INFOSYS TECHNOLOGIES LTD, 20-F, 2000-05-03

INFOSYS TECHNOLOGIES LTD
20-F, 2000-05-03
COMPUTER PROGRAMMING SERVICES

Previous: WARBURG PINCUS LONG SHORT MARKET NEUTRAL FUND INC, N-30D, 2000-05-03

Next: VICTORY VARIABLE INSURANCE FUNDS, 497J, 2000-05-03

<PAGE>

- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
- --------------------------------------------------------------------------------

FORM 20-F

(Mark One)
[_] Registration statement pursuant to section 12(b) or (g) of the Securities
Exchange Act of 1934

[X] Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the fiscal year ended March 31, 2000

[_] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from ______ to ______

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 561 229
+91-80-852-0261
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which Registered
None Not Applicable

Securities registered pursuant to Section 12(g) of the Act:

American Depositary Shares,
each represented by one-half of one Equity Share, par value Rs. 5 per share.
(Title of class)

Securities for which there is a reporting obligation pursuant to Section 15(d)
of the Act:
Not Applicable
(Title of class)

Indicate the number of outstanding shares of each of the issuer's classes of
capital or common stock as of the close of the period covered by the annual
report - 66,150,700 Equity Shares

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes _________ No _____X_____

Indicate by check mark which financial statement item the registrant has elected
to follow.
Item 17 _________ Item 18 ______X_____
<PAGE>

Currency of Presentation and Certain Defined Terms

Unless the context otherwise requires, references herein to the "company" or to
"Infosys" are to Infosys Technologies Limited, a limited liability company
organized under the laws of the Republic of India. 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. Yantra
Corporation, a Delaware Corporation ("Yantra"), in which the company holds a
minority interest, is considered a subsidiary of the company for purposes of
Indian GAAP. "Infosys" is a registered trademark of the company in the United
States and India. All other trademarks or tradenames used in this Annual Report
on Form 20-F ("Annual Report") are the property of their respective owners.

In this Annual Report, 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. The company's 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 ("U.S. GAAP"). References to "Indian GAAP" are to Indian generally
accepted accounting principles. Except as otherwise specified, financial
information is presented in dollars. References to a particular "fiscal" year
are to the company's fiscal year ended March 31 of such year.

Unless otherwise specified herein, financial information has been converted into
dollars at the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank (the
"Noon Buying Rate") on March 31, 2000, which was Rs. 43.65 per $ 1.00. For the
convenience of the reader, this Annual Report contains translations of certain
Indian rupee amounts into U.S. dollars which should not be construed as a
representation that such Indian rupee or U.S. dollar amounts referred to herein
could have been, or could be, converted to U.S. dollars or Indian rupees, as the
case may be, at any particular rate, the rates stated below, or at all. Any
discrepancies in any table between totals and sums of the amounts listed are due
to rounding. For historical information regarding rates of exchange between
Indian rupees and U.S. dollars, see "Key Information - Exchange rates".

Forward-Looking Statements May Prove Inaccurate

IN ADDITION TO HISTORICAL INFORMATION, THIS ANNUAL 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 A DIFFERENCE 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 ANNUAL REPORT AND IN THE
COMPANY'S PERIODIC REPORTS AND OTHER DOCUMENTS FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION ("SEC") FROM TIME TO TIME.
<PAGE>

Part I
- --------------------------------------------------------------------------------

Item 1. Identity of Directors, Senior Management and Advisers

Not applicable.

Item 2. Offer Statistics and Expected Timetable

Not applicable.

Item 3. Key Information

3.A.1 & 2 Selected financial data

This information is set forth under the caption "Summary of Selected
Consolidated Financial Data" on page 96 of the Infosys Annual Report for
fiscal 2000 and is incorporated herein by reference.

3.A.3 Exchange rates

Fluctuations in the exchange rate between the Indian rupee and the U.S. dollar
will affect the U.S. dollar equivalent of the Indian rupee price of the equity
shares on the Indian stock exchanges and, as a result may affect the market
price of the ADSs in the United States, and vice versa. Such fluctuations will
also affect the U.S. dollar conversion by the Depositary of any cash dividends
paid in Indian rupees on the equity shares represented by the ADSs. The
following table sets forth, for the fiscal years indicated, certain
information concerning the exchange rates between Indian rupees and U.S.
dollars based on the Noon Buying Rate:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
Fiscal year ended March 31, Period end /1/ Average /1/,/2/ High Low
-------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1994/3/ Rs. 31.37 Rs. 31.52 Rs. 31.75 Rs. 31.37
1995/3/ 31.43 31.38 31.90 31.37
1996 34.35 33.47 38.05 31.36
1997 35.88 35.70 36.85 34.15
1998 39.53 37.37 40.40 35.71
1999 42.35 42.10 43.68 39.25
2000 43.65 43.46 43.68 42.84
--------------------------------------------------------------------------------------------------
</TABLE>

1. The Noon Buying Rate at each period end and the average rate for each
period differed from the exchange rates used in the preparation of the
company's consolidated financial statements.
2. Represents the average of the Noon Buying Rate on the last day of each
month during the period.
3. From March 1, 1992 through August 19, 1994, the rupee was not permitted to
fully float and convert on the current account. Instead, a dual exchange
rate mechanism made the rupee partially convertible by permitting
conversion of 60% of the foreign exchange received on a trade or revenue
account at a market-determined rate and the remaining 40% at the official
Government of India rate.
4. The high and low exchange rates for the previous six months are as follows:

<TABLE>
<CAPTION>
------------------------------------------------------------------------
Month High Low
------------------------------------------------------------------------
<S> <C> <C>
October 1999 Rs. 43.73 Rs. 43.39
November 1999 43.51 43.43
December 1999 43.60 43.43
January 2000 43.65 43.55
February 2000 43.75 43.58
March 2000 43.65 43.58
------------------------------------------------------------------------
</TABLE>

3.B Capitalization and indebtedness
Not applicable.

3.C Reasons for the offer and use of proceeds
Not applicable.
<PAGE>

3.D Risk factors

This information is set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 97 through
110 of the Infosys annual report for fiscal 2000 and such information is
incorporated herein by reference.

Item 4. Information on the Company

4.A History and development of the company

4.A.1 Company overview

Infosys was originally incorporated as Infosys Consultants Private Limited on
July 2, 1981, as a private limited company under the Companies Act, 1956
("Indian Companies Act"), of the Republic of India. The name of the company
was changed to Infosys Technologies Private Limited in April 1992 and
subsequently to Infosys Technologies Limited in June 1992 when it became a
public limited company. Information about the registered office of the company
is disclosed on the cover page to this Form 20-F. The name and address of the
agent for service in the United States is CT Corporation System, 49, Stevenson
Street, Suite 900, San Francisco, CA 94105.

The company, one of India's leading information technology ("IT") services
companies, utilizes an extensive non-U.S. based ("offshore") infrastructure to
provide managed software solutions to clients worldwide. Headquartered in
Bangalore, India, the company has seventeen state-of-the-art offshore software
development facilities located throughout India and one global development
center in Canada, that enable it to provide high-quality, cost-effective
services to clients in a resource-constrained environment. The company's
services, which are offered on either a fixed-price, fixed-time frame or a
time-and-materials basis, include custom software development, maintenance,
re-engineering services, e-commerce and internet consulting as well as
dedicated offshore software development centers ("OSDCs") for certain clients.
In each of its service offerings, the company assumes full project management
responsibility in order to strengthen client relationships, offer higher
value-added services and enhance its profitability. In addition, the company
develops and markets certain company-owned software products. As a result of
its extensive network of offshore software development facilities, its quality
systems, its disciplined processes and its significant investment in people,
the company has built a platform from which it has been able to achieve
significant growth to date.

The company's initial public offering ("IPO") was in February 1993 on the
Bangalore Stock Exchange and raised approximately $ 4.4 million in gross
aggregate proceeds. To further fund its capital programs, Infosys raised
approximately $ 7.7 million in gross aggregate proceeds through a private
placement of shares in October 1994. These shares were purchased by foreign
institutional investors, mutual funds as well as Indian domestic financial
institutions and corporations. Most recently, in order to partially fund the
expansion of its existing Indian facilities and telecommunication
infrastructure in Bangalore, Bhubaneswar, Chennai, Mangalore and Pune and to
develop new facilities, the company raised approximately $ 70.38 million in
gross aggregate proceeds through its initial U.S. public offering of American
Depositary Shares ("ADSs") on March 11, 1999. The company has incurred $ 35.9
million, $ 16.1 million and $ 7.9 million in fiscal 2000, 1999 and 1998
respectively towards capital expenditure. The company intends to spend
approximately $ 46.0 million in capital expenditure, during fiscal 2001, the
majority of which will be utilized in India. This would be funded out of the
internal accruals and existing cash balances of the company.

Through its worldwide sales headquarters in Fremont, California and 19 other
sales offices located in the United States, Canada, the United Kingdom,
Belgium, Sweden, Germany, Australia, Japan, and India, the company markets its
services to large IT-intensive businesses. During fiscal 2000, the company
derived 78.0% of its revenues from North America, 14.8% from Europe and 1.4%
from India. While the company derives its revenues primarily from the United
States, Infosys maintains a diversified client base, with its largest client
representing 7.2% of fiscal 2000 revenues. As of March 31, 2000, the company
had approximately 194 clients. This diversified client base is comprised
primarily of Fortune 500 companies, growing internet companies and other
multinational companies. As a result of its commitment to quality and client
service, the company enjoys a high level of repeat business. For fiscal 2000
and 1999, existing clients from the previous fiscal year generated 87.0% and
90.0%, respectively, of the company's revenues.

The company was incorporated in 1981 by seven founders who shared a vision to
build a world-class IT services organization based on a deeply-held value
system, leadership by example, and continuous innovation. Six of these
original founders remained with the company (one of the six founders, Mr. N.
S. Raghavan retired on February 7, 2000), and, together with other members of
the company's management council, have pursued their vision by focusing on
certain key strategies including: (i) pursuing a world-class operating model;
(ii) investing heavily in
<PAGE>

human resources; (iii) focusing on managed software solutions; (iv)
capitalizing on a well established offshore development model; (v) maintaining
a disciplined focus on business and client mix; and (vi) pursuing growth
opportunities. In recognition of its efforts, the company was voted "Best
Managed Company" in India by Asiamoney magazine in each of the last four
years, was selected as "Company of the Year" by The Economic Times Awards for
Corporate Excellence in 1999, was voted "India's Most Admired Company" in a
poll by The Economic Times, was the first recipient of the National Award for
Excellence in Corporate Governance instituted by the Ministry of Finance,
Government of India and sponsored by the UTI Institute of Capital Markets and
was awarded the Silver Shield in each of the last five years by the Institute
of Chartered Accountants of India as the Indian company with the best
presented financial statements by a non-financial company. Management believes
that this reputation for leadership and innovation and the recognition it has
received has been and will continue to be a key competitive advantage,
particularly in attracting and retaining the highest quality IT professionals.

4.B Business overview

4.B.1 Industry overview

In today's increasingly competitive business environment, companies have
become dependent on IT not only for efficiency in day-to-day operations, but
also as a strategic tool for re-engineering business processes, restructuring
organizations and for reacting quickly to competitive, regulatory and
technological changes. For these reasons, IT capabilities are particularly
critical in certain vertical markets that are undergoing rapid deregulation
and globalization like financial services, utilities and telecommunications.
As corporations are becoming increasingly reliant on their IT systems, the
technological challenges of managing such systems have increased. IS
departments must not only implement new systems based on technologies such as
internet and client/server systems, but maintain and update legacy systems to
work with the latest software and hardware, to expand functionality, to
recognize and process dates that begin in the year 2000 and to handle other
developments such as the conversion to Eurocurrency.

As businesses have become more dependent on IT, corporate budgets for IT
services have grown dramatically. According to the NASSCOM-McKinsey Study, on
"Indian I. T. Strategies", the total market for IT products and services is
expected to grow from $ 461 billion in 1998 to $ 1.92 trillion by 2008.
India's share of the relevant market will grow to nearly $ 57 billion by 2008.
The need to outsource is particularly acute for companies whose IT staff lack
the requisite skill set and project management capabilities to implement new
technologies, yet are reluctant to work solely with outdated technology. As a
result, such companies seek third-party IT service providers to implement new
technology and support existing legacy systems. Additionally, in many cases,
businesses are being forced to outsource IT projects due to the difficulty and
expense of recruiting and training sufficient IT staff in a resource-
constrained environment. Outsourcing enables businesses to minimize the risks
and reduce the time-to-completion of large IT projects by shifting some or all
of their IT responsibilities to capable service organizations. In addition to
this trend towards outsourcing, the IT services industry has also benefited
recently from a significant demand for Year 2000 conversion services.

Simultaneously with this significant increase in demand for IT services, the
supply of qualified IT professionals has decreased in most developed
countries, particularly the United States, Western Europe and Japan. According
to the United States Department of Education, the number of bachelor degrees
in computer science awarded annually at U.S. universities fell 41.7% from
41,889 in 1986 to 24,404 in 1995. One result of this downward trend is a
growing shortage of IT professionals in the United States; furthermore, the
United States Department of Commerce has estimated that between 1994 and 2005,
U.S. companies will require more than one million new IT professionals to fill
newly created positions and to replace workers who are retiring or are
otherwise leaving the IT sector.

This shortage of IT professionals, along with recent advances in
telecommunications and the growing acceptance of telecommuting, has led to the
globalization of the market for IT services. It is now well accepted that
remote offshore software development and maintenance is possible if the
offshore facilities leverage world-class physical and technological
infrastructure, quality processes, project management methodologies, and data
communications infrastructure to provide video conferencing, internet/e-mail
connectivity and remote computer access. By outsourcing software development
and maintenance projects to offshore IT service providers, establishing
overseas facilities, or entering into joint ventures with foreign partners,
companies have been able to access skilled IT professionals in lower cost
environments with a large population of English-speaking technical talent.

India: A source for software services. According to a survey of U.S. software
service vendors conducted by the World Bank, India is the leading offshore
destination for companies seeking to outsource software development or IT
projects. India's National Association of Software and Service Companies
("NASSCOM") estimates that
<PAGE>

India's export revenue from software, including software services, was
approximately $ 2.7 billion in fiscal 1999 and will reach $ 4.0 billion by
fiscal 2000, contributing to total Indian software industry revenues of
approximately $ 5.9 billion by fiscal 2000.

There are three key factors contributing to this rapid growth of India's
software market. First, India has a large, skilled labor pool that is
available at a relatively low labor cost. With over four million engineers,
India ranks second only to the United States as the country with the largest
population of English-speaking technical personnel. According to NASSCOM, the
number of software professionals employed by the Indian software industry was
around 250,000 in 1998-99 as compared to 200,000 in the previous year. India
has more than 1,800 engineering colleges and technical institutes which
produce approximately 68,000 IT graduates annually. This sizable pool of IT
talent in India is available to companies worldwide. According to Software
Productivity Research, the average annual wage for software professionals in
India is approximately 15% of the average U.S. rate. Although wages in India
are rising faster than in the United States, the labor rate differential is
anticipated to remain a competitive advantage for Indian companies in the
foreseeable future.

A second key factor driving the Indian software market is the capability of
Indian IT firms to produce high-quality software deliverables. A NASSCOM
analysis of international quality standards of the top 300 Indian software
companies undertaken in August 1999, showed that 137 had already acquired ISO
9000 or SEI Level 2 equivalent certification, with an additional 74
anticipated to acquire such certification by March 2000. These capabilities
have led to the recognition of India's IT talent by companies worldwide. To
take advantage of India's high-quality IT services at attractive prices,
companies worldwide have outsourced their software services needs to India
unrestrained by distances or transportation limitations that often handicap
Indian manufacturing firms. In fact, the 10 to 12 hour time difference between
India and its largest market, the United States, allows work to be carried on
by teams spanning both countries on a 24-hour basis, shortening cycle times
and improving productivity and service quality.

The final factor driving the Indian software industry is the recognition by
successive Indian governments in recent times of the importance of the IT
sector in the Indian economy. In 1991, the Government of India introduced a
number of measures to liberalize the economy and thus addressed the economic
difficulties that India had been facing. These measures included policies to
stimulate investment in infrastructure industries and the growing Indian
software industry. This commitment to the software sector has been and
continues to be pursued by each successive government since 1991. For example,
the most recent Government of India established the National Task Force on
Information Technology in April 1998 with a mandate to make recommendations
that detail policies designed to increase India's IT exports. In addition,
software firms benefit from a variety of incentives, such as relief from
import duties on hardware, a tax deduction for income derived from software
exports, and infrastructure support for companies operating in Software
Technology Parks.

4.B.2 Strategy

4.B.2.1 Business strategy

The company's vision is to become a globally respected corporation providing
best-of-breed solutions employing best-in-class professionals. In order to
achieve this goal, the company focuses on the following key elements of its
business strategy:

Pursue world-class operating model. The management believes that one of the
most critical contributing factors to the company's success has been its
commitment to pursue high-quality standards in all aspects of its business,
including deliverables to the customers, human resource management, investor
relations, planning, finance, physical and technological infrastructure, sales
and marketing. In its services and operations, the company achieves quality
through rigorous adherence to highly evolved processes, including a detailed
approach to planning and execution, multi-level testing and careful tracking
and analysis of quality control. The company is certified under the ISO 9001
and TickIT quality standards. In addition, the company has been certified at
Level 5 of the Capability Maturity Model, a software-specific quality
management model developed by the Software Engineering Institute at Carnegie
Mellon University. This model defines five levels of process maturity for a
software organization. Certification to Level 5 has been achieved by only
around 20 companies worldwide assessed under the Capability Maturity Model.
Infosys also adheres to high-quality standards in its investor relations. For
example, the company was one of the first public Indian companies to adopt
U.S. GAAP reporting in fiscal 1995 and quarterly-audited Indian financial
statements in fiscal 1998.

Invest heavily in human resources. The company believes that its continued
success will depend upon its ability to recruit, train, deploy and retain
highly talented IT professionals. Even as the field of software engineering
has been attracting the best and brightest Indian students, management
believes the company has become, for Indian engineering graduates, one of the
most sought after employers. The company focuses its recruiting efforts on the
<PAGE>

top 20% of the students from the engineering departments of Indian
universities and uses a series of tests and interviews to identify the best
applicants. In an effort to attract the most highly qualified candidates, the
company has spent significant resources in creating a quality work
environment. For example, its main facility in Bangalore, which spans five
acres, encompasses not only 160,000 sq. ft. of office space but also 150,000
sq. ft. of landscaping, a cafeteria, outdoor sitting area, library and
gymnasium as well as tennis, volleyball and basketball courts. Through this
campus-like environment, the company fosters a collegial atmosphere and
informal culture, which is further promoted by its "open door" operating
philosophy where communication and ideas flow freely irrespective of title or
tenure. The company also offers its IT professionals challenging assignments,
competitive salaries and benefits and one of the first stock option plans
adopted by a public Indian company. In addition, the company invests heavily
in training, including three-month training sessions for newly recruited IT
professionals as well as a variety of two-week continuing education courses in
technology and management skills conducted by a 50-person faculty. As a result
of this high level of investment in its people, management believes that the
company has become one of the most attractive employers for Indian software
professionals and that its attrition rate is significantly below the industry
average.

Focus on managed software solutions. Since its inception, the company has
dedicated itself to providing managed software solutions, many of which are
offered on a fixed-price, fixed-time frame basis. By taking full project
management responsibility in every project, the company provides its clients
high-quality, cost-effective solutions with low risk. Such services offer the
company the opportunity to build client confidence with the potential benefit
of enhanced margins. Management believes that by demonstrating its ability to
manage and successfully execute large projects, the company is better
positioned to become a long-term partner to its clients for all of their
software needs. In addition, by retaining project management responsibility,
the company accumulates significant industry expertise and continues to
develop and refine its software development tools and proprietary
methodologies.

Capitalize on a well-established offshore development model. As one of the
pioneers of the offshore software development model, the company has made
significant investments in its infrastructure and has developed the advanced
processes and expertise necessary to manage and successfully execute projects
in multiple locations with seamless integration. The company has high levels
of project management skills and rigid controls as evidenced by its Level 5
Capability Maturity Model certification. This commitment to quality allows the
company to successfully execute approximately 68% of its project work in India
while maintaining a high level of client satisfaction. These capabilities not
only provide significant cost advantages but also shorten the time to deliver
a solution to the client. With significant investments in offshore software
development facilities, plans to expand its available facilities significantly
and plans to hire additional IT professionals, the company believes that it is
well-positioned to serve clients globally in a resource-constrained
environment.

Maintain disciplined focus on business and client mix. The company provides a
wide range of software services and maintains a disciplined focus on its
business mix in an effort to avoid service or client concentration. Beginning
in fiscal 1996, the company aggressively sought to minimize its client
concentration and to accept as clients only those that met strict guidelines
for overall revenue potential and profitability. In fiscal 2000 and 1999, the
company's largest client accounted for 7.2% and 6.4%, respectively, of
revenues and its five largest clients accounted for 30.2% and 28.4%,
respectively, of revenues. Similarly, the company has endeavored to maintain a
balance among its service offerings despite certain trends in the marketplace,
in particular, Year 2000 remediation services. This balance is key to ensuring
that the technology skill sets of the company's IT professionals remain
diversified. Such diversification is critical not only in providing the
company the flexibility to adapt to changing market conditions but also in
attracting and retaining highly skilled professionals who seek the opportunity
to continue to learn new technologies.

4.B.2.2 Growth strategy

From fiscal 1994 to fiscal 2000, the company experienced compounded annual
revenue and net income growth rates of 62% and 73%, respectively, and grew
from approximately 480 IT professionals to approximately 4,625. The following
are the key elements of the company's growth strategy:

Broaden service offerings. To meet all of its clients' IT needs, the company
strives to offer a comprehensive range of services by continuously evaluating
new and emerging technologies. As a full-service provider, the company
believes that it can increase its revenues from existing clients as well as
attract new clients. Toward this end, the company has opportunistically
expanded its services beyond its core development, maintenance and re-
engineering services. For example, the company has recently begun initiatives
to develop practices focused on packaged applications implementation, e-
commerce and
<PAGE>

internet/intranet services. E-commerce and internet/intranet services
constituted 18.8% during fiscal 2000. The management believes that these
services will increasingly become a significant part of the company's
portfolio of services.

Increase business with existing clients. In fiscal 2000, the company provided
software services for more than 190 clients in the United States, Europe,
Australia, Asia and Japan. A key objective of the company's growth strategy is
to expand the nature and scope of its engagements with existing clients both
by increasing the volume of its projects and by expanding the breadth of
services offered. Establishing broad, long-term relationships potentially
increases the quality and efficiency of the company's service to a particular
client since each project performed for a client increases the company's
understanding of the client's systems, requirements and business practices.
For the same reason, establishing broad, long-term relationships with a client
also reduces the company's marketing costs, increases the client's reliance on
the company and creates barriers to entry for competitors. The company seeks
to foster such relationships by delivering high-quality services on time and
on budget and, over the course of a relationship, by increasing the
integration of its services with the client's internal IT operations. To date,
this approach has been highly effective. Despite the company's high rate of
growth during the last few years, over 85% of revenues in both fiscal 2000 and
1999 were generated from companies who were clients in the prior fiscal year.

Develop new clients. The company pursues several new client development
strategies. First, the company offers a broad array of managed software
solutions that provide an initial entry into a new client. Second, Infosys
believes that it can leverage the industry-specific expertise it has developed
in key vertical markets (financial services, manufacturing and distribution,
retail, telecommunications and technology) to further develop its portfolio of
clients in these targeted markets. This vertical market orientation continues
to help Infosys design and develop re-usable software tools and processes
which have specific applications to clients in these markets and which can
improve the company's efficiency and productivity. Finally, the company
intends to expand its global sales and marketing infrastructure by hiring new
sales and marketing personnel, opening additional regional sales offices and
increasing its marketing expenditures. Infosys currently maintains sales and
marketing offices in 20 locations and intends to add new offices in North
America, Europe and Asia. The management believes that increasing the
company's geographic presence will enhance its ability to establish and
support new client relationships.

Increase revenue per IT professional. To increase its revenue per IT
professional, the company continually focuses on building expertise in
vertical markets, refining its software development tools and methodologies,
and storing and disseminating experiential knowledge in order to improve
efficiency and productivity. Additionally, to enhance productivity per IT
professional, Infosys continually monitors client accounts for profitability
and seeks to focus on select new clients and on those existing client
relationships that have the potential for high long-term profitability. The
company's policy is to decline or discontinue projects that do not offer the
potential to meet its profitability targets. Finally, the company is seeking
to increase the proportion of projects that are undertaken on a fixed-price,
fixed-time frame rather than a time-and-materials basis. The management
believes that effectively structured fixed-price, fixed-time frame projects
benefit the client by reducing the client's risk, while offering the company
the potential benefit of enhanced margins for projects that are performed
efficiently.

Expand and diversify base of IT professionals. Management believes that a
critical element of the company's growth strategy is its ability to increase
its base of IT professionals. To address this issue, the company plans to
build new software development facilities in locations where it can access
local pools of talent as well as increase the number of professionals employed
at its existing locations. In addition, the company looks at other fields of
expertise, such as business school graduates and accountants, for recruiting.
Accordingly, the company has approved plans to expand its facilities in
Bangalore, Bhubaneswar, Chennai, Mangalore, Pune and has opened new facilities
in Hyderabad, Mysore and Mohali, Punjab all in India and one global
development center in Toronto, Canada. The company is also contemplating
addition of facilities in the United States, Europe and Asia.

Pursue selective strategic acquisitions. The company believes that pursuing
selective acquisitions of IT services and software applications firms could
potentially expand the company's technical expertise, facilitate expansion
into new vertical markets and increase its client base. Although no
acquisitions are currently being contemplated, the company anticipates that it
will seek to identify and acquire companies that have well-developed
applications in vertical markets, extensive client bases, proprietary
technical expertise, or other strengths that would complement the company's
business.

4.B.2.3 The Infosys offshore development model

The Indian offshore development model became popular in the mid-1990's as a
method of dividing software project activities between a service provider's
offshore software development facility and a client's on-site location. This
model contains many features that are attractive to IT consumers who are
primarily located in the
<PAGE>

United States, Europe and Japan, including: (i) access to a large pool of
highly skilled, English-speaking IT professionals; (ii) relatively low labor
costs of IT professionals offshore; (iii) the ability to provide high-quality
IT services at internationally recognized standards; (iv) the capability to
work on specific projects on a 24-hour basis by exploiting time zone
differences between India and client sites; and (v) the ability to accelerate
the delivery time of larger projects by parallel processing different phases
of a project's development. While some U.S. and European companies have
commenced their own operations in India, most large corporations have opted to
form strategic alliances with local Indian IT companies to reduce the risks
and start-up costs of operations in India.

As one of the pioneers of the offshore development model, Infosys has a long
history of successfully executing projects between its clients' sites in North
America, Europe and Asia and the company's offshore software development
facilities in India. In a typical software development or re-engineering
assignment, the company assigns a small team of two to five IT professionals
to visit a client's site and determine the scope and requirements of the
project. Once the initial specifications of the engagement have been
established, the project managers return to India to supervise a much larger
team of 10 to 50 IT professionals dedicated to the development of the required
software or system. A small team remains at the client's site to track changes
in scope and address new requirements as the project progresses. The client's
systems are then linked via satellite to the company's facilities enabling
simultaneous processing in as many as four offshore software development
facilities. Once the development stage of the assignment is completed and
tested in India, a team returns to the client's site to install the newly
developed software or system and ensure its functionality. At this phase of
the engagement, the company will often enter into an ongoing agreement to
provide the client with comprehensive maintenance services from one of its
offshore software development facilities. In contrast to development projects,
a typical maintenance assignment requires a larger team of 10 to 20 IT
professionals to travel to the client's site to gain a thorough understanding
of all aspects of the client's system. The majority of the maintenance team
subsequently returns to the offshore software development facility, where it
assumes full responsibility for day-to-day maintenance of the client's system,
while coordinating with a few maintenance professionals who remain stationed
at the client's site. By pursuing this model, the company completes
approximately 68% of its project work at its offshore software development
facilities in India.

The company's project management techniques, risk management processes and
quality control measures enable it to complete projects seamlessly across
multiple locations with a high level of client satisfaction. Certified under
ISO 9001, TickIT and at Level 5 of the Capability Maturity Model, the company
rigorously adheres to highly evolved processes. These processes govern all
aspects of the software product life cycle, from requirements to testing and
maintenance. The company seeks to prevent defects through its quality program,
which includes obtaining early sign off on acceptance test scripts, project
specifications and design documents, assigning software quality advisors to
help each team set up appropriate processes for each project and adhering to a
multi-level testing strategy. Defects are documented, measured, tracked and
analyzed, and feedback is provided to the project manager. The company
compiles metrics for not only defect density and size, but also actual effort
as compared to project estimates, adherence to schedule and productivity.
Frequent internal and external audits are conducted to assure compliance with
procedures. All of these procedures have been continuously refined throughout
the company's history of providing its clients with offshore software
development services.

In addition to the processes and methodologies necessary to successfully
execute the offshore model, the company has invested significant resources in
its infrastructure to ensure uninterrupted service to its clients. The company
has invested in redundant infrastructure with "warm" backup sites and
redundant telecommunication capabilities with alternate routings to provide
its clients with high service levels. Additionally, the company utilizes two
telecommunications carriers in India and has installed in its principal
facilities multiple international satellite links connecting with network hubs
in Fremont, California and in Quincy, Massachusetts. A different ocean cable
connecting Europe and the United States serves each of these hubs. Moreover,
the company has installed wireless links among its facilities in Bangalore and
intends to install wireless links among its other Indian facilities by the end
of 2000.

4.B.3 Service offerings and products

The company's services include software development, maintenance and re-
engineering services, e-commerce and internet/intranet consulting as well as
dedicated OSDCs for certain clients. In each of its service offerings the
company assumes full project management responsibility for each project it
undertakes rather than providing supplemental personnel to work under a
client's supervision. In addition to its IT services, the company as well as
its minority-owned subsidiary, Yantra, also develop and market certain
packaged applications software.
<PAGE>

4.B.3.1 Software development

The company provides turnkey software development, typically pursuant to
fixed-price, fixed-time frame contracts. The projects vary in size and may
involve the development of new applications or new functions for existing
software applications. Each development project typically involves all aspects
of the software development process, including definition, prototyping,
design, pilots, programming, testing, installation and maintenance. In the
early stage of a development project, Infosys personnel often work at a
client's site to help determine project definition and to estimate the scope
and cost of the project. Infosys then performs design review, software
programming, program testing, module testing, integration and volume testing,
primarily at its own facilities in India. For example, for a
telecommunications client facing deregulation and subsequent declining market
share, the company partnered with a specialty marketing firm to design and
implement a customer rewards program. Infosys was able to work with both the
marketing firm and the client to complete this project within six months,
ensuring the system's technical proficiency and enabling the client to reverse
the trend of declining market share.

4.B.3.2 Software maintenance

The company provides maintenance services for large legacy software systems.
Maintenance services include minor and major modifications and enhancements
(including Year 2000 and Eurocurrency conversion) and production support. Such
systems are either mainframe-based or client/server and are typically
essential to a client's business, though over time they become progressively
more difficult and costly for the client's internal IT department to maintain.
By outsourcing the maintenance responsibilities to Infosys, clients can
control costs and free their IT departments for other work. The company's IT
professionals take an engineering approach to software maintenance, focusing
on the long-term functionality and stability of the client's overall system
and attempting to avoid problems stemming from "quick-fix" solutions. The
company performs most of the maintenance work at its own facilities using
satellite-based links to the client's system. In addition, the company
maintains a small team at the client's facility to coordinate support
functions. Infosys was a pioneer in managing time-zone differences between
India and the United States to provide near 24-hour maintenance services. As
an example, the IT department of a large retailer with inadequate and
inflexible systems was overburdened by both building new systems and
maintaining the current legacy infrastructure. The company was able to assume
maintenance responsibilities for these systems in a short time frame and
reduce maintenance costs to the client by utilizing its offshore facilities.

4.B.3.3 Software re-engineering

The company's re-engineering services assist clients in migrating to new
technologies while extending the life cycle of existing systems that are rich
in functionality. Projects include re-engineering software to migrate
applications from mainframe to client/server architectures, to extend existing
applications to the internet, to migrate from existing operating systems to
UNIX or Windows NT, or to update from a non-relational to a relational
database technology. For companies with extensive proprietary software
applications, implementing such technologies may require rewriting and testing
millions of lines of software code. As with its other services, the company
has developed proven methodologies that govern the planning, execution and
testing of the software re-engineering process. For instance, for a nationwide
manufacturer and distributor experiencing operating inefficiency with a legacy
system installed in its two call centers, the company re-engineered the system
to run in a distributed processing environment with front-end internet
browser-based capabilities allowing 24-hour internet access to the client's
distribution systems. As a result, the client was able to consolidate its call
center workforce into one location and reduce its workforce by over 50%.

4.B.3.4 Dedicated offshore software development centers

The company has pioneered the concept of dedicated OSDCs in which a software
development team that is dedicated to a single client uses technology, tools,
processes and methodologies unique to that client. Each dedicated OSDC is
located at a company facility in India and is staffed and managed by the
company. Once the project priorities are established by the client, the
company, in conjunction with the client's IT department, manages the execution
of the project. By focusing on a single client over an extended time frame,
the dedicated OSDC team gains a deeper understanding of the client's business
and technology and can begin to function as a virtual extension of the
client's software team.

4.B.3.5 New services

The company is also focussed in certain new service areas such as (i) internet
consulting, which includes developing
<PAGE>

e-commerce and internet/intranet solutions; (ii) Euro conversion, which
assists clients in making their systems Euro compliant; and (iii) engineering
services, which include software product design. For example, the company
recently developed an intranet-based application to automate the sales order
creation process of one of the world's largest office solution companies,
using Java on an Oracle application server. Also, the company recently
developed an intranet client service portal for a leading US life insurance
firm that enables its agents to view customer policies, insurance history and
rates, etc.

4.B.3.6 Software products

In addition to the IT services described above, the company develops and
markets certain proprietary software applications. Bancs2000 is an online,
retail and corporate banking system that offers rich functionality,
scalability and flexibility for automation of banking operations. This product
is used by banks in emerging markets that seek to implement state-of-the-art
banking technology and achieve high levels of client service. Bancs2000 has
been installed at more than 535 bank branches in India, Sri Lanka, Nepal,
Indonesia and Tanzania. In addition, BankAway was implemented at four banks
during the year.

4.B.4 Markets and sales revenue

The company markets its services primarily to large IT-intensive organizations
in North America, Europe, and Japan The company focuses on certain market
segments, including financial services, manufacturing and distribution,
retail, telecommunications and technology. The company provides a wide range
of IT services and maintains a disciplined focus on its business mix in an
effort to avoid service or client concentration. Beginning in fiscal 1996, the
company aggressively sought to minimize its client concentration and to accept
as clients only those that met strict guidelines for overall revenue potential
and profitability. For fiscal 2000, 1999 and 1998, the company's largest
client accounted for 7.2%, 6.4% and 10.5%, respectively, of revenues. Revenues
for the last three fiscal years by geographic area are as follows:
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------
Year ended March 31, 2000 1999 1998
--------------------------------------------------------------------------
<S> <C> <C> <C>
North America $158,723,649 $ 99,203,989 $56,211,753
Europe 30,064,939 11,302,791 6,179,621
India 2,912,091 2,051,492 1,799,368
Rest of the world 11,743,075 8,396,954 4,139,219
--------------------------------------------------------------------------
$203,443,754 $120,955,226 $68,329,961
==========================================================================
</TABLE>

4.B.5 Sales and marketing

The company sells and markets its services and products from 20 sales offices
located in nine countries. In the United States, the company presently has
sales offices located in Atlanta, Boston, Chicago, Dallas, Detroit, Fremont,
Los Angeles, New York and Seattle. Additionally, the company's international
sales offices are located in Australia, Belgium, Canada, Germany, India,
Japan, Sweden and the United Kingdom. With its global sales headquarters in
Fremont, California and its corporate marketing group in Bangalore, India, the
company targets its sales and marketing efforts towards IT-intensive
organizations in North America, Europe and Japan. As of March 31, 2000, the
company had 48 sales and marketing employees outside of India. To continue
this focus on countries with sophisticated IT services needs, the company
intends to expand its global sales and marketing infrastructure by opening
additional regional sales and marketing offices in North America and Europe.
In addition, the company has partnered with Teksels S.A., a Swiss firm, to
assist its marketing efforts in Switzerland.

