director   Company Secretary and Vice President – Finance
             
Bangalore
October 10, 2003
           

18

 


 

Consolidated Cash Flow Statement for the

                   
      in Rs. crore, except per share data
     
      Quarter ended
      September 30,
      2003   2002
     
 
CASHFLOWS FROM OPERATING ACTIVITIES
               
Profit before tax
    360.98       269.50  
Adjustments to reconcile profit before tax to cash provided by operating activities
               
 
(Profit)/Loss on sale of fixed assets
          (0.14 )
 
Depreciation and amortization
    63.42       46.39  
 
Interest and dividend income
    (23.91 )     (19.79 )
 
Provisions on long-term investments
    0.22       23.76  
 
Exchange differences on translation of foreign currency cash and cash equivalents
    1.59       2.13  
Changes in current assets and liabilities
               
 
Sundry debtors
    (27.09 )     (45.84 )
 
Loans and advances
    4.03       (23.96 )
 
Current liabilities and provisions
    18.99       50.80  
 
Income taxes paid during the period/year
    (49.33 )     (79.09 )
 
   
     
 
NET CASH GENERATED BY OPERATING ACTIVITIES
    348.90       223.76  
 
   
     
 
CASHFLOWS FROM FINANCING ACTIVITIES
               
Proceeds from the issue of preference share capital
           
Proceeds on exercise of stock options
    4.02       2.74  
Dividends paid during the period/year, including dividend tax
           
 
   
     
 
NET CASH USED IN FINANCING ACTIVITIES
    4.02       2.74  
 
   
     
 
CASHFLOWS FROM INVESTING ACTIVITIES
               
Purchases of fixed assets and change in capital work-in-progress
    (72.63 )     (46.99 )
Proceeds on disposal of fixed assets
    (0.01 )     0.32  
Long-term investments in securities
    (349.83 )      
Interest and dividend income
    23.91       19.79  
 
   
     
 
NET CASH USED IN INVESTING ACTIVITIES
    (398.56 )     (26.88 )
 
   
     
 
Effect of exchange differences on translation of foreign currency cash and cash equivalents
    (1.59 )     (2.13 )
 
   
     
 
Net (decrease)/increase in cash and cash equivalents during the period/year
    (47.23 )     197.49  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR
    1,768.40       1,149.54  
 
   
     
 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
    1,721.17       1,347.03  
 
   
     
 

[Additional columns below]

[Continued from above table, first column(s) repeated]
                           
      in Rs. crore, except per share data
     
      Half-year ended   Year ended
      September 30,   March 31,
      2003   2002   2003
     
 
 
CASHFLOWS FROM OPERATING ACTIVITIES
                       
Profit before tax
    691.89       527.63       1,155.77  
Adjustments to reconcile profit before tax to cash provided by operating activities
                       
 
(Profit)/Loss on sale of fixed assets
    0.01       (0.13 )     (0.01 )
 
Depreciation and amortization
    108.56       86.88       190.34  
 
Interest and dividend income
    (47.22 )     (37.50 )     (80.67 )
 
Provisions on long-term investments
    6.59       23.76       23.77  
 
Exchange differences on translation of foreign currency cash and cash equivalents
    3.17       1.36       (2.23 )
Changes in current assets and liabilities
                       
 
Sundry debtors
    (73.94 )     (123.00 )     (181.92 )
 
Loans and advances
    (5.44 )     (75.10 )     (132.38 )
 
Current liabilities and provisions
    56.89       116.70       163.04  
 
Income taxes paid during the period/year
    (60.51 )     (105.05 )     (232.54 )
 
   
     
     
 
NET CASH GENERATED BY OPERATING ACTIVITIES
    680.00       415.55       903.17  
 
   
     
     
 
CASHFLOWS FROM FINANCING ACTIVITIES
                       
Proceeds from the issue of preference share capital
          49.00       49.00  
Proceeds on exercise of stock options
    5.08       3.14       13.52  
Dividends paid during the period/year, including dividend tax
    (108.35 )     (82.73 )     (165.49 )
 
   
     
     
 
NET CASH USED IN FINANCING ACTIVITIES
    (103.27 )     (30.59 )     (102.97 )
 
   
     
     
 
CASHFLOWS FROM INVESTING ACTIVITIES
                       
Purchases of fixed assets and change in capital work-in-progress
    (133.76 )     (101.19 )     (225.82 )
Proceeds on disposal of fixed assets
    0.23       0.43       0.33  
Long-term investments in securities
    (450.38 )     (0.27 )     (0.27 )
Interest and dividend income
    47.22       37.50       80.67  
 
   
     
     
 
NET CASH USED IN INVESTING ACTIVITIES
    (536.69 )     (63.53 )     (145.09 )
 
   
     
     
 
Effect of exchange differences on translation of foreign currency cash and cash equivalents
    (3.17 )     (1.36 )     2.23  
 
   
     
     
 
Net (decrease)/increase in cash and cash equivalents during the period/year
    36.87       320.07       657.34  
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR
    1,684.30       1,026.96       1,026.96  
 
   
     
     
 
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
    1,721.17       1,347.03       1,684.30  
 
   
     
     
 

These are the Cash Flow Statements referred to in our report of even date.

for Bharat S. Raut & Co.
Chartered Accountants

             
S. Balasubrahmanyam   N. R. Narayana Murthy   Nandan M. Nilekani   S. Gopalakrishnan
Partner   Chairman and Chief Mentor   Chief Executive Officer, President   Chief Operating Officer and
        and Managing Director   Deputy Managing Director
             
    Deepak M. Satwalekar   Marti G. Subrahmanyam   Rama Bijapurkar
    Director   Director   Director
             
    Sridar A. Iyengar   K. Dinesh   S. D. Shibulal
    Director   Director   Director
             
    T. V. Mohandas Pai   Srinath Batni   V. Balakrishnan
    Director and   Director   Company Secretary and
    Chief Financial Officer       Vice President – Finance
             
Bangalore            
             
October 10, 2003            

19


 

Ratio analysis as per Indian GAAP (Non consolidated)

                                   
      Quarter ended   Half-year ended
      September 30,   September 30,
      2003   2002   2003   2002
     
 
 
 
Financial performance
                               
 
Export revenue / total revenue (%)
    98.35       97.46       98.10       97.78  
 
Domestic revenue / total revenue (%)
    1.65       2.54       1.90       2.22  
 
Software development expenses / total revenue (%)
    51.74       48.26       52.33       48.77  
 
Gross profit / total revenue (%)
    48.26       51.74       47.67       51.23  
 
Selling and marketing expenses / total revenue (%)
    7.09       7.88       7.23       7.57  
 
General and administration expenses / total revenue (%)
    7.82       7.11       7.66       7.28  
 
Selling, general and administration expenses / total revenue (%)
    14.91       14.99       14.89       14.85  
 
Employee costs / total revenue (%)
    49.99       45.46       49.81       45.55  
 
Operating profit / total revenue (%)
    33.35       36.75       32.78       36.38  
 
Depreciation and amortization / total revenue (%)
    5.49       5.26       4.81       5.27  
 
Operating profit after depreciation and Interest / total revenue (%)
    27.86       31.49       27.98       31.11  
 
Other income / total revenue (%)
    3.90       1.99       3.46       2.58  
 
Provision for investments / total revenue (%)
    0.02       2.70       0.30       1.45  
 
Profit before tax / total revenue (%)
    31.74       30.78       31.14       32.24  
 
Tax / total revenue (%)
    5.29       5.12       5.05       5.32  
 
Tax / PBT (%)
    16.66       16.62       16.23       16.51  
 
PAT from ordinary activities / total revenue (%)
    26.45       25.67       26.09       26.92  
 
Capital expenditure / total revenue (%) (LTM)
    5.93       6.33       5.93       6.33  
 
PAT from ordinary activities / average net worth (%) (LTM)
    37.85       41.04       37.85       41.04  
 
ROCE ( PBIT/Average capital employed) (%) (LTM)
    45.65       48.76       45.65       48.76  
 
Return on invested capital (%) (LTM)*
    88.20       75.04       88.28       75.04  
 