From its offices located around the world, the company's sales professionals
contact prospective clients in developed markets and position the company as a
leading IT services provider with operations in India. In many cases,
potential clients in their search for offshore IT service providers submit a
request for proposal from leading Indian software firms, including the
company. The company's superior management team, quality of work, competence
of its IT professionals, and competitive prices are often cited as reasons for
the award of competitive contracts. In addition, the company's impressive
client references and endorsements as well as its willingness to participate
in trade shows and speaking engagements, have helped the company to generate
greater awareness for its services. The company believes that its NASDAQ
listing and its profile as a public company in the United States will further
enhance its corporate marketing efforts. The company has focused its sales and
marketing efforts on expanding the scope and depth of its relationships with
existing clients. Although initially the company may only provide one service
to a client, the company seeks to convince the client to expand and diversify
the type of services the client outsources to the company. As a result, the
company strengthens its relationships with its clients by closely integrating
its services with its clients' IT operations. The success of this targeted
strategy is reflected in the company's high rate of repeat business. Over 85%
of the company's revenues in each of the last two fiscal years were generated
from pre-existing clients.

4.B.6 Competition

The market for IT services is highly competitive. Competitors include IT
services companies, large international accounting firms and their consulting
affiliates, systems consulting and integration firms, temporary employment
agencies, other technology companies and client in-house MIS departments.
Competitors include international firms as well as national, regional and
local firms located in the United States, Europe and India. The company
expects that future competition will increasingly include firms with
operations in other countries, potentially including countries with lower
personnel costs than those prevailing in India. Part of the company's
competitive advantage has historically been a cost advantage relative to
service providers in the United States and Europe. Since wage costs in India
are presently increasing at a faster rate than those in the United States, the
company's ability to compete effectively will become increasingly dependent on
its reputation, the quality of its services and its expertise in specific
markets. Many of the company's competitors have significantly greater
financial, technical and marketing resources and generate greater revenue than
the company, and there can be no assurance that the company will be able to
compete successfully with such competitors and will not lose existing clients
to such competitors. The company believes that its ability to compete also
depends in part on a number of factors outside its control, including the
ability of its competitors to attract, train, motivate and retain highly
skilled IT professionals, the price at which its competitors offer comparable
services and the extent of its competitors' responsiveness to client needs.

4.B.7 Intellectual property

Ownership of software and associated deliverables created for clients is
generally retained by or assigned to the client, and the company does not
retain an interest in such software or deliverables. The company also develops

<PAGE>

software products and software tools which are licensed to clients and remain
the property of the company. The company relies upon a combination of non-
disclosure and other contractual arrangements and copyright, trade secret and
trademark laws to protect its proprietary rights in technology. The company
currently requires its IT professionals to enter into non-disclosure and
assignment of rights agreements to limit use of, access to and distribution of
its proprietary information. The source code for the company's proprietary
software is generally protected as trade secrets and as unpublished
copyrighted works. The company has obtained registration of "INFOSYS" as a
trademark in India and in the United States. The company does not have any
patents or registered copyrights in the United States. The company generally
applies for trademarks and service marks to identify its various service and
product offerings.

The laws of India may not, under some circumstances, permit the protection of
the company's proprietary rights in the same manner or to the same extent as
the laws of the United States. India is a member of the Berne Convention and
the Universal Copyright Convention, as revised at Paris (1971), both
international treaties. As a member of the Berne Convention, the Government of
India has agreed to extend copyright protection under its domestic laws to
foreign works, including works created or produced in the United States. The
company believes that laws, rules, regulations and treaties in effect in the
United States and India are adequate to protect it from misappropriation or
unauthorized use of its copyrights. However, there can be no assurance that
such laws will not change in ways that may prevent or restrict the protection
of the company's proprietary rights. There can be no assurance that the steps
taken by the company to protect its proprietary rights will be adequate to
deter misappropriation of any of its proprietary information or that the
company will be able to detect unauthorized use and take appropriate steps to
enforce its intellectual property rights.

Although the company believes that its services and products do not infringe
on the intellectual property rights of others, there can be no assurance that
such a claim will not be asserted against the company in future. Assertion of
such claims against the company could result in litigation, and there is no
assurance that the company would prevail in such litigation or be able to
obtain a license for the use of any infringed intellectual property from a
third party on commercially reasonable terms. There can be no assurance that
the company will be able to protect such licenses from infringement or misuse,
or prevent infringement claims against the company in connection with its
licensing efforts. The company expects that the risk of infringement claims
against the company will increase if more of the company's competitors are
able to obtain patents for software products and processes. Any such claims,
regardless of their outcome, could result in substantial cost to the company
and divert management's attention from the company's operations. Any
infringement claim or litigation against the company could, therefore, have a
material adverse effect on the company's results of operations and financial
condition.

4.B.8 Government of India incentives and regulation.

The company benefits from a variety of incentives given to software firms in
India, such as relief from import duties on hardware, a tax exemption for
income derived from software exports, and tax holidays and infrastructure
support for companies, such as Infosys, operating in specially designated
"Software Technology Parks". There can be no assurance that these incentives
will continue in future. Further, there is a risk that changes in tax rates or
laws affecting foreign investment, currency exchange rates or other
regulations will render the Government of India's regulatory scheme less
favorable to the company and could adversely affect the market price of the
company's equity shares and its ADSs. Should the regulations and incentives
promulgated by the Government of India become less favorable to the company,
the company's results of operations and financial condition could be adversely
affected.

4.C Organizational structure

The company holds a minority interest in Yantra and is a joint venture member
of the JASDIC Park Company ("JASDIC") which is an Indo-Japanese consortium
founded by Kenichi Ohmae. Yantra's primary objectives are to develop, sell and
support software products in the retail and distribution areas. When Infosys
established Yantra, it transferred the intellectual property rights in Eagle
(now known as WMSYantra), a software solution for warehouse management, to
Yantra, for shares of common stock of Yantra. Subsequently, in September 1998,
Yantra raised working capital funds from the company and U.S. venture
capitalists through a private placement of its convertible preferred stock. In
the third quarter of fiscal 1999, the company sold 1,363,637 shares of
Yantra's preferred stock held by it to a U.S. venture capital fund based in
Boston. As a result of this sale, the company reduced its economic interest in
Yantra to less than one-half of the voting stock of Yantra. The company
continues to own all of the outstanding common stock in Yantra but has no
financial obligations or commitments to Yantra and does not intend to provide
it with financial support, and therefore does not recognize Yantra's
performance in financial statements after October 20, 1998. On June 14, 1999,
Yantra sold Series C Convertible
<PAGE>

Preferred Stock for an aggregate purchase price of $ 15.0 million to various
existing and new investors, which reduced Infosys' economic interest in Yantra
to approximately 25%.

JASDIC was formed as a consortium of several Japanese companies and three
Indian companies, including Infosys. JASDIC's primary objectives are to
provide high-quality software services from India to the Japanese market.
During fiscal 1999, the company invested 24 million Yen equivalent to $ 0.18
million in JASDIC with the purpose of promoting the company's strategy of
diversifying its geographic customer base.

Additionally, the company has begun an incubation mechanism for its existing
employees to launch their own ventures while continuing to derive benefits
from a close association with Infosys. The company has piloted Onscan - a web-
focused wireless-enabled notification service.

4.D Property, plants and equipment

The company's principal campus situated at Electronics City, Bangalore, India,
is owned by Infosys and consists of its corporate office and two new software
development facilities. The corporate office consists of 220,000 square feet
of land with 150,000 square feet of landscaped area, a 160,000 square feet
building with 32 conference rooms and leisure infrastructure, including
cafeteria, sports facilities and gymnasium. The technological infrastructure
at the corporate office includes over a 1,000 networked workstations, several
Netware, UNIX and WINDOWS NT servers, systems from HP, IBM, SUN, DEC, COMPAQ,
ACER and AST, a video-conferencing facility, and multiple 64 kbps data
communication links. In addition, the company has set up "Infosys Park I", a
new software development facility, consisting of 435,600 square feet of land
with 323,400 square feet of building including one block of 77,000 square
feet, currently under construction. The other new software development
facility, "Infosys Park II", consisting of 693,900 square feet of land with
proposed building of 290,000 square feet is under construction, of which,
120,000 square feet of building is ready for use.

As part of its strategy to provide high-quality services to its clients, the
company has a detailed facility management plan. First, the company seeks to
provide its Indian IT professionals with facilities that are comparable to
those used by software companies in the United States and Europe. Second, the
company seeks to establish facilities near large sources of technical talent.
Third, the company equips its facilities to minimize vulnerability to
interruptions in local utility and telecommunication services.

The company acquired the land where its corporate headquarters are located
from the State of Karnataka in 1993 and has subsequently acquired parcels for
various other offices, pursuant to certain lease cum sale agreements (the
"Conditional Purchase Agreements"), which are used by the State of Karnataka
to make land available to private companies for specific purposes. Under the
Conditional Purchase Agreements, property is sold subject to a long-term
(typically 25-year), rental-free lease which transfers ownership to the buyer
at the end of the period provided that the buyer uses the land for specified
purposes. The Conditional Purchase Agreements require the company to use the
various parcels for software development facilities. Typically, the company
pays 99% of the purchase price at the time the agreement is signed and pays
the remaining 1% when the term is concluded.

The company has its worldwide sales headquarters in Fremont, California and
branch sales offices in Atlanta, Bangalore, Boston, Brussels, Chennai,
Chicago, Dallas, Detroit, Frankfurt, London, Los Angeles, Mumbai, New Delhi,
New York, Seattle, Stockholm, Tokyo and Toronto. All sales offices, except the
Mumbai office, are in leased facilities.

The company plans to expand its facilities to meet its anticipated growth.
Currently, the company is planning new facilities in Bangalore, Bhubaneswar,
Chennai, Mangalore and Pune. The table on the following page sets forth
certain information as of March 31, 2000 relating to the company's principal
facilities and proposed developments:
<PAGE>

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Location Approximate Ownership Type of facility
Sq.ft.
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Bangalore, India 323,400/1/ Conditional Software development
facility
(Plots 45, 46, Electronics City) purchase
Bangalore, India 290,000/2/ Conditional Proposed software
(Plots 4/1, 4/2, 4/3, 4/4, 26/1, 26/2, purchase development facility
97C, 97D and 97E, Electronics City)
Bangalore, India 160,000/3/ Conditional Corporate headquarters,
(Plots 44 and 97A, Electronics City) purchase software development
facility
Bangalore, India -/4/ Conditional Proposed software
(Survey No. 8 and 9, Electronics City) purchase development facility
Bangalore, India (Dickenson Road) 7,000 Owned Office premises
Bangalore, India (BTM Layout) 11,300 Leased Software development
facility
Bangalore, India (Koramangala) 22,000 Leased Software development
facility
Bangalore, India (J. P. Nagar, Phase II) -/5/ Owned Proposed office premises
Bangalore, India (J. P. Nagar, Phase III) 59,500 Leased Software development
facility
Bangalore, India (Adarsh Gardens) 78,700 Owned Employee residence flats
and guesthouses
Hyderabad, India 5,000 Leased Software development
facility
Mangalore, India, (Kankanady). 14,100 Leased Software development
facility
Mangalore, India, (MUDA Building) 33,900 Leased Software development
facility
Mangalore, India 5,100 Owned Guesthouses
Mohali, Punjab, India 20,000 Leased Software development
facility
Mumbai, India 1,200 Owned Sales and marketing office
Mysore, India 6,000 Leased Software development
facility
Pune, India 43,700 Leased Software development
facility
Pune, India 202,700/6/ Conditional Software development
facility
purchase
Pune, India 3,300 Owned Employee residence flats
Bhubaneswar, India 52,900 Leased Software development
facility
Bhubaneswar, India 189,100/7/ Conditional Proposed software
development
purchase facility
Bhubaneswar, India -/8/ Conditional Proposed software
(S/2, Jayadev Vihar Mouza) purchase development facility
Chennai, India 26,600 Leased Software development
facility
Chennai, India 23,200 Leased Software development
facility

Chennai, India 193,800/9/ Conditional Proposed software
development
purchase facility
Delhi, India 2,500 Leased Sales and marketing office
Fremont, California 17,700 Leased Worldwide sales
headquarters and
proximity development
center
Toronto, Canada 13,000 Leased Global development center
</TABLE>
<PAGE>

<TABLE>
<S> <C> <C> <C>
Boston, Massachusetts 7,400 Leased Proximity development center
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

1. Total land parcel is 435,600 square feet. One block of 77,000 square feet is
under construction.
2. Total land parcel is 693,911 square feet.
3. Total land parcel is 220,000 square feet.
4. The company has not yet determined the aggregate square feet of the proposed
development. The land parcel is approximately 435,600 square feet.
5. The company has not yet determined the aggregate square feet of the
proposed development. The land parcel is approximately 16,500 square feet.
6. Total land parcel is 1,089,000 square feet.
7. Total land parcel is 1,089,000 square feet.
8. The company has not yet determined the aggregate square feet of the proposed
development. The land parcel is approximately 293,333 square feet.
9. Total land parcel is 577,607 square feet.
<PAGE>

Material plans to construct, expand and improve facilities

The company intends to create new software development facilities in various
places in India partly to shift the operations which are in the existing
leased facilities and partly to expand the existing capacities to provide for
the growth in business. Such expansions are planned in Bangalore, Bhubaneswar,
Chennai, Mangalore and Pune. Most of these facilities would be operational in
the next 24 months. As of March 31, 2000, the company had contractual
commitments for capital expenditure of $18.4 million. The company has not yet
made contractual commitments for the majority of its budgeted capital
expenditure. The company intends to spend approximately $46.0 million on
various capital expenditure during fiscal 2001 and the same would be met out
of the internal accruals and existing cash balances of the company. In the
opinion of the company, the working capital is sufficient for the company's
present requirements.

Item 5. Operating and Financial Review and Prospects

5.A Operating results

This information is set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 97 through
110 of the Infosys Annual Report for fiscal 2000 and such information is
hereby incorporated herein by reference.

Investment in Yantra Corporation

Up to October 20, 1998, the company owned a majority of the voting stock of
Yantra. Consequently, all of Yantra's operating losses through October 20,
1998 were recognized in the company's consolidated financial statements. For
fiscal 1998 and fiscal 1999, Yantra's losses recognized in the company's
financial statements were $1.6 million and $2.0 million, respectively. On
October 20, 1998, the company sold a portion of Yantra's shares held by it,
thereby reducing the its interest to less than one-half of the voting stock of
Yantra. The company continues to own all of the outstanding common stock of
Yantra but has no financial obligations or commitments to Yantra and does not
intend to provide Yantra with financial support. Accordingly, Yantra's results
subsequent to October 20, 1998 were not recognized in the company's financial
statements under U.S. GAAP. Yantra's revenues were $1.3 million and $2.0
million for fiscal 1998 and for the period ended October 20, 1998,
respectively, while gross profits were $574,000 and $546,000, respectively,
for these same periods. Yantra's revenues were 1.9% and 2.3% of the company's
revenues for fiscal 1998 and for the period ended October 20, 1998,
respectively. Its gross profits were 2.0% and 1.4% of the company's gross
profits for these same periods. Yantra currently provides e-commerce
operations solutions through PureEcommerce(TM), a scalable web-based solution
that facilitates real-time transaction management across the extraprise. On
June 14, 1999, Yantra sold Series C Convertible Preferred Stock in the amount
of $15.0 million to unrelated existing and new investors, further reducing
the company's voting control to approximately 25%.

5.B Liquidity and capital resources

5.C Research and development, patents and licences, etc.

The company has committed and expects to continue to commit in the future, a
material portion of resources to research and development. Research and
development efforts are focused on development and refinement of
methodologies, tools and techniques, implementation of metrics, improvement in
estimation process, and the adoption of new technologies. The company's
research and development expenses in fiscal 2000, 1999 and 1998 were $1.9
million, $2.8 million and $1.8 million, respectively which amounts to
approximately 0.9%, 2.3% and 2.6% of total revenues, respectively.

5.D Trend information

This information is set forth under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" on pages 97 through
110 of the Infosys Annual Report for fiscal 2000 and is incorporated herein by
reference This information is set forth.
<PAGE>

Item 6. Directors, Senior Management and Employees

6.A Directors, senior management

The directors and executive officers of the company, their respective ages as
of March 31, 2000, and their respective positions with the company are as
follows:
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Name Age Position
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
N. R. Narayana Murthy 53 Chairman and Chief Executive Officer
Nandan M. Nilekani/4/ 44 Managing Director, President and Chief Operating Officer
Susim M. Datta* /1,2,3/ 63 Non-executive director
Deepak Satwalekar /1,2/ 51 Non-executive director
Ramesh Vangal /1,2,3/ 45 Non-executive director
Marti G. Subrahmanyam, Prof. /1 2 3/ 53 Non-executive director
Philip Yeo/3/ 54 Non-executive director
Gopalakrishnan S. 44 Deputy Managing Director - Customer Service & Technology
Dinesh K./4/ 45 Director - Human Resources Development, Information Systems, Quality &
Productivity and Communication Design Group
Shibulal S. D./4/ 45 Director - Customer Delivery
Ajay Dubey 42 Vice President - Delivery - Europe
Balasubramanian P., Dr. 50 Senior Vice President - Domain Competency Group
Balakrishnan V. 35 Associate Vice President - Finance
Basab Pradhan 34 Regional Manager and Vice President - Sales - West North America
Deepak Sinha, Gp. Capt. (Retd.) 52 Senior Manager - Computers & Communications Division
Girish Vaidya 49 Senior Vice President - Banking Business Unit
Hema Ravichandar 38 Senior Vice President - Human Resources Development
Jan DeSmet 41 Vice President - Infosys Business Consulting Services
Mohandas Pai T. V. 41 Senior Vice President - Finance & Administration and Chief Financial Officer
Phaneesh Murthy 36 Senior Vice President - Sales & Marketing and Communication & Product Services
Prabhu M. S. S., Dr. 52 Senior Vice President - Engineering Services and Consultancy Practice
Raghavan S. 38 Associate Vice President - Quality & Productivity
Raghupathi G. Bhandi 39 Senior Vice President - Delivery - Enterprise Solutions
Rajiv Kuchhal 34 Associate Vice President - Communication & Product Services - Nortel and PCC,
Development Center - Mohali
Sobha Meera P. R. 32 Regional Manager and Vice President - Sales - Canada & East North America
Srinath Batni 45 Senior Vice President and Head - West North America
Vasudeva L. Rao 38 Senior Vice President - Delivery - Canada & East North America
Yegneshwar S., Dr. 39 Vice President - Education & Research
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Mr. S. M. Datta is due for retirement by rotation at the ensuing Annual
General Meeting of the company and is not seeking re-election.

1. Member of the Compensation Committee
2. Member of the Audit Committee
3. Member of Nomination Committee
4. Member of Investor Grievance Committee

N. R. Narayana Murthy has served as Chairman of the Board and Chief Executive
Officer of Infosys since 1981, when he founded the company with six software
professionals. Mr. Murthy also served as Managing Director of Infosys until
February 1999. While at Infosys, from 1992 to 1994, Mr. Murthy also served as
the President of National Association of Software and Service Companies
("NASSCOM"). Mr. Murthy is on the Governing Council of the National Information
Technology Task Force of India and was voted "IT Man of the Year" for 1996 by
Dataquest India. In 1998, Mr. Murthy was awarded the prestigious J.R.D. Tata
Corporate Leadership Award. Since 1998, Mr. Murthy has served as a director of
ICICI Ltd. and as a director of Videsh Sanchar Nigam Ltd. ("VSNL") and since
1999 he has served as a director of India Growth Fund, New York. He is a Fellow
of the All India Management Association ("AIMA") and the Computer Society of
India ("CSI"). Mr. Murthy received a B.E. in Electrical Engineering from the
University of Mysore and a M.Tech. from the Indian Institute of Technology
("IIT") Kanpur.

Nandan M. Nilekani is a co-founder of Infosys and has served as a director since
1981, Head - Marketing and Sales of Infosys since 1987, Head - Banking Business
Unit since 1997 and Managing Director, President and Chief Operating Officer
since February 1999. From 1981 to 1987, Mr. Nilekani was in the United States
<PAGE>

managing the marketing and development efforts of Infosys. Mr. Nilekani is a
co-founder of NASSCOM and received a B.Tech. in Electrical Engineering from
IIT Bombay.

Susim M. Datta has served as a Director of Infosys since 1997. He is Chairman
of Castrol India Ltd., Philips India Ltd., Albright & Wilson Chemicals India
Ltd. and IL&FS Venture Corporation Ltd. He is a director of EID Parry Ltd.,
TIL Ltd., Bells Control Ltd., Indian Petrochemicals Corporation Ltd., Zodiac
Clothing Company Ltd., Tata Trustee Company Ltd. and various unlisted
corporations in India. From 1990 to 1996, he was Chairman of Hindustan Lever
Ltd. and all Unilever Group companies in India and Nepal. Mr. Datta is a
Trustee of the government-sponsored India Brand Equity Fund Trust and a member
of the Advisory Board of the Council for Fair Business Practices, Mumbai. He
is also Chairman of the Board of Governors of the Indian Institute of
Management ("IIM") Bangalore and the Goa Institute of Management. Mr. Datta
received an M.Sc. from Calcutta University.

Deepak M. Satwalekar has served as a director of Infosys since 1997. He has
been Managing Director of Housing Development Finance Corporation Ltd. since
1993, and was Deputy Managing Director since 1990. He was a member of the
Managing Committee of the Bombay Chamber of Commerce and Industry from 1996 to
1998. Mr. Satwalekar was also a Member of the Economic Affairs Committee of
the Indo-American Chamber of Commerce from 1993 to 1994 and 1996 to 1997. He
is a director of Tata Housing Development Corporation Ltd., HDFC Bank Ltd.,
HDFC Holdings Ltd., HDFC Investments Ltd., Indian Opportunities Fund
(Mauritius) Ltd., Iridium India Telecom Ltd., Maruti Countrywide Auto
Financial Service Ltd., Mahindra Holidays & Resorts India Ltd., SchoolNet
India Ltd., Tube Investments of India Ltd., Chemplast Sanmar Ltd. and
Templeton Asset Management India Private Ltd. Mr. Satwalekar received a
B.Tech. in Mechanical Engineering from IIT Bombay and an M.B.A. from the
American University.

Prof. Marti G. Subrahmanyam has served as a director of Infosys since April
1998. He has served as the Charles E. Merrill Professor of Finance and
Economics at the Stern School of Business at New York University since 1991
and has been a visiting professor at IIT Madras, INSEAD, IIM Ahmedabad and
Manchester Business School, among other academic institutions. Prof.
Subrahmanyam has written several books and published numerous articles in the
areas of finance and economics. He is a director of ICICI Ltd., Dextrous Faber
Ltd., Hindalco Industries Ltd., Aventine Investment Management, Inc., Nippon
Performance Fund Ltd., Indiaserver.com, Inc., SpeedMerchant.com, Inc., Usha
Communications, Inc., RMAS Ltd., Sanwa International plc., Nomura Asset
Management, Inc. and Deutsche Software India Ltd., a subsidiary of Deutsche
Bank AG. Dr. Subrahmanyam received a B.Tech. from IIT Madras, a Diploma in
Business Administration, from IIM Ahmedabad and a Ph.D. in Finance and
Economics from the Massachusetts Institute of Technology.

Ramesh Vangal has served as a director of Infosys since 1997. He has served as
the President of Seagram Asia Pacific since 1998 and is currently the Chairman
of Seagram India Ltd., Asia Net Media, BL.com, and is a director in Indo Bio
Care, CEBECO India, Kirin Seagram, and several other private companies. From
1994 to 1997, he was a member of the Worldwide Operating Council of PepsiCo
and was President of PepsiCo Foods International, Asia Pacific. From 1985 to
1994, he served in various management capacities for PepsiCo. Mr. Vangal
received a B.Tech. from IIT Bombay and a M.Sc. in Business from the London
Business School. He also holds a Certificate Diploma, Accounting and Finance
from the Institute of Chartered Accountants in England and Wales.

Mr. Philip Yeo has served as a director of Infosys since October 29, 1999. Mr.
Yeo has served as the Executive Chairman of the Singapore Economic Development
Board since January 1986 and as Deputy Chairman of Singapore's National
Science and Technology Board since June 1999. He is also the Chairman of the
Institute for Molecular & Cell Biology, Pidemco Land and Singapore Aerospace
Manufacturing and is a Board member in INSEAD, Paris. Mr. Yeo was the first
Chairman of Singapore's National Computer Board from 1981 to 1987. Mr. Yeo
joined the Administrative Service in 1970 and served in the Ministry of
Defence where he held several appointments including the appointment of
Permanent Secretary for logistics, technology research & development and
defence industries up to January 1986. He retired from the Administrative
Service on March 31, 1999. Mr. Yeo graduated in 1970 in Applied Science
(Industrial Engineering) from the University of Toronto, Canada under a
Colombo Plan Scholarship. He later obtained a Master of Science (Systems
Engineering) from the University of Singapore in 1974. In 1976, he obtained a
Master in Business Administration from Harvard University, under a Fulbright
scholarship. He is the recipient of many international awards, and was
conferred an Honorary Doctorate in Engineering from the University of Toronto.

S. Gopalakrishnan is a co-founder of Infosys and has served as a director from
1981 to 1987. From 1987 to 1994, he was Technical Vice President and managed
all projects at the US-based KSA/Infosys, a former joint venture between the
company and Kurt Salmon Associates. From 1994 to date he has served as a
director of Infosys. Mr.
<PAGE>

Gopalakrishnan was head of Technical Support Services from 1994 to 1996,
Head - Client Delivery and Technology of Infosys from 1996 to 1999 and has
served as Head - Customer Service & Technology from 1999 to date. Mr.
Gopalakrishnan received an M.Sc. in Physics and an M.Tech. in Computer Science
from IIT Madras. Mr. Gopalakrishnan is a director in Yantra Corporation.

K. Dinesh is a co-founder of Infosys and has served as a director since 1985.
He has served as Head - Quality, Productivity and MIS of Infosys since 1996.
From 1991 to 1996, Mr. Dinesh served in various project management capacities
and was responsible for worldwide software development efforts for Infosys.
From 1981 to 1990, he managed projects for Infosys in the United States. Mr.
Dinesh received an M.Sc. degree in Mathematics from Bangalore University.

S. D. Shibulal is a co-founder of Infosys and has served as a director from
1984 to 1991 and since 1997. He has served as Head - Manufacturing,
Distribution and Year 2000 Business Unit, and Head - Internet and Intranet
Business Unit of Infosys since 1998. From 1991 to 1996, Mr. Shibulal was on
sabbatical from Infosys and served as Senior Information Resource Manager at
Sun Microsystems, Inc. From 1981 to 1991, he worked for Infosys in the United
States on projects in the retail and manufacturing industries. Mr. Shibulal
received an M.Sc. in Physics from the University of Kerala and an M.S. in
Computer Science from Boston University.

Ajay Dubey has served as Vice President - Financial Services and
Transportation Business Unit of Infosys since April 1999. From 1995 to 1999,
he was an Associate Vice President working in the Financial Services and
Transportation Business Unit. He joined the company in 1993 as a Senior
project manager. From 1990 to 1993, he served as a Technical Team leader in
ANZ Grindlays, New Zealand. Mr. Dubey received a B.Tech. from IIT Kanpur in
1980.

Dr. P. Balasubramanian has served as Senior Vice President and Head -
Financial Services and Transportation Business Unit of Infosys since 1995.
From 1989 to 1992, Dr. Balasubramanian was Chief Executive Officer and
Technical Director of Hitek Software Engineers Ltd. ("Hitek"), Jamaica, West
Indies. From 1992 to 1994, he was a Technical Director of Hitek. From 1986 to
1989, Dr. Balasubramanian was Chief Executive Officer of Cholamandalam
Software Ltd., Chennai. Dr. Balasubramanian has been invited as guest faculty
to several executive training programs in India as well as at the University
of West Indies. Dr. Balasubramanian received a B.Tech. and M.Tech from IIT
Madras and a Ph.D. in Operations Research and Financial Management from Purdue
University.

V. Balakrishnan has served as Associate Vice President - Finance, since 1999.
After joining Infosys in 1991, he has served in various capacities in the
Finance department of the company. Prior to joining Infosys, he was Senior
Accounts Executive for Amco Batteries Ltd.. Mr. Balakrishnan received a B.Sc.
from the University of Madras and is an Associate Member of the Institute of
Chartered Accountants of India, a Member of the Institute of Company
Secretaries of India and an Associate Member of the Institute of Cost & Works
Accountants of India.

Basab Pradhan has served as Regional Manager since 1998. After joining Infosys
in 1994, Basab served in various capacities for the company, including as
Business Development Manager between 1995-98. Prior to joining Infosys, he was
Area Sales Manager for Lipton India Ltd. Basab received a B.Tech. in
Mechanical Engineering from IIT Kanpur in 1987 and a Post Graduate Diploma in
Management from IIM Ahmedabad in 1989.

Group Captain (Retd) Deepak Sinha has served as Head - Computer and
Communications Division (CCD) of Infosys since April 1998. Prior to joining
Infosys, he was Director - IMMOLS Project for The Indian Air Force. Group
Captain (Retd.) Sinha graduated from IIT Kharagpur in 1968.

Girish Vaidya has served as Senior Vice President and Head - Banking Business
Unit of Infosys since April 1999. Prior to that, Mr. Vaidya was Director and
Head - Operations India for ANZ Grindlays with whom he had been since 1975.
Mr. Vaidya received a B.E. from S.P College of Engineering, Mumbai in 1973 and
a Post Graduate Diploma in Management from IIM Calcutta in 1975.

Hema Ravichandar has served as Senior Vice President and Head - Human
Resources of Infosys since 1998. From 1996 to 1998, Ms. Ravichandar was an
independent consultant. From 1992 to 1995, she served as Head - Human
Resources at Infosys. From 1983 to 1992, Ms. Ravichandar was Deputy Manager -
Human Resource Development at Motor Industries Company Ltd.. Ms. Ravichandar
received a B.A. in Economics and a Post Graduate Diploma in Management from
IIM Ahmedabad.

Jan DeSmet has served as Vice President - Consulting Services and Head -
Strategic Business Unit-4 since January 1999 and is currently Vice President -
Business Consulting Services. From 1996 to 1998, Mr. DeSmet was Senior
Principal with Diamond Technology Partners in Chicago. Mr. DeSmet received a
M.B.A from the University of Dallas in 1982.
<PAGE>

T. V. Mohandas Pai has served as Senior Vice President, Head - Finance and
Administration and Chief Financial Officer of Infosys since 1996. From 1994 to
1996, he served as Vice President of Finance at Infosys. From 1988 to 1994,
Mr. Pai was Executive Director of Prakash Leasing Ltd.. He was also a member
of the Capital Markets Committee of the Institute of Chartered Accountants of
India. Mr. Pai received a B.Com. from St. Joseph's College of Commerce,
Bangalore and an LL.B. from the University Law College, Bangalore. Mr. Pai is
a Fellow Member of the Institute of Chartered Accountants of India.

Phaneesh Murthy has served as Senior Vice President and Head - Worldwide Sales
of Infosys since 1996. From 1992 to 1996, Mr. Murthy was a Marketing Manager
for Infosys based in the United States. From 1987 to 1992, he worked in sales
and marketing for Sonata, the software division of Indian Organic Chemicals
Ltd. Mr. Murthy received a B.Tech. in Mechanical Engineering from IIT Madras
and a post graduate diploma in business administration from IIM Ahmedabad.

Dr. M. S. S. Prabhu has served as Senior Vice President and Head - Engineering
Services Business Unit of Infosys since 1997. From 1994 to 1997, Dr. Prabhu
served as head of CAD/CAM group at Tata Consultancy Services. From 1972 to
1994, he served in various capacities for the Indian Satellite Research
Organization. Dr. Prabhu received a B.E. in Civil Engineering from Bangalore
University and a Ph.D. in Aeronautical Engineering from Indian Institute of
Science, Bangalore.

Raghavan S. has served as Associate Vice President and Head - Quality &
Productivity since April 1999. From 1987 to 1999 Mr. Raghavan has served in
various capacities for the company, starting as a Software Engineer in 1987
upto a Senior Project Manager in 1999. Mr. Raghavan received a B.E. from
Osmania University in 1983.

Raghupathi G. Bhandi has served as Vice President of Infosys since April 1998.
From 1995 to 1998, he started and developed the company's first software
development facility outside of Bangalore. From 1991 to 1995, Mr. Bhandi
worked in the Quality Department of Infosys with attention to ISO 9000
certification. From 1988 to 1991, he was an Assistant Manager on projects in
the United States and Europe. Mr. Bhandi received a B.E. from Mysore
University and an M.Tech. in Industrial Management and Engineering from IIT
Kanpur.

Rajiv Kuchhal has served as Associate Vice President of Infosys since 1998 and
Head--Nortel OSDC Business Unit of Infosys since April 1998. From 1990 to
1998, Mr. Kuchhal served in various capacities for the company, including
projects relating to an electronic telex interface and management of the
Nortel OSDC before it became a separate business unit. Mr. Kuchhal received a
B.Tech. in Electrical and Electronics Engineering from IIT Delhi.

Srinath Batni has served as Senior Vice President and Head - Retail and
Telecommunications Business Unit of Infosys since 1996. After joining Infosys
in 1992, Mr. Batni was a Project Manager. From 1990 to 1992, he was Manager of
Technical Support for PSI Bull, an Indian software development subsidiary of
Bull, S.A., a French company. Mr. Batni received a B.E. in Mechanical
Engineering from Mysore University and an M.E. in Mechanical Engineering from
the Indian Institute of Science, Bangalore.

Sobha Meera P. R. has served as Regional Manager - Canada & East North America
since 1998. After joining Infosys in 1995 Ms. Meera served as Branch Manager
between 1995 and 1998. Prior to joining Infosys, she worked in various Sales &
Marketing positions for HCL Ltd. & Sonata, the software division of Indian
Organic Chemicals Ltd. Ms. Meera received her Post Graduate Diploma in
Management from the IIM Ahmedabad in 1995 and a B.E. from Osmania University
in 1989.

Vasudeva L. Rao has served as Vice President of Infosys since April 1998,
operating in the distribution and logistics domains of the Manufacturing and
Distribution Business Unit. From 1994 to 1996, he was an Associate Vice
President working in the Manufacturing and Distribution Unit. From 1991 to
1994, he served as a project manager in the retail industry at Software
Sourcing Company, formerly KSA/Infosys. From 1985 to 1991, Mr. Rao was a
software engineer for Infosys based in the United States. Mr. Rao received a
B.E. in Mechanical Engineering from Bangalore University.

Dr. S. Yegneshwar has served as Associate Vice President and Head - Education
and Research of Infosys since 1996. From 1993 to 1996, Dr. Yegneshwar was a
group leader of the Software Engineering group in the Education and Research
Department of Infosys. From 1990 to 1993, he was an Assistant Professor of
Computers and Information Systems at IIM Ahmedabad, where he taught courses in
software engineering and management to postgraduate and doctoral students. Dr.
Yegneshwar received a B.E. in Mechanical Engineering from the Birla Institute
of Technology and Science, Pilani and a Ph.D. in Computer Science and
Engineering from IIT Bombay.

6.B Compensation

In fiscal 2000, the company's five non-employee directors were paid an
aggregate of $ 110,500. Directors who are also employees of the company do not
receive any additional compensation for their service on the board of
directors. Directors are also reimbursed for certain expenses in connection
with their attendance at the board and the committee meetings.