Capital output ratio (LTM)
    1.45       1.43       1.45       1.43  
 
Invested capital output ratio (LTM)*
    3.57       2.74       3.57       2.74  
Balance sheet
                               
 
Debt-equity ratio
                       
 
Debtors turnover (Days) (LTM)
    50       56       50       56  
 
Current ratio
    3.35       3.34       3.35       3.34  
 
Cash and cash equivalents / total assets (%)*
    64.15       52.77       64.15       52.77  
 
Cash and cash equivalents / total revenue (%) (LTM)*
    51.00       43.19       51.00       43.19  
 
Depreciation/ average gross block (%) (LTM)
    16.36       17.95       16.36       17.95  
 
Technology investment / total revenue (%) (LTM)
    3.99       3.14       3.99       3.14  
Year on Year Growth (%) **
                               
 
Export revenue
    30       34       35       30  
 
Total revenue
    29       35       35       30  
 
Operating profit
    17       25       21       20  
 
Net profit
    33       12       31       13  
 
EPS
    33       12       31       13  
Per-share data (period end)
                               
 
Basic earnings per share from ordinary activities (Rs.)
    45.30       34.10       87.29       66.87  
 
Basic earnings per share (including extraordinary items) (Rs.)
    45.30       34.10       87.29       66.86  
 
Basic cash earnings per share from ordinary activities (Rs.)
    54.71       41.09       103.37       79.96  
 
Basic cash earnings per share (including extraordinary items) (Rs.)
    54.71       41.09       103.37       79.95  
 
Book value (Rs.)
    503.34       369.05       503.34       369.05  
 
Price / earning (LTM)
    27.43       26.25       27.43       26.25  
 
Price / cash earnings (LTM)
    23.03       21.86       23.03       21.86  
 
Price / book value
    9.00       9.23       9.00       9.23  
 
PE / EPS growth
    0.84       2.20       0.90       2.03  
 
Dividend per share (Rs.)
    14.50       12.50       14.50       12.50  
 
 
   
     
     
     
 

[Additional columns below]

[Continued from above table, first column(s) repeated]
           
      Year ended
      March 31,
      2003
     
Financial performance
       
 
Export revenue / total revenue (%)
    97.81  
 
Domestic revenue / total revenue (%)
    2.19  
 
Software development expenses / total revenue (%)
    50.05  
 
Gross profit / total revenue (%)
    49.95  
 
Selling and marketing expenses / total revenue (%)
    7.37  
 
General and administration expenses / total revenue (%)
    7.46  
 
Selling, general and administration expenses / total revenue (%)
    14.83  
 
Employee costs / total revenue (%)
    46.30  
 
Operating profit / total revenue (%)
    35.11  
 
Depreciation and amortization / total revenue (%)
    5.22  
 
Operating profit after depreciation and Interest / total revenue (%)
    29.90  
 
Other income / total revenue (%)
    2.75  
 
Provision for investments / total revenue (%)
    0.66  
 
Profit before tax / total revenue (%)
    31.99  
 
Tax / total revenue (%)
    5.55  
 
Tax / PBT (%)
    17.34  
 
PAT from ordinary activities / total revenue (%)
    26.44  
 
Capital expenditure / total revenue (%) (LTM)
    6.05  
 
PAT from ordinary activities / average net worth (%) (LTM)
    38.78  
 
ROCE ( PBIT/Average capital employed) (%) (LTM)
    46.91  
 
Return on invested capital (%) (LTM)*
    79.86  
 
Capital output ratio (LTM)
    1.47  
 
Invested capital output ratio (LTM)*
    3.18  
Balance sheet
       
 
Debt-equity ratio
     
 
Debtors turnover (Days) (LTM)
    52  
 
Current ratio
    3.87  
 
Cash and cash equivalents / total assets (%)*
    57.28  
 
Cash and cash equivalents / total revenue (%) (LTM)*
    45.23  
 
Depreciation/ average gross block (%) (LTM)
    16.92  
 
Technology investment / total revenue (%) (LTM)
    3.62  
Year on Year Growth (%) **
       
 
Export revenue
    39  
 
Total revenue
    39  
 
Operating profit
    23  
 
Net profit
    19  
 
EPS
    18  
Per-share data (period end)
       
 
Basic earnings per share from ordinary activities (Rs.)
    144.68  
 
Basic earnings per share (including extraordinary items) (Rs.)
       
 
Basic cash earnings per share from ordinary activities (Rs.)
    173.22  
 
Basic cash earnings per share (including extraordinary items) (Rs.)
       
 
Book value (Rs.)
    431.84  
 
Price / earning (LTM)
    28.01  
 
Price / cash earnings (LTM)
    23.40  
 
Price / book value
    9.39  
 
PE / EPS growth
    1.52  
 
Dividend per share (Rs.)
    27.00  
 
 
   
 

*     Investments in liquid funds have been considered as Cash and Cash equivalents for the purpose of the above ratio analysis.

**     Denotes growth compared with figures of the corresponding period in the previous year.

LTM : Last Twelve Months

20


 

At a glance – US GAAP

                                         
    US $millions, except as otherwise stated
   
    Quarter ended   Half-year ended   Year ended
    September 30,   September 30,   March 31,
    2002   2003   2002   2003   2003
   
 
 
 
 
For the period
                                       
Revenues
    181.45       250.77       337.76       484.02       753.81  
Operating income
    55.44       67.81       101.87       131.84       218.64  
Operating income/revenues (%)
    30.55 %     27.04 %     30.16 %     27.24 %     29.00 %
Net income
    46.70       64.71       89.54       122.98       194.87  
Net income/revenues (%)
    25.74 %     25.80 %     26.51 %     25.41 %     25.85 %
Basic earnings per equity share ($)
    0.71       0.99       1.36       1.87       2.97  
Cash dividend per equity share ($)
    NA             0.26       0.31       0.51  
Capital expenditure
    9.48       15.79       20.08       28.80       46.71  
At the end of the period
                                       
Total assets
    591.52       854.27       591.52       854.27       704.31  
Property, plant and equipment – net
    149.20       172.74       149.20       172.74       157.19  
Cash and cash equivalents
    278.31       375.97       278.31       375.97       354.36  
Working capital
    355.04       567.05       355.04       567.05       444.77  
Total debt
                             
Stockholders’ equity
    524.02       754.39       524.02       754.39       626.00  
Common stock
    8.60       8.61       8.60       8.61       8.60  
Market capitalization
    4,659.60       6,554.59       4,659.60       6,554.59       5,648.50  
 
   
     
     
     
     
 

Note:

Market capitalization is calculated by considering the Indian market price for the shares outstanding at the period / year-end.

(INCOME GRAPH)

21


 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended September 30, 2003

Commission File Number 333-72195

Infosys Technologies Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Bangalore, Karnataka, India

(Jurisdiction of incorporation or organization)

Electronics City, Hosur Road, Bangalore, Karnataka, India 560 100 +91-80-852-0261.

(Address of principal executive offices)

Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F  þ    Form  40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934

Yes o    No þ

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g 3-2(b)

Not applicable


Currency of Presentation and Certain Defined Terms

In this Quarterly Report, references to “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to “$” or “dollars” or “U.S. dollars” are to the legal currency of the United States and references to “Rs.” or “rupees” or “Indian rupees” are to the legal currency of India. Our financial statements are presented in Indian rupees and translated into U.S. dollars and are prepared in accordance with United States Generally Accepted Accounting Principles, or U.S. GAAP. References to “Indian GAAP” are to Indian Generally Accepted Accounting Principles. References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

All references to “we,” “us,” “our,” “Infosys” or the “Company” shall mean Infosys Technologies Limited. “Infosys” is a registered trademark of Infosys Technologies Limited in the United States and India. All other trademarks or tradenames used in this Quarterly Report are the property of their respective owners.

Except as otherwise stated in this Quarterly Report, all translations from Indian Rupees to U.S. dollars are based on the noon buying rate in the City of New York on September 30, 2003, for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York which was Rs. 45.78 per $1.00. No representation is made that the Indian rupee amounts have been, could have been or could be converted into U.S. dollars at such a rate or any other rate. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Information contained in our website, www.infosys.com, is not part of this Quarterly Report.