The table below sets forth the compensation for the officers and directors of
the company, for the fiscal year ended March 31, 2000.
<PAGE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Annual compensation awards Stock options Amount
-----------------------------------------------------------------------------------------------------------------
Name Salary Bonus Other No. of Grant Expiration accrued
annual options price date for long-
compen- granted term
sation during the benefits
year
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
N. R. Narayana Murthy $ 14,986 $3,747 $ 9,741 - - - 4,767
Nandan M. Nilekani 14,986 3,747 11,333 - - - 4,767
Gopalakrishnan S. 14,986 3,747 9,741 - - - 4,767
Dinesh K. 14,986 3,747 11,146 - - - 4,767
Shibulal S. D. 14,986 3,747 9,741 - - - 4,767
Susim M. Datta - - 25,000 - - - -
Deepak Satwalekar - - 25,000 - - - -
Ramesh Vangal - - 25,000 - - - -
Marti G. Subrahmanyam, Prof. - - 25,000 - - - -
Philip Yeo - - 10,500 - - - -
Options to purchase equity shares
Ajay Dubey 9,529 - 9,592 8,000 $99.12 November 10, 2008 3,031
Balasubramanian P., Dr. 14,072 - 14,437 8,000 93.66 November 10, 2008 4,476
Balakrishnan V. 7,620 - 10,899 10,000 93.66 November 10, 2008 2,424
Deepak Sinha, Gp. Capt. (Retd.) 5,327 1,065 10,422 4,000 93.66 November 10, 2008 1,694
Girish Vaidya 14,072 - 14,105 8,000 93.66 November 10, 2008 4,476
Hema Ravichandar 11,385 - 10,201 8,000 93.66 November 10, 2008 3,622
Jan DeSmet 165,000 - - - - - -
Mohandas Pai T. V. 17,756 - 9,289 14,000 93.66 November 10, 2008 5,648
Prabhu M. S. S., Dr. 13,321 - 13,329 6,000 93.66 November 10, 2008 4,238
Raghavan S. 8,695 - 10,118 10,000 93.66 November 10, 2008 2,766
Raghupathi G. Bhandi 9,150 - 11,337 8,000 93.66 November 10, 2008 2,910
Rajiv Kuchhal 8,033 - 8,120 - - - 2,555
Srinath Batni 16,094 - 6,130 12,000 93.66 November 10, 2008 5,120
Vasudeva L. Rao 8,637 - 8,957 12,000 93.66 November 10, 2008 2,747
Yegneshwar S., Dr. 7,529 - 7,959 10,000 93.66 November 10, 2008 2,395
Options to purchase ADSs
Basab Pradhan 86,004 - 38,832 5,000 89.50 November 10, 2008 -
Phaneesh Murthy 230,004 - 33,128 8,000 89.50 November 10, 2008 -
Sobha Meera P. R. 86,004 - 25,800 5,000 89.50 November 10, 2008 -
----------------------------------------------------------------------------------------------------------------
</TABLE>

6.C.1 Board practices

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
Name Expiration of current Term of office
term of office
----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
N. R. Narayana Murthy April 30, 2002 5 years /1/
Nandan M. Nilekani April 30, 2002 5 years /1/
Gopalakrishnan S. October 17, 2004 5 years /1 2/
Dinesh K. April 30, 2002 5 years /1/
Shibulal S. D. April 30, 2002 5 years /1/
Susim M. Datta May 27, 2000 Retirement by rotation /3/
Deepak Satwalekar Retirement by rotation
Ramesh Vangal Retirement by rotation
Marti G. Subramanyam, Prof. Retirement by rotation
Philip Yeo Retirement by rotation
----------------------------------------------------------------------------------------------------------------
</TABLE>

1. The period of appointment as an executive director is for five years.
However, these directors customarily retire by rotation once in three
years and are to be re-elected by the stockholders.

2. Mr. S. Gopalakrishnan's Contract of Service with the company as Deputy
Managing Director, ended on October 18, 1999. He was re-appointed by the
board for a new term of five years ending on October 17, 2004 and his
re-appointment has been recommended for the approval of the stockholders
in the ensuing Annual General Meeting and forms part of the Items of
Special Business of the Notice to the stockholders, which is attached as
an exhibit to this Form 20-F.

3. Mr. S. M. Datta is due for retirement by rotation at the ensuing
Annual General Meeting of the company and is not seeking re-election.
<PAGE>

4. The board constantly evaluates the contribution of its members, and
recommends to stockholders their re-appointment periodically as per
statute. The Indian Companies Act mandates that two-thirds of the
members of the board should retire by rotation, of which, one-third of
such members should retire every year, and qualifies the retiring
members for re-appointment. However all the directors of the company
customarily retire by rotation. The executive directors are appointed
by the stockholders for a maximum period of five years at one time but
are eligible for re-appointment upon completion of their term. The
nominations committee of the board, composed entirely of independent
directors, recommends such appointment / re-appointment. However, the
membership term is limited by the retirement age for members. The
board has adopted a retirement policy for its members. Under this
policy, the maximum age of retirement of executive directors,
including the CEO, is 60 years, which is the age of superannuation for
the employees of the company. Their continuation as members of the
board upon superannuation / retirement is determined by the
nominations committee. The age limit for retirement from the board is
65 years. The directors' contracts do not contain material severance
packages.

6.C.2 Employment contracts

Under the Indian Companies Act, the company's stockholders must approve the
salary, bonus and benefits of all employee directors at an Annual General
Meeting of stockholders. Each employee director of the company has signed an
agreement containing the terms and conditions of employment, including a monthly
salary, performance bonus and benefits including vacation, medical reimbursement
and pension fund contributions. These agreements are made for a five year
period, but either the company or the employee director may terminate the
agreement upon six months notice to the other party.

6.C.3 Board committee information

The details relating to the company's audit committee and remuneration
committee, including the names of committee members and a summary of the terms
of reference under which the committee operates is on pages 45 through 54 of the
Infosys Annual Report for fiscal 2000 and is incorporated herein by reference.

6.D Employees

As of March 31, 2000, the company had approximately 5,390 employees, including
approximately 4,625 IT professionals, up from approximately 3,770 and
approximately 3,160, respectively, as of March 31, 1999 and approximately 2,190
and approximately 2,610, respectively as of March 31, 1998. The company invests
heavily in its programs to recruit, train and retain qualified employees, and
management believes the company has established a reputation as one of the most
preferred employers for software engineers in India.

The company focuses its recruiting efforts on the top 20% of students from
engineering departments of Indian schools and relies on a rigorous selection
process involving a series of tests and interviews to identify the best
applicants. Because the company emphasizes flexibility and innovation,
applicants are selected on the basis of their ability to learn as well as their
academic achievement, conceptual knowledge and their temperament for, and fit
with, the company's culture. The company's reputation as a premier employer
enables it to select from a large pool of qualified applicants. For example, in
fiscal 2000, the company received approximately 184,000 job applications, tested
approximately 36,610, interviewed approximately 10,180 and extended job offers
to approximately 3,330 of whom approximately 2,050 accepted. The company seeks
to attract and motivate IT professionals by offering: an entrepreneurial
environment that empowers IT professionals; programs that recognize and reward
performance; challenging assignments; a continuous updating of skills; and a
culture that emphasizes openness, integrity and respect for the employee. IT
professionals receive competitive salaries and benefits and are eligible to
participate in the company's stock option plans. In addition, the company spends
significant resources on training and continuing education. To conduct training,
the company employs a 50-person faculty, including 20 with doctorate or master's
degrees. The faculty conducts three-month training sessions for new recruits and
a variety of two-week continuing education courses in technology and management
skills.

At any given time, approximately 30% of the company's IT professionals are
working on-site at client facilities in the United States and elsewhere while
the balance are working off-site in India. On average, approximately 980, 530
and 330 of the company's IT professionals worked on-site in the United States
and elsewhere per month in fiscal 2000, fiscal 1999 and fiscal 1998,
respectively. On average, approximately 3,100, 2,630 and 1,780 of the company's
IT professionals and support staff worked off-site in India per month in fiscal
2000, fiscal 1999 and fiscal 1998, respectively.

The company's professionals that work on-site at client facilities in the United
States on temporary and extended assignments are typically required to obtain
visas. As of March 31, 2000, substantially all of the company's personnel in the
United States were working pursuant to H-1B visas (745 persons) or L-1 visas
(218 persons). Both H-1B and L-1 visas require that recipients meet certain
education requirements; however, only employees
<PAGE>

who have worked for the company for at least one year are eligible to obtain L-1
visas. The company is generally able to obtain H-1B and L-1 visas within two to
four months of applying for such visas, which remain valid for three years.
Although there is no limit to new L-1 petitions, there is a limit to the number
of new H-1B petitions that the United States Immigration and Naturalization
Service may approve in any government fiscal year. In the years in which this
limit is reached, the company may be unable to obtain H-1B visas necessary to
bring critical Indian IT professionals to the United States on an extended
basis. The H-1B limit was reached in March 2000 by the U.S. Government for its
fiscal year ending September 30, 2000 and in May 1999 for its fiscal year ending
September 30, 1999. The company planned for the H-1B limit being reached prior
to the end of the U.S. Government's current fiscal year primarily by forecasting
its annual needs for such visas early in the U.S. Government's fiscal year and
applying for such visas as soon as practicable. In addition, the company
utilizes L-1 visas whenever available and redeploys existing H-1B visa holders
in order to minimize the number of new H-1B visas needed by the company. While
the company anticipated that such limit would be reached prior to the end of the
U.S. government's fiscal year and has made efforts to plan accordingly, there
can be no assurance that the company will continue to be able to obtain a
sufficient number of H-1B visas.

The market for hiring software professionals is highly competitive. Competing
employers include multinational corporations that perform software development
in India through subsidiaries and joint ventures with Indian companies; a number
of well-known Indian IT services and software product companies; and a large
number of small and medium regional companies, many with affiliates or parent
companies in the United States and Europe.

6.E.1 Share ownership (As of March 31, 2000)

The following table sets forth the options to purchase securities, granted to
executive officers and directors, that were outstanding as of March 31, 2000.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Class of securities Total securities Exercise price Expiration dates
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Equity shares 1,14,000 $93.66 November 2003-2008
American Depositary Shares 18,000 $89.50 November 2003-2008
- ----------------------------------------------------------------------------------------
</TABLE>

The following table sets forth for each director and executive officer, the
total number of equity shares, ADSs and Options to purchase equity shares and
ADSs held as of March 31, 2000.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Name Shares % of shares Shares Exercise Expiration
beneficially beneficially underlying price
owned owned options
granted
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N. R. Narayana Murthy /1/ 4,931,300 7.45 - - -
Nandan M. Nilekani /1/ 3,334,900 5.04 - - -
Dinesh K. /1/ 2,143,400 3.24 - - -
Gopalakrishnan S. /1/ 3,090,000 4.67 - - -
Shibulal S. D. /1/ 2,124,500 3.21 - - -
Susim M. Datta - - - - -
Deepak Satwalekar - - - - -
Ramesh Vangal /2/ - - - - -
Marti G. Subrahmanyam, Prof. /2/ - - - - -
Philip Yeo - - - - -
Ajay Dubey /2/ - - - - -
Balasubramanian P., Dr. /2/ - - - - -
Balakrishnan V. /2/ - - - - -
Basab Pradhan /2/ - - - - -
Deepak Sinha, Gp. Capt. (Retd.) /2/ - - - - -
Girish Vaidya /2/ - - - - -
Hema Ravichandar /2/ - - - - -
Jan DeSmet /2/ - - - - -
Mohandas Pai T. V. /2/ - - - - -
Phaneesh Murthy /2/ - - - - -
Prabhu M. S. S., Dr. /2/ - - - - -
Raghavan S. /2/ - - - - -
Raghupathi G. Bhandi /2/ - - - - -
Rajiv Kuchhal /2/ - - - - -
</TABLE>
<PAGE>

1. Number of shares and percentage ownership is based on 66,15,0700 equity
shares outstanding as of March 31, 2000. Beneficial ownership is determined
in accordance with rules of the SEC and includes voting and investment
power with respect to such shares. Shares subject to options that are
currently exercisable or exercisable within 60 days of March 31, 2000 are
deemed to be outstanding and to be beneficially owned by the person holding
such options for the purpose of computing the percentage ownership of such
person, but are not deemed to be outstanding and to be beneficially owned
for the purpose of computing the percentage ownership of any other person.
All information with respect to the beneficial ownership of any principal
shareholder has been furnished by such shareholder and, unless otherwise
indicated below, the company believes that persons named in the table have
sole voting and sole investment power with respect to all the shares shown
as beneficially owned, subject to community property laws, where
applicable. The shares beneficially owned by the directors include the
equity shares owned by their family members to which such directors
disclaim beneficial ownership.

2. Hold less than one percent of the class of shares and individual share
ownership has not previously been disclosed to shareholders or otherwise
made public.

6. E. 2 Option plans

The company has three Option plans in operation the 1994 Employee Stock Offer
Plan, the 1998 Stock Option Plan and the 1999 Stock Option Plan, a description
of which is provided below:

1994 Employees Stock Offer Plan. In September 1994, the company established the
Employees Stock Offer Plan ("ESOP") which provides for the issuance of 6,000,000
warrants (as adjusted for the stock split effective June 1997, December 1998 and
February 2000) to eligible employees. The warrants were issued to an employee
welfare trust ("Trust") at Rs. 1 each. The warrants were purchased by the Trust
using the proceeds of a loan obtained from the company. The Trust holds the
warrants and transfers them to eligible employees. The warrants are transferred
to employees at Re. 1 each and each warrant entitles the holder to purchase one
of the company's equity shares at a price of Indian Rs. 100 per share. The
warrants and the equity shares received upon the exercise of warrants are
subject to a five-year aggregate vesting period from the date of issue of
warrants to employees. The warrants expire upon the earlier of five years from
the date of issue or September 1999. The fair market value of each warrant is
the market price of the underlying equity shares on the date of the grant.

In 1997, in anticipation of a share dividend to be declared by the company, the
Trust exercised all warrants held by it and converted them into equity shares
with the proceeds of a loan obtained from the company. In connection with the
warrant exercise and the share dividend, on an adjusted basis, 3,011,200 equity
shares were issued to employees of the company who exercised stock purchase
rights and 2,988,800 equity shares were issued to the Trust for future issuance
to employees pursuant to the ESOP. Following such exercise, there were no longer
any rights to purchase equity shares from the company in connection with the
ESOP. Only equity shares held by the Trust remained for future issues to
employees, subject to vesting provisions. The equity shares acquired upon the
exercise of the warrants vests 100% upon the completion of five years of
service. The warrant holders were entitled to exercise early, but the shares
received are subject to the five year vesting period. As of March 31, 2000, the
company's outstanding equity shares included 509,800 equity shares held by the
Trust of which 341,400 equity shares were allotted to employees, subject to
vesting provisions and have been included in the calculation of basic and
diluted earnings per share. The 168,400 equity shares were not considered
outstanding for purposes of calculating diluted earnings per share calculations.
The warrants allotted and the underlying equity shares are not subject to any
repurchase obligations by the company.

The company has elected to use the intrinsic value-based method of APB Opinion
No. 25 to account for its employee stock-based compensation plan. During the
years ended March 31, 2000, 1999 and 1998, the company recorded deferred
compensation of $ 1,029,649, $ 30,407,892 and $ 6,890,343, respectively, for the
difference, on the grant date, between the exercise price and the fair value as
determined by quoted market prices of the common stock underlying the warrants.
The deferred compensation is amortized on a straight-line basis over the vesting
period of the warrants/equity shares.

In fiscal 1998, the company declared a stock split of two equity shares for each
equity share outstanding in the form of a stock dividend to all its shareholders
including participants in the ESOP. Under the terms of the ESOP, the additional
equity shares issued to ESOP participants as a result of the stock dividend were
not subject to vesting. Consequently, the amortization of deferred stock
compensation of $ 1,519,739 relating to these shares
<PAGE>

was accelerated at the time of the stock dividend. Similarly, in fiscal 1999,
the company declared a stock split of two equity shares for each equity share
outstanding to all its shareholders including participants in the ESOP in the
form of a stock dividend and consequently recognized an accelerated compensation
charge at the time of the stock dividend amounting to $ 12,906,962.

1998 Stock Option Plan. The company's 1998 Stock Option Plan ("1998 Plan")
provides for the grant of nonstatutory stock options and incentive stock options
(within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Internal Revenue Code"), to employees of the company. The
establishment of the 1998 Plan was approved by the board of directors in
December 1998 and by the shareholders in January 1998. The Government of India
has approved the 1998 Plan, subject to maximum limit of 1,470,000 equity shares
issuable under the 1998 Plan. A total of 1,600,000 equity shares are currently
reserved for issuance pursuant to the 1998 Plan. Unless terminated sooner, the
1998 Plan will terminate automatically in January 2008. All options under the
1998 Plan will be exercisable for ADSs represented by ADRs.

The 1998 Plan is administered by a committee of the Board (the "Committee"). The
Committee has the power to determine the terms of the options granted, including
the exercise price, the number of ADSs subject to each option, the
exercisability thereof, and the form of consideration payable upon such
exercise. In addition, the Committee has the authority to amend, suspend or
terminate the 1998 Plan, provided that no such action may affect any ADS
previously issued and sold or any option previously granted under the 1998 Plan.

Options granted under the 1998 Plan are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the 1998 Plan must generally be
exercised within three months of the end of optionee's status as an employee of
the company, but in no event later than the expiration of the option's term. In
the event of optionee's termination as a result of death or disability, the
vesting and exercisability of the optionee's option will accelerate in full and
the option must be exercised within 12 months after such optionee's termination
by death or disability, but in no event later than the expiration of the
option's term. The exercise price of incentive stock options granted under the
1998 Plan must be at least equal to the fair market value of the ADSs on the
date of grant. The exercise price of nonstatutory stock options granted under
the 1998 Plan must be at least equal to 90% of the fair market value of the ADSs
on the date of grant. With respect to any participant who owns stock possessing
more than 10% of the voting power of all classes of the company's outstanding
capital stock, the exercise price of any incentive stock option granted must
equal at least 110% of the fair market value on the grant date and the term of
such incentive stock option must not exceed five years. The term of all other
options granted under the 1998 Plan may not exceed 10 years.

The 1998 Plan provides that in the event of a merger of the company with or into
another corporation, a sale of substantially all of the company's assets or a
like transaction involving the company, each option shall be assumed or an
equivalent option substituted by the successor corporation. If the outstanding
options are not assumed or substituted as described in the preceding sentence,
the vesting and exercisability of each option will accelerate in full.

1999 Stock Option Plan (the 1999 Plan) The 1999 Plan was approved by the
shareholders and the board of directors in June 1999. The 1999 Plan provides for
the issue of 6,600,000 equity shares to employees. The 1999 Plan is administered
by a compensation committee comprising a maximum of seven members, the majority
of whom are independent directors on the board of directors. Under the 1999
Plan, options will be issued to employees at an exercise price not less than the
Fair Market Value. Fair Market Value means the closing price of the company's
shares on the stock exchange where there is the highest trading volume on a
given date and if the shares are not traded on that day, the closing price on
the next trading day. Under the 1999 Plan, options may also be issued to
employees at exercise prices that are less than Fair Market Value only if
specifically approved by the members of the company in a general meeting.

Options granted under the 1999 Plan are not generally transferable by the
optionee, and each option is exercisable during the lifetime of the optionee
only by such optionee. Options granted under the 1999 Plan must generally be
exercised within three months of the end of optionee's status as an employee of
the company, but in no event later than the expiration of the option's term. In
the event of optionee's termination as a result of death or disability, the
vesting and exercisability of the optionee's option will accelerate in full and
the option must be exercised within 12 months after such optionee's termination
by death or disability, but in no event later than the expiration of the
option's term.

The 1999 Plan provides that in the event of a merger of the company with or into
another corporation, a sale of substantially all of the company's assets or a
like transaction involving the company, each option shall be assumed or an
equivalent option substituted by the successor corporation. If the outstanding
options are not
<PAGE>

assumed or substituted as described in the preceding sentence, the vesting and
exercisability of each option will accelerate in full.

Item 7 Major Shareholders and Related Party Transactions

7.A Major shareholders

The following table sets forth certain information regarding the beneficial
ownership of the equity shares at March 31, 2000 of (i) each person or
group known by the company to own beneficially 5% or more of the
outstanding equity shares and (ii) the beneficial ownership of all officers
and directors as a group, in each case as reported to Infosys by such
persons.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Name of the Class of No of shares % of No of shares % of No of shares % of
beneficial owner security beneficially class beneficially class beneficially class
held /1 2/ held /1 2/ held /1 2/
------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
N. R. Narayana Murthy Equity shares 4,931,300 7.45 5,047,200 7.63 5,107,200 7.97
Nandan M. Nilekani Equity shares 3,334,900 5.04 3,376,400 5.10 3,432,400 5.36
N. S. Raghavan* Equity shares 3,467,860 5.24 3,531,200 5.33 3,572,400 5.57
Shareholding of all directors and
officers as a group (29 persons) 20,194,562 25.03
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Ceased to be director of the company effective as of February 7, 2000.

1. Number of shares and percentage ownership is based on 66,15,0700
equity shares outstanding as of March 31, 2000. Beneficial ownership
is determined in accordance with rules of the SEC and includes voting
and investment power with respect to such shares. Shares subject to
options that are currently exercisable or exercisable within 60 days
of March 31, 2000 are deemed to be outstanding and to be beneficially
owned by the person holding such options for the purpose of computing
the percentage ownership of such person, but are not deemed to be
outstanding and to be beneficially owned for the purpose of computing
the percentage ownership of any other person. All information with
respect to the beneficial ownership of any principal shareholder has
been furnished by such shareholder and, unless otherwise indicated
below, the company believes that persons named in the table have sole
voting and sole investment power with respect to all the shares shown
as beneficially owned, subject to community property laws, where
applicable. The shares beneficially owned by the directors include the
equity shares owned by their family members to which such directors
disclaim beneficial ownership.

2. As adjusted to reflect the company's 2-for-1 stock splits in 1998 and
2000.

The major shareholders of the company do not have a differential voting
right in respect of the equity shares of the company.

The company's American Depositary Shares listed on the NASDAQ National
Market(R) each representing one-half of one equity share of par value Rs. 5
per share are registered pursuant to Section 12(g) of the Securities
Exchange Act of 1934 and are held by approximately 13,500 holders of record
in the United States of America ("USA"), as of March 31, 2000.

The company's equity shares can be held by Foreign Institutional Investors
("FIIs"), Overseas Corporate Bodies ("OCBs") and Non-resident Indians
("NRIs") who are registered with the Securities and Exchange Board of India
("SEBI") and the Reserve Bank of India ("RBI"). Currently over 25.13% of
the Company's equity shares are held by these FIIs, OCBs and NRIs of which
some of them may be residents or bodies corporate registered in the United
States of America and elsewhere. The company is not aware which of these
FIIs, OCBs and NRIs hold these equity shares as residents of or bodies
corporates registered in the USA and is not aware of the portion of these
equity shares held by these FIIs, OCBs and NRIs in the USA.

To the best of its knowledge, the company is not owned or controlled
directly or indirectly by any government or by any other corporation. The
company is not aware of any arrangement, the operation of which may at a
subsequent date result in a change in control of the company

The above shares are issued and traded within India and is held, directly
or indirectly, in the beneficial name of the holders.

7.B Related party transactions

The Company had no material transaction with any shareholders owning more
than 10% of the equity of the company.
<PAGE>

Yantra Corporation

In December 1996, the company transferred all rights, title and interest in
and to the WMSYantra (formerly known as EAGLE) software product to Yantra,
then a majority-owned subsidiary of the company. Yantra granted Infosys a
non-exclusive right to reproduce, distribute and service the product to the
extent necessary to fulfill the company's pre-existing contractual
obligations for the product. In consideration for this transaction Infosys
received 7,500,000 shares of common stock of Yantra, which had a fair
market value at the time of $ 0.20 per share. In September 1997, the
company purchased 2,000,000 shares of Series A Preferred Stock of Yantra at
$ 0.75 per share. Certain of the company's directors or officers are
directors of Yantra. As of March 31, 1998, Mr. Phaneesh Murthy, an
executive officer of the company, held options to purchase 100,000 shares
of common stock of Yantra at an exercise price of $ 0.10 per share, all of
which were granted on September 29, 1997. Other than Mr. Phaneesh Murthy,
none of the company's directors or officers beneficially owns any shares or
options of Yantra. On October 20, 1998, the company sold 1,363,637 shares
of Series A Preferred Stock of Yantra for $ 1.10 per share to an
unaffiliated purchaser. As a result, the company reduced its interest in
Yantra to less than one-half of voting stock of Yantra. On June 14, 1999,
Yantra issued Series C Preferred Stock amounting to $ 15.0 million to
various existing and new investors. Sales to Yantra in fiscal 2000 were $
2.6 million.

7.B.1 Employment agreements

The company has entered into agreements with its employee directors
containing a monthly salary, performance bonus and benefits including
vacation, medical reimbursement and pension fund contributions. These
agreements are made for a five-year period, but either the company or the
employee director may terminate the agreement upon six months notice to the
other party.

7.B.2 Loans to employees

Pursuant to an employee loan program, the company grants loans to employees
to acquire certain assets such as property, vehicles or for personal needs.
Such loans are made at interest rates ranging from 0% to 4% and are
repayable over fixed periods ranging from one to 100 months. The loans
generally are secured by the assets acquired by the employees. As of March
31, 2000, there were $ 12 million in loans outstanding to employees, of
which $ 163,881 were loans receivable from executive officers of the
company in amounts less than $ 60,000. The largest outstanding loan during
fiscal 2000 was a housing loan for $ 34,404 given to Mr. Ajay Dubey, Vice
President - Europe. The loan, made on June 23, 1999 carried no interest and
was outstanding in the amount of $ 33,257 as of March 31, 2000.

7.C Interests of experts and counsel

Not applicable.

Item 8. Financial Information

8.A.1 Consolidated statements and other financial information

The following financial statements of the company and the auditors' report
appearing on pages 112 through 131 of the Infosys Annual Report for fiscal
2000 are incorporated herein by reference:

. Independent auditors' report.
. Balance Sheets as of March 31, 2000 and 1999.
. Statements of Income for the years ended March 31, 2000, 1999 and 1998.
. Statements of Shareholders' Equity for the years ended March 31, 2000,
1999 and 1998.
. Statements of Cash Flows for the years ended March 31, 2000, 1999 and
1998.
. Notes to financial statements.

The Infosys Annual Report for fiscal 2000, except for those portions which
are expressly incorporated by reference in this filing, is furnished for
the information of the Securities and Exchange Commission and is not to be
deemed as filed as a part of this report on Form 20-F.

8.A.2 Legal proceedings

The company, its directors, senior executive officers and affiliates are
not currently a party to any material legal proceedings.
<PAGE>

8.A.3 Dividends

Dividends

Under Indian law, a corporation pays dividends upon a recommendation by the
Board of Directors and approval by a majority of the shareholders, who have
the right to decrease but not increase the amount of the dividend
recommended by the Board of Directors. Under the Indian Companies Act,
dividends may be paid out of profits of a company in the year in which the
dividend is declared or out of the undistributed profits of previous fiscal
years. In the last three fiscal years, the company declared an aggregate of
approximately $ 0.24 per equity share, as adjusted to reflect the company's
two-for-one stock split in November 1999, in cash dividends (equivalent to
approximately $ 0.12 per ADS). Although the company has no current
intention to discontinue dividend payments, there can be no assurance that
any future dividends will be declared or paid or that the amount thereof
will not be decreased. Owners of ADSs will be entitled to receive dividends
payable in respect of the equity shares represented by such ADSs. The
equity shares represented by ADSs will rank pari passu with existing equity
shares of the company in respect of dividends. Cash dividends in respect of
the equity shares represented by the ADSs will be paid to the Depositary in
rupees and except as otherwise described in the Deposit Agreement dated
March 11, 1999 (the "Deposit Agreement") will be converted by the
Depositary into U.S. dollars and distributed, net of Depositary fees and
expenses, to the holders of such ADSs.

With respect to equity shares issued by the company during a particular
fiscal year (including the equity shares underlying the ADSs issued to the
Depositary, dividends declared and paid for such fiscal year generally will
be prorated from the date of issuance to the end of such fiscal year. Once
a cash dividend is declared, equity shares entitled to prorated dividends
are quoted on the Indian stock exchanges at the same price as equity shares
entitled to full dividends. However, upon sale of and payment for equity
shares entitled to a prorated dividend, the selling broker will deduct the
difference between the full dividend and the prorated dividend from the
sale price of such shares. Holders of ADSs will only receive dividends
prorated from the date of issuance of the underlying equity shares to the
end of the fiscal year for which such dividends are declared and paid.

The following table sets forth the annual dividends paid per equity share
for each of the years indicated.

--------------------------------------------------------------------
Year ended March 31, Dividend paid per equity share /1/
--------------------------------------------------------------------
Indian rupee $
--------------------------------------------------------------------
2000 4.50 0.11
1999 3.75 0.09
1998 3.00 0.04
1997 2.75 0.02
1996 2.50 0.02
--------------------------------------------------------------------

1. Dividends are retroactively adjusted to reflect the effect of the two-
for-one stock split in November 1999.

8.B Significant changes

None.

Item 9. The Offer and Listing

9.1 General

The company's equity shares are traded on The Stock Exchange, Mumbai
("BSE"), the Bangalore Stock Exchange ("BGSE") and The National Stock
Exchange ("NSE") in India ("Indian Stock Exchanges"). The company's
American Depositary Shares as evidenced by American Depositary Receipts
("ADRs") are traded in the U.S. on the NASDAQ National Market(R) under the
ticker symbol "INFY". Each equity share of the company is represented by
two American Depositary Shares ("ADSs"). The ADRs evidencing ADSs began
trading on the NASDAQ from March 11, 1999 when they were issued by the
depositary Bankers Trust Company (the "Depositary"), pursuant to the
Deposit Agreement.

The number of outstanding equity shares in the company, as of March 31,
2000, were 66,150,700. As of March 31, 2000, there were approximately
13,500 record holders of ADRs evidencing 4,163,800 ADSs (equivalent to
2,081,900 equity shares). As of March 31, 2000, there were 43,000 record
holders of the 66,150,700 equity shares listed and traded on the stock
exchanges in India.

The following table sets forth for the periods indicated the price history
of the equity shares and the ADSs on the Indian Stock Exchanges and the
NASDAQ respectively:
<PAGE>

Annual high-low price history for previous five years

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
BSE NSE BGSE NASDAQ
American Price per equity Price per equity Price per equity Price per Depositary
share in $ share in $ share in $ Shares in $
- ------------------------------------------------------------------------------------------------------------------------------
Fiscal Year High Low High Low High Low High Low
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000 316.84 29.29 319.57 28.90 320.55 55.24 375.00 19.63
1999 40.73 11.16 40.82 10.84 13.18 7.21 25.00 18.69
1998 11.56 3.54 11.89 3.32 9.85 3.76 - -
1997 4.10 1.67 4.18 1.76 4.08 1.65 - -
1996 2.02 1.33 2.00 1.35 1.94 1.33 - -
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

Stock price per share have been restated to reflect a two-for-one stock-split in
fiscal 1998, 1999 and 2000.

Source: The Economic Times
<PAGE>

Quarterly high-low price history for previous two years

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
BSE NSE BGSE NASDAQ
American Price per equity Price per equity Price per equity Price per Depositary
share in $ share in $ share in $ /1/ Shares in $
- ----------------------------------------------------------------------------------------------------------------------------
Fiscal Year High Low High Low High Low High Low
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
2000

First quarter 44.04 29.29 43.39 28.90 - - 30.63 19.63
Second quarter 91.56 41.69 91.61 41.91 86.32 55.24 73.88 28.69
Third quarter 168.75 78.70 167.35 78.85 168.19 79.49 180.00 65.50
Fourth quarter 316.84 130.74 319.57 129.88 320.55 131.89 375.00 133.00

1999

First quarter 14.75 11.16 15.30 10.84 13.18 7.21 - -
Second quarter 15.96 12.76 16.17 12.48 - - - -
Third quarter 17.46 13.03 18.28 12.58 - - - -
Fourth quarter 40.73 17.35 40.82 14.35 - - 25.00 18.69
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

1. The company's shares were not traded on the BGSE between May 1998 and July
1999.

Stock price per share have been restated to reflect a two-for-one stock-split in
February 2000.

Source: The Economic Times for Indian quotes and http://finance.yahoo.com for
------------------------
ADS quotes

Monthly high-low price history for previous six months

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
BSE NSE BGSE NASDAQ
American Price per equity Price per equity Price per equity Price per Depositary
share in $ share in $ share in $ Shares in $
- --------------------------------------------------------------------------------------------------------------------------
Month High Low High Low High Low High Low
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Oct 1999 100.65 78.86 102.44 79.01 98.68 79.64 179.50 65.50
Nov 1999 112.33 75.92 112.59 76.04 112.33 74.31 117.50 71.50
Dec 1999 168.42 103.48 167.02 103.83 167.85 104.62 180.00 102.07
Jan 2000 194.17 130.73 193.52 129.87 192.66 131.88 201.00 133.00
Feb 2000 246.85 163.13 247.76 164.03 250.06 166.90 340.50 159.25
Mar 2000 316.81 201.83 319.54 195.21 320.53 208.85 375.00 180.00
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>

Stock price per share have been restated to reflect a two-for-one stock-split in
February 2000

Source: The Economic Times for Indian quotes and http://finance.yahoo.com for
------------------------
ADS quotes

9.2 Trading practices and procedures on the Indian Stock Exchanges

The Stock Exchange, Mumbai ("BSE") and the National Stock Exchange ("NSE")
together account for more than 80% of the total trading volume on the Indian
Stock Exchanges. Trading on both of these exchanges is accomplished through
online execution. These two stock exchanges handle over 398,000 trades per
day. Trading takes place on a five-day fixed settlement basis on most of the
exchanges, including the BSE and NSE. Any outstanding amount at the end of the
settlement period is settled by delivery and payment. However, institutional
investors are not permitted to "net out" their transactions and must trade on
a delivery basis only.

The BSE permits carry forwards of trades in certain securities by non-
institutional investors with an associated charge. In addition, orders can be
entered with a specified term of validity that may last until the end of the
session, day or settlement period. Dealers must specify whether orders are for
a proprietary account or for a client. The BSE specifies certain margin
requirements for trades executed on the exchange, including margins based on
the volume or quantity of exposure that the broker has on the market, as well
as mark-to-market margins payable on a daily basis for all outstanding trades.
Trading on the BSE takes place from 10:00 a.m. to 3:30 p.m. on all weekdays,
except holidays. The NSE does not permit carry forwards of trades. It has
separate margin
<PAGE>

requirements based on the net exposure of the broker on the exchange. The NSE
trades from 9:30 a.m. until 4:00 p.m. on weekdays, except holidays. The NSE
and BSE have separate online trading systems and separate clearing houses. The
BSE was closed from January 11 through January 13, 1993 due to a riot in
Mumbai. It was also closed on March 12, 1993 due to a bomb explosion within
the premises of the BSE. From December 14 through December 23, 1993, the BSE
was closed due to a broker's strike, and from March 20 through March 22, 1995,
the Governing Board of the BSE closed the market due to a default of one of
the broker members. There have been no closures of the Indian Stock Exchanges
in response to "panic" trading or large fluctuations. The equity shares of the
Company were not traded on the BGSE between May 1998 and July 1999 owing to
the absence of quotes for trades in the BGSE.

Item 10. Additional Information

10.A Share capital
Not applicable.

10.B Memorandum and Articles of association
Description of equity shares

Set forth below is a brief summary of the material provisions of the company's
Articles of Association ("AOA") and the Indian Companies Act, all as currently
in effect. The company is registered under the Indian Companies Act with the
Registrar of Companies, Karnataka, India with Company No. 13115. The following
description of the company's Articles does not purport to be complete and is
qualified in its entirety by the AOA and Memorandum of Association ("MOA") of
the company that are included as exhibits to the company's quarterly report on
Form 6-K filed with the Commission on January 21, 2000 and is incorporated
herein by reference.

Share capital

The company's authorized share capital is 100,000,000 shares, par value Rs. 5
per share. As of March 31, 2000, 66,150,700 equity shares (as adjusted to
reflect the company's stock split effective, February 11, 2000) were issued
and outstanding. The equity shares are the only class of share capital of the
company. There are no convertible debentures or warrants of the company
currently in existence. For the purposes of this Annual Report, "shareholder"
means a shareholder who is registered as a member in the register of members
of the company.

Dividends

Under the Indian Companies Act, unless the Board of Directors of the Company
(the "board") recommends the payment of a dividend, the company has no power
to declare a dividend. Similarly, under the AOA, although the shareholders
may, at the annual general meeting, approve a dividend in an amount less than
that recommended by the board, they cannot increase the amount of the
dividend. Dividends generally are declared as a percentage of the par value of
the company's shares. The dividend recommended by the Board, and subject to
the limitations described above, is distributed and paid to shareholders in
proportion to the paid up value of their shares within 42 days of the approval
by the shareholders at the annual general meeting. Pursuant to the company's
AOA, the board has discretion to declare and pay interim dividends without
shareholder approval. With respect to equity shares issued by the company
during a particular fiscal year (including the equity shares underlying the
ADSs issued to the Depositary), cash dividends declared and paid for such
fiscal year generally will be prorated from the date of issuance to the end of
such fiscal year. Under the Indian Companies Act, dividends can only be paid
in cash to the registered shareholder at a record date fixed on or prior to
the annual general meeting or to his order or his banker's order.

Under the Indian Companies Act, dividends may be paid out of profits of a
company in the year in which the dividend is declared or out of the
undistributed profits of previous fiscal years. Before declaring a dividend
greater than 10%, a company is required under the Indian Companies Act to
transfer to its reserves a minimum percentage of its profits for that year,
ranging from 2.5% to 10% depending upon the dividend percentage to be declared
in such year. The Indian Companies Act further provides that, in the event of
an inadequacy or absence of profits in any year, a dividend may be declared
for such year out of the company's accumulated profits, subject to the
following conditions: (i) the rate of dividend to be declared shall not exceed
10% of its paid up capital or the average of the rate at which dividends were
declared by the company in the prior five years, whichever is less; (ii) the
total amount to be drawn from the accumulated profits earned in the previous
years and transferred to the reserves shall not exceed an amount equivalent to
10% of its paid up capital and free reserves, and the amount so drawn is to be
used first to set off the losses incurred in the fiscal year before any
dividends in respect of preference or equity shares are declared; and (iii)
the balance of reserves after withdrawals shall not fall below
<PAGE>

15% of its paid-up capital. A dividend tax of 10% of the total dividend
declared, distributed or paid for a relevant period is payable by the company.

Bonus shares

In addition to permitting dividends to be paid out of current or retained
earnings as described above, the Indian Companies Act permits the company to
distribute an amount transferred from the general reserve or surplus in the
company's profit and loss account to its shareholders in the form of bonus
shares (similar to a stock dividend). The Indian Companies Act also permits
the issuance of bonus shares from a share premium account. Bonus shares are
distributed to shareholders in the proportion recommended by the Board.
Shareholders of record on a fixed record date are entitled to receive such
bonus shares.

Preemptive rights and issue of additional shares

The Indian Companies Act gives shareholders the right to subscribe for new
shares in proportion to their respective existing shareholdings unless
otherwise determined by a special resolution passed by a general meeting of
the shareholders. Under the Indian Companies Act, in the event of an issuance
of securities, subject to the limitations set forth above, the company must
first offer the new shares to the shareholders on a fixed record date. The
offer must include: (i) the right, exercisable by the shareholders of record,
to renounce the shares offered in favor of any other person; and (ii) the
number of shares offered and the period of the offer, which may not be less
than 15 days from the date of offer. If the offer is not accepted it is deemed
to have been declined. The board is authorized under the Indian Companies Act
to distribute any new shares not purchased by the preemptive rights holders in
the manner that it deems most beneficial to the company.

Annual general meetings of shareholders

The company must convene an annual general meeting of its shareholders within
six months after the end of each fiscal year and may convene an extraordinary
general meeting of shareholders when necessary or at the request of a
shareholder or shareholders holding at least 10% of the company's paid up
capital carrying voting rights. The annual general meeting of the shareholders
is generally convened by the company secretary pursuant to a resolution of the
board. Written notice setting out the agenda of the meeting must be given at
least 21 days (excluding the days of mailing and receipt) prior to the date of
the general meeting to the shareholders of record. Shareholders who are
registered as shareholders on the date of the general meeting are entitled to
attend or vote at such meeting.

The annual general meeting of shareholders must be held at the registered
office of the company or at such other place within the city in which the
registered office is located; meetings other than the annual general meeting
may be held at any other place if so determined by the board. The company's
registered office is located at Electronics City, Hosur Road, Bangalore, 561
229, Karnataka, India.

The AOA provide that a quorum for a general meeting is the presence of at
least five shareholders in person.

Voting rights

At any general meeting, voting is by show of hands unless a poll is demanded
by a shareholder or shareholders present in person or by proxy holding at
least 10% of the total shares entitled to vote on the resolution or by those
holding shares with an aggregate paid up capital of at least Rs. 50,000. Upon
a show of hands, every shareholder entitled to vote and present in person has
one vote and, on a poll, every shareholder entitled to vote and present in
person or by proxy has voting rights in proportion to the paid up capital held
by such shareholders. The chairman of the board has a deciding vote in the
case of any tie.

Any shareholder of the company may appoint a proxy. The instrument appointing
a proxy must be delivered to the company at least 48 hours prior to the
meeting. A proxy may not vote except on a poll. A corporate shareholder may
appoint an authorized representative who can vote on behalf of the
shareholder, both upon a show of hands and upon a poll. Ordinary resolutions
may be passed by simple majority of those present and voting at any general
meeting for which the required period of notice has been given. However,
certain resolutions such as amendments of the AOA and the MOA, commencement of
a new line of business, the waiver of preemptive rights for the issuance of
any new shares and a reduction of share capital, require that votes cast in
favor of the resolution (whether by show of hands or poll) are not less than
three times the number of votes, if any, cast against the resolution.

The company maintains a register of shareholders of the company. For the
purpose of determining the shares entitled to annual dividends, the register
is closed for a specified period prior to the annual general meeting. To
<PAGE>

determine which shareholders are entitled to certain shareholder rights, the
company, pursuant to a board resolution, may close the register of
shareholders. The Indian Companies Act and each of the company's listing
agreements with the Indian Stock Exchanges require the company to give at
least 30 days' prior notice to the Indian Stock Exchanges and at least seven
days' prior notice to the public. The Company may not close the register of
shareholders for more than 30 consecutive days, and in no event more than 45
days in a year. Trading of equity shares may, however, continue while the
register of shareholders is closed.

Following the introduction of the Depositories Act, 1996, and the repeal of
Section 22A of the Securities Contracts (Regulation) Act, 1956, which enabled
companies to refuse to register transfers of shares in certain circumstances,
the shares of the company are freely transferable, subject only to the
provisions of Section 111A of the Indian Companies Act. The AOA currently
contain provisions which give the directors discretion to refuse to register a
transfer of shares in certain circumstances. In accordance with the provisions
of Section 111A(2) of the Indian Companies Act, the directors may exercise
this discretion if they have sufficient cause to do so. Pursuant to Section
111A(3), if the transfer of shares contravenes any of the provisions of the
Securities and Exchange Board of India Act, 1992 or the regulations issued
thereunder or the Sick Industrial Companies (Special Provisions) Act, 1985 or
any other similar laws, the Company Law Board (the "CLB") may, on application
made by the company, a depositary incorporated in India, an investor, the SEBI
or certain other parties, direct the rectification of the register of records.
The CLB may, in its discretion, issue an interim order suspending the voting
rights attached to the relevant shares before making or completing its
investigation into the alleged contravention. Notwithstanding such
investigation, the rights of a shareholder to transfer the shares will not be
restricted.

Under the Indian Companies Act, a transfer of shares is effected by an
instrument of transfer in the form prescribed by the Indian Companies Act and
the rules thereunder together with delivery of the share certificates. The
transfer agent of the company is Karvy Consultants Limited, Bangalore,
Karnataka, India.

The company has entered into listing agreements with each of the Indian Stock
Exchanges. Clause 40A of each of the listing agreements provides that if an
acquisition of a listed company's shares results in the acquiror and its
associates holding 5% or more of the company's outstanding equity shares or
voting rights, the acquiror must report its holding to the company and the
relevant stock exchange(s). If an acquisition results in the acquiror and its
associates holding equity shares that have 15% or more of the voting rights,
then the acquiror must, before acquiring such equity shares, make an offer (in
accordance with Clause 40B of the listing agreements) on a uniform basis to
all remaining shareholders of the company to acquire equity shares that have
at least an additional 20% of the voting rights of the total equity shares of
the company at a prescribed price. The acquisition of shares of a company
listed on an Indian stock exchange beyond certain threshold amounts is subject
to regulations governing takeovers of Indian companies. Although clauses 40A
and 40B and such regulations will not apply to the equity shares so long as
they are represented by ADSs, holders of ADSs may be required to comply with
such notification and disclosure obligations pursuant to the provisions of the
Deposit Agreement to be entered into by such holders, the company and a
depositary.

Disclosure of ownership interest

Section 187C of the Indian Companies Act requires beneficial owners of shares
of Indian companies who are not holders of record to declare to the company
details of the holder of record and the holder of record to declare details of
the beneficial owner. Any person who fails to make the required declaration
within 30 days may be liable for a fine of up to Rs. 1,000 for each day the
declaration is not made. Any lien, promissory note or other collateral
agreement created, executed or entered into with respect to any share by the
registered owner thereof, or any hypothecation by the registered owner of any
share, pursuant to which a declaration is required to be made under Section
187C, shall not be enforceable by the beneficial owner or any person claiming
through the beneficial owner if such declaration is not made. Failure to
comply with Section 187C will not affect the obligation of the company to
register a transfer of shares or to pay any dividends to the registered holder
of any shares pursuant to which such declaration has not been made. While it
is unclear under Indian law whether Section 187C applies to holders of ADSs of
the company, investors who exchange ADSs for the underlying equity shares of
the company will be subject to the restrictions of Section 187C. Additionally,
holders of ADSs may be required to comply with such notification and
disclosure obligations pursuant to the provisions of the Deposit Agreement to
be entered into by such holders, the company and a depositary.

Audit and annual report

At least 21 days before the annual general meeting of shareholders, the
company must distribute a detailed version of the company's audited balance
sheet and profit and loss account and the reports of the board and the
auditors thereon. Under the Indian Companies Act, the company must file the
balance sheet and annual profit and
<PAGE>

loss account presented to the shareholders within 30 days of the conclusion of
the annual general meeting with the Registrar of Companies. The company must
also file an annual return containing a list of the company's shareholders and
other company information, within 60 days of the conclusion of the meeting.

Company acquisition of equity shares

Under the Indian Companies Act, the company may not acquire its own equity
shares because of the resulting reduction in the company's capital. Such a
reduction in capital is permitted only in certain circumstances and requires
compliance with specific buy-back regulations, a special resolution passed by
the shareholders and approval by the high court of the state in which the
registered office of the company is situated. The Government of India has
recently published guidelines that would permit a company to form a separate
trust specifically for the purpose of buying odd lots of shares and disposing
of such shares through a stock exchange.

Liquidation rights

Subject to the rights of creditors, employees and the holders of any shares
entitled by their terms to preferential repayment over the equity shares, if
any, in the event of the winding-up of the company, the holders of the equity
shares are entitled to be repaid the amounts of paid up capital or credited as
paid up on such equity shares. All surplus assets after payments due to the
holders of any preference shares at the commencement of the winding-up shall
be paid to holders of equity shares in proportion to their shareholdings.

Voting rights of deposited equity shares represented by ADSs

Under Indian law, voting of the equity shares is by show of hands unless a
poll is demanded by a member or members present in person or by proxy holding
at least one-tenth of the total shares entitled to vote on the resolution or
by those holding an aggregate paid up capital of at least Rs. 50,000. A proxy
may not vote except on a poll.

As soon as practicable after receipt of notice pursuant to the Deposit
Agreement of any meeting of holders of equity shares or other deposited
securities, the Depositary shall fix a record date for determining the holders
entitled to give instructions for the exercise of voting rights, if any, as
provided in the Deposit Agreement and shall mail to the holders a record
notice which shall contain: (i) such information as is contained in such
notice of meeting; (ii) a statement that the holders of record at the close of
business on a specified record date will be entitled, subject to any
applicable provisions of Indian law and of the MOA and AOA of the company
governing the deposited securities represented by their respective ADSs
evidenced by their respective ADRs; (iii) a brief statement as to the manner
in which such instructions may be given including (a) an express indication
that the Depositary should demand a poll or instruct the chairman of the
meeting (the "Chairman") or a person designated by the Chairman to demand a
poll in the event that a poll is not otherwise demanded pursuant to Indian law
and (b) an express indication that instructions may be given to the Depositary
to give a discretionary proxy to a person designated by the company; and (iv)
a statement that if the Depositary does not receive instructions from a
holder, such holder may under certain circumstances be deemed to have
instructed the Depositary to give a discretionary proxy to a person designated
by the company to vote such deposited securities. Upon the written request of
a holder on such record date, received on or before the date established by
the Depositary for such purpose, the Depositary shall endeavor, insofar as is
practicable and permitted under the applicable provisions of Indian law and of
the MOA and AOA of the company governing the deposited securities, to vote or
cause to be voted the amount of deposited securities represented by such ADSs
evidenced by such ADRs in accordance with the instructions set forth in such
request. In the event that the Depositary receives express instructions from
holders to demand a poll with respect to any matter to be voted on by holders,
the Depositary may notify the Chairman or a person designated by the Chairman
of such instructions and request the Chairman or such designee to demand a
poll with respect to such matters and the company agrees that the Chairman or
such designee will make their reasonable best efforts to so demand a poll at
the meeting at which such matters are to be voted on and to vote such equity
shares in accordance with such holders' instructions; provided, however, that
prior to any demand of a poll or request to demand a poll by the Depositary
upon the terms set forth herein, the company is required, at its own expense,
to use its best efforts to obtain and deliver to the Depositary an opinion of
Indian counsel, reasonably satisfactory to the Depositary, stating that such
action is in conformity with all applicable laws and regulations and that such
demand for a poll by the Depositary or a person designated by the Depositary
will not expose the Depositary to any liability to any person. The Depositary
shall not have any obligation to demand a poll or request the demand of a poll
if the company shall not have delivered to the Depositary the local counsel
opinion set forth in this paragraph.

The Depositary agrees not to, and shall ensure that the custodian and each of
their nominees does not vote, attempt to exercise the right to vote, or in any
way make use of, for purposes of establishing a quorum or
<PAGE>

otherwise, the equity shares or other deposited securities represented by the
ADSs evidenced by an ADR other than in accordance with such instructions from
the holder or as provided below. The Depositary may not itself exercise any
voting discretion over any equity shares. If the Depositary does not receive
instructions from any holder with respect to any of the deposited securities
represented by the ADSs evidenced by such holder's ADRs on or before the date
established by the Depositary for such purpose, such holder shall be deemed,
and the Depositary shall deem such holder, to have instructed the Depositary
to give a discretionary proxy to a person designated by the company to vote
such deposited securities; provided that: (i) no such discretionary proxy
shall be given with respect to any matter as to which the company informs the
Depositary (and the company agrees to provide such information as promptly as
practicable in writing) that (a) the company does not wish such proxy given,
(b) substantial opposition exists or (c) the rights of the holders of equity
shares will be adversely affected; and (ii) the Depositary shall not have any
obligation to give such discretionary proxy to a person designated by the
company if the company shall not have delivered to the Depositary the local
counsel opinion and representation letter set forth in the next paragraph.

Prior to each request for the delivery of a discretionary proxy upon the terms
set forth herein, the company shall, at its own expense, deliver to the
Depositary: (i) an opinion of Indian counsel, reasonably satisfactory to the
Depositary, stating that such action is in conformity with all applicable laws
and regulations; and (ii) a representation letter from the company (executed
by a senior officer of the company) which (a) designates the person to whom
any discretionary proxy should be given, (b) confirms that the company wishes
such discretionary proxy to be given and (c) certifies that the company has
not and shall not request the discretionary proxy to be given as to any matter
as to which substantial opposition exists or which may adversely affect the
rights of holders of equity shares.

10.C Material contracts
None.

10.D Exchange controls

Foreign investment in the Indian securities is generally regulated by the
Foreign Exchange Regulation Act, 1973 ("FERA"). Under Section 29(1)(b) of
FERA, no person or company resident outside India that is not incorporated in
India (other than a banking company) can purchase the shares of any company
carrying on any trading, commercial or industrial activity in India without
the permission of the RBI. Also, under Section 19(1)(d) of FERA, the transfer
and issuance of any security of any Indian company to a person resident
outside India requires the permission of the RBI. Under Section 19(5) of FERA,
no transfer of shares in a company registered in India by a non-resident to a
resident of India is valid unless the transfer is confirmed by the RBI upon
application filed by the transferor or the transferee. Under guidelines issued
by the RBI, the RBI will approve such transfers if such transfer is transacted
on an Indian Stock Exchange through a registered stock broker. Furthermore,
the issuance of rights and other distributions of securities to a non-resident
also require the prior consent of the RBI.

10.D.1 General

Shares of Indian companies represented by ADSs may be approved for issuance to
foreign investors by the Government of India under the Issue of Foreign
Currency Convertible Bonds and Equity Shares (through Depositary Receipt
Mechanism) Scheme, 1993 (the "1993 Regulation"), as modified from time to
time, promulgated by the Government of India. The 1993 Regulation is distinct
from other policies or facilities, as described below, relating to investments
in Indian companies by foreign investors. The issuance of ADSs pursuant to the
1993 Regulation also affords to holders of the ADSs the benefits of Section
115AC of the Indian Income Tax Act, 1961 for purposes of the application of
Indian tax law.

10.D.2 Foreign direct investment

In July 1991, the Government of India raised the limit on foreign equity
holdings in Indian companies from 40% to 51% in certain high priority
industries. The RBI gives automatic approval for such foreign equity holdings.
The Foreign Investment Promotion Board (the "FIPB"), currently under the
Ministry of Industry, was thereafter formed to negotiate with large foreign
companies wishing to make long-term investments in India. Foreign equity
participation in excess of 51% in such high priority industries or in any
other industries up to Rs. six billion is currently allowed only with the
approval of the FIPB. Proposals in excess of Rs. six billion require the
approval of the Cabinet Committee on Foreign Investment. Proposals involving
the public sector and other sensitive areas require the approval of Cabinet
Committee on Economic Affairs. These facilities are designed for direct
foreign investments by non-residents of India who are not NRIs, OCBs or FIIs
(as each term is defined below) ("Foreign Direct Investors"). The Department
of Industrial Policy and Promotion, a part of the Ministry of Industry, issued
<PAGE>

detailed guidelines in January 1997 for consideration of foreign direct
investment proposals by the FIPB (the "Guidelines"). Under the Guidelines,
sector specific guidelines for foreign direct investment and the levels of
permitted equity participation have been established. In January 1998, the RBI
issued a notification that foreign ownership of up to 50%, 51% or 74%,
depending on the category of industry, would be allowed without prior
permission of the RBI. The issues to be considered by the FIPB, and the FIPB's
areas of priority in granting approvals are also set out in the Guidelines.
The basic objective of the Guidelines is to improve the transparency and
objectivity of the FIPB's consideration of proposals. However, because the
Guidelines are administrative guidelines and have not been codified as either
law or regulations, they are not legally binding with respect to any
recommendation made by the FIPB or with respect to any decision taken by the
Government of India in cases involving foreign direct investment.

In May 1994, the Government of India announced that purchases by foreign
investors of ADSs as evidenced by ADRs and foreign currency convertible bonds
of Indian companies will be treated as direct foreign investment in the equity
issued by Indian companies for such offerings. Therefore, offerings that
involve the issuance of equity that results in Foreign Direct Investors
holding more than the stipulated percentage of direct foreign investments
(which depends on the category of industry) would require approval from the
FIPB. In addition, in connection with offerings of any such securities to
foreign investors, approval of the FIPB is required for Indian companies
whether or not the stipulated percentage limit would be reached, if the
proceeds therefrom are to be used for investment in non-high priority
industries. With respect to the activities of the company, FIPB approval is
required for any direct foreign investment in the company which exceeds 51% of
the total issued share capital of the company.

In July 1997, the Government of India issued guidelines to the effect that
foreign investment in preferred shares will be considered as part of the share
capital of a company and will be processed through the automatic RBI route or
will require the approval of the FIPB, as the case may be. Investments in
preferred shares are included as foreign direct investment for the purposes of
sectoral caps on foreign equity, if such preferred shares carry a conversion
option. If the preferred shares are structured without a conversion option,
they would fall outside the foreign direct investment limit but would be
treated as debt and would be subject to special Government of India guidelines
and approvals.

10.D.3 Investment by NRIs and OCBs

A variety of special facilities for making investments in India in shares of
Indian companies is available to individuals of Indian nationality or origin
residing outside India and to OCBs , at least 60% owned by such persons. These
facilities permit NRIs and OCBs to make portfolio investments in shares and
other securities of Indian companies on a basis not generally available to
other foreign investors. These facilities are different and distinct from
investments by Foreign Direct Investors described above.

10.D.4 Investment by Foreign Institutional Investors

In September 1992, the Government of India issued guidelines which enable
FIIs, including institutions such as pension funds, investment trusts, asset
management companies, nominee companies and incorporated/institutional
portfolio managers, to invest in all the securities traded on the primary and
secondary markets in India. Under the guidelines, FIIs are required to obtain
an initial registration from the SEBI and a general permission from the RBI to
engage in transactions regulated under FERA. FIIs must also comply with the
provisions of the SEBI Foreign Institutional Investors Regulations, 1995. When
it receives the initial registration, the FII also obtains general permission
from the RBI to engage in transactions regulated under FERA. Together, the
initial registration and the RBI's general permission enable the registered
FII to buy (subject to the ownership restrictions discussed below) and sell
freely securities issued by Indian companies, to realize capital gains on
investments made through the initial amount invested in India, to subscribe or
renounce rights offerings for shares, to appoint a domestic custodian for
custody of investments held and to repatriate the capital, capital gains,
dividends, income received by way of interest and any compensation received
towards sale or renunciation of rights offerings of shares.

10.D.5 Ownership restrictions

SEBI and RBI regulations restrict investments in Indian companies by Foreign
Direct Investors. Under current SEBI regulations applicable to the company,
subject to the requisite approvals of the shareholders in a general meeting,
Foreign Direct Investors in aggregate may hold no more than 40% of the
company's equity shares, excluding the equity shares underlying the ADSs, and
NRIs and OCBs in aggregate may hold no more than 10% of the company's equity
shares, excluding the equity shares underlying the ADSs. Furthermore, SEBI
regulations
<PAGE>

provide that no single FII may hold more than 10% of the company's total
equity shares and no single NRI or OCB may hold more than 5% of the company's
total equity shares.

FIIs may only purchase securities of public Indian companies (other than the
ADSs) through a procedure known as a "preferential allotment of shares", which
is subject to certain restrictions. These restrictions will not apply to
equity shares issued as stock dividends or in connection with rights offerings
applicable to the equity shares underlying the ADSs.

There is uncertainty under Indian law about the tax regime applicable to FIIs
which hold and trade ADSs. FIIs are urged to consult with their Indian legal
and tax advisers about the relationship between the FII guidelines and the
ADSs and any equity shares withdrawn upon surrender of ADSs.

More detailed provisions relating to FII investment have been introduced by
the SEBI with the introduction of the SEBI Foreign Institutional Investors
Regulations, 1995. These provisions relate to the registration of FIIs, their
general obligations and responsibilities, and certain investment conditions
and restrictions. One such restriction is that the total investment in equity
and equity-related instruments should not be less than 70% of the aggregate of
all investments of an FII in India. The SEBI has also permitted private
placements of shares by listed companies with FIIs, subject to the prior
approval of the RBI under FERA. Such private placement must be made at the
average of the weekly highs and lows of the closing price over the preceding
six months or the preceding two weeks, whichever is higher.

Under the Securities and Exchange Board of India (Substantial Acquisition of
shares and Takeovers) Regulations, 1997 approved by the SEBI in January 1997
and promulgated by the Government of India in February 1997 (the "Takeover
Code"), which replaced the 1994 Takeover Code (as defined herein), upon the
acquisition of more than 5% of the outstanding shares of a public Indian
company, a purchaser is required to notify the company and all the stock
exchanges on which the shares of the company are listed. Upon the acquisition
of 15% or more of such shares or a change in control of the company, the
purchaser is required to make an open offer to the other shareholders offering
to purchase at least 20% of all the outstanding shares of the company at a
minimum offer price as determined pursuant to the rules of the Takeover Code.
Upon conversion of ADSs into equity shares, an ADS holder will be subject to
the Takeover Code.

Open market purchases of securities of Indian companies in India by Foreign
Direct Investors or investments by NRIs, OCBs and FIIs above the ownership
levels set forth above require Government of India approval on a case-by-case
basis.

10.E Taxation

10.E.1 Indian taxation

10.E.1.1 General

The following summary is based on the provisions of the Income Tax Act, 1961
(the "Indian Tax Act"), including the special tax regime contained in Section
115AC (the "Section 115AC Regime") and the 1993 Regulation. The Indian Tax Act
is amended every year by the Finance Act of the relevant year. Some or all of
the tax consequences of the Section 115 AC Regime may be amended or changed by
future amendments of the Indian Tax Act.

THE SUMMARY SET FORTH BELOW IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS
OF THE INDIVIDUAL TAX CONSEQUENCES TO NON-RESIDENT HOLDERS UNDER INDIAN LAW
FOR THE ACQUISITION, OWNERSHIP AND SALE OF ADSS AND EQUITY SHARES BY NON-
RESIDENT HOLDERS. PERSONAL TAX CONSEQUENCES OF AN INVESTMENT MAY VARY FOR
INVESTORS IN VARIOUS CIRCUMSTANCES AND POTENTIAL INVESTORS SHOULD THEREFORE
CONSULT THEIR OWN TAX ADVISERS ON THE TAX CONSEQUENCES OF SUCH ACQUISITION,
OWNERSHIP AND SALE, INCLUDING SPECIFICALLY THE TAX CONSEQUENCES UNDER THE LAW
OF THE JURISDICTION OF THEIR RESIDENCE AND ANY TAX TREATY BETWEEN INDIA AND
THEIR COUNTRY OF RESIDENCE.

10.E.1.2 Residence

For purposes of the Indian Tax Act, an individual is considered to be a
resident of India during any financial year if he: (i) is in India in that
year for a period or periods amounting to 182 days or more; or (ii) is in
India in that year for 60 days or more and, in case of a citizen of India or a
person of Indian origin, who, being outside India, comes on a visit to India,
is in India for more than 182 days effective April 1, 1995 and in each case
within the four preceding years has been in India for a period or periods
amounting to 365 days or more. A company is
<PAGE>

resident in India if it is registered in India or the control and the
management of its affairs is situated wholly in India.

10.E.1.3 Taxation of distributions

Pursuant to the Finance Act, 1997, withholding tax on dividends paid to
shareholders no longer applies. Distributions to Non-resident Holders of
additional ADSs or equity shares or rights to subscribe for equity shares
("Rights") made with respect to ADSs or equity shares are not subject to
Indian tax.

10.E.1.4 Taxation of capital gains

Any gain realized on the sale of ADSs or equity shares by a non-resident
holder to another Non-resident holder outside India is not subject to Indian
capital gains tax. However, as Rights are not expressly covered by the Indian
Income Tax Act, 1961, it is unclear, as to whether capital gain derived from
the sale of Rights by a non-resident holder (not entitled to an exemption
under a tax treaty) to another non-resident holder outside India will be
subject to Indian capital gains tax. If such Rights are deemed by the Indian
tax authorities to be situated within India, the gains realized on the sale of
such Rights will be subject to customary Indian taxation as discussed below.

Since the issuance of the ADSs has been approved by the Government of India
under the Section 115AC Regime, non-resident holders of the ADSs will have the
benefit of tax concessions available under the Section 115AC Regime. However,
the 1993 Regulation provides that if the equity shares are sold on an Indian
Stock Exchange against payment in Indian rupees, they will no longer be
eligible for such concessional tax treatment. The Section 115AC Regime is
unclear, as to whether such tax treatment is available to a non-resident who
acquires equity shares outside India from a non-resident holder of equity
shares after receipt of the equity shares upon surrender of the ADSs. If
concessional tax treatment is not available, gains realized on the sale of
such equity shares will be subject to customary Indian taxation as discussed
below.

Subject to any relief provided pursuant to an applicable tax treaty, any gain
realized on the sale of equity shares to an Indian resident or inside India
generally will be subject to Indian capital gains tax which is to be deducted
at the source by the buyer. For the purpose of computing capital gains tax,
the cost of acquisition of equity shares received in exchange for ADSs will be
determined on the basis of the prevailing price of the shares on any of the
Indian Stock Exchanges on the date that the Depositary gives notice to the
custodian of the delivery of the equity shares in exchange for the
corresponding ADSs. A non-resident holder's holding period (for purposes of
determining the applicable Indian capital gains tax rate) in respect of equity
shares received in exchange for ADSs commences on the date of the notice of
the redemption by the Depositary to the custodian. The Indo-U.S. Treaty does
not provide an exemption from the imposition of Indian capital gains tax.

Taxable gain realized on equity shares (calculated in the manner set forth in
the prior paragraph) for more than 12 months (long-term gain) is subject to
tax at the rate of 10%. Taxable gain realized on equity shares held for 12
months or less (short-term gain) is subject to tax at variable rates with a
maximum rate of 48%. The actual rate of tax on short-term gain depends on a
number of factors, including the legal status of the non-resident holder and
the type of income chargeable in India.

10.E.1.5 Stamp duty and transfer tax

Upon issuance of the equity shares, the company is required to pay a stamp
duty of 0.1% per share of the issue price of the underlying equity shares. A
transfer of ADSs is not subject to the Indian stamp duty. However, upon the
acquisition of equity shares from the Depositary in exchange for ADSs, the
holder will be liable for Indian stamp duty at the rate of 0.5% of the market
value of the ADSs or equity shares exchanged. A sale of equity shares by a
registered holder will also be subject to Indian stamp duty at the rate of
0.5% of the market value of the equity shares on the trade date, although
customarily such tax is borne by the transferee.

10.E.1.6 Gift and Wealth tax

ADSs held by non-resident holders and the underlying equity shares held by the
Depositary as a fiduciary and the transfer of ADSs between non-resident
holders and the Depositary will be exempt from Indian gift tax and Indian
wealth tax. Although Indian gift tax was abolished effective October 1, 1998,
a gift tax may apply to transfers by way of gift of equity shares or ADSs in
the future. Investors are advised to consult their own tax advisers in this
context.

10.E.1.7 Estate duty

Under current Indian law, there is no estate duty applicable to a non-resident
holder of ADSs or equity shares.
<PAGE>

10.E.2 United States federal taxation

The following is a summary of the material U.S. federal income and estate tax
matters that may be relevant with respect to the acquisition, ownership and
disposition of equity shares or ADSs. This summary addresses only the U.S.
federal income and estate tax considerations of holders that are citizens or
residents of the United States, partnerships or corporations created in or
under the laws of the United States or any political subdivision thereof or
therein, estates, the income of which is subject to U.S. federal income
taxation regardless of its source and trusts ("U.S. Holders") or are not U.S.
Holders ("Non-U.S. Holders") and that will hold equity shares or ADSs as
capital assets. This summary does not address tax considerations applicable to
holders that may be subject to special tax rules, such as banks, insurance
companies, dealers in securities or currencies, tax-exempt entities, persons
that will hold equity shares or ADSs as a position in a "straddle" or as part
of a "hedging" or "conversion" transaction for tax purposes, persons that have
a "functional currency" other than the U.S. dollar or holders of 10% or more
(by voting power or value) of the stock of the company. This summary is based
on the tax laws of the United States as in effect and on United States
Treasury Regulations in effect (or, in certain cases, proposed), as well as
judicial and administrative interpretations thereof available on or before
such date and is based in part on representations of the Depositary and the
assumption that each obligation in the Depositary Agreement and any related
agreement will be performed in accordance with its terms. All of the foregoing
are subject to change, which change could apply retroactively and could affect
the tax consequences described below.

EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR WITH RESPECT TO THE U.S.
FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF ACQUIRING, OWNING AND
DISPOSING OF EQUITY SHARES OR ADSs.

10.E.2.1 Ownership of ADSs

For U.S. federal income tax purposes, holders of ADSs will be treated as the
owners of equity shares represented by such ADSs.

10.E.2.2 Dividends

Distributions of cash or property (other than equity shares, if any,
distributed pro rata to all shareholders of the company, including holders of
ADSs) with respect to equity shares will be includible in income by a U.S.
Holder as foreign source dividend income at the time of receipt, which in the
case of a U.S. Holder of ADSs generally will be the date of receipt by the
Depositary, to the extent such distributions are made from the current or
accumulated earnings and profits of the company. Such dividends will not be
eligible for the dividends received deduction generally allowed to corporate
U.S. Holders. To the extent, if any, that the amount of any distribution by
the company exceeds the company's current and accumulated earnings and profits
as determined under U.S. federal income tax principles, it will be treated
first as a tax-free return of the U.S. Holder's tax basis in the equity shares
or ADSs and thereafter as capital gain.

A U.S. Holder will not be eligible for a foreign tax credit against its U.S.
federal income tax liability for Indian taxes paid by the company and deemed
under Indian law to have been paid by the shareholders of the company, unless
it is a U.S. company holding at least 10% of the Indian company paying the
dividends.

U.S. Holders should be aware that dividends paid by the company generally will
constitute "passive income" for purposes of the foreign tax credit. The
Internal Revenue Code applies various limitations on the amount of foreign tax
credit that may be available to a U.S. taxpayer. U.S. Holders should consult
their own tax advisors with respect to the potential consequences of those
limitations.

A Non-U.S. Holder of equity shares or ADSs generally will not be subject to
U.S. federal income tax or withholding tax on dividends received on equity
shares or ADSs unless such income is effectively connected with the conduct by
such Non-U.S. Holder of a trade or business in the United States

10.E.2.3 Sale or exchange of equity shares or ADSs

A U.S. Holder generally will recognize gain or loss on the sale or exchange of
equity shares or ADSs equal to the difference between the amount realized on
such sale or exchange and the U.S. Holder's tax basis in the equity shares or
ADSs, as the case may be. Such gain or loss will be capital gain or loss, and
will be long-term capital gain or loss if the equity shares or ADSs, as the
case may be, were held for more than one year. Gain, if any, recognized by a
U.S. Holder generally will be treated as U.S. source passive income for U.S.
foreign tax credit purposes.

A Non-U.S. Holder of equity shares or ADSs generally will not be subject to
U.S. federal income or withholding tax on any gain realized on the sale or
exchange of such equity shares or ADSs unless: (i) such gain is effectively
connected with the conduct by such Non-U.S. Holder of a trade or business in
the U.S.; or (ii) in the case of any
<PAGE>

gain realized by an individual Non-U.S. Holder, such holder is present in the
United States for 183 days or more in the taxable year of such sale and
certain other conditions are met.

If dividends are paid in Indian rupees, the amount of the dividend
distribution includible in the income of a U.S. Holder will be in the U.S.
dollar value of the payments made in Indian rupees, determined at a spot
exchange rate between Indian rupees and U.S. dollars applicable to the date
such dividend is includible in the income of the U.S. Holder, regardless of
whether the payment is in fact converted into U.S. dollars. Generally, gain or
loss (if any) resulting from currency exchange fluctuations during the period
from the date the dividend is paid to the date such payment is converted into
U.S. dollars will be treated as ordinary income or loss.

10.E.2.4 Estate taxes

An individual shareholder who is a citizen or resident of the United States
for U.S. federal estate tax purposes will have the value of the equity shares
or ADSs owned by such holder included in his or her gross estate for U.S.
federal estate tax purposes. An individual holder who actually pays Indian
estate tax with respect to the equity shares will, however, be entitled to
credit the amount of such tax against his or her U.S. federal estate tax
liability, subject to certain conditions and limitations.