Forward-looking Statements May Prove Inaccurate

In addition to historical information, this Quarterly Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such differences include but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. In addition, readers should carefully review the other information in this Quarterly Report and in the Company’s periodic reports and other documents filed with the Securities and Exchange Commission (“SEC”) from time to time.

22


 

Part I - Financial information

Item 1. Financial statements
Consolidated balance sheets

               
          March 31, 2003(1)
         
ASSETS
       
Current Assets
       
 
Cash and cash equivalents
  $ 354,362,918  
 
Investments in liquid mutual fund units
     
 
Trade accounts receivable, net of allowances
    109,119,856  
 
Deferred tax assets
    288,541  
 
Prepaid expenses and other current assets
    24,384,316  
 
Unbilled revenue
    19,702,186  
 
 
   
 
 
Total current assets
    507,857,817  
Property, plant and equipment, net
    157,194,190  
Intangible assets, net
    6,471,236  
Deferred tax assets
    7,264,885  
Investments
    4,613,833  
Prepaid income taxes
    4,452,678  
Other assets
    16,454,328  
 
 
   
 
TOTAL ASSETS
  $ 704,308,967  
 
 
   
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
       
Current Liabilities
       
 
Accounts payable
  $ 426,611  
 
Client deposits
    3,208,295  
 
Other accrued liabilities
    46,249,269  
 
Income taxes payable
     
 
Unearned revenue
    13,202,115  
 
 
   
 
Total current liabilities
    63,086,290  
Non-current liabilities
       
Preferred stock of subsidiary
       
 
0.0005% Cumulative Convertible Preference Shares, par value $2 each, 4,375,000 preference shares Authorized, issued and outstanding – 4,375,000 preference shares as of March 31, 2003 and September 30, 2003
    10,000,000  
 
Other non-current liabilities
    5,217,758  
Stockholders’ Equity
       
   
Common stock, $0.16 par value; 100,000,000 equity shares authorized, Issued and outstanding – 66,243,078 and 66,268,972 as of March 31, 2003 and September 30, 2003, respectively
    8,602,909  
   
Additional paid-in capital
    127,042,751  
   
Accumulated other comprehensive income
    (31,444,835 )
   
Deferred stock compensation
    (2,817,066 )
Retained earnings
    524,621,160  
 
 
   
 
Total stockholders’ equity
    626,004,919  
 
 
   
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 704,308,967  
 
 
   
 

[Additional columns below]

[Continued from above table, first column(s) repeated]
               
          September 30, 2003
          (Unaudited)
         
ASSETS
       
Current Assets
       
 
Cash and cash equivalents
  $ 375,967,500  
 
Investments in liquid mutual fund units
    98,257,986  
 
Trade accounts receivable, net of allowances
    129,442,231  
 
Deferred tax assets
    116,065  
 
Prepaid expenses and other current assets
    29,323,666  
 
Unbilled revenue
    18,694,049  
 
 
   
 
 
Total current assets
    651,801,497  
Property, plant and equipment, net
    172,741,594  
Intangible assets, net
    2,628,011  
Deferred tax assets
    6,826,125  
Investments
    3,259,660  
Prepaid income taxes
    149,868  
Other assets
    16,862,659  
 
 
   
 
TOTAL ASSETS
  $ 854,269,414  
 
 
   
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
       
Current Liabilities
       
 
Accounts payable
  $ 235,574  
 
Client deposits
    3,037,861  
 
Other accrued liabilities
    60,087,899  
 
Income taxes payable
    5,834,081  
 
Unearned revenue
    15,551,461  
 
 
   
 
Total current liabilities
    84,746,876  
Non-current liabilities
       
Preferred stock of subsidiary
       
 
0.0005% Cumulative Convertible Preference Shares, par value $2 each, 4,375,000 preference shares Authorized, issued and outstanding – 4,375,000 preference shares as of March 31, 2003 and September 30, 2003
    10,703,364  
 
Other non-current liabilities
    4,427,001  
Stockholders’ Equity
       
   
Common stock, $0.16 par value; 100,000,000 equity shares authorized, Issued and outstanding – 66,243,078 and 66,268,972 as of March 31, 2003 and September 30, 2003, respectively
    8,605,728  
   