10.E.2.5 Backup withholding tax and information reporting requirements

Under current U.S. Treasury Regulations, dividends paid on equity shares, if
any, generally will not be subject to information reporting and generally will
not be subject to U.S. backup withholding tax. Information reporting will
apply to payments of dividends on, and to proceeds from the sale or redemption
of, equity shares or ADSs by a paying agent (including a broker) within the
United States to a U.S. Holder (other than an "exempt recipient", including a
corporation, a payee that is a Non-U.S. Holder that provides an appropriate
certification and certain other persons). In addition, a paying agent within
the United States will be required to withhold 31% of any payments of the
proceeds from the sale or redemption of equity shares or ADSs within the
United States to a holder (other than an "exempt recipient") if such holder
fails to furnish its correct taxpayer identification number or otherwise fails
to comply with such backup withholding requirements.

10.E.2.6 Passive foreign investment company

A non-U.S. corporation will be classified as a passive foreign investment
company (a "PFIC") for U.S. Federal income tax purposes if it satisfies either
of the following two tests: (i) 75% or more of its gross income for the
taxable year is passive income; or (ii) on average for the taxable year (by
value or, if the company so elects, by adjusted basis) 50% or more of its
assets produce or are held for the production of passive income.

The company does not believe that it satisfies either of the tests for PFIC
status. If the company were to be a PFIC for any taxable year, U.S. Holders
would be required to either: (i) pay an interest charge together with tax
calculated at maximum ordinary income rates on certain "excess distributions"
(defined to include gain on a sale or other disposition of equity shares); or
(ii) if a Qualified Electing Fund election is made, to include in their
taxable income their pro rata share of certain undistributed amounts of the
company's income.

10.G Statement by experts

The U.S. GAAP financial statements of Infosys Technologies Limited as of March
31, 2000 and 1999, and for each of the years in the three-year period ended
March 31, 2000, have been included herein in reliance upon the report of KPMG,
India, independent accountants, appearing elsewhere herein, and upon the
authority of said firm as experts in auditing and accounting.

10.H Documents on display
This report and other information filed or to be filed by the company can be
inspected and copied at the public reference facilities maintained by the SEC
at:

. Judiciary Plaza
450 Fifth Street, N.W.
Room 1024
Washington, D.C. 20529

. Seven World Trade Center
13/th/ Floor,
New York, New York 10048; and

. Northwestern Atrium Center
500 West Madison Street
<PAGE>

Suite 1400
Chicago, Illinois 60661-2511

Copies of these materials can also be obtained from the Public Reference
Section of the SEC, 450/th/ Street, N.W., Washington, DC 20549, at prescribed
rates.

The SEC maintains a website at http://www.sec.gov that contains reports, proxy
------------------
and information statements, and other information regarding registrants that
make electronic filings with the SEC using its EDGAR system. As a foreign
private issuer, we are not required to use the EDGAR system, but currently
intend to do so in order to make our reports available over the Internet.

Additionally, documents referred to in this Form 20-F may be inspected at the
corporate offices of the company which are located at Electronics City, Hosur
Road, Bangalore -561229.

10.I Subsidiary information
Not applicable.

Item 11. Quantitative and Qualitative Disclosure About Market Risk

Item 12. Description of Securities Other than Equity Securities
Not applicable.

Part II
- -------------------------------------------------------------------------------

Item 13. Defaults, Dividend Arrearages and Delinquencies
None.

Item 14. Material Modifications to the Rights of Security Holders and Use of
Proceeds
None.

Item 17
Not Applicable.

Part III
- -------------------------------------------------------------------------------

Item 18. Financial Statements

The following financial statements of the company included in Item 18 of this
Report on Form 20-F are hereby incorporated by reference from the Infosys
Annual Report for fiscal 2000, filed as Exhibit 13.1 to this Report on Form
20-F.

. Independent auditors' report.

. Balance Sheets as of March 31, 2000 and 1999.

. Statements of Income for the years ended March 31, 2000, 1999 and 1998.

. Statements of Shareholders' Equity for the years ended March 31, 2000,
1999 and 1998.

. Statements of Cash Flows for the years ended March 31, 2000, 1999 and
1998.

. Notes to financial statements.

Item 19. Exhibits
------------------------------------------------------------------------
Exhibit number Description of document
------------------------------------------------------------------------
**3.1 Articles of Association of the Registrant, as amended
<PAGE>

**3.2 Memorandum of Association of the Registrant, as amended

*3.3 Certificate of Incorporation of the Registrant, as
currently in effect

*4.1 Form of Deposit Agreement among the Registrant, Bankers
Trust Receipts issued thereunder (including as an exhibit,
the form of American Depositary Receipt)

*4.2 Registrant's Specimen Certificate for Equity Shares

*10.1 Registrant's 1998 Stock Option Plan

*10.2 Registrant's Employee Stock Offer Plan

*10.3 Employees Welfare Trust Deed of Registrant Pursuant to
Employee Stock Offer Plan

*10.4 Form of Indemnification Agreement

***10.5 Registrant's 1999 Stock Option Plan

13.1 Infosys Annual Report for fiscal 2000

23.1 Consent of KPMG, India

27.1 Financial Data Schedule

99.1 Proxy Information Statement to holders of American
Depositary Shares

99.2 Proxy Information Statement to holders of Equity Shares

99.3 Proxy Form to holders of Equity Shares

99.4 Proxy Form to holders of American Depositary Shares
- --------------------------------------------------------------------------------

* Incorporated by reference to exhibits filed with the Registrant's
Registration Statement on Form F-1 (File No. 333-72195) in the form
declared effective on March 10, 1999.

** Incorporated by reference to exhibits filed with the Registrant's Quarterly
Report on Form 6-K filed on January 21, 2000

*** Incorporated by reference to exhibits filed with the Registrant's Quarterly
Report on Form 6-K filed on August 4, 1999
<PAGE>

Signatures

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.

for Infosys Technologies Limited

/s/ Nandan M. Nilekani /s/ N. R. Narayana Murthy
Nandan M. Nilekani N. R. Narayana Murthy
Bangalore Managing Director, President Chairman
April 28, 2000 and Chief Operating Officer and Chief Executive Officer

<PAGE>

EXHIBIT 13.1
The Power of E-Commerce
- --------------------------------------------------------------------------------

Only those who dare to fail greatly can ever achieve greatly.
Robert Francis Kennedy
(1925-1968)

[GRAPHIC OMITTED]

- --------------------------------------------------------------------------------
At the turn of the last millennium, e-commerce created excitement in the
hallowed corridors of Harvard Business School as well as the poorest lanes of
Hoshiarpur, Punjab, India. The reasons for this are not far to seek. The two
powerful paradigms of anytime-anywhere and virtualization of the corporation
have demonstrated their tremendous potential to improve business reach, to
reduce costs and cycle times, and to enhance productivity in organizations
across the globe. Consequently, consumers can hope for better comfort and
greater value-for-money. We, at Infosys, believe that technology has the
potential to bring as much value to the poor of India as to the rich of the
United States. However, the task of e-enabling corporations to take advantage of
this seminal phenomenon requires deep thought and quick action on the part of
business leaders and IT professionals. This year, Infosys brings you an abridged
version of a very informative panel discussion on the challenges faced by
corporations in harnessing The Power of E-Commerce.

1
<PAGE>

<TABLE>
<CAPTION>
Contents
- -------------------------------------------------------------------------------------------------------------------
<S> <C>
The year at a glance 3
Awards for excellence - 1999-2000 4
Adieu, NSR 7
Letter to the shareholders 9
The Power of E-Commerce 12
Directors' report 24
Risk management 38
Corporate governance 45
Report of the committees of the board 57
Management statement 60
Auditors' report 61
Financial statements prepared in accordance with 64
Indian Generally Accepted Accounting Principles (Indian GAAP)
Management's discussion and analysis of financial condition and results of operations 79
Statement of cash flows 91
Balance sheet abstract and company's general business profile 93
Financial statements prepared in accordance with 95
the United States Generally Accepted Accounting Principles (US GAAP)
Summary of consolidated financial data 96
Management's discussion and analysis of financial condition and results of operations 97
Report of management 111
Independent auditors' report 112
Balance sheets 113
Statements of income 114
Statements of stockholders' equity 115
Statements of cash flows 117
Notes to financial statements 118
Information in Form 20-F of United States Securities and Exchange Commission
Shareholder information 173
Frequently asked questions 180
Additional information to shareholders
Share performance chart 184
Intangible assets scoresheet 185
Human resources accounting and value-added statement 188
Brand valuation 190
Balance sheet (including the intangible assets) 192
Economic value-added (EVA) statement 193
Ratio analysis 194
Statutory obligations / segment reporting 197
Management structure 200
A historical perspective 201
Infosys Foundation 203
Financial statements prepared in substantial compliance with 205
GAAP requirements of Australia, Canada, France,
Germany, Japan and the United Kingdom
</TABLE>

2
<PAGE>

<TABLE>
<CAPTION>
The year at a glance
- ----------------------------------------------------------------------------------------------------------------------

in Rs. crore, except per share data
- ----------------------------------------------------------------------------------------------------------------------
March 31, 2000 March 31, 1999 Growth %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
For the year
Total revenues 921.46 512.74 80
Export revenues 869.70 500.25 74
Operating profit (PBIDT) 378.88 191.75 98
Profit after tax (PAT) from ordinary activities 285.95 132.92 115
Profit after tax and extraordinary items 293.52 135.26 117
PBIDT as a percentage of total revenues 41.12% 37.40%
PAT from ordinary activities
as a percentage of total revenues 31.03% 25.92%
Earnings per share (from ordinary activities) *
Basic 43.23 20.10 115
Diluted 42.15 19.93 112
Dividend per share 4.50 3.75 20
Dividend amount 29.76 12.11 146
Capital investment 159.87 71.68 123
PAT as a percentage of average net worth 40.63% 54.16%
At the end of the year
Total assets 833.30 574.43 45
Fixed assets - net 207.34 100.72 106
Cash and equivalents 508.37 416.66 22
Working capital 612.13 472.96 29
Total debt - - -
Net worth 833.30 574.43 45
Equity 33.08 33.07 -
Market capitalization 59,338.17 9,672.80 513
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

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

/*/ Basic and diluted EPS are calculated on profit after tax before considering
extraordinary income and effect of extraordinary item - provision no longer
required. The basic and diluted EPS for the year ended March 31, 1999 has been
resta ted for a stock split of 2 for 1 (subdivision of 1 share of Rs. 10 par
value into 2 shares of Rs. 5 par value) effected during the year.

<TABLE>
<CAPTION>
Year ended March 31, Year ended March 31, Year ended March 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
260.37 512.74 921.46 250.94 500.25 869.70 60.3 132.92 285.96
1998 1999 2000 1998 1999 2000 1998 1999 2000

Total revenues in Rs.crore Exports in Rs.crore PAT from ordinary activities in Rs.crore
</TABLE>

3
<PAGE>

<TABLE>
<S> <C> <C> <C>
[GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] from top to bottom
[GRAPHIC OMITTED]
Awards for excellence . Comfactory
1999-2000 ---------------------------

Nagaraj N. S.
Srinivas T.

[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] from top to bottom from top to bottom
from top to bottom
. CMM Level 5 team . Sainsbury's
---------------------------
Raghavan S. Senthil Nathan M. Krishnamoorthy A. S.
Bhashyam M. R. Ravikrishnan K. Srinjay Sengupta
Ramakrishnan M. Ravindra Karanam
Lakshmi S. Kumar Mohan Ram B. R.
Kiran M. Potdar

. The ADR team
- -----------------------------

Mohandas Pai T. V.
Phaneesh Murthy
Balakrishnan V.
Ramadas Kamath U.
Ganapathy P. R.
Vinayak Pai V.
</TABLE>

4
<PAGE>

<TABLE>
<S> <C> <C> <C>
[GRAPHIC OMITTED] Awards for excellence [GRAPHIC OMITTED]
[GRAPHIC OMITTED] 1999-2000 [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
from top to bottom [GRAPHIC OMITTED] [GRAPHIC OMITTED]
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
<184> Kansas City Southern [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
Railways project [GRAPHIC OMITTED] from top to bottom [GRAPHIC OMITTED]
- ----------------------------- from top to bottom from top to bottom

<184> Spurt <184> Aetna <184> E&R team 1
Sajan Verghis Mathew ------------------- -------------------------- ---------------------------
Muthuvel G. Bart Higgins
Sanjay Surendranath Srivathsa P. S. Priti Rao Yegneshwar S., Dr.
Venkatnarayan S. Srirangan Rajagopal Jayaraman Nair Kochikar V. P.
Prasad T. P. Srikanth N. R. Shinju Damodaran Nandakumar N.
Suma Subramanian Madhav Kulkarni Prashant V. Mahajan
Sangeetha Pradeep Samuelraj S.
Lakshmi Sujayananda Rakesh Agarwal
</TABLE>

5
<PAGE>

<photo>

6
<PAGE>

Adieu, NSR
- --------------------------------------------------------------------------------

Nadathur Sarangapani Raghavan or NSR, as he is affectionately called, has
several rare distinctions. He was employee Number One at Infosys. He is the
oldest amongst the founders. He is the only passable singer and restaurant
quality cook among the gang of founders! I can go on and on because NSR has an
inexhaustible set of endearing qualities.

NSR worked with me when I was head of the software division at Patni Computer
Systems (PCS). He was the first person I spoke to about founding Infosys. When,
on a cloudy winter morning in Mumbai, I told him that I was going to leave PCS
and that I would recommend that he take over from me, his reaction was
incredulous - he just wanted to be with me! He had a wife and two teenage sons
to support, and here I was - with no concrete idea as to what I was going to do!
But, just the comfort that a valued colleague of mine was ready to stake his
rosy future at a well-established corporation in favor of an adventurous and
somewhat reckless maverick was a great morale booster for me. Thus, Infosys was
born with NSR's house in Matunga as its registered office.

In his nineteen years at Infosys, NSR has taken up a variety of
responsibilities. He has probably had the most eclectic career profile in this
organization. He has handled HRD, Delivery, Education and Research, Planning and
Finance, all with distinction. He designed the first revenue tracking system for
Infosys, The Billing Performance Report (BPR) - still a widely used application
despite our becoming an SAP shop. He was even the first ever chauffeur of an
Infosys vehicle - a rented Vespa scooter - ferrying me, the eternal pillion
rider, across the streets of Bangalore during 1983!

The most striking quality of NSR is his pleasantness. I have rarely seen him get
upset about anything. He is best known at Infosys for his saying: You can
disagree with me as long as you are not disagreeable. He is also, probably, the
most enthusiastic window-shopper in the world!

NSR continues to be a Trustee of the Infosys Foundation. He will be dearly
missed at Infosys. I hope that NSR and his family are blessed with the best of
everything in the future.

Sd.
Bangalore N. R. Narayana Murthy
April 11, 2000 Chairman and Chief Executive Officer

7
<PAGE>

Board of directors
- --------------------------------------------------------------------------------

[GRAPHIC OMITTED]
[GRAPHIC OMITTED] Nandan M. Nilekani
N. R. Narayana Murthy Managing Director, President
Chairman and Chief Executive Officer and Chief Operating Officer

[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
Susim M. Datta Deepak M. Satwalekar Ramesh Vangal
Director Director Director

[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
Prof. Marti G. Subrahmanyam Philip Yeo Gopalakrishnan S.
Director Director Deputy Managing Director

[GRAPHIC OMITTED] [GRAPHIC OMITTED]
Dinesh K. Shibulal S. D.
Director Director

8
<PAGE>

Letter to the shareholders
- --------------------------------------------------------------------------------
Dear shareholders:

Infosys has had yet another good year. As in the past, we worked very hard to
design, develop and deploy high quality solutions for our clients, and thereby
further strengthened our partnerships with them. Under Indian GAAP, total
revenues grew by 80% while profits after taxes from ordinary activities
witnessed an increase of 115% over fiscal 1999. As intended, revenues from the
e-business space grew faster than our other revenue streams. We are delighted to
report on the year gone by and invite you to review our performance and also to
learn more about the trajectory that Infosys intends to take in the future.

From the very beginning, our approach to doing business has entailed a client-
focussed work ethic. To this end, we have laid great emphasis on harnessing the
talents of best-in-class people and on implementing our engagements using world-
class quality processes. This, in turn, has brought about a consistent increase
in revenues and net income from operations 28 quarters in a row, since we went
public in India in 1993.

We would like to share with you our thoughts on the drivers for our past
successes and on the role that our strategic assets will play in accomplishing
our vision for your company's future. While change is the only constant in the
world of technology, we firmly believe that our uniquely implemented business
strategies, outlined below, will continue to be the cornerstones of our success
in the years to come.

1. Aim to be a global corporation - and fully exploit the resultant benefits

The essence of Infosys' business model is to access pools of high-quality
talent wherever they are available at competitive costs and use them to
deliver value to target markets that are at the forefront of using leading-
edge technology in business. Further, operating from facilities across the
globe enables us to leverage time zone differences to facilitate 24 x 7
partnering with our clients. This approach - perfected over the years through
our Global Delivery Model - has not only resulted in consistently high
profitability levels, but has also assured the stability and scalability of
our business model.

As part of our continuing efforts at globalization, we set up a Global
Development Centre at Toronto, Canada in January 2000. In October 1999, we
established two Proximity Development Centres (PDCs) at Fremont, California
and Boston, Massachusetts. Plans are also underway to set up a PDC in the
U.K. shortly. Further, we recently established sales offices in Australia,
Belgium and Sweden.

2. Build long-term relationships with clients

A strong focus on satisfying customer needs has enabled us to build long-term
partnerships with our clients. Our record of delivering superior solutions to
clients is manifested in the high level of repeat business year after year -
accounting for 87% of fiscal 2000 revenue.

3. Recruit, enable and retain high-quality people

The success of our business model hinges on attracting the best and the
brightest. Today, Infosys has become the employer of choice in India - we had
approximately 184,000 job applicants in fiscal 2000, and, from them, hired
approximately 2,050 new Infoscions.

Intensive entry-level training, amounting to nearly 100,000 person-days in
fiscal 2000, helps us equip new recruits with the skills required to mature
into world-class software professionals. And with nearly 14,500 person-days
of total internet-related training this year, our employees continue to be
well equipped to capitalize on the opportunities thrown up by the explosive
growth of the internet.

Our stock offer plan, driven by a desire to share wealth with our highly
driven workforce, was and continues to be a huge success - we have around 270
dollar-equivalent millionaires in our workforce today and our attrition rate,
at 9.2% for fiscal 2000, is among the lowest in the industry.

9
<PAGE>

4. Be exceptional change managers - maintain a prudent business mix while
proactively seeking out new growth opportunities

Over the years, we have evolved a portfolio approach to our basket of service
offerings, technologies and clients. Prudent risk management norms, as
outlined elsewhere in this annual report, have helped us avoid excessive
dependence on any one service offering or client - without compromising on
our agility in tapping new opportunities that the IT services space continues
to throw up. This ability to quickly respond to changes in the marketplace
and to effectuate smooth transitions in business mix is a key strength of
Infosys. For instance, we successfully managed the transition of our Year
2000 related engagements - down from contributing 24.0% to our Q1FY1999
revenues to 0.9% of our Q4FY2000 revenues. This was accompanied by a sharp
rise in revenues from the internet space - up from 1.3% of Q1FY1999 revenues
to 18.8% of Q4FY2000 revenues. The enabling factors for this performance
included the delivery of internet-focussed training at all levels of the
organization, a special initiative for e-inventing the company, and a
concerted effort to adapt existing methodologies to the needs of the e-
solutions space.

5. Maintain an unwavering focus on quality

After fully leveraging the value of Level 4 implementation of the Capability
Maturity Model (CMM) of the Software Engineering Institute at Carnegie Mellon
University, USA, we obtained accreditation to Level 5 of the CMM. Further, in
keeping with our philosophy of sharing our best practices with the industry,
we accepted the request of Prof. Pankaj Jalote of the Indian Institute of
Technology, Kanpur, India to publish a book entitled "CMM in Practice:
Processes for Executing Software Projects at Infosys (The SEI series in
Software Engineering)". Incidentally, this is the first book ever to be
published on CMM Level 4 implementation.

6. Seek out innovative avenues for growth

Having grown organically to over $ 200 million in revenues, we decided this
year to accelerate our initiatives to tap alternative means for continued
growth. Towards this end, we decided to begin exploring acquisition
opportunities, to make selective strategic investments, and to encourage
budding entrepreneurs within our highly competent and ambitious family of
Infoscions by incubating their ventures.

We emphasize that, given the tremendous management attention required in
order to unlock value from an acquisition, we will opt for this step if and
only if it brings in significant strategic benefits along with revenue and
net income enhancement commensurate with such effort.

We intend to make select investments in leading-edge companies that have the
potential to yield substantial business benefits. These benefits would
primarily be in the form of opportunities for revenue and net income growth
and access to the very latest technological developments. We made our first
investment this year in Massachusetts-based EC Cubed, Inc., a dynamic
application provider for B2B e-commerce, granting it $ 3 million in funding.

Further, we have provided an incubation mechanism for our existing employees
to launch their own ventures while continuing to derive benefits from a close
association with Infosys. Having launched Yantra in 1996, we recently piloted
Onscan - a web-focussed wireless-enabled notification service.

7. Maintain disciplined financial management practices and tap high-quality
sources of capital

Conservative financial management policies have enabled us to maintain high
and stable profitability levels in the past. We continue to be debt-free, to
have conservative budgeting and cost management processes, and to have a
strong and healthy balance sheet.

March 11, 2000 was the first anniversary of our listing on the NASDAQ. Apart
from meeting our requirement for high-quality capital and enabling us to
attract high-quality employees across the globe through the ADS-linked ESOP,
the listing has yielded the expected spin-off brand equity benefits.

8. Build world-class physical and technological infrastructure

We continue to provide world-class infrastructure for our client engagements
and for our employees. In addition to our new overseas development centres,
we expanded our operations in India to three new cities and continued to
invest in cutting-edge technological infrastructure.

10
<PAGE>

9. Maintain a firm commitment to our core values

[GRAPHIC OMMITTED]

The strength of our business, in the ultimate analysis, lies in the supreme
commitment, strong customer focus and impeccable integrity of our workforce.
Further, as an organization, we continue our quest for increased transparency
and openness in every transaction.

Infosys continues to be a pioneer in adhering to global best practices in
corporate governance. During the year, the company won the prestigious
National Award for Excellence in Corporate Governance instituted by the
Ministry of Finance, Government of India and sponsored by the UTI Institute
of Capital Markets. This year, we are happy to provide reports on our
compliance with the recommendations of the Shri Kumar Mangalam Birla
Committee on Corporate Governance (constituted by the Securities and Exchange
Board of India) and the Blue Ribbon Committee (constituted by the Securities
and Exchange Commission, USA).

This year, Infosys was voted India's Most Admired Company by The Economic
Times - India's leading business daily. Moving forward, we are more enthused
than ever about steering Infosys to greater heights and look forward to your
continued encouragement.

As in the past, our success depends strongly on the commitment of our fellow
Infoscions. We salute them on yet another year of sterling achievements and
appreciate their unwavering trust and support.

Bangalore Sd. Sd.

April 11, 2000 Nandan M. Nilekani N. R. Narayana Murthy
Managing Director, President Chairman
and Chief Operating Officer and Chief Executive Officer

Forward-looking statements in the letter to the shareholders should be read in
conjunction with the following cautionary statements. Certain expectations and
projections regarding future performance of the company referenced in this
Annual Report are forward-looking statements. These expectations and projections
are based on currently available competitive, financial, and economic data along
with the company's operating plans and are subject to certain future events and
uncertainties, that could cause actual results to differ materially from those
that may be indicated by such statements.

11
<PAGE>

The Power of E-Commerce
- --------------------------------------------------------------------------------

[PHOTO]

GOPALAKRISHNAN S.
Founder Deputy Managing Director - Customer
Service and Technology, Infosys

The turn of the last millennium saw the emergence of
what is, probably, the most powerful paradigm that
the world has witnessed in recent years - e-commerce.
Advances in communications and computing, and the
realization of the power of the internet have made
e-commerce the most revolutionary instrument for
improving the productivity of both corporations and
individuals. In the last twenty years, Information
Technology (IT) has influenced our lives and the way
we do business like no other technology has. Change,
speed of change, and adaptability to change have
become the key concerns of every Chief Information
Officer. To understand the challenges involved in
harnessing the power of e-commerce, Infosys invited
several well-known thinkers and practitioners of IT
from across the globe for a panel discussion on this
topic at Minneapolis, USA on September 23, 1999.

Gopalakrishnan S., Founder, Deputy Managing
Director - Customer Service and Technology, Infosys,
moderated the discussion. The participants were:

HARSHA KUMAR
Co-founder and Director - Product Strategy, EC Cubed

JOE PROCHASKA
CFO & Executive Vice-President, Aon Group

IVO COOLS
CIO, Belgacom Mobile

CRAIG PAGE
Managing Director - Technology Services, First Data
Resources

BERNADETTE KIRBY
Managing Director - IT & Product Development, NCH
Marketing Services

ARTUR URBANSKI
Chief Technology Officer, NetProspect

JIM BRACKEN
Vice-President - Engineering and Operations, CBS
Sportsline

BOB AUSTRIAN
Managing Director, Bank of America Securities

The editors of this annual report provide below an
abridged version of the panel discussion. Infosys
accepts full responsibility for any possible errors
in abridging the views of the panelists. However,
Infosys is not responsible for the views expressed by
the panelists.

Gopalakrishnan S. (Kris)
Welcome to this panel discussion on the Power of E-Commerce. I am excited
about this opportunity to learn from the scholarship and wisdom of our
eminent panelists. Thanks to the anytime-anywhere paradigm and to the
virtualization of corporations around the world that the internet has
brought about, it is well accepted by now that every corporation should
embrace this channel for survival and success. Who do you think should
drive e-commerce initiatives? The technologists or the business leaders?

Joe Prochaska
Survival and success in any technology-driven business initiative requires
both the business and the IT people to jointly drive strategic decisions.
The objectives of these two groups have to be aligned in order to leverage
the

12
<PAGE>

much-needed mutually exclusive but collectively exhaustive experience and
expertise to harness the power of the web. In my own organization, I have
found greater success in e-commerce initiatives implemented in areas where
both the IT and the business people worked together as a well-knit team.

Kris
In the future, will you look for business people with technical skills or
technical people with business skills?

Joe
We will look for both types of people. Growth in revenue and in
profitability will come only if our business people appreciate the role of
IT in creating a competitive advantage for the corporation. Resistance to
embracing new technologies is the weakest link in any corporation. We have
to create an environment where the technologists and business people are
not afraid to interact closely with each other. In fact, this is one of the
fundamental responsibilities of a CIO. This is particularly true in an
organization that has grown rapidly through acquisitions, and is trying to
erect a common information infrastructure.
Ivo Cools
I agree that e-commerce mandates a joint effort from both the technologists
and the business people. However, I believe that business people need not
be concerned about the trench-level details of technology. They have to
look at how technology can bring better business benefits to the
corporation. The e-commerce paradigm is a great opportunity for the
business people to generate new ideas on how their company's business
should be run. They should resist going beyond intelligent users of
technology. This is especially true in a hi-tech corporation like ours.
Thus, technology knowledge should lie with technologists and business
knowledge with business people. We have to create suitable interfaces for
dialogue between these two groups.

Kris
But, everybody today has to become more IT-savvy. For example, the use of
tools is increasing personal productivity. Perhaps, being a hi-tech
company, your company is an exception.

Ivo
If being IT-savvy is to know how to use IT products, I agree with you. Let
us remember that, in general, the most successful products are those that
bring great benefits to the users and are also the easiest to use. For
example, users of high quality headsets must have an appreciation not for
the technology that goes into the product but for the quality of music that
it produces.

Harsha Kumar
Because internet applications are becoming ubiquitous and are accessible
from anywhere, it is now possible for a business person from one company to
visit the website of a competitor and to evaluate how that competitor
leverages technology for the benefit of the stakeholders of the company.
This was not possible within the client/server environment. Thus, business
people need increased awareness and appreciation of technological
developments if the organization is to retain its competitive advantage.
The converse is also true. Thus, I agree with Joe that business people need
more technology awareness and that technology people need more business
awareness. More often than not, it is the business people who lead the
strategic thrust for leveraging a new technology paradigm. However, I have
seen exceptions. In one of my implementations for a large credit card
company, it was actually the IT people who drove the whole initiative
without even taking permission of the business folks. That doesn't happen
too often, though.

Kris
And, what if that initiative succeeds?

Harsha
This particular initiative will succeed. The system has gone live and is
performing well. The technology people wanted to prove a point to their
business colleagues and worked smart and hard. What was thought to be
impossible even in six to eight months by business people was completed in
six weeks! The technologists got the attention and admiration of the
business folks only because they did something radical. We have to see such
radical steps from both sides. Businessmen have to demonstrate their
appreciation for the complexities of IT. And the IT folks have to be more
responsive.

[PHOTO]

JOE PROCHASKA
CFO & Executive Vice-President
Aon Group

13
<PAGE>

Jim Bracken
Technology is changing rapidly and there is a plethora of tools available
in the market today. Every day, we get hundreds of calls from vendors who
tell us how good their tools are. In such an environment, it is easy for
technologists to lose the business perspective and to get carried away.
Thus, potentially, huge amounts of money and time can be wasted. The need
of the day is to look at the business benefits from these technologies and
to estimate the return on investment that they can offer. Thus, unless we
can have an educated dialogue between the technologists and the business
people with each group bringing their expertise to the table, we may not
get the desired returns.

Kris
Let me turn to another important question. Are traditional companies,
including technology-driven firms, run differently from dot-com companies?

Bob Austrian
I believe that every aspiring company - traditional or dot-com - will have
to look at innovation, at using that innovation to create a strategy, and
at ensuring a high velocity of decision making in implementing that
strategy. Whoever does all these things well will be a good bet for the
future. There is a lot to be said, and, we all have a lot of affection for
the latest in the `shopping cart', `personalized news', `send the quotes to
my pager or phone' kind of technology; but, at the same time, we are
entering a level of e-business and a time in the development of e-business
where success is not really about technology features and functions.
Success is about business strategy. It is about how technology and a
business mindset support that strategy. That level of abstract business
thinking is probably not going to come from the IT people unless they wear
their `What is our business strategy?' hat.

Kris
Bernadette, do you consider your company closer to the dot-com companies?

Bernadette Kirby
No, I do not think that we are very similar to a dot-com. Our
transformation has not been as much due to a dot-com mindset as due to
asking fundamental questions about our business strategy, our focus, and
our processes. As a result, we did a lot of re-engineering. In the process,
we discovered that what we had traditionally been selling was not what our
customers actually wanted to buy. We were selling paper, process, and
handling, when what our customers wanted was information.
Coming back to the question of who should drive strategy - business people
or technologists - I agree with Joe that business people and technologists
should work together for a successful solution. I have found that, often,
business people do not adapt to new paradigms as quickly as technologists
do. For example, it took us a longer time to revamp our pricing strategy
than it did to develop a re- engineering solution. The business people
could not adapt because we changed so quickly from being a paper-handling
house into being an information provider. Thus, while re-engineering an
application, we actually discovered a new product, and maybe even part of a
new business model.

Kris
Craig, any thoughts on re-inventing the business?

Craig Page
We believe that the marketplace should drive our business strategy. We want
our business folks to be out in the field talking to our customers and
coming up with new and intelligent business ideas. They then bring those
ideas to us in the IT function and challenge us to help them thrive in the
marketplace. Thus, we minimize our interaction with the business folks,
often restricting communication to e-mail since writing improves clarity of
one's ideas.

On the IT front, we must become more open-minded and solution-oriented. In
our company, the role of IT is to re-engineer and re-architect our business
processes and the underlying technology platforms.

Kris
Thanks to the internet, Harsha can now look at what the competition is
doing. Do you feel uncomfortable putting up your critical IT applications
on the internet or do you see your competitors differently today? We have
heard Prof. Prahalad talk about competitors as being possible partners.

[PHOTO]

IVO COOLS
CIO, Belgacom Mobile

14
<PAGE>

Artur Urbanski
In the realm of dot-com companies, competition is heavy and the first-mover
advantage is a big leverage. Hence, unless you are fully ready and have
some lead over your competitors, you have to be very careful in deciding
what can be seen on your website. If you go to our website, you will see
only one page and no information!

Kris
Under construction, right?

Artur
In some sense, yes. But that is not the key reason. There are many reasons
why we do not disclose too much on our website. Let me just give you two of
them. First, we do not use our website to attract prospective employees
because describing critical job profiles may disclose a lot about our idea.
Second, with a rapidly and dynamically changing marketplace, we may have to
change our direction based on where our current and potential competitors
are.

Kris
Any other views on the marketplace and on competition?

Joe
We face several challenges in leveraging the power of the web in the
marketplace. First, we bring the best product and price value to the
consumer. The net offers a good opportunity there. We have already
leveraged the web for this purpose in some of our smaller products. Second,
we have focused on individual cities. But, the web allows us to go much
beyond this. However, we have to remain both hi-tech and hi-touch because
our customers want a comfortable relationship with us.

Harsha
Coming back to the issue of the visibility of your prime applications to
your competitors, my view is that we should not worry about it. You have to
do something unique to stay ahead of the competition. That will come from
the intrinsic worth of your business model. I would argue that this is
actually embedded in your legacy applications. That is where I completely
disagree with Prof. Prahalad. Legacy systems have value and you may have to
bring about a gradual replacement of these systems.

Kris
Any other views on this issue?

Jim
Let me bring another dimension to our discussion. The life span of any new
competitive advantage is fast reducing. We used to talk of a competitive
advantage of six months, in fact, a year plus during the last decade. The
internet has brought down that period from several months to just a few
weeks. We see it all the time in our business. We launched a new,
completely re-designed store in October last year. It took only two and
half months before all our key competitors completely copied our user
interface. So, you are constantly working on your next competitive
advantage, not just sitting there and following what other people are
doing. You have to be at the cutting edge and keep pushing those new ideas
that are going to be beneficial to your business.

Kris
Are current structures of traditional organizations hindrances to agility,
adaptability and innovation required for thriving in these times?

Craig
Yes, I think so. The tendency to build organizational silos has slowed down
communication and decision-making in traditional companies. The successful
ones focus on teamwork and ensure open lines of communication. That is what
I have observed in my company too. Initiatives based on teamwork and shared
objectives have succeeded while those that shunned these have failed to
take off.

Kris
What are the issues you faced when implementing e-commerce solutions? How
did you solve them?

[PHOTO]

HARSHA KUMAR
Co-founder and Director - Product Strategy
EC Cubed

15
<PAGE>

Joe
Decentralization of IT, with each of our divisions having its own IT staff,
was a big problem. Given the acquisitions that Aon has been through, that
was inevitable. Thus, there was a not-yet-invented syndrome leading to a
lot of duplication of effort and not too much focus on improving upon
somebody else's existing work. We are now focusing on using the best
practices across all these groups. We have fostered the concept of
interdependency in Aon. Our objective is to bring all the products and
services of Aon to every individual client. This requires all our business
units to interact to enhance their collective response to each client.
Technology brings the information about all our products and services, as
well as about the client to the desktop, and helps our people identify the
best way to serve the client in an integrated value addition framework.

Bob
The number one impediment, in my opinion, is the fear of cannibalization of
an existing business model or pricing structure. As we heard, it is
difficult not to feel that some of the new e-commerce products, strategies,
services, pricing models and disintermediation effects are a real
fear-point. This can happen all the way up to the executive level, to the
point where, as we have all read, you get companies like Merrill Lynch on
the internet, trying to figure out what to do with their entire brokerage
structure and all of its professionals. They have spent so many years
building this stuff up; and then they move to an e-commerce strategy, where
all of us in this room can login and, sort of, go around our brokers. That
is a terrifying scenario, and that is also probably the biggest impediment
to effectively implementing an e-business strategy. This stands out when
you read about why someone like Wal-Mart, for instance, takes a long time
to engage in a straight-to-the-consumer-over-the-net strategy. Or when you
see that Borders or Barnes & Noble are slow in responding to the e-business
imperative.

Ivo
The first major issue we face when we engage in e-commerce is the near-zero
tolerance that the customer has towards errors and delays in transacting
business via the internet. The second is the reaction time of the
competition, which is now a matter of days in this intensely competitive
environment.

Kris
Let me now come to the technology issues in adopting an e-commerce
solution. There have been some concerns about security, reliability,
performance, and maturity of various platforms for an e-commerce solution.
Do you see these as key issues and what, in your opinion, are the
solutions?

Craig
Distrust arising from skepticism about security is certainly an issue in
our industry - the financial data processing industry. It is a huge issue
because there are lots of folks out there who do not trust the internet at
all with their credit card numbers. My 70-year old father still does not
use an ATM machine because he swears somebody in that box is going to take
his money and not give it back to him. So, it is a very serious issue from
our perspective. This can be effectively tackled if we use instruments like
certificates, packaging, and various processes that are available to us
today. It is a solvable issue and I am confident that we will overcome it.
In fact, we have overcome a number of these issues already.

Kris
What about the maturity of the platform? Traditionally, the mainframe has
been in use for over 20 to 30 years. We knew that the system was going to
work 24 hours a day and 7 days a week without any problem; but, today's
software products are very complex and have still not reached that level of
stability.

Craig
Well, stability has certainly a lot to do maturity. I remember the day when
it was okay to have 85% availability; and, then it went to 90%
availability, and, today, it is 99.9% availability, especially on the
mainframes. Our clients are demanding similar levels of stability as we get
on to the internet. We do a lot of bill presentment and bill payment
through the internet. Our clients can look at their statements and can
review their balances. Their expectations have been raised to very high
levels. They are very unforgiving of response time delays, let alone
security lapses. They have multiple choices and loyalties can shift
quickly. That is why maturity and stability are of paramount importance.

[PHOTO]

ARTUR URBANSKI
Chief Technology Officer,
NetProspect

16
<PAGE>

Joe
I guess I have to confess that I am a CFO and not a CIO. I am really
concerned about availability, reliability, maintainability, performance and
security from the business angle. Customer confidence in us depends on
these factors. Business growth comes if we can implement customer-friendly
processes on IT platforms with these attributes. That is where I depend
heavily on our IT people.

Ivo
Recovery from failure of internet systems requires agile responses from the
organization. News of such failures spreads like wild fire and corporate
reputations can easily be destroyed, thanks to mechanisms like chat, news
channels and radio on the internet.

Harsha
Being a software vendor operating at the leading edge of technology, we ask
these questions very often. We aim to bring the benefits of such technology
to our customers. Given the rapidity of change in technology, it is
unlikely that we will see maturity of platforms like in the past. However,
the security issue is pretty much solved. I think people are much more
confident now about internet transactions than they were before. Web-based
transactions are probably more secure than paper-based transactions. As far
as maturity goes, models like EJB and CORBA have vendors who specialize in
them. So, the IT departments can focus on their application layer and not
have to focus on the security level or distributed component models or
applications server infrastructure.

Bernadette
I tend to agree that security issues are reasonably well-solved in today's
environment. The IT people have to remain very close to the business and to
the development of new products and services. I cannot expect them to be
all things to all people in a very fast moving environment. Thus, we do use
a couple of companies to manage security for our website.

Artur
I would like to comment on the pain of being a first mover. If you are at
the leading edge, the marketplace shows tolerance for errors and delays.
People understand the negatives of beta versions and put up with them. We
have seen many examples of that. You can keep working on your product till
you get it right. Of course, once competition comes into play, you do not
have this luxury. However, I am not sure if the marketplace will ever show
such tolerance if the security of your product or service is not within
acceptable levels.

Jim
Security is critical for us because we cannot lose the trust of our
consumers. In my opinion, security cannot be just left to the software
developers. We also need the services of security architecture experts.

Bob
In the current context, it will be unacceptable for a company to fall
behind in performance on any front - whether it is in e-commerce
functionality, in security, in response times, or in building new
competencies. If you are a bank and you do not have the latest features in
internet banking, you will see a huge customer defection rate. For
instance, in the cellular business, churn is the number one enemy. The
cost, to the consumer, of defecting to a competitor is falling rapidly
because companies are willing to spend a lot to acquire new customers -
`Will you provide the instrument?' `Will you give three months free?' `Will
you give me free nights and weekends for rest of my life?' Probably, there
is still a group of loyal consumers because our parents and grandparents
are not going to change their consumer behavior that rapidly. The problem
will become acute in a few years when your son is going to be amongst the
mainstream consumers of P&G or Bell Atlantic. Then, performance is going to
have to be top class or companies are going to be out of the marketplace.

Kris
Now, let me come to the funding for all these new initiatives. Is the
budget for IT increasing because of the e-business phenomenon? Is IT being
funded differently? I know that the VCs look at dot-com companies in a
different way from the funding of start-ups in traditional sectors.
Near-term profitability does not seem to be a criterion for funding
dot-coms today.

[PHOTO]

JIM BRACKEN
Vice-President - Engineering and Operations,
CBS Sportsline

17
<PAGE>

Craig
Well, I think part of the issue within our company is that there is no
in-depth understanding among the financial folks of the funding needs of
these initiatives. They do not always appreciate the medium-term nature of
benefits to the corporation from e-commerce initiatives. The ROI models for
e-commerce initiatives are not yet fully developed. However, things are
changing.

Kris
Joe, do you want to respond to this?

Joe
There is some skepticism about funding e-commerce initiatives since several
of them have gone bust in the past. However, we have to recognize that this
phenomenon is not unique to e-commerce. Further, at Aon, IT budgeting has
traditionally been decentralized and it was done bottom up. Now, we have
moved to a model where standards for hardware and software are set
centrally. Thus, the amount of money available for non-standard initiatives
has come down. Further, we compute overhead charges for any new common
initiative and allocate it to individual businesses. The idea is to fund
the pilots for these initiatives, to prove them to be useful and then to
deploy them across the entire organization.

Ivo
Funding is hardly a problem in our company due to the highly competitive
marketplace we operate in. Revenues are very important to us. Thus, if we
make a business case based on revenues, we will get funding. The real
problem is to find people to execute the projects since we have a
centralized IT department, and there is considerable demand for their
expertise.

Bernadette
A lot of e-commerce development takes place under the badge of IT funding.
Most of the funding requests for such projects come from individual
departments - sales, marketing, etc. Thus, IT builds the application but
the motivation and justification has to be from a particular function. For
example, we asked our CFO to reserve 10% of the sales revenue from the new
channel towards R&D initiatives to fight the competition in the future. The
other concern is the declining marginal benefit from improving e-commerce
applications. The customers perceive the first wave as new but subsequent
improvements will not generate similar excitement and marginal revenue.

Artur
Let me put on my old corporate hat for a while and talk about my experience
at Bell Atlantic. When I started there, IT was a background activity with
hardly any visibility. There was a strong emphasis on R&D but not on IT. By
the time I left, forty to fifty thousand out of a total of one hundred and
forty thousand employees were on-line. They could send a message to the
chairman and get a direct response. So, there has been a tremendous change
in funding for IT.

Jim
In obtaining funding, we have to answer two key questions. First, are we
doing this just to be quick to market? Second, are we doing this because
this is going to be scalable and will support our business over the next 2
or 3 years? Users do not want to pay incrementally every six months for the
next improvement.

Kris
Bob, you cover several companies. Do you see a trend of increased IT
spending in companies because of e-commerce?

Bob
In general, funding for IT has been increasing. E-commerce and internet
initiatives seem to be behind this increase. In the final analysis, IT has
definitely become more popular. Whether it is due to the cultural shift
that you have mentioned or due to the fact that there is better
appreciation of the Chief Information Officer, it is not easy to say.

Kris
Is the shift in spending dramatic? You say it is increasing; is it
increasing by 1-2%, 5-10% or 15-20%?

[PHOTO]

CRAIG PPAGE
Managing Director - Technology Services,
First Data Resources

18
<PAGE>

Bob
It is pretty dramatic if you look at the revenues of companies that sell
internet commerce enabling technologies because they have gone from zero to
a couple of billions in one to two years. That is not just a one or two
percent shift in corporate budgets. However, it is still a small number in
the global IT budget which is a big percentage of total revenue.

Kris
Jim talked about getting resources to do e-commerce and other technology
work on the internet. Do you see that as an issue? And, again, probably,
there may be some differences between the companies that are going for
their IPOs - they can attract anybody they want - and the companies that do
not have that flexibility. Can you throw some light on resources and some
innovative ways to cut costs?

Jim
In the past, you had access to a large talent pool if you wanted to get a
client/server or mainframe application. Today, it is extremely difficult to
find talent well-versed in internet and web technologies. Thus, today, we
do not look for these skills while recruiting. We just look for people with
some generic skills in programming and design. Then, we get these people
well trained in internet and web technologies in-house, and deploy them.

Kris
So, are you able to find the resources you need?

Jim
I am not going to say that it is easy. We certainly have an advantage of
being a dot-com company that is among the Top 50. It is still not easy
finding qualified resources that are really skilled and have the background
to make the transition to working in this fast-paced environment.

Bernadette
In the UK, we have used outsourcing for the last four years. Since we have
long-term relationships with outsourcers, the internet-driven demand for
resources has not made any difference to us. We have had to take some of
our existing IT people and convert them into business analysts or project
managers. I am not terribly sure that all of them were happy in their new
role. So we let them off - back to coding - now and again. However, I must
say outsourcing has been very popular in the UK for a long time.

Harsha
The human resource crunch is a big issue. Since we are a software company,
the kinds of people we need are different from what an IT shop would need.
But, it is such a big issue in Connecticut that we are moving our entire
office to Boston. You know how painful this is if you have been through a
company move. So, the human resource issue is huge. The Boston market has a
lot of talent; but there is also a lot of competition. Silicon Valley is
probably another place with a lot of talent.

Ivo
In Belgium, the situation is same as in the UK. It has become increasingly
difficult to find people in the last four years. We have resorted to a lot
of outsourcing.

Joe
I agree with what Bernadette said. We too have taken out some of our
in-house people and put them into project management and business analysis.
They weren't really comfortable there to start with; so, we invested lots
of time and resources in training them in new systems, codes, new
programming languages. We then made them a part of the team in some of the
development work we were doing. And so, we kept that embedded knowledge in
our company. Thus, we made proactive investments in training. This has
helped us in making some transitions. But, clearly, we have to do a lot of
outsourcing to be able to get the skill-sets we need to move forward.

[PHOTO]

BERNADETTE KIRBY
Managing Director - IT & Product Development
NCH Marketing Services

19
<PAGE>

Craig
I agree that the difficulty in getting good resources has not just begun
this year. I do not think that it is a result of e-commerce. It is just a
result of emphasis on data and information processing. Three or four years
ago, we actually took a group of folks and began to train them on
distributed technology and tried to move them from COBOL and Assembler to
C++ and Java. And, they did not make the transition well. Now, we find the
situation to be totally different. We have internal people just knocking on
our doors asking: When are you going to teach me these new technologies?
So, there are a lot of opportunities in-house, but there is also a lot of
brand new technology out there. This requires us to go to outsourcing
companies with the required skills. If we do not do this, we will spend six
to eight months trying to learn these new technologies ourselves; and, by
then, we would have already missed the opportunity.

Kris
With that, we conclude the discussion. I am sure that everybody is excited
about e-commerce and about the large opportunities it offers. Today, people
are keenly aware of the challenges involved in e-enabling their
organizations and are working towards addressing them effectively.

I would like to thank all the panelists for sharing their wealth of
knowledge and insights with all of us. Let us give them a big hand. Thank
you.

[PHOTO]

BOB AUSTRIAN
Managing Director,
Bank of America Securities

20
<PAGE>

Management council

<TABLE>
<S> <C> <C> <C>
[PHOTO] [PHOTO]

[PHOTO] [PHOTO] [PHOTO]

[PHOTO] [PHOTO] [PHOTO] [PHOTO]

[PHOTO] from top to bottom [PHOTO] from top to bottom

from top to bottom Balakrishnan V. from top to bottom Girish G. Vaidya
Associate Vice President - Senior Vice President -
Nandan M. Nilekani Finance Deepak Sinha, Gp.Capt. Banking Business Unit
Managing Director, President & Senior Manager -
Chief Operating Officer; Basab Pradhan Computers & Communications Gopalakrishnan S.
Chairman - Management Council Regional Manager and Division Deputy Managing Director -
Vice President - Sales Customer Service &
Mohandas Pai T. V. West North America Dinesh K. Technology
Senior Vice President - CFO, Director - Human Resources
Administration & Facilities; Development, Information Hema Ravichandar
Secretary - Management Council Systems, Quality & Senior Vice President -
Productivity and Human Resources Development
Ajay Dubey Communication Design Group
Vice President - Delivery -
Europe

Balasubramanian P., Dr.
Senior Vice President -
Domain Competency Group
</TABLE>

21
<PAGE>

Management council

<TABLE>
<S> <C> <C> <C>
[PHOTO] [PHOTO]

[PHOTO] [PHOTO] [PHOTO] [PHOTO]

from top to bottom from top to bottom [PHOTO]

Jan DeSmet Rajiv Kuchhal
Vice President - Associate Vice President -
Infosys Business Consulting Communication & Product
Services Services - Nortel and PCC,
Development Center - Mohali
Phaneesh Murthy
Senior Vice President - Shibulal S. D.
Sales & Marketing and Director - Customer Delivery
Communication & Product
Services

Prabhu M. S. S., Dr. from top to bottom from top to bottom
Senior Vice President -
Engineering Services and Raghavan S. Sobha Meera P. R.
Consultancy Practice Associate Vice President - Regional Manager and
Quality & Productivity Vice President - Sales
Canada & East North America
Raghupathi G. Bhandi
Senior Vice President - Srinath Batni
Delivery - Enterprise Senior Vice President -
Solutions Delivery - West North
America

Vasudeva Rao L.
Senior Vice President -
Delivery - Canada & East
North America

Yegneshwar S., Dr.
Vice President - Education
& Research

</TABLE>

22
<PAGE>

<TABLE>
<CAPTION>
Board of directors Management council invitees
- ------------------------------------ -------------------------------------------------------------------
<S> <C> <C>
N. R. Narayana Murthy Bhashyam M. R. Shiv Shankar N.
Chairman and Chief Executive Officer Associate Vice President - Senior Project Manager -
Software Engineering Process Group Development Center - Chennai

Nandan M. Nilekani Bhaskar Ghosh Sivashankar J.
Managing Director, President and Associate Vice President - Senior Manager -
Chief Operating Officer Development Center - Bhubaneswar Information Systems

Susim M. Datta Binod H. R. Srinivasan V.
Director Associate Vice President - Associate Vice President -
Commercial & Facilities Delivery - eBusiness Practice
Deepak M. Satwalekar
Director Dheeshjith V. G. Srinjay Sengupta
Associate Vice President - Regional Manager and
Ramesh Vangal Delivery - Asia Pacific Associate Vice President -
Director Sales - Europe
Hariharan S. Murthy
Prof. Marti G. Subrahmanyam Regional Manager and Sriram V.
Director Associate Vice President - Sales - Regional Manager and
Communication & Product Services Associate Vice President -
Philip Yeo Sales - Asia Pacific
Director Ashwani K. Khurana
Senior Vice President - Srivathsa P. S.
Gopalakrishnan S. National and International Sales & Senior Manager -
Deputy Managing Director Support - Banking Business Unit Recruitment -
Human Resources Development
Dinesh K. Nandita Gurjar
Director Senior Manager - Subhash Dhar
Learning & Development - HRD Regional Manager and
Shibulal S. D. Associate Vice President -
Director Narendran K. Sales - eBusiness Practice
Senior Project Manager -
Development Center - Mangalore Subramanyam G. V.
Senior Project Manager -
Parameswar Y. Software Engineering & Technology
Audit committee Associate Vice President - Labs
Deepak M. Satwalekar, Chairman Communication & Product Services -
Susim M. Datta Other Telecom Business Sukumar S.
Ramesh Vangal Assistant Manager -
Prof. Marti G. Subrahmanyam Prasad T. P. Corporate Planning
Regional Manager and
Compensation committee Associate Vice President - Sudha Kumar
Prof. Marti G. Subrahmanyam, Chairman Sales - South North America Senior Manager -
Susim M. Datta Corporate Marketing
Deepak M. Satwalekar Pravin Rao U. B.
Ramesh Vangal Vice President - Venkataramanan T. S.
Delivery - South North America Senior Project Manager -
Nominations committee Banking Business Unit
Susim M. Datta, Chairman Priti Jay Rao
Ramesh Vangal Associate Vice President - Vijay Kumar C.
Prof. Marti G. Subrahmanyam Development Center - Pune Associate Vice President -
Philip Yeo Infrastructure Development
Ramadas Kamath U.
Investor grievance committee Associate Vice President - Vivekanand P. Kochikar
Nandan M. Nilekani, Chairman Accounts & Administration Senior Project Manager -
Dinesh K. Education & Research
Shibulal S. D.
Management council invitees - Voice of the Youth
Bhaskar Chakravarthy Sajan V. Mathew
Eshan Joshi Srinivas V.
Indranil M. Smitha Murthy
Meera Rajeevan Vinayak Pai V.
Nagaraj N. S.
</TABLE>

23
<PAGE>

Directors' report
- --------------------------------------------------------------------------------

To the members,
Your directors are pleased to present their report on the business and
operations of your company for the year ended March 31, 2000.

<TABLE>
<CAPTION>
Financial results in Rs. crore *
- -----------------------------------------------------------------------------------------------------------------
Year ended March 31 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenues 921.46 512.74
Total expenditure 542.58 320.99
Operating profit (PBIDT) 378.88 191.75
Interest - -
Depreciation 53.23 35.89
Profit before tax and extraordinary items 325.65 155.86
Provision for tax 39.70 22.94
Profit after tax before extraordinary items 285.95 132.92
Effect of extraordinary item - provision no longer required 7.57 -
Extraordinary income, net of tax - 2.34
Net profit after tax and extraordinary items 293.52 135.26
- -----------------------------------------------------------------------------------------------------------------
Appropriation
Interim dividend paid 9.92 4.00
Dividend recommended - final 19.84 8.11
Total dividend 29.76 12.11
Dividend tax 3.27 1.21
Transferred to - capital reserve -- -2.34
- general reserve 260.49 119.60
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

* 1 crore equals 10 million.

Results of operations

Your company experienced rapid growth this year as well. Total revenues grew to
Rs. 921.46 crore during the year from Rs. 512.74 crore last year, a growth rate
of 79.71%. Operating profit grew to Rs. 378.88 crore (41.12% of total revenues)
from Rs. 191.75 crore (37.40% of total revenues), a growth rate of 97.59%.
Operating profit margins increased due to enhanced revenue productivity, lower
growth in administrative expenses, a broadening of the business mix, and an
increase in other income. Profit after tax, from ordinary activities, increased
to Rs. 285.95 crore (31.03% of total revenue) from Rs. 132.92 crore (25.92% of
total revenue), an increase of 115.12%.

Your company had instituted a contingency plan effective October 1, 1998 to meet
any possible disruption in client support due to the Year 2000 impact on the
technology and communication infrastructure provided to the company by its
vendors. The contingency plan called for the creation of a total provision of
Rs. 20.00 crore based on an initial estimate. This provision was required to be
made over six quarters starting October 1998. Accordingly, your company had made
a total provision of Rs. 9.99 crore up to the quarter ended June 30, 1999. At
this time, your company was led to believe that all its telecommunication
service providers were Year 2000 ready, and therefore did not expect significant
disruption of these facilities. During the second quarter of this remaining
year, your company made an appraisal and re-estimated the provision required for
meeting such contingencies over the next two quarters of fiscal 2000 and was of
the opinion that the provision already made was adequate for the purpose and
that, henceforth no further provisions were required.

During the year, an amount of Rs. 2.42 crore was spent towards support for the
Year 2000 transition activities and the same was set-off against the provision
made earlier. After such set-off, a balance of Rs. 7.57 crore remained in the
provision account, which was written back as it was no longer required.

24
<PAGE>

Your company has been preparing to leverage the opportunities offered by the
e-business paradigm, and has taken necessary steps to do so. This required that
your company incur business restructuring costs for creating a knowledge
infrastructure, acquiring people with technical skills in the e-commerce area
and for e-inventing the company. Accordingly, your company made a provision of
Rs. 3.50 crore during the quarter ended September 30, 1999. An amount of Rs.
3.11 crore was incurred towards e-inventing the company and was set-off against
this provision. After this set-off, a balance of Rs. 0.39 crore remains as a
provision for e-inventing the company as on March 31, 2000.

Dividend

An interim dividend of Rs. 1.50 per share (30% on par value of Rs. 5) was paid
in November 1999. Your directors now recommend a final dividend of Rs. 3.00 per
share (60% on par value of Rs. 5) making, in all, a total dividend of Rs. 4.50
per share (90% on par value of Rs. 5), for the current year. The total amount of
dividend is Rs. 29.76 crore as against Rs. 12.11 crore for the previous year.
Dividend (including dividend tax), as a percentage of net profit after tax from
ordinary activities, is 11.55% as compared to 10.02% in the previous year. The
final dividend is, however, payable pro rata on the equity shares issued upon
the exercise of ADS-linked stock options. Under the Indian Income Tax Act 1961,
the receipt of dividend is tax-free in the hands of the shareholders. The tax on
distributed profits, payable by the company, increased to Rs. 3.27 crore from
Rs. 1.21 crore.

Increase in share capital

During the year, upon your approval, a stock split of 2-for-1 (a subdivision of
every equity share from the par value of Rs. 10 each into two equity shares of
par value of Rs. 5 each) was effected. Your company also issued 11,900 shares
(equivalent to 23,800 ADS) on the exercise of ADS-linked stock options issued
under the 1998 Employee Stock Option Plan. Due to this, the outstanding issued,
subscribed and paid-up equity share capital increased from 3,30,69,400 shares of
par value of Rs. 10 each during the previous year to 6,61,50,700 shares of par
value of Rs. 5 each.

Business

The Indian software exports industry demonstrated healthy growth during the
year. The year saw your company winding down its Year 2000 related engagements,
in line with its risk management strategy. Your company has successfully managed
the transition of its Year 2000 related work. While Year 2000 engagements
contributed to 0.90% of revenues in Q4 of this year, down from 24.00% in Q1 of
fiscal 1999, internet and e-commerce related work grew to 18.80% of revenues in
Q4 of this year, up from 3.70% during Q4 of fiscal 1999. Your company's software
export revenues grew by 73.85% to Rs. 869.70 crore from Rs. 500.25 crore, and 99
new clients were added during the year. Your company continues to focus on
offshore software development, re-engineering, maintenance and products. The
share of the fixed-price component of the business was 31.50%, as compared to
36.70% during the previous year. Revenue productivity in dollar terms, grew by
19.80% during the year.

Domestic market

The domestic market witnessed improved performance over the previous year. With
the release of the New Generation Core Banking Solution, the successor to
Bancs2000, the banking sector in India now has a leading-edge web-enabled
product. This solution incorporates the latest technology and business trends
including internet-based interfaces and an integrated banking business platform.
Further, with banks actively pursuing an e-commerce strategy, your company's
pioneering efforts in this area have paid off. BankAway - a powerful e-commerce
platform, and PayAway - the universal bill payment and presentment engine, have
emerged as winners in the marketplace. Four out of the six banks in India
offering internet banking services are now powered by BankAway. Further,
BankAway was included in the report `Ranking International internet Banking
Solutions' by Meridien Research, US, a global strategic and technology research
company focussing on the financial services industry. BankAway is the only
internet banking solution from Asia to be covered in the report, and according
to Meridien Research, "Infosys is poised to become a leading player in the Asian
market". The Banking Business Unit acquired 4 new clients - UTI Bank, IDBI Bank,
Karnataka Bank and Federal Bank, increasing its client base to 22 banks in
India. The revenue from domestic sales during the year increased by 46% over the
previous year. Your directors hope that this trend will continue to accelerate
in the future.

25
<PAGE>

Global Development Centers

Last year, as part of its globalization program, your company had stated its
intention to start development centers outside India. Based on the
recommendations of an internal committee, your company set up a Global
Development Center at Toronto, Canada in January 2000. This initiative will help
accelerate your company's responses to North American client requirements. In
October 1999, your company opened two Proximity Development Centers in the U.S.
- - one each at Fremont, California, and Boston, Massachusetts. These centers will
further help your company address the requirements of its clients with increased
alacrity.

Development centers in India

Construction of the software development center at Infosys Park I - adjoining
your company's existing facility at Electronics City, Bangalore - is progressing
well. One more block with a total built-up area of 29,600 sq. ft. and a capacity
to accommodate up to 225 employees was made operational during this year, as
also a food court with a total area of 42,205 sq. ft. Infosys Park I now has the
capacity to accommodate up to 1,440 employees on a total built-up area of
2,46,400 sq. ft. Construction of a Customer Care Center of 77,000 sq. ft at
Infosys Park I is in progress. During the year, the construction of Infosys Park
II began on a plot of 14.06 acres, adjacent to your company's headquarters in
Electronics City, Bangalore. This facility, when completed, will comprise around
290,000 sq. ft. of built-up area. Two software development blocks of 70,000 sq.
ft. each, with a total capacity to accommodate 1,200 employees, were completed
in March 2000. Your company's software development facility, with a capacity to
accommodate 1,200 employees at the Pune Infotech Park, Hinjewadi, Pune, was
completed this year. Phase I of a new development facility to accommodate 100
employees at Mangalore was inaugurated in February 2000. When completed, this
facility will accommodate up to 1,200 employees. Construction of software
development centers at Chennai and Bhubaneswar commenced during Q4 this year.
When completed, each of these facilities will accommodate up to 2,400 employees.
In addition, your company set up software development centers in Hyderabad,
Mohali and Mysore. These cities have excellent pools of trained personnel as
well as good infrastructure and will complement existing development centers
located across the country at Bangalore, Bhubaneswar, Chennai, Mangalore, and
Pune.

Overseas branches

To accelerate the sales effort in overseas markets, sales offices were opened in
Australia, Belgium and Sweden. During the coming year, additional sales offices
are expected to be opened in North America and Europe. Expansion of the overseas
sales network will help your company access new markets and broaden its client
base. As at the year-end, your company had 16 sales offices overseas.

Yantra Corporation

The sales effort at Yantra was further intensified. Your directors are informed
that Yantra has installed a high quality management team to implement its
aggressive growth plans. Such accelerated effort requires funds as well as close
links with prospective-client and prospective-employee networks. Recently,
Yantra closed a $ 15 million venture funding round led by RHO Management and
included new investors like Boston Millenia. Existing investors of Yantra -
Charles River Ventures, One Liberty Ventures, Hambrecht & Quist and Draper
International also co-invested. With this round of financing, Infosys' economic
interest in Yantra has come down to 25.10% (on a fully diluted basis), even
though Yantra continues to be a subsidiary under the Companies Act, 1956 as the
entire common stock is held by your company. The Board of Yantra were of the
opinion that its financial information is of a private and confidential nature,
and its publishing may be detrimental to Yantra's growth plans. Therefore, given
your company's economic interest in Yantra is below 50%, your company requested
the Government of India for an exemption from providing details required under
Section 212 of the Companies Act, 1956 and also from attaching the financial
statements of Yantra to your company's balance sheet. The government has granted
an exemption, and hence such information is not disclosed.

26
<PAGE>

JASDIC

JASDIC Park Company is an Indo-Japanese consortium founded by Mr. Kenichi Ohmae,
a well-known management strategist, along with a few Japanese companies and
three Indian companies including your company. The aim of JASDIC is to provide
high-quality software services from India to the Japanese market. This is in
line with your company's strategy to diversify its geographic client base. This
investment is yielding positive results and your company sees further growth in
revenues from Japan through this venture.

Incubator funding

Your company is in an industry with great opportunity for highly competent and
entrepreneurial professionals, who have high aspirations. In keeping with your
company's philosophy of encouraging budding entrepreneurs within the
organization, your company has provided an incubation mechanism for them to
launch their own ventures while continuing to derive benefits from a close
association with Infosys. Having launched Yantra in 1996, your company recently
piloted another idea Onscan - a web-focussed wireless-enabled comprehensive
notification service. Your company has put in place a management team and is in
the process of transferring the intellectual property related to the product to
Onscan, Inc. The Onscan management team is in the process of raising venture
capital to fund the company's growth plans.

Strategic investments

Your company had earlier announced its intention to make selective investments
in leading-edge companies that have the potential to yield substantial business
benefits. Such investments are also envisaged in select venture capital funds.
Benefits from these investments would primarily be in the form of revenue and
net income enhancements, through technology partnerships and access to the
latest technological developments. Your company made its first investment this
year in Massachusetts-based EC Cubed, Inc., a dynamic application provider for
B2B e-commerce, granting it Rs. 13.08 crore ($ 3 million) in capital. EC Cubed,
Inc., is an existing client of your company and this business relationship has
witnessed high growth in the recent past.

Acquisitions

Your company has articulated that acquisitions are one of the key instruments of
its growth strategy. Accordingly, your company has initiated discussions with
the Government of India for a blanket approval for such acquisitions. Benefits
from such acquisitions, as envisaged, include access to new clients, new
geographical areas and new service offerings as well as an increase in
per-capita revenue productivity. Further, the ability to leverage your company's
Global Delivery Model to improve the margins of the acquired business is an
important means for unlocking value from the transaction. Availability of proven
methodologies, tools and other intellectual property (IP) would be a key
criterion since the IP would be scalable across a large group of people in your
company and will help enhance skill levels and productivity. The government has
recently liberalized acquisition guidelines to permit software companies to
freely make acquisitions up to ten times their export revenues in the preceding
year.

Quality

After fully leveraging the value of Level 4 implementation of the Capability
Maturity Model (CMM) of the Software Engineering Institute at Carnegie Mellon
University, USA, your company obtained the CMM Level 5 accreditation during the
year. In keeping with its philosophy of openness and sharing its best practices
with the industry, your company accepted the request of Prof. Pankaj Jalote of
Indian Institute of Technology, Kanpur, India to publish a book entitled "CMM in
Practice: Processes for Executing Software Projects at Infosys (The SEI series
in Software Engineering)". Incidentally, this is the first book ever to be
published on CMM Level 4 implementation.

The new information infrastructure

Your company firmly believes that cutting-edge information infrastructure is a
strategic asset for its business. The factors that have driven your company to
implement world-class internal systems are:

. the challenge of managing consistently high growth,
. the strong focus on quality and the resultant dependence on systems and
processes,

27
<PAGE>

. the criticality of having timely information in the dynamic and
knowledge-intensive IT industry, and

. the need to provide 24 x 7 information availability to a workforce, mobile
across various time zones.

In the early- and mid-1990s, your company had put in place several homegrown
applications which were far from being seamlessly integrated. However, as your
company's scale of operations increased and the information requirements of its
workforce became more sophisticated, your company decided to adopt a
standardized platform that would be the cornerstone of its internal information
architecture.

The implementation of SAP R/3 in all the core areas of your company's business
was a landmark event in its quest to make IS a strategic partner to the line
function. Today, this core platform is supplemented by select inhouse web-based
applications that are seamlessly integrated into it.

Going ahead, your company's objective is to focus on state-of-the-art
applications with web-based interfaces. Among the projects in the pipeline is
the implementation of a system for Customer Relationship Management that will
further strengthen client partnerships.

Additional information to shareholders

In earlier years, your company provided additional information in the form of an
intangible assets scoresheet, human resources accounting, value-added analysis,
brand accounting, economic value-added analysis, and financial statements in
substantial compliance with the GAAP of six countries in addition to the U.S.
and India. Such information is provided in this year's annual report also.

Corporate governance

With increasing globalization, there has been a renewed thrust on corporate
governance in India. Your company continues to be a pioneer in benchmarking its
corporate governance policies with the best in the world and its efforts are
widely recognized by investors in India and abroad. Your company won the first
National Award for Excellence in Corporate Governance, 1999 instituted by the
Ministry of Finance, Government of India and sponsored by the UTI Institute of
Capital Markets. Your company was selected from an initial short-list of
approximately 60 companies by a panel headed by the former Chief Justice of
India, Mr. P. N. Bhagwati. Further, the Stock Exchange, Mumbai chose your
company as the first winner of their Award for Excellence in Corporate
Governance.

The Shri Kumar Mangalam Birla Committee on Corporate Governance constituted by
the Securities and Exchange Board of India (SEBI) submitted its report in
November 1999, which was accepted by SEBI in December 1999. The recommendations
of the committee are mandatory for certain classes of companies effective fiscal
2001. Your company has complied with most of the recommendations in fiscal 2000
itself. The compliance report on various recommendations made by the committee
is provided elsewhere in this report. In addition, your directors have
documented your company's internal policies on corporate governance. The
increasing diversity of the investing community and the integration of global
capital markets make corporate governance a key issue in the investment
decisions of investors. In line with the committee's recommendations, the
management discussion and analysis of the financial position of the company is
provided elsewhere in this annual report and is incorporated here by reference.

Capital market developments

The Securities and Exchange Board of India (SEBI) mandated the trading of
Infosys shares only in the dematerialized form, with effect from January 4,
1999. Over 96% of the company's shares are presently held in electronic form and
with this your company had become the largest electronically held listed company
in India. The market capitalization of your company increased to Rs. 58,887.02
crore as on March 31, 2000 as compared to Rs. 9,672.80 crore as on March 31,
1999, based on the quotations on the Indian stock exchanges. The equity shares
listed on the NASDAQ continue to quote at a premium to the Indian price.

28
<PAGE>

Employee Stock Offer Plan (ESOP)

1994 Stock Offer Plan (the 1994 plan)

During the year, your company granted letters of right to acquire 30,000 shares
(as adjusted for the 2-for-1 stock split effected in February 2000) originally
reserved under the 1994 plan. As of March 31, 2000, letters of right to acquire
341,400 shares (as adjusted for the 2-for-1 stock split effected in February
2000) were in force. The 1994 plan has come to an end and no further options
will be issued under this plan, in future. No grants were made to the senior
management during the year.

1998 Stock Option Plan (the 1998 plan)

Your company had issued 294,300 ADS-linked stock options to 72 employees during
the year under the 1998 plan. Details of the options granted under the 1998 plan
during the year are given below.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Description Details
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Total number of shares 3.20 million ADS (Adjusted for stock split of 2-for-1 announced
during the year)

2. The pricing formula Not less than 90% of the fair market value as on date of grant

3. Ratio of ADS to equity shares One share represents two ADS

4. Weighted average price per option granted $ 114.30 (100% of fair market value on the date of grant)

5. Options granted during the year 294,300 options representing 147,150 equity shares

6. Options exercised during the year 23,800 options (granted in 1999) representing 11,900 equity shares

7. Total number of options in force 689,500 options representing 344,750 equity shares

8. Grant to senior management No. of options
Phaneesh Murthy 8,000
Sobha Meera 5,000
Basab Pradhan 5,000
- ----------------------------------------------------------------------------------------------------------------------
Total 18,000
- ----------------------------------------------------------------------------------------------------------------------

9. Employees holding 5% or more of the total number of options granted during the year: Nil
</TABLE>

1999 Stock Option Plan (the 1999 plan)

Your company had issued 10,14,500 stock options to 1,228 employees during the
year under the 1999 plan. The details of the options granted under the 1999 plan
during the year are given below.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Description Details
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Total number of shares 66,00,000 shares (Adjusted for stock split of 2-for-1
announced during the year)

2. The pricing formula At the fair market value as on date of grant

3. Weighted average price per option granted Rs. 4,267.80 (100% of fair market value on the date of grant)

4. Options granted during the year 10,14,500 options for 10,14,500 equity shares

5. Options exercised during the year Nil

6. Total number of options in force 10,06,800

7. Grant to senior management No. of options
Deepak Sinha 4,000
Ajay Dubey 8,000 Raghupathi G. Bhandi 8,000
Balakrishnan V 10,000 Raghavan S. 10,000
Balasubramanian P. 8,000 Srinath Batni 12,000
</TABLE>

29
<PAGE>

<TABLE>
<S> <C>
Hema Ravichandar 8,000 Vasudeva Rao L. 12,000
Mohandas Pai T. V. 14,000 Yegneshwar S. 10,000
Girish Vaidya 8,000
- ----------------------------------------------------------------------------------------------------------------------
Prabhu M. S. S. 6,000 Total 1,18,000
- ----------------------------------------------------------------------------------------------------------------------
8. Employees holding 5% or more of the
total number of options granted during the year: Nil
</TABLE>

Liquidity

A liquid balance sheet is a key element of the financial strategy of your
company. Enhanced liquidity reduces financial risk and allows a rapid shift in
direction should the market so demand. During the current year, internal cash
accruals have more than adequately covered working capital requirements, capital
expenditure and dividend payments, and have resulted in a surplus of Rs. 83.39
crore. As on March 31, 2000, excluding the funds collected under the ADS issue,
your company had liquid assets of Rs. 231.19 crore as against Rs. 137.13 crore
at the previous year-end. Including the funds collected under the ADS issue,
your company had liquid assets of Rs. 508.37 crore. These funds have been
invested both in rupee and dollar deposits with banks and financial
institutions. A high level of liquidity reduces return on shareholders funds.
However, a balance between high returns on funds deployed in the business and
the ready availability of cash for strategic decisions on growth will have to be
maintained. The creation of physical and technological infrastructure will
absorb a significant part of the liquid assets over the next three years.