Additional paid-in capital
    128,818,007  
   
Accumulated other comprehensive income
    (6,610,579 )
   
Deferred stock compensation
    (673,687 )
Retained earnings
    624,252,704  
 
 
   
 
Total stockholders’ equity
    754,392,173  
 
 
   
 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 854,269,414  
 
 
   
 

(1) March 31, 2003 balances were obtained from audited financial statements

Unaudited consolidated statements of income

                             
        Three months ended September 30,   Six months ended September 30,
        2002   2003   2002
       
 
 
Revenues
  $ 181,446,939     $ 250,768,976     $ 337,761,808  
Cost of revenues (including amortization of stock compensation expenses of $729,994 and $628,905 for the three months ended September 30, 2002 and 2003 and $1,459,988 and $1,257,812 for the six months ended September 30, 2002 and 2003)
    97,292,593       140,742,637       183,297,362  
 
   
     
     
 
Gross profit
    84,154,346       110,026,339       154,464,446  
 
   
     
     
 
Operating Expenses:
                       
 
Selling and marketing expenses
    14,484,552       18,013,747       25,782,286  
 
General and administrative expenses
    13,102,320       20,437,144       24,961,448  
 
Amortization of stock compensation expense
    513,954       442,783       1,027,908  
 
Amortization of intangible assets
    615,904       3,322,455       820,025  
 
   
     
     
 
Total operating expenses
    28,716,730       42,216,129       52,591,667  
 
   
     
     
 
Operating income
    55,437,616       67,810,210       101,872,779  
 
Other income, net
    534,252       10,242,926       5,630,772  
 
   
     
     
 
Income before income taxes
    55,971,868       78,053,136       107,503,551  
 
Provision for income taxes
    9,271,397       13,339,383       17,958,780  
 
   
     
     
 
   
Net income
  $ 46,700,471     $ 64,713,753     $ 89,544,771  
 
   
     
     
 
Earnings per equity share
                       
 
Basic
  $ 0.71     $ 0.99     $ 1.36  
 
Diluted
  $ 0.70     $ 0.97     $ 1.35  
Weighted equity shares used in computing earnings per equity share
                       
 
Basic
    65,567,135       65,591,028       65,567,033  
 
Diluted
    66,175,895       66,412,725       66,275,118  

[Additional columns below]

[Continued from above table, first column(s) repeated]
             
        Six months ended September 30,
        2003
       
Revenues
  $ 484,024,612  
Cost of revenues (including amortization of stock compensation expenses of $729,994 and $628,905 for the three months ended September 30, 2002 and 2003 and $1,459,988 and $1,257,812 for the six months ended September 30, 2002 and 2003)
    273,645,026  
 
   
 
Gross profit
    210,379,586  
 
   
 
Operating Expenses:
       
 
Selling and marketing expenses
    35,416,302  
 
General and administrative expenses
    38,161,371  
 
Amortization of stock compensation expense
    885,567  
 
Amortization of intangible assets
    4,071,573  
 
   
 
Total operating expenses
    78,534,813  
 
   
 
Operating income
    131,844,773  
 
Other income, net
    15,543,706  
 
   
 
Income before income taxes
    147,388,479  
 
Provision for income taxes
    24,404,180  
 
   
 
Net income
  $ 122,984,299  
 
   
 
Earnings per equity share
       
 
Basic
  $ 1.87  
 
Diluted
  $ 1.85  
Weighted equity shares used in computing earnings per equity share
       
 
Basic
    65,587,368  
 
Diluted
    66,244,852  

See accompanying notes to the unaudited consolidated financial statements

23


 

Unaudited consolidated statements of stockholders’ equity and comprehensive income

                                 
    Common stock   Additional        
   
  paid-in   Comprehensive
    Shares   Par value   capital   income
   
 
 
 
Balance as of March 31, 2002
    66,186,130     $ 8,597,001     $ 123,079,948          
Common stock issued
    19,050       1,961       646,906          
Cash dividends declared
                         
Income tax benefit arising on exercise of stock options
                438,139          
Amortization of compensation related to stock option grants
                         