Year 2000 risks and issues

The Year 2000 transition has been smooth, for both your company as well as its
clients. Your directors believe that this has been a result of the preparatory
work done for the transition as well as the changes already made to the systems.
The company provided 24 x 7 transition support to its users and clients by
setting-up a Year 2000 War Room. Very few calls came in and all of them were
handled immediately. The financial impact of the transition was insignificant.
Your directors are happy to report that the transition was completed smoothly
and, going forward, see no material financial impact arising from Year 2000
issues.

Organizational changes

During the year, your company re-organized and aligned its delivery and
marketing channels in order to decentralize operations, to ensure better
responses to client needs, to focus on developing domain expertise, and to
develop the next-generation business leaders. The revised management structure
is provided elsewhere in the report.

Research and education initiatives

In fiscal 1999, your company instituted the Infosys Fellowship Program at five
Indian Institutes of Technology, the Indian Institute of Science, the National
Center for Software Technology, Pune University, three Indian Institutes of
Management, the National Law School of India University and the Institute of
Chartered Accountants of India for Ph.D. programs in computer science,
management, law and accounting. This was part of your company's initiative to
foster excellence in education. During the current year, an amount of Rs. 75
lakhs was allocated by way of a one year grant to these institutions to continue
this initiative. In addition, your company has donated Rs. 1.0 crore to the
Indian Institute of Information Technology, Bangalore.

Infosys Foundation

Your company is committed to contribute to its social milieu and, in 1998,
established Infosys Foundation as a not-for-profit trust to support initiatives
that benefit society-at-large. The Foundation supports organizations devoted to
the cause of destitutes, the rural poor, spastics, senior citizens and
illiterates. It also helps preserve certain arts and cultural activities of
India which are under threat of fading out.

A summary of the work done by the Foundation appears elsewhere in this report.
On your behalf, your directors express their gratitude to the honorary trustees
of the Foundation for sparing their valuable time and energy for the activities
of the Foundation.

30
<PAGE>

Community services

Your company continued the three social programs initiated last year - Catch
Them Young, Train the Trainer and Rural Reach. The Catch Them Young program
identified 150 promising students for intensive computer training. The Rural
Reach program, conducted in four languages, brought elementary computer literacy
to over 1500 participants from rural India. The Train the Trainer program
familiarized 75 faculty members from various universities with the latest
developments in the IT industry.

Further, your company launched a new program, Computers@Classrooms, jointly with
Microsoft Corporation. As part of this initiative, your company committed to
donate 282 computers from its purchases in earlier years to over 100
institutions across India. Your directors expect these numbers to increase
significantly in the future.

Awards

Your directors are happy to report on some of the awards that your company
received during the year.

. For the fifth year in succession, your company received the Silver Shield
from the Institute of Chartered

. Accountants of India for the Best Presented Accounts, amongst the entries
received from non-financial, private sector companies, for the year
1998-99.

. The Asiamoney poll of financial analysts voted Infosys the best in
management among the listed companies in India for the fourth time in a
row.

. Your company was unanimously awarded the first "National Award for
Excellence in Corporate Governance" for the year 1999 by a panel of judges
chaired by former Chief Justice of India, Mr. P. N. Bhagwati. This award is
conferred by the Government of India and is sponsored by the UTI Institute
of Capital Markets. Your company also received the first "Award for
Excellence in Corporate Governance" instituted by the Stock Exchange,
Mumbai.

. In a survey conducted among 1636 senior mangers of the Indian industry by
The Economic Times, Infosys was voted the Most Admired Company in India.

. The Software Magazine, USA has ranked Infosys as one of the top 100
companies in its Software 500 rankings.

Fixed deposits

Your company has not accepted any fixed deposits and, as such, no amount of
principal or interest was outstanding as of the balance sheet date.

Directors

As per Article 122 of the Articles of Association, Mr. Nandan M. Nilekani, Mr.
K. Dinesh and Mr. S. M. Datta retire by rotation in the forthcoming Annual
General Meeting. Mr. Nandan M. Nilekani and Mr. K. Dinesh being eligible, offer
themselves for re-appointment. Mr. S. M. Datta has expressed his intention not
to seek re-election. Your directors place on record their deep appreciation of
the yeoman service rendered by Mr. S. M. Datta during his tenure on the board.
Mr. S. M. Datta participated actively in the deliberations of the board and your
company benefited immensely from his insights.

Your directors have expanded the board and co-opted Mr. Philip Yeo, Executive
Chairman of the Economic Development Board, Government of Singapore as an
additional director. Mr. Yeo's appointment as director requires the approval of
the members at the ensuing Annual General Meeting.

As part of the globalization process, your directors consider it necessary to
increase the size of the board up to 18 members. The necessary resolutions for
obtaining the approval of the members are incorporated in the notice for the
ensuing Annual General Meeting. The increase also requires the approval of the
Government of India under Section 259 of the Companies Act, 1956.

Auditors
The auditors, Bharat S Raut & Co. Chartered Accountants, retire at the ensuing
Annual General Meeting and have confirmed their eligibility and willingness to
accept office, if re-appointed.

31
<PAGE>

FII investment limit

Recently, the Government of India has raised the investment limit in an Indian
company for Foreign Institutional Investors, from 30% to 40%, subject to the
approval of the board of the investee company, and a special resolution of the
shareholders of such a company. Your directors are of the opinion that it would
be in the interest of the company to increase the limit of such investment to
40%. The necessary resolutions are being placed before the members in the
ensuing Annual General Meeting.

Conservation of energy, research and development, technology absorption, foreign
exchange earnings and outgo

The particulars as prescribed under subsection
(1)(e) of section 217 of the Companies Act, 1956, read with the Companies
(Disclosure of particulars in the report of board of directors) Rules, 1988, are
set out in the annexure included in this report.

Particulars of employees

As required under the provisions of section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of employees) Rules, 1975, as amended, the
names and other particulars of employees are set out in the annexure included in
this report.

Acknowledgments

Your directors thank the clients, vendors, investors and bankers for their
continued support of your company's growth. Your directors place on record their
appreciation of the contribution made by the employees at all levels, who,
through their competence, hard work, solidarity, cooperation and support, have
enabled the company to achieve rapid growth.

Your directors thank the Government of India, particularly the Department of
Electronics, the Customs and Excise departments, Software Technology Parks -
Bangalore, Chennai, Hyderabad, Mohali, Mysore, Pune, Bhubaneswar and New Delhi,
the Ministry of Commerce, the Reserve Bank of India, VSNL, the Department of
Telecommunications, the state governments, and other government agencies for
their support during the year, and look forward to their continued support in
the future.

<TABLE>
For and on behalf of the board of directors
<S> <C> <C>

Sd. Sd.
Nandan M. Nilekani N. R. Narayana Murthy
Bangalore Managing Director, President Chairman
April 11, 2000 and Chief Operating Officer and Chief Executive Officer
</TABLE>

32
<PAGE>

Annexure to the directors' report
- --------------------------------------------------------------------------------

a) Particulars pursuant to Companies (disclosure of particulars in the report
of the board of directors) Rules, 1988

1. Conservation of energy

The operations of your company are not energy-intensive. Adequate measures
have, however, been taken to reduce energy consumption by using
energy-efficient computer terminals and by the purchase of energy-efficient
equipment incorporating the latest technology. Your company has replaced
the existing incandescent lamps with CFL fittings and has shifted to the
use of electronic ballast to reduce the power consumption of fluorescent
tubes. Your company constantly evaluates new technologies and invests in
them to make its infrastructure more energy-efficient. Energy-efficient
transformers and UPS systems have been purchased. Energy-saving air
conditioners are being purchased and air-conditioned areas have been
treated with heat-resistant material to reduce heat absorption. These
measures have enhanced energy efficiency. As energy cost forms a very small
part of the total cost, the impact on cost is not material.

2. Research and development (R&D)

Research and development of new services, designs, frameworks, processes
and methodologies continue to be of importance at Infosys. This allows your
company to reuse designs across projects, and thereby increase quality and
productivity.

a. R&D initiative at institutes of national importance

This initiative has been described in the directors' report.

b. Specific areas for R&D at Infosys

Since businesses and technologies are changing constantly, continuous
investments in research and development need to be made. Your company has
taken the approach that its research must be beneficial to the company and
to its clients either in the short term or in the medium term. As in
earlier years, your company continues to conduct research in the areas of
software engineering, offshore project management, the Global Delivery
Model, emerging technologies, and new tools and techniques. Continuous
education is required to keep up with changes around. The traditional form
of classroom training is synchronous, and requires the trainer and trainee
to be physically present in the same location at the same time.
Effectiveness of non-traditional and asynchronous modes of training is an
area of research at your company.

Your company has, as a result of research, been able to develop processes
and methodologies for engineering services. This was instrumental in your
company getting quality certification for the engineering services group. A
consulting methodology has also been developed. Research has been initiated
in the areas of software architecture and performance engineering. This is
to help projects deliver high performance / high transaction volume
software solutions to clients. Research has also been started in object and
component technologies to create modules for repeatability of projects.
Your company continues to undertake research in the following areas:

. General software engineering - Your company is constantly improving
its methodologies to increase quality and productivity and to reduce
time-to-market for its clients. Since time-to-market is important,
your company also needs to deliver features on an ongoing basis -
almost every month.

. New technologies - Your company has developed a Rapid Application
Development methodology for e-commerce and internet projects.

. Products - Your company continues to enhance and add additional
products in the Banking area.

Infosys has various groups engaged in R&D. The Education and Research
division looks at short-term and long-term research in the areas of
Knowledge Management, Education & Training, methodologies, and techniques.
Software Engineering and Technology Labs (SETLabs) looks at emerging
technology trends in the short term and consists of two divisions. SysLab
looks at emerging technology trends in the long term. Comfactory looks at
object technology, reuse, component libraries, and related areas.

c. Benefits derived as a result of R&D activity

Your company has been able to maintain margins despite changes in
technology and increased personnel costs. For instance, your company
successfully managed to reduce its exposure to Year 2000 based services,
down to 0.9% of

33
<PAGE>

revenues in Q4 this year. This was accompanied by an increase in internet
and e-commerce revenues, up to 18.8% in Q4 this year.

d. Future plan of action

There will be continued focus and increased investment in the above R&D
activities. Future benefits are expected to flow in from initiatives
undertaken this year.

<TABLE>
<CAPTION>
e. Expenditure on R&D for the year ended March 31 in Rs. croore
----------------------------------------------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenue expenditure 8.08 9.51
Capital expenditure 0.15 0.30
Total R&D expenditure 8.23 9.81
R&D expenditure as a percentage of total revenue 0.89% 1.91%
----------------------------------------------------------------------------------------------------------
</TABLE>

3. Technology absorption, adaptation and innovation

During this year, your company has standardized the use of Pentium III 500
MHz system with 128 MB RAM and at least 10 GB hard disk space as the
standard desktop PC. All personnel traveling frequently to client sites are
given Pentium notebook computers. Your company has made significant
additions to the number of servers used for software development as well as
file and print servers. During the year, your company has also provided
video conferencing facility to all its Software Development Centers and
offices across the world. Your company has made investments in several
engineering workstations and in software required for engineering design
work. Your company has also invested in middleware technologies, mobile
technologies as well as Palm computing technologies; your company is now
capable of integrating these to provide total technology solutions to its
clients.

4. Foreign exchange earnings and outgo

a. Activities relating to exports, initiatives taken to increase exports,
development of new export markets for products and services, and
export plans

In the past, your company has had a strong export focus. In fiscal 2000,
94.38% of revenues were derived from exports. Your company has, over the
years, built up a substantial direct marketing network all over the world.
Its marketing offices are situated in North America, Europe and Asia
Pacific, and are staffed with sales and marketing specialists who directly
sell your company's services to large, international clients. The export
thrust of your company will continue in the future.

During the year, your company opened marketing offices in Melbourne in
Australia, Brussels in Belgium and Stockholm in Sweden. It also set up
development centers in Toronto, Canada, and Fremont and Boston in the U.S.
Your company has also launched an initiative to increase the awareness of
the Infosys brand, and of its products and services, globally. Several
press and public relations exercises have been launched in the U.S. to
enhance your company's visibility. Further, your company plans to take part
in several international exhibitions to promote its products and services.

During the year, your company's Banking Business Unit won new clients in
Maldives and Mauritius. The long-term goal of your company is to be a
highly respected name in the global market for its services and products,
and to continue to realize a significant portion of its revenue from
exports.

<TABLE>
<CAPTION>
b. Foreign exchange earned and used for the year ended March 31 in Rs. crore
-----------------------------------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Foreign exchange earnings 851.72 477.44
Foreign exchange outgo (including capital goods and imported software packages) 336.58 192.56
-----------------------------------------------------------------------------------------------------------

For and on behalf of the board of directors

Sd. Sd.
Nandan M. Nilekani N. R. Narayana Murthy
Bangalore Managing Director, President Chairman
</TABLE>

34
<PAGE>

<TABLE>
<S> <C> <C>
April 11, 2000 and Chief Operating Officer and Chief Executive Officer
</TABLE>

35
<PAGE>

Annexure to the directors' report
- --------------------------------------------------------------------------------
Information as per Section 217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of employees) Rules, 1975, and forming part of the
directors' report for the year ended March 31, 2000

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Sl. Name Designation Qualification Age Date of joining
No. (Years)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Ajay Dubey Vice President B.Tech.(IIT) 42 07.06.1993
*2. Ajay Vishwanath Gokhale Associate Project Manager B.Sc., MMS 36 19.07.1999
3. Amit Kumar Bhadra Manager (Customer Support) B.Sc., M.Sc. 34 22.01.1998
4. Ardhendu Sekhar Das Associate Project Manager B.E. 34 23.01.1998
5. Aseem Purohit Regional Manager MMS 32 17.06.1996
*6. Ashok V. Arunachalam Senior Project Manager B.Tech., MS 37 03.05.1999
7. Babuji S. Senior Project Manager B.E. 50 17.12.1997
*8. Badrinarayanan
Jagannathan Project Manager B.E.(Hon.), PGD 33 02.08.1999
9. Balakrishnan V. Associate Vice President (Finance) B.Sc., ACA, ACS, AICWA 35 02.09.1991
10. Balashankar Project Manager B.E. 44 17.12.1997
11. Balasubramaniam T. A. Assistant Project Manager B.Sc., PGD 37 22.05.1997
12. Balasubramanian P. Senior Vice President B.Tech.(IIT), M.Tech. (IIT), 50 01.10.1995
Ph.D (PURDUE)
*13. Balwant Chitubhai Surti Manager - Business Consultancy LLB, AICWA 39 16.08.1999
14. Bhashyam M. R. Senior Manager (Quality) B.E., M.E. 49 07.07.1995
15. Bhaskar Ghosh Senior Project Manager B.Sc., MBA 40 03.02.1997
16. Bibhu R. Pattanayak Senior Project Manager B.Tech., M.Tech. (IIT) 42 11.08.1997
17. Bikramjit Maitra Senior Project Manager B.Sc., B.Tech. 45 22.02.1999
18. Binod H. R. Sr. Manager (Customer Support) B.E. 37 02.08.1993
19. C. S. Srinivas Associate Vice President B.E. 43 15.10.1998
20. Chandra Shekar Kakal Senior Consultant B.E., MBA 39 01.03.1999
*21. Chandrakanth Desai Manager (CCD) B.Tech., M.Tech. (IIT) 44 17.01.2000
22. Chandramouli J. Senior Project Manager B.E. 32 15.06.1988
23. Col. Krishna C. V. Advisor (Infrastructure) B.E., MBA 53 01.04.1998
*24. D. T. Bhat Manager - Testing (BBU) B.Sc., M.Sc. 45 02.08.1999
25. Deepak Sinha Senior Manager (CCS) B.Sc.(Hon.)(IIT) 52 06.04.1998
26. Deepak N. Hoshing Senior Project Manager B.Tech. (IIT) 37 10.10.1996
27. Dheeshjith V. G. Associate Vice President B.Sc., M.E. (IISc) 36 14.09.1987
28. Dinesh Krishnaswamy Director B.Sc., M.Sc. 45 01.09.1981
29. Ganesh G. Senior Project Manager B.E. (Hon.), PGD 37 02.05.1994
30. Gautam Parija Manager (F&A) B.E., MBA 41 27.03.1997
31. Geetha G. Associate Project Manager B.E. 34 01.12.1995
32. Girish G. Vaidya Senior Vice President B.E., PGD (IIM) 49 22.01.1999
33. Gopalakrishnan S. Deputy Managing Director B.Sc., M.Tech. (IIT) 44 01.02.1981
34. Guruprasad R. A. Assistant Project Manager B.E. 31 05.10.1998
35. Hema Ravichandar Senior Vice President (HRD) BA, PGD (IIM) 38 30.12.1998
36. Ishwar C. Halalli Project Manager B.E., M.Tech. 37 19.01.1996
*37. Jayaram B. G. Project Manager B.Sc.(Hon.), M.Sc. 46 10.12.1999
(Education & Research)
38. Kannan Iyer Project Manager B.Sc., PGD 38 01.10.1997
39. Khurana A. K. Senior Vice President B.Tech. (IIT) 49 01.06.1992

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Sl. Name Experience Gross Previous employment - Designation
No. (Years)Remuneration (Rs.)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Ajay Dubey 18 828,328 ANZ Bank, New Zealand - Technical Team Leader
*2. Ajay Vishwanath Gokhale 13 423,938 Siemens Information Systems Limited - Associate Consultant
3. Amit Kumar Bhadra 14 672,990 Unit Trust of India - Asst. General Manager Systems
4. Ardhendu Sekhar Das 13 636,468 ICIM Intl Inc. - Consultant
5. Aseem Purohit 10 640,293 Dataline & Research Technologies (I) Ltd. - General Manager
*6. Ashok V. Arunachalam 11 552,629 New Bridge Networking Corpn. - Manager Advanced Technical
Support
7. Babuji S. 26 944,952 Mahindra British Telecom Ltd. - Chief Manager
*8. Badrinarayanan Jagannathan 11 447,028 Oxford Health Plans Incorporations - Sr. Technical Analyst
9. Balakrishnan V. 15 842,977 Amco Batteries Ltd - Senior Accounts Executive
10. Balashankar 20 664,481 B.E.L - Manager
11. Balasubramaniam T. A. 14 632,076 Mastek Limited. - Project Leader
12. Balasubramanian P. 27 1,235,001 Hitek S/W Engineers Ltd. - CEO \ Technical Director

*13. Balwant Chitubhai Surti 18 395,821 The Saraswat Co-Operative Bank Limited - Senior Manager
14. Bhashyam M. R. 26 779,420 Aeronautical Dev. Agency - Scientist
15. Bhaskar Ghosh 18 659,185 Philips India Ltd. - Sr. Marketing Manager
16. Bibhu R. Pattanayak 17 737,683 AT&T - Project Manager
17. Bikramjit Maitra 20 714,834 R. S. Software - Vice President-Technology
18. Binod H. R. 14 738,947 Motor Industries Co. Ltd. - Senior Engineer
19. C. S. Srinivas 18 845,951 Tektronics - Manager
20. Chandra Shekar Kakal 17 718,207 Ramco Systems - Product Manager
*21. Chandrakanth DesaiManager 23 128,632 Indian Air Force - Wing Commander
22. Chandramouli J. 12 611,414 -
23. Col. Krishna C. V. 24 719,001 Indian Army - Signal Intteligence Decorate
*24. D. T. Bhat 23 403,342 Infosys Technologies Limited - Consultant
25. Deepak Sinha 31 723,808 Indian Air Force - Group Captain
26. Deepak N. Hoshing 15 635,515 Unisys Distr. - Sr. Systems Analyst
27. Dheeshjith V. G. 12 757,753 -
28. Dinesh Krishnaswamy 24 1,294,343 Patni Computer Systems Pvt Ltd. - Sr.Software Engineer
29. Ganesh G. 13 722,015 Asian Paints - Systems Executive
30. Gautam Parija 19 630,021 Osedc Limited - Deputy General Manager - Planning
31. Geetha G. 13 757,866 I. T. I. Limited - Senior Engineer
32. Girish G. Vaidya 25 1,220,619 ANZ Grindlays Bank Ltd. - Head & Director Operations
33. Gopalakrishnan S. 20 1,233,480 Software Sourcing Co. - V.P. Technical Group
34. Guruprasad R. A. 10 765,581 Spectrum Infotech Pvt. Ltd. - Sr. Design Engineer
35. Hema Ravichandar 17 935,112 Empower Associates - Proprietrix
36. Ishwar C. Halalli 13 711,141 At&T SSTL - Manager - Technical
*37. Jayaram B. G. 23 202,647 Raffler Software - Project Manager

38. Kannan Iyer 18 689,518 Ramco Systems - Manager - Technical
39. Khurana A. K. 28 1,047,142 New Building Material Project - Chief Executive
40. Krishnamoorthy Ananthasivam Associate Vice President B.Tech.(IIT), M.Sc. 38
41. Krishnamurthy T. S. Senior Project Manager B.E.(Hon.) 37
42. Krishnan S. Manager (International Taxation) B.Com., ACA 32

43. Latha K. Project Manager B.Sc., MA 36
44. Lilly Vasanthini Associate Project Manager B.E., PGD 37
45. Madhav Dattaraj Kulkarni Associate Project Manager B.Tech.(IIT), M.Tech.(IIT) 33
46. Mallya P. D. Associate Vice President B.Tech., M.Tech.(IIT) 45
47. Merwin Fernandes Senior Manager BCOM 40
(Sales & Marketing)
48. Milind S. Deshpande Project Manager B.E. 33
*49. Mini V. Sarasamma Consultant B.E. 31
50. Mohammed Hussain Naseem Manager-International Sales B.Tech.(IIT), MS 34
(Banking)
51. Mohan Sekhar Associate Vice President B.E., MS 37
52. Mohan M. M. Senior Manager (HRD) B.Com., PGDBM 55
53. Mohandas Pai T. V. Senior Vice President (Finance B.Com., LLB, FCA 41
& Admn.) and CFO
*54. Nadathur S. Raghavan Joint Managing Director B.E. 56
55. Nagaraj R. N. Senior Manager (Product Support) LLB, M.A. 45
56. Nandakumar N. Project Manager B.Sc. 41
(Education & Research)
57. Nandan M. Nilekani Managing Director, B.Tech.(IIT) 44
President & COO
*58. Nandita Mohan Gurjar Corporate Development Manager B.A., M.A. 39
59. Narasimman R. Associate Project Manager B.Sc., M.Tech.(IIT) 36
60. Narayana Murthy N. R. Chairman & CEO B.E., M.Tech.(IIT) 53

61. Narendran Koduvattat Project Manager B.Sc. 33
62. Padmanabhan D. Senior Project Manager B.Sc. 37
*63. Palanisamy Palaniappan Project Manager B.E., M.Tech.(IIT), Ph.D (IISc) 41
64. Parameswar Y. Associate Vice President B.E., M.Tech.(IIT) 44
*65. Parthasarathy M. A. Senior Project Manager B.E. 50
66. Poornima Harekrishna Associate Project Manager B.Sc., PGD 36

67. Prabhakara H. R. Project Manager M.Tech.(IIT) 39
68. Prabhu M. S. S. Senior Vice President B.E., Ph.D (IISc) 52
69. Pravin Rao U. B. Associate Vice President B.E. 38
70. Priti Jay Rao Associate Vice President B.Sc., M.Sc.(IIT) 40
71. Raghavan S. Associate Vice President B.E. 38
*72. Raghu Ponnapalli Senior Project Manager B.Sc., MS 35
*73. Raghunath K. Banking Customer Support Manager BCOM 46
*74. Raghupathi N. Cavale Senior Consultant (ERP) B.E., MS (IIT) 38
75. Raghupati Bhandi Vice President B.E., M.Tech.(IIT) 39

76. Raghuveer B. K. Associate Project Manager B.E. 32
77. Rajasekaran K. S. Senior Manager (Business Consultancy) B.Sc., M.Sc., PGD 41
*78. Rajeev Easwara Warrier Project Manager B.E. 33
*79. Rajgopal S. Kishore Project Manager B.Tech.(IIT), M.Tech.(IIT) 35
80. Rajiv Kuchhal Associate Vice President B.Tech.(IIT) 34

*81. Raju Bannur Project Manager B.E., M.Tech.(IIT) 36
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
Sl. Name Date of joining Experience Gross Previous employment - Designation
No. (Years) Remuneration (Rs.)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
40. Krishnamoorthy Ananthasivam 10.01.1986 16 967,953 Urban Transport Development Corpn. - Research Asst.
41. Krishnamurthy T. S. 26.10.1987 15 684,875 Zenith Electro Systems Pvt Ltd. - Software Executive
42. Krishnan S. 15.09.1997 9 672,767 Bennett, Coleman & Company Limited - Senior
Business Correspondent
43. Latha K. 22.08.1997 11 669,480 Riyam Computer Services - Project leader
44. Lilly Vasanthini 28.05.1997 15 624,368 C-Dot - Programme Engineer
45. Madhav Dattaraj Kulkarni 04.05.1998 11 664,687 PRT (Barbados) Ltd. - Project Manager
46. Mallya P. D. 15.12.1986 22 704,637 IDS - A.V.P
47. Merwin Fernandes 06.08.1997 18 755,561 DSQ Software Ltd - Business Development Manager

48. Milind S. Deshpande 15.12.1993 11 600,561 Reesan Imr - Senior A\P
*49. Mini V. Sarasamma 23.08.1999 7 345,648 Softline / KPMG - SAP Consultant
50. Mohammed Hussain Naseem 07.09.1998 10 645,298 Wipro GE Medical Systems - National Product Manager

51. Mohan Sekhar 17.08.1998 13 812,116 AT&T - Operations Manager
52. Mohan M. M. 11.07.1992 30 693,732 Motor Industries Co Ltd. - Asst.Officer HRD
53. Mohandas Pai T. V. 17.10.1994 20 1,171,588 Prakash Leasing Limited - Executive Director

*54. Nadathur S. Raghavan 01.09.1981 36 1,052,713 Patni Computer Systems Pvt. Ltd - Asst. Manager
55. Nagaraj R. N. 06.03.1995 24 649,798 State Bank of Hyderabad - Manager
56. Nandakumar N. 02.12.1996 19 613,323 Mastek Limited - Training Manager

57. Nandan M. Nilekani 01.07.1981 22 1,302,458 Patni Computer Systems Pvt Ltd. - Asst. Project
Manager
*58. Nandita Mohan Gurjar 20.12.1999 8 199,068 Wipro Infotech - Corporate Manager - HRD
59. Narasimman R. 03.04.1998 15 637,473 DRDO - Scientist
60. Narayana Murthy N. R. 18.03.1982 31 1,416,068 Patni Computer Systems Pvt Ltd. - Head-Software
Group
61. Narendran Koduvattat 08.03.1993 14 604,514 PSI Data Systems Ltd. - Senior Software Engineer
62. Padmanabhan D. 02.11.1992 16 705,665 PSI Data Systems Ltd. - Product Manager
*63. Palanisamy Palaniappan 21.09.1999 7 350,910 C. S. T. Inc., - Director Asia-Pacific
64. Parameswar Y. 14.10.1996 20 1,073,076 C-Dot - Divisional Manager
*65. Parthasarathy M. A. 30.08.1999 28 430,488 IMR Global Ltd. - Group Manager
66. Poornima Harekrishna 02.11.1998 13 608,145 ICON Information Technologies Services - Project
Manager
67. Prabhakara H. R. 04.03.1996 15 611,063 ITI Limited - Senior Engineer
68. Prabhu M. S. S. 01.08.1997 26 1,154,474 Tata Consultancy Services - V.P. Systems Manager
69. Pravin Rao U. B. 04.08.1986 14 847,238 Indian Institute of Science - Trainee Programmer
70. Priti Jay Rao 02.07.1997 17 882,084 L&T - Project Manager
71. Raghavan S. 16.04.1987 16 861,139 B. H. E. L. - Maintenance Engineer
*72. Raghu Ponnapalli 09.12.1999 14 213,057 Sun Microsystems Inc. - IR Technical Consultant
*73. Raghunath K. 16.09.1999 23 329,038 Canara Bank - Manager
*74. Raghupathi N. Cavale 13.12.1999 8 224,148 Price Waterhouse Coopers - Principal Consultant
75. Raghupati Bhandi 07.07.1988 16 887,462 Wipro Information Technology Ltd. - Sr.Systems
Engineer
76. Raghuveer B. K. 16.04.1992 10 630,420 Ashok Leyland Ltd. - Head
77. Rajasekaran K. S. 08.11.1983 16 713,352 Voores High School - Teacher
*78. Rajeev Easwara Warrier 02.11.1999 11 260,174 Aspect Development - Group Leader
*79. Rajgopal S. Kishore 09.08.1999 12 556,154 Novell - Manager
80. Rajiv Kuchhal 05.02.1990 13 699,751 Telecommunications Consultants (I) Ltd. -
Asst.Manager
*81. Raju Bannur 17.01.2000 11 139,759 IMR Global - Group Manager
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

36
<PAGE>

Annexure to the directors' report (contd.)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
Sl. Name Designation Qualification Age Date of joining
No. (Years)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
82. Rama N. S. Senior Project Manager B.E. 50 31.03.1999
83. Ramadas Kamath U. Senior Manager BBM, FCA 39 01.07.1994
(Accounts & Administration)
84. Ramakrishnan M. Associate Project Manager (Quality) B.Sc. 43 04.09.1996
85. Ramanamurthy M. S. Project Manager B.E., M.Tech.(IIT) 34 08.10.1997
86. Ravi Kiran Project Manager B.E. 36 15.02.1996
87. Ravi C. Senior Project Manager B.E. 34 02.05.1988
88. Ravishankar M. R. Project Manager B.E., M.E.(IISc) 34 16.01.1998
*89. Rohan Joshi Senior Manager - B.E., MBA 38 02.11.1993
Corp Mark (Operations)
90. Sajaneel S. Ankola Associate Project Manager B.Sc. (Hon.) 33 01.07.1998
*91. Sanat Rao Manager - Business Consultancy B.Com., PGD (IIM) 35 20.12.1999

*92. Sandeep Srivastava Senior Project Manager B.Tech. 35 10.05.1999
93. Sanjeev V. R. Senior Project Manager B.E., PGD 42 12.02.1998
*94. Saravanan S. Associate Project Manager B.Tech.(IIT), PGD (IIM) 33 27.12.1999

95. Satish G. Bableshwar Project Manager B.E. 33 23.06.1988
96. Saumyasanta Chaudhuri Project Manager B.Tech.(IIT), M.E. 45 30.01.1998
97. Seshan P. Senior Project Manager B.E.(Hon.) 39 02.11.1990
98. Sharad K. Hegde Senior Vice President B.Tech.(IIT), PGD 41 01.07.1983
*99. Shekar S. R. Manager - User Education (BBU) B.Com., CAIIB 44 01.07.1999
100. Shibulal S.D. Director B.Sc., M.Sc., MS (Boston Univ.) 45 01.09.1981
*101. Shiv Shankar N. Senior Project Manager B.Tech.(IIT) 38 04.08.1999
102. Shivaprasad K. G. Associate Vice President B.Sc.(Hon.), M.Sc. 44 10.06.1996
*103. Shivaprasad Rai B. Project Manager B.Sc., MBA 39 28.06.1999
*104. Sitaram M. L. Manager (CCD) B.E. 43 24.01.2000

105. Siva Kumar N. S. Regional Manager B.Com. 32 14.04.1997
106. Sivashankar J. Senior Manager (MIS) B.Tech., MMS 40 22.01.1999
107. Skanthaswamy T. V. Project Manager B.E.(Hon.), M.Tech.(IIT) 42 18.03.1998
108. Sreenivas Gunturi Senior Project Manager B.E., M.Tech.(IIT) 38 18.02.1998
*109. Sridharan Baskar Project Manager B.Sc., MBA 40 20.03.2000
110. Srinath Batni Senior Vice President B.E., M.E.(IISc) 45 15.06.1992
*111. Srinivas B. G. Senior Consultant B.E. 39 03.05.1999
*112. Srinivas K. S. Senior Consultant (ERP) B.E. 35 06.03.2000
113. Srinivasan V. Senior Project Manager B.Tech.(IIT) 37 03.03.1997
*114. Srinivasaraghavan Project Manager B.Tech.(IIT), M.Tech.(IIT), 38 02.11.1999
Gopalakrishnan Ph.D (IIT)
115. Srivathsa P. S. Manager (HRD) B.Sc.(Hon.), PGD 37 09.03.1994
116. Subbaraya M. Sastry Associate Vice President B.Tech., PGD (IIM) 41 13.04.1995
117. Subrahmanya S. V. Project Manager B.E., M.Tech.(IIT) 38 08.10.1996
(Education & Research)
118. Subramanian K. Project Manager B.Sc., M.Sc. 40 22.04.1996
- ------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Sl. Name Experience Gross Previous employment - Designation
No. (Year) Remuneration (Rs.)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
82. Rama N. S. 27 943,427 Satyam Computer Services - Consultant
83. Ramadas Kamath U. 15 804,496 Manipal Printers & Publishers Ltd. - Accountant

84. Ramakrishnan M. 23 608,960 Canara Bank - Officer
85. Ramanamurthy M. S. 13 646,247 Tata Consultancy Services - Asst.Consultant
86. Ravi Kiran 13 916,254 Asea Brown Boveri Ltd. - Sr. Engineer Marketing
87. Ravi C. 12 666,876 -
88. Ravishankar M. R. 12 646,759 Tata Consultancy Services - Associate Consultant
*89. Rohan Joshi 12 261,635 Philips Internationals - Junior Vice President

90. Sajaneel S. Ankola 11 643,956 Tata Infotech - Manager
*91. Sanat Rao 9 175,380 Citicorp Information Technology Industries Ltd -
Consultant - Dataware Housing Unit
*92. Sandeep Srivastava 13 821,795 Satyam Computer Services Ltd. - Senior Consultant
93. Sanjeev V. R. 19 810,313 C-Dot - Divisional Manager
*94. Saravanan S. 12 159,180 A.F. Ferguson & Co. - Manager-
Business Dev./Assignment/Client Management
95. Satish G. Bableshwar 12 654,935 -
96. Saumyasanta Chaudhuri 24 615,035 International Computers India Limited - Senior Manager
97. Seshan P. 16 941,128 Stanford Business Software (I) Pvt Ltd. - Senior Engineer
98. Sharad K. Hegde 19 1,162,670 Patni Computer Systems Pvt Ltd. - Software Engineer Trainee
*99. Shekar S. R. 23 460,598 State Bank of Mysore - Manager Grade III
100. Shibulal S.D. 24 1,233,480 Sun Micro Systems - Sr. I.R. Manager
*101. Shiv Shankar N. 18 490,324 PRT - Senior Manager
102. Shivaprasad K. G. 23 731,615 Oman Computer Services - Software Development Manager
*103. Shivaprasad Rai B. 16 498,469 Raffles Software - Resident Manager - Europe
*104. Sitaram M. L. 20 116,939 Network Solutions Pvt. Ltd. - General Manager -
Facility Management Services
105. Siva Kumar N. S. 12 654,403 JK Technosoft - Manager
106. Sivashankar J. 15 709,440 Anuvin Business Solutions - Director
107. Skanthaswamy T. V. 17 708,832 Tata Consultancy Services - Project leader
108. Sreenivas Gunturi 15 914,201 IBM Global Services - Dy. General Manager
*109. Sridharan Baskar 19 20,410 G.I.C. Mumbai - Asst. Manager
110. Srinath Batni 22 962,735 PSI Bull - Senior Manager Marketing
*111. Srinivas B. G. 15 677,759 Asea Brown Boveri - Manager Erp
*112. Srinivas K. S. 0 45,997 Oracle - Principal Consultant
113. Srinivasan V. 14 662,918 Deutsche Software - Asst.Manager Systems
*114. Srinivasaraghavan 7 273,363 Peritus Software Services - Program Manager
Gopalakrishnan
115. Srivathsa P. S. 15 630,952 Essar Services Ltd. - Management Trainee
116. Subbaraya M. Sastry 17 675,762 Verifone - Manager - MIS
117. Subrahmanya S. V. 10 625,969 Ashok Leyland Information Technology Ltd. -
Asst.Project Manager
118. Subramanian K. 17 634,002 Mastek Limited - Asst. Project Manager
119. Subramanyam G. V. Senior Project Manager B.E. 33 15.06.1988 12
120. Sudha Kumar Senior Manager B.E., PGD (IIM) 35 14.03.1994 12
(Corporate Marketing)
*121. Sudheer K. Associate Vice President B.Tech.(IIT) 39 14.11.1986 15
*122. Suma Subramanian Associate Manager B.Sc., PGD 32 30.04.1999 7
(Human Resources)
*123. Sunil Kumar Kolangara Project Manager B.Tech., PGD (IIM) 33 07.02.2000 9
124. Suresh J. K. Project Manager B.Tech.(IIT), MS (IIT), 40 27.07.1998 17
(Education & Research) Ph.D (IISc)
125. Suresh Kamath K. Associate Manager - Accounts B.Com. 37 26.11.1987 12
126. Surya Prakash K. Project Manager B.E. 31 23.07.1990 10
127. Suvro Banerjee Project Manager B.E., MS 35 15.10.1998 12
*128. Tapas Roy Associate Project Manager B.Sc., M.Sc. 41 08.02.1999 16

129. Vasudeva Rao L. Vice President B.E. 38 15.01.1985 15
130. Venkataramanan T. S. Senior Project Manager B.E. 35 27.11.1993 14
131. Venkateswarlu Pallapothu Senior Project Manager B.E., M.Tech.(IIT) 39 29.03.1999 16
*132. Verender Kumar Associate Project Manager B.E. 31 09.08.1999 11
133. Vijay Ratnaparkhe Project Manager B.E., M.Tech.(IIT) 35 11.05.1998 12
134. Vijay Kumar C. Associate Vice President B.E. 38 03.11.1987 19
(Infr. Devt.)
*135. Vijaya Raghavan T. R. Banking Specialist B.Sc., PGD 46 01.09.1999 23
136. Vinayak Pai V. Associate Manager (Finance) B.Com., ACA 29 03.04.1995 8
137. Vivekanand P. Kochikar Project Manager B.Tech.(IIT), M.Tech., 36 02.05.1994 9
(Education & Research) Ph.D (IIT)
138. Yegneshwar S. Associate Vice President B.E. (Hon.), Ph.D (IIT) 39 06.04.1993 12
- ---------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Sl. Name Gross Previous employment - Designation
Remuneration (Rs.)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
119. Subramanyam G. V. 840,572 -
120. Sudha Kumar 627,403 A. F. Fergusson & Co. - Consultant

*121. Sudheer K. 434,487 Indian Organics Chemicals Ltd - Programmer Analyst
*122. Suma Subramanian 598,529 Free Lance Consultant for HR - HR Consultant

*123. Sunil Kumar Kolangara 99,050 Unit Trust Of India - Asst. General Manager
124. Suresh J. K. 683,244 ADA Bangalore - Dy. Project Director

125. Suresh Kamath K. 613,856 Sukruta Agencies - Accounts Asst.
126. Surya Prakash K. 666,455 -
127. Suvro Banerjee 613,720 TCG S/W - Managing Consultant
*128. Tapas Roy 28,571 United Bank of India - Manager (EDP)
129. Vasudeva Rao L. 762,180 Software Services - Project Manager
130. Venkataramanan T. S. 624,596 Tata Engineering & Locomotive Co. Ltd. - Senior Systems Officer
131. Venkateswarlu Pallapothu 711,333 Tata Consultancy Services - Senior Consultant
*132. Verender Kumar 387,757 IBM Global Services - Project Manager
133. Vijay Ratnaparkhe 691,255 Citicorp Overseas Software Ltd. - Consultant
134. Vijay Kumar C. 753,839 Self Employed

*135. Vijaya Raghavan T. R. 352,822 Vysya Bank - Senior Manager
136. Vinayak Pai V. 697,456 Sajawat Industries - Chief Accountant
137. Vivekanand P. Kochikar 609,207 H. M. T. Ltd - Dy. Engineer

138. Yegneshwar S. 670,931 I. I. M. Ahmedabad - Assistant Professor
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

NOTE:

Remuneration comprises basic salary, allowances and taxable value of
perquisites.
*Employed for part of the year.
None of the employees are related to any director of the company.