Comprehensive income
                               
Net income
                      89,544,771  
Other comprehensive income
                               
Translation adjustment
                      5,473,659  
 
                           
 
Comprehensive income
                          $ 95,018,430  
 
   
     
     
     
 
Balance as of September 30, 2002
    66,205,180     $ 8,598,962     $ 124,164,993          
 
   
     
     
         
Balance as of March 31, 2003
    66,243,078     $ 8,602,909     $ 127,042,751          
 
   
     
     
         
Common stock issued
    25,894       2,819       1,105,240          
Cash dividends declared
                         
Income tax benefit arising on exercise of stock options
                670,016          
Amortization of compensation related to stock option grants
                         
Comprehensive income
                               
Net income
                      122,984,299  
Other comprehensive income
                               
Translation adjustment
                      24,834,256  
 
                           
 
Comprehensive income
                          $ 147,818,555  
 
   
     
     
     
 
Balance as of September 30, 2003
    66,268,972     $ 8,605,728     $ 128,818,007          
 
   
     
     
         

[Additional columns below]

[Continued from above table, first column(s) repeated]
                                 
    Accumulated                        
    other                   Total
    comprehensive   Deferred stock   Retained   stockholders’
    income   compensation   earnings   equity
   
 
 
 
Balance as of March 31, 2002
  $ (45,441,148 )   $ (7,620,600 )   $ 363,764,165     $ 442,379,366  
Common stock issued
                      648,867  
Cash dividends declared
                (16,956,889 )     (16,956,889 )
Income tax benefit arising on exercise of stock options
                      438,139  
Amortization of compensation related to stock option grants
          2,487,896             2,487,896  
Comprehensive income
                               
Net income
                89,544,771       89,544,771  
Other comprehensive income
                               
Translation adjustment
    5,473,659                   5,473,659  
 
                               
Comprehensive income
                               
 
   
     
     
     
 
Balance as of September 30, 2002
  $ (39,967,489 )   $ (5,132,704 )   $ 436,352,047     $ 524,015,809  
 
   
     
     
     
 
Balance as of March 31, 2003
  $ (31,444,835 )   $ (2,817,066 )   $ 524,621,160     $ 626,004,919  
 
   
     
     
     
 
Common stock issued
                      1,108,059  
Cash dividends declared
                (23,352,755 )     (23,352,755 )
Income tax benefit arising on exercise of stock options
                      670,016  
Amortization of compensation related to stock option grants
          2,143,379             2,143,379  
Comprehensive income
                               
Net income
                122,984,299       122,984,299  
Other comprehensive income
                               
Translation adjustment
    24,834,256                   24,834,256  
 
                               
Comprehensive income
                               
 
   
     
     
     
 
Balance as of September 30, 2003
  $ (6,610,579 )   $ (673,687 )   $ 624,252,704     $ 754,392,173  
 
   
     
     
     
 

See accompanying notes to the unaudited consolidated financial statements

24


 

Unaudited consolidated statements of cash flows

                 
    Six months ended September 30,
    2002   2003
   
 
OPERATING ACTIVITIES:
               
Net income
  $ 89,544,771     $ 122,984,299  
Adjustments to reconcile net income to net cash provided by operating activities
               
Loss on sale of property, plant and equipment
    24,787       2,153  
Depreciation
    17,386,573       19,365,934  
Amortization of intangible assets
    820,025       4,071,573  
Provision for investments
    3,163,560       1,419,662  
Deferred taxes
    (1,561,294 )     907,313  
Amortization of deferred stock compensation expense
    2,487,896       2,143,379  
Changes in assets and liabilities
               
Trade accounts receivable
    (25,241,313 )     (15,922,435 )
Prepaid expenses and other current assets
    (2,819,465 )     (5,535,317 )
Unbilled revenue
    (9,355,693 )     1,736,340  
Income taxes
    (3,908,096 )     10,456,367  
Accounts payable
    337,610       (204,409 )
Client deposits
    1,298,162       (288,926 )
Unearned revenue
    7,270,897       1,818,558  
Other accrued liabilities
    14,401,660       11,860,194  
 
   
     
 
Net cash provided by operating activities
    93,850,080       154,814,685  
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