<TABLE>
<CAPTION>
For and on behalf of the board of directors
<S> <C> <C>
Sd. Sd.
Bangalore Nandan M. Nilekani N. R. Narayana Murthy
April 11, 2000 Managing Director, President Chairman
and Chief Operating Officer and Chief Executive Officer
</TABLE>

<PAGE>

Risk management
- --------------------------------------------------------------------------------
The management cautions readers that the risks outlined below are not exhaustive
and are for information purposes only. Investors are requested to exercise their
own judgement in assessing various risks associated with the company and to
refer to discussions of some of these risks in the company's earlier annual
reports and Securities and Exchange Commission filings.

Infosys has adopted an integrated approach to managing the risks inherent in
various aspects of its business. As part of this approach, the board of
directors is responsible for monitoring risk levels on various parameters, and
the management council is responsible for ensuring implementation of mitigation
measures, if required. Prudential norms aimed at limiting exposures are an
integral part of this approach. Formal reporting and control mechanisms ensure
timely information availability and facilitate proactive risk assessment.

Given the rapidly changing environment in which Infosys operates, a dynamic
framework for risk assessment is of paramount importance. The company has
proactively capitalized on the recent upsurge in e-business related outsourcing
activity - and has also made suitable adjustments in its risk assessment
methodology to manage risks specific to e-business activity.
The company's risk management process includes timely dissemination of
information on the parameters outlined below. Periodic risk reports to senior
management help identify potential areas for concern and therefore enable swift
corrective action, when required.

1. Business portfolio risks

E-business exposure
Service concentration
Client concentration
Geographical concentration
Vertical domain concentration
Technology concentration

2. Financial risks

Foreign currency rate fluctuations
Liquidity
Leverage

3. Legal and statutory risks

Contractual liabilities
Statutory compliance

4. Internal process risks

Project execution
Disaster prevention and recovery
Technological obsolescence
Human resource management
Internal control systems
5. Political risks

1. Business portfolio risks

Excessive dependence on any single business segment increases risk and
therefore needs to be avoided. To this end, the company has adopted
prudential norms to prevent undesirable concentration. The management takes
appropriate corrective steps, when required.

1.1 E-business exposure

In recent years, the internet has emerged as an extremely efficient
platform for enabling business transactions. This revolution has given rise
to several new firms with business models that are challenging traditional
modes of doing business. Further, this has also created an unprecedented
business opportunity for IT service companies such as Infosys.

38
<PAGE>

Over the last two years, Infosys has demonstrated its ability to partner
with dot-com start-ups to bring their ideas to market in highly compressed
time-frames. Infosys' expertise in integrating a wide range of platforms
with the latest internet technologies has also helped several traditional
businesses embrace the e-paradigm. The recent upsurge in our partnerships
with start-ups has resulted in increased exposure to new risk factors, as
outlined below.

. Business risks: The high risk of failure, the possibility of lack of
sustained funding from venture capitalists, and the possibility of the
venture getting acquired by a third party result in lack of
predictability in revenues from the account and also result in higher
credit risk.

. Project execution risks: Frequent shifts in business models, and the
consequent changes in client requirements, increases the difficulty in
delivering solutions within a pre-determined timeframe and budget.

. Legal risks: Given that e-business initiatives in dot-coms are highly
mission-critical, the litigation risk associated with these accounts
is significant.

Measures that Infosys has put in place to address these risks are outlined
below.

1.1.1 Business risks

The company chooses its clients in the dot-com sphere based on their
potential to succeed. These decisions are based on an analysis of the
business plan, the promoters' track record, quality of venture capital
backing, extent of funds available, etc. Further, for most start-ups, the
payment structure is designed such that a significant proportion of the
amount is received in advance of the work delivered.

1.1.2 Project execution risks

A robust iterative solution delivery methodology has been developed which
aids Infosys in managing scope changes, reducing cycle times, and ensuring
a good fit between the clients' requirements and the solution delivered.
Further, the usage of CMM Level 5 processes ensures that the risks involved
in any given project are identified well in advance, discussed with the
client, and mitigated early in the project life cycle through appropriate
steps.

1.1.3 Legal risks

An in-depth analysis of legal issues specific to the e-business segment has
been performed and contracts with these companies include specific clauses
to protect the company's interests.

1.2 Service concentration

Infosys has an array of service offerings across various horizontal and
vertical business segments. To prevent excessive dependence on any service
offering that caters to one-time market opportunities, the company has
adopted a norm to restrict business from any such service to less than 25%
of total revenue. Further, these opportunities (such as Year 2000
conversion services) were used to make inroads into hitherto untapped
client accounts. These have resulted in a broader client base for other
services and have also helped build fruitful, long-term client
relationships.

During the year, revenues of the company from Year 2000 conversion services
decreased steadily. This decline was offset by increasing revenues from
e-business engagements. The table below shows the movement of these two
segments in fiscal 2000.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
Quarter 1 Quarter 2 Quarter 3 Quarter 4
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Year 2000 revenues 12.1% 9.4% 5.8% 0.9%
E-business revenues 6.4% 10.3% 15.6% 18.8%
------------------------------------------------------------------------------------------------------------
</TABLE>

1.3 Client concentration

Excessive exposure to a few large clients has the potential to impact
profitability and to increase credit risk. However, large clients and high
repeat business lead to higher revenue growth and lower marketing costs.
Therefore, the company needs to strike a balance. Infosys has chosen to
limit the revenue from any one client to 10% of total revenue.

In addition to increasing revenues from existing clients, Infosys actively
seeks new business opportunities and clients to reduce client concentration
levels. During the year, the company added 99 clients, many of whom are
start-ups in the telecom and e-business space. Given the inherent risks
associated with start-ups, the company closely monitors the proportion of
revenues derived from this segment. In fiscal 2000, start-ups contributed
5% to total revenues. A prudential norm for business from this segment may
be put in place in future, if deemed necessary.

39
<PAGE>

The following table provides historical data on client concentration (based
on Indian GAAP).

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
FY 2000 FY 1999 FY 1998
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Active clients 194 115 93
Clients added during the year 99 39 45
% of revenues from the largest client 7.2% 6.4% 10.5%
% revenues from top five clients 30.2% 28.4% 35.1%
% revenues from top ten clients 45.7% 44.0% 50.1%
Clients accounting for >5% of total revenue 4 5 5
------------------------------------------------------------------------------------------------------------
</TABLE>

1.4 Geographical concentration

A high geographical concentration of business could lead to volatility
because of political and economic factors in target markets. However,
individual markets have distinct characteristics - growth, IT spends,
willingness to outsource, costs of penetration, and price points. Cultural
issues such as language, work culture and ethics, and acceptance of global
talent also come into play. Due to these business considerations the
company has decided not to impose rigid limits on geographical
concentration.

This risk is managed by proactively looking for business opportunities in
new geographical areas and thereby increasing their contribution to total
revenues. In line with this, the company has made significant efforts to
enhance business from Europe and Asia Pacific.

The following table provides historical data relating to geographical
concentration (based on Indian GAAP).

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Geographical area FY 2000 FY 1999 FY 1998
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North America 77.4% 81.4% 81.5%
Europe 14.0% 9.3% 8.9%
Rest of the world 5.7% 6.9% 6.0%
India 2.9% 2.4% 3.6%
----------------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
======================================================================================================================
</TABLE>

1.5 Vertical domain concentration

Vertical domains relate to the industry in which clients operate. Infosys
has chosen to focus on certain vertical segments with a view to leverage
accumulated domain expertise to deliver enhanced value to its clients. To
ensure that cyclicality in any one industry does not adversely impact
revenues, proportion of revenue from each vertical domain is closely
monitored.

Focussed marketing efforts in chosen domains serve to mitigate this risk.

The following table provides historical information on the proportions of
revenue from various domains (based on Indian GAAP).

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Vertical domain FY 2000 FY 1999 FY 1998
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Manufacturing 23.0% 24.6% 21.1%
Insurance, banking and financial services 30.1% 23.3% 19.7%
Telecom 15.4% 14.2% 16.8%
Retail 10.6% 13.8% 17.6%
Others 20.9% 24.1% 24.8%
--------------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
==============================================================================================================
</TABLE>

1.6 Technology concentration

Being a company exposed to rapid shifts in technology, an undue focus on
any particular technology could adversely affect the risk profile of the
company. However, given the rapid pace of technological change, Infosys has
chosen not to impose rigid concentration limits. Often, industry
characteristics and market dynamics determine the choice of

40
<PAGE>

technology. Over the year, the market has seen a dramatic shift towards
internet-related technologies, which is reflected in the change of mix.

The following table provides historical technology-related data (based on
Indian GAAP).

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Technology FY 2000 FY 1999 FY 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Distributed systems 47.2% 41.5% 36.4%
Mainframe/mid-range 25.0% 37.1% 38.9%
Internet 13.6% 3.7% 0.1%
Proprietary telecom systems 6.8% 12.1% 19.2%
Others 7.4% 5.6% 5.4%
----------------------------------------------------------------------------------------------------------
Total 100.0% 100.0% 100.0%
==========================================================================================================
</TABLE>

2. Financial risks

2.1 Foreign currency rate fluctuations

Infosys derives its revenue from more than 20 countries around the world.
The US constitutes a significant portion of total revenues with
approximately 88% of revenues in fiscal 2000 being dollar-denominated. A
large proportion of Infosys' expenses are in Indian rupees. Operating
profits are therefore subject to foreign currency rate fluctuations. While
the depreciation of the Indian rupee would have a favorable bottom-line
impact, an appreciation would affect the company's profitability adversely.
As Infosys is a net foreign currency earner, it has a natural hedge on all
forex-related payments.

The table below gives the foreign currency receipts and payments.

<TABLE>
<CAPTION>
in Rs. crore
----------------------------------------------------------------------------------------------------------
FY 2000 FY 1999 FY 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Earnings in foreign currency 851.72 477.44 226.12
Revenue expenditure in foreign currency 296.56 162.75 79.12
Net revenue foreign currency earnings 555.16 314.69 147.00
Capital expenditure in foreign currency 40.02 29.81 19.53
Net foreign currency earnings 515.14 284.88 127.47
----------------------------------------------------------------------------------------------------------
</TABLE>

To avoid risks arising from short-term foreign currency rate fluctuations,
Infosys hedges a part of its dollar receivables in the forward market.
Dollar expenses are met out of foreign currency accounts. A significant
part of the surplus funds of the company is maintained in foreign currency
deposits. The company does not take active trading positions in the foreign
currency markets and operates only to hedge its receivables. Any bad debt
write-offs in foreign currencies are effected only after obtaining
permission from the Reserve Bank of India.

2.2 Liquidity

An essential part of the financial strategy of Infosys is to have a liquid
balance sheet. The company aims to have liquid assets at 25% of revenue and
around 40% of total assets. Operating as it does in a high technology area,
a high level of liquidity enables quick responses to rapid changes in the
environment.

Infosys also has a policy to settle its payables well within stipulated
time frames. Further, the nature of business is such that significant
investments may have to be made in marketing, and research and development
activities. All these factors call for considerable liquidity.

The following table gives the data on the liquidity position of the company
based on Indian GAAP.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Ratio FY 2000 FY 1999 FY 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Operating cash flow as % of revenue 27.07% 30.98% 22.19%
Days of sales receivable 56 61 57
Cash and equivalents as % of assets 61.00% 72.51% 29.57%
Cash and equivalents as % of revenue 55.17% 81.26% 19.64%
-----------------------------------------------------------------------------------------------------------
</TABLE>

<PAGE>

2.3 Leverage

Infosys has been a debt free company for the last three financial years.
Currently, the company has a policy to use debt financing only for
short-term funding requirements, should the necessity arise.

3. Legal and statutory risks

3.1 Contractual liabilities

Litigation regarding intellectual property rights, patents and copyrights
is increasing in the software industry. In addition, there are other
general corporate legal risks.

The management has clearly charted out a review and documentation process
for contracts. This process focuses on evaluating the legal risks involved
in a contract, on ascertaining the legal responsibilities of the company
under the applicable law of the contract, on restricting its liabilities
under the contract, and on covering the risks involved. The management has
also taken sufficient insurance cover abroad to cover possible liabilities
arising out of non-performance of the contract. The management reviews this
on a continuous basis and takes corrective action. As a matter of policy
the company does not enter into contracts which have open-ended legal
obligations.

To date, the company has no material litigation in relation to contractual
obligations pending against it in any court in India or abroad.

3.2 Statutory compliance

Infosys has a compliance officer to advise the company on compliance issues
with respect to the laws of various jurisdictions in which the company has
its business activities and to ensure that the company is not in violation
of the laws of any jurisdiction where the company has operations. The
compliance officer reports from time to time on the compliance or otherwise
of the laws of various jurisdictions to the board of directors. Various
business heads give compliance certificates to the board of directors and
the compliance officer reports deviations, if any. Generally, the company
takes appropriate business decisions after ascertaining from the compliance
officer and, if necessary, from independent legal counsel, that the
business operations of the company are not in contravention of any law in
the jurisdiction in which it is undertaken. Legal compliance issues are an
important factor in assessing all new business proposals. The company has
strengthened its legal team and put in place appropriate policies towards
legal compliance. The company follows an affirmative policy in protecting
its trade name and trademark/service mark and is actively pursuing
trademark infringement suits against various persons / companies in India.

4. Internal process risks

4.1 Project execution

Risk management processes at the operational level are a key requirement
for reducing uncertainty in delivering high-quality software solutions to
clients within budgeted time and cost. Adoption of quality models such as
the Software Engineering Institute's Capability Maturity Model (SEI-CMM)
has ensured that risks are identified and measures are taken to mitigate
them at the project plan stage itself. During the year, Infosys was
assessed to be at Level 5 of the CMM, a distinction that only around 20
companies in the world have achieved.

A Risk Management Guideline is in place to provide guidance to project
leaders and module leaders on ways in which risks can be identified and
mitigated. Important metrics are also collected and analyzed for all
projects and a database of such information is maintained to focus
attention on key improvement areas. Standard methodologies, perfected
through accumulated experience, form the basis for execution of projects in
most of Infosys' service offerings.

Infosys also has an effective system in place to ensure creation,
documentation and dissemination of experiential knowledge. The backbone of
this system is a user friendly, searchable database known as the Body of
Knowledge (BoK) comprising of knowledge components contributed by employees
of the company. Incentive schemes are in place to encourage a knowledge
sharing culture in the organization. Even so, the company has now created a
dedicated central team of experts in the knowledge management sphere to
provide further impetus to this initiative. This group will create
technology aids and also facilitate knowledge accumulation and
dissemination through innovative methods.

42
<PAGE>

4.2 Disaster prevention and recovery

Adherence to ISO 9001 and CMM Level 5 quality standards has ensured that
the company has a robust disaster prevention and recovery system in place.
The company has a disaster recovery plan for each of its work locations as
well as for each technology category. Possible risks for each category have
been identified and action plans put in place to cope with any
contingencies. These plans are reviewed and updated periodically to make
sure that they are in sync with changes in technology and risks.

All software media brought into the company's offices are scanned for
viruses before being used. Further, Infosys has firewalls in place on all
connections to clients and to the internet.

The Year 2000 problem had the potential to affect systems, transaction
processing, computer applications and devices used by the company to
operate and monitor major aspects of its business. Towards reducing this
risk, the company had undertaken a series of measures. Infosys is glad to
report that due to the steps taken proactively, the transition into the new
millennium was smooth. Infosys provided 24 x 7 transition support to its
clients and internal users through a Year 2000 `War Room' created
specifically for this purpose.

4.3 Technological obsolescence

The company evaluates technological obsolescence and the associated risks
on a continuing basis and makes investments accordingly. Information
technology is possibly the only area where costs for a given technology
reduce over time. The cost of acquiring technology also includes the cost
of installation and retraining.

The technology requirements of the company can be classified into three
categories and different strategies are used to manage risk in each
category. The first category is the company's desktop environment
consisting of PCs along with associated software. In this category, volumes
are large and retraining costs are high. The company considers this as a
commodity product and goes for a technology that is mature - not leading
edge - so that costs are low. The company has also standardized its user
interface software so that retraining costs are minimal. Once the warranty
period on these systems expires, they are donated to educational and
charitable institutions, after obtaining suitable approval.

The second category of systems are proprietary systems used for development
of software for clients as well as the servers used for running internal IS
applications. The technological obsolescence in these areas is not rapid,
especially in the mainframe segment. Purchase decisions in this category
are determined by client requirements. The company has standardized on the
Windows NT platform for its internal IS needs. Network components also fall
into this category and the company is standardizing its network components,
based on a few suppliers.

The third category of systems are the tools required for software
development including project management tools, integrated software
development environments, testing and other CASE tools, collaborative
software development tools, etc. In this category, the company continuously
looks out for leading-edge products that help increase productivity and
also give the company an advantage over its competitors. In its technology
infrastructure, Infosys aims to be on par with or better than the best
anywhere in the world including its clients. The company's clients would
like it to advise them on emerging products and technologies. Hence,
Infosys continuously invests in these technologies. Several research
initiatives are going on in the company to review and adopt the technology
for use internally as well as on client projects.

The company's amortization strategy reflects the requirements of the
various categories of systems. Infosys has an aggressive amortization
program under which category 1 and 2 are amortized in 2 years except for
mainframe technology. Further, purchase of software is treated as revenue
expenditure in the same year. Other assets are also aggressively amortized
to ensure that the investment is current and that any change in technology
would not lead to large write-offs. Such an amortization policy also
ensures full cost recovery as part of current costs.

The following table gives depreciation expense and software expense as a
proportion of revenues for the last three years (based on Indian GAAP).

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
FY 2000 FY 1999 FY 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Depreciation / average gross block 23.5% 26.2% 25.8%
Depreciation / total revenue 5.8% 7.0% 8.7%
Software for own use / total revenue 1.8% 2.9% 3.4%
-----------------------------------------------------------------------------------------------------------
</TABLE>

4.4 Human resource management

The key resource for Infosys is its people. The company has been able to
create a favorable work environment that encourages innovation and
meritocracy. This, combined with a well-balanced compensation package,
ensures that

43
<PAGE>

Infosys has one of the lowest attrition rates in the industry, today. The
table below gives attrition rates for the past three years:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
FY 2000 FY 1999 FY 1998
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Attrition rate 9.2% 11.5% 15.9%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

Infosys enjoys excellent relationships with leading universities in India
and thus has a huge talent pool to draw from. The company added 1880
software professionals during the year ended March 31, 2000 This was
achieved in spite of the stiff entry criteria the company sets for aspiring
employees. During this period the company witnessed a 147% increase in the
number of job applications received -- from around 74,450 in fiscal 1999 to
about 184,000 in fiscal 2000.

Today, Infosys is the employer-of-choice across universities in India. The
company is also in the process of building relationships with universities
outside India in order to gain access to a wider talent pool. Given
Infosys' track record and its strong brand equity among the pool of
potential employees, the company is confident of scaling up to the numbers
required to support its growth in future.

4.5 Internal control systems

Being a process-oriented company, Infosys has in place clear processes and
well-defined roles and responsibilities for people at various levels. This,
coupled with robust internal information systems, ensures appropriate
information flow to facilitate monitoring. Adherence to these processes is
ensured through frequent internal audits. Additionally, the following
measures are in place to ensure proper control:

. Any unbudgeted expense has to be approved by the managing director,
president and COO.

. Any policy change is approved by a committee headed by the chairman
and CEO after a 5-year profitability impact assessment.

. Senior management personnel submit periodic reports on their
activities and achievements and these are reviewed by the managing
director, president and COO.

5. Political risks

Recognizing that India's education system, its world-class professionals,
and its low cost structure give it an intrinsic comparative advantage in
software exports, successive governments have accorded a special status to
this industry. Task Forces comprising politicians, bureaucrats and
industrialists have recommended policy measures to give a fillip to the
Indian IT industry. Many of these recommendations have been implemented and
some of them are actively being considered for implementation. On the
whole, the government's favorable disposition towards the IT industry - and
specifically towards software exports - is highly encouraging. Given the
consensus among all leading political parties on the importance of the
software industry, it is likely to remain a focus area for governmental
policy in the years to come. However, in order to mitigate the risk of
operating from a single country, Infosys has recently established
development centers outside India. A Global Development Center was set up
at Toronto, Canada in January 2000. In October 1999, the company also
established Proximity Development Centers (PDCs) at Fremont, California and
Boston, Massachusetts. Plans are also underway to set up a PDC in the U.K.
shortly.

44
<PAGE>

Corporate governance
- --------------------------------------------------------------------------------

Corporate governance policies

Infosys has been a pioneer in benchmarking its corporate governance policies
with the best in the world. The directors present below the company's policies
on corporate governance.

A. Board composition

1. Responsibilities of the CEO and the COO

The current policy of the company is to have an executive chairman and
chief executive officer (CEO), and a managing director, president and chief
operating officer (COO). There is a clear demarcation of responsibilities
and authority between the two. The CEO is responsible for corporate
strategy, brand equity, planning, external contacts, acquisitions, and
board matters. The COO is responsible for all day-to-day operations-related
issues and for the achievement of annual targets in customer satisfaction,
sales, profitability, quality, productivity, recruitment, training and
employee retention. The CEO, COO, the other executive directors and the
senior management make periodic presentations to the board on their
responsibilities, performance and targets.

2. Size of the board

The board has ten members, and periodically reviews the need for its
expansion. As per the current by-laws of the company, the board can have up
to twelve members. The board intends to increase its size upto eighteen
members in line with its plans for globalization.

3. Executive and independent directors

The current policy is to have an appropriate mix of executive and
independent directors to maintain the independence of the board, and to
separate the board functions of governance and management. To ensure
independence of the board, the members of the audit committee, the
nominations committee and the compensation committee are composed entirely
of independent directors. The current board has five independent directors
and five executive directors. All executive directors are also founders of
the company.

4. Board membership criteria

Board members are expected to possess the expertise, skills and experience
required to manage and guide a high growth, hi-tech software company
deriving revenue primarily from G-7 countries. Expertise in strategy,
technology, finance, quality and human resources is essential. Generally,
they will be between 40 and 55 years of age. They will not be a relative of
an executive director or of an independent director. They are generally not
expected to serve in any executive or independent position in any company
in direct competition with Infosys. Board members are expected to
rigorously prepare for, attend, and participate in all board and applicable
committee meetings. Each board member is expected to ensure that other
existing and planned future commitments do not materially interfere with
the member's responsibility as a director of Infosys.

5. Membership term

The board constantly evaluates the contribution of its members, and
recommends to shareholders their re-appointment periodically as per
statute. The current law in India mandates the retirement of one-third of
the board members every year and qualifies the retiring members for re-
appointment. The executive directors are appointed by the shareholders for
a maximum period of five years at one time but are eligible for re-
appointment upon completion of their term. The nominations committee of the
board, composed entirely of independent directors, recommends such
appointment / re-appointment. However, the membership term is limited by
the retirement age for members.

6. Retirement policy

The board has adopted a retirement policy for its members. Under this
policy, the maximum age of retirement of executive directors, including the
CEO, is 60 years, which is the age of superannuation for the employees of
the company. Their continuation as members of the board upon superannuation
/ retirement is determined by the nominations committee. The age limit for
retirement from the board is 65 years.

7. Board compensation review

The compensation committee determines and recommends to the board, the
compensation payable to the members of the board. The compensation of the
executive directors consists of a fixed component and a performance
incentive. The

45
<PAGE>

compensation committee makes a quarterly appraisal of their performance.
The annual compensation of the executive directors is approved by the
compensation committee within the parameters set by the shareholders at the
shareholders meetings. The shareholders determine the compensation of the
executive directors for the entire period of their term. The compensation
of the independent directors is approved at a meeting of the full board.
The total compensation payable to all the independent directors together is
limited to a fixed sum per year determined by the board. This sum is within
the limit of 0.5% of the net profits of the company for the year calculated
as per the provisions of the Companies Act, 1956 and as approved by the
shareholders and is separately disclosed in the financial statements. The
compensation payable to the independent directors and the method of
calculation are also disclosed separately in the financial statements. As
founders of the company, the present executive directors have voluntarily
excluded themselves from the 1994 Stock Offer Plan, the 1998 Stock Option
Plan and the 1999 Stock Option Plan. The independent directors are also not
eligible for stock options under these plans, except the 1999 Stock Option
Plan. However, no options have been issued so far under the plan to the
independent directors.

8. Memberships of other boards

Executive directors are excluded from serving on the board of any other
entity unless the said entity is an industrial entity whose interests are
germane to the business of the software industry, or a government body that
is of relevance to the software industry, or an entity whose objective is
the upliftment of society. Independent directors are generally not expected
to serve on the boards of competing companies. Other than this, there are
no limitations on them save those imposed by law and good corporate
governance.

B. Board meetings

1. Scheduling and selection of agenda items for board meetings

Normally, board meetings are scheduled at least a month in advance. Most of
them are held at the company's registered office at Electronics City,
Bangalore, India. The chairman of the board and the company secretary draft
the agenda for each meeting, along with explanatory notes, and distribute
it in advance to the board members. Every board member is free to suggest
the inclusion of items on the agenda. Normally, the board meets once a
quarter to review the quarterly results and other items on the agenda. The
board also meets on the occasion of the annual shareholders' meeting. On a
need basis, additional meetings are held. Independent directors are
expected to attend at least four board meetings in a year.

A committee of the board meets as and when required for transacting
business of a routine nature.

2. Availability of information to the members of the board

The board has unfettered and completes access to any information within the
company, and to any employee of the company. At the meetings of the board,
the board welcomes the presence of managers who can provide additional
insights into the items being discussed.

C. Board committees

1. The committees of the board

Currently, the board has three committees - the audit committee, the
compensation committee and the nominations committee. These committees are
composed entirely of independent directors. The functions of these
committees are described elsewhere in this report.
The board has recently constituted an investor grievance committee as per
the requirements of the Shri Kumar Mangalam Birla Committee
recommendations.

2. Assignment and terms of service of committee members

The board decides, in consultation with the chairman and considering the
views of individual board members, terms of service of various committees
and the assignment of specific board members to various committees.

3. Frequency and duration of committee meetings and committee agenda

The chairman of the board, in consultation with the company secretary of
the company and the committee chairman, determines the frequency and
duration of the committee meetings. Normally, the committees meet at least
twice a year. The committee agenda and the minutes of the committee meeting
are submitted to the full board for approval.

46
<PAGE>

D. Management review and responsibility

1. Formal evaluation of officers

A committee headed by the chairman and CEO reviews, evaluates and decides
the annual compensation for officers of the company from the level of
associate vice president excluding members of management council. Further,
the compensation committee decides the compensation and benefits for board
members as well as for the members of the management council. Grants of
stock options under the 1994 Stock Offer Plan were decided by the advisory
board constituted under the 1994 Plan. The compensation committee of the
board administers the 1998 Stock Option Plan and the 1999 Stock Option
Plan.

2. Succession planning and management development

The chairman reviews succession planning and management development with
the board from time to time.

3. Board interaction with clients, employees, institutional investors,
the government and the press

The chairman and CEO manages all interaction with investors, the media, and
the government. In this task, he seeks advice and help from the managing
director, president and COO as well as the CFO, where necessary. The
managing director and COO manages all interaction with clients taking the
advice and the help of the CEO, where necessary. Both the CEO and the COO
handle employee communication.

Compliance with corporate governance codes

Corporate governance has assumed great significance in India in the recent past.
Even though the Companies Act, 1956 provided a framework for corporate
governance, defined the powers, duties and responsibilities of the board, and
instituted a system of checks and balances with punishment for transgression of
law, there was a need felt for a comprehensive code of corporate governance.
Indian industry associations have taken the lead in framing such a code.
Globally, the Cadbury Committee on corporate governance has framed a similar
code. As already stated, the company is committed to good corporate governance
and has benchmarked itself against global best practices.

The Shri Kumar Mangalam Birla Committee on Corporate Governance appointed by the
Securities and Exchange Board of India (SEBI) submitted its report in November
1999 and the report was accepted by SEBI in December 1999. The recommendations
of the committee are mandatory for some companies effective fiscal year 2001,
including your company. The company has already complied with most of the
recommendations.

As additional disclosure of the company's compliance with corporate governance
standards, a report on compliance with the recommendations of the Shri Kumar
Mangalam Birla Committee on Corporate Governance and with the Cadbury
Committee recommendations is given hereunder.

1. Compliance with the recommendations of the Shri Kumar Mangalam Birla
Committee on Corporate Governance

"Strong corporate governance is thus indispensable to resilient and vibrant
capital markets and is an important instrument of investor protection. It
is the blood that fills the veins of transparent corporate disclosure and
high-quality accounting practices. It is the muscle that moves a viable and
accessible financial reporting structure."

Excerpts from the Shri Kumar Mangalam Birla Committee
Report on Corporate Governance

1. Board of directors

1.1 All pecuniary relationships or transactions of the non-executive
directors should be disclosed in the annual report. None of the
non-executive directors of the company have any pecuniary
relationships or transactions with the company.

1.2 The Committee is of the view that non-executive directors help bring
an independent judgement to bear on board's deliberations, especially
on issues of strategy, performance, management of conflicts and
standards of conduct. The Committee therefore lays emphasis on the
calibre of the non-executive directors, especially of the independent
directors.

The non-executive directors of the company are highly respected and
accomplished professionals in the corporate and academic worlds.

1.3 The Committee is of the view that it is important that an adequate
compensation package be given to the non-executive independent
directors so that these positions become sufficiently financially
attractive to attract talent and that the non-executive directors are
sufficiently compensated for undertaking this work.

The non-executive directors are eligible for a commission of upto 0.5%
of the net profits of the company. In fiscal 2000, the total
commission payable to the five non-executive directors amounted to Rs.
48.18 lakhs. The 1999 Stock Option Plan includes non-executive
directors as beneficiaries. However, no options have been issued so
far under the plan to non-executive directors.

47
<PAGE>

1.4 The Committee recommends that the board of a company have an optimum
combination of executive and non-executive directors with not less
than fifty percent of the board comprising the non-executive
directors. The number of independent directors depends on the nature
of the chairman of the board. In case a company has a non-executive
chairman, at least one-third of board should comprise of independent
directors and in case a company has an executive chairman, at least
half of board should be independent (Mandatory recommendation).

As of March 31, 2000, non-executive directors constituted 50% of the
board. The board has divided the responsibility for the management of
the company between the chairman and CEO and the managing director,
president and COO.

2. Nominee directors

2.1 The Committee recommends that when a nominee of the institutions is
appointed as a director of the company, he should have the same
responsibility, be subject to the same discipline and be accountable
to the shareholders in the same manner as any other director of the
company. In particular, if he reports to any department of the
institutions on the affairs of the company, the institution should
ensure that there exist chinese walls between such department and
other departments which may be dealing in the shares of the company in
the stock market.

Not applicable.

3. Chairman of the board

3.1 The Committee recommends that a non-executive Chairman should be
entitled to maintain a Chairman's office at the company's expense and
also allowed reimbursement of expenses incurred in performance of his
duties. This will enable him to discharge the responsibilities
effectively.
The company has an executive chairman.

4. Audit committee

4.1 The Committee recommends that a qualified and independent audit
committee should be set up by the board of a company (Mandatory
recommendation).

The company has in place an independent audit committee since fiscal
1998. The audit committee's role flows directly from the board's
oversight function.

4.2 The Committee recommends that
. the audit committee should have a minimum of three members, all
being non-executive directors, with the majority being independent,
and with at least one director having financial and accounting
knowledge;
. the chairman of the committee should be an independent director;
. the chairman should be present at the Annual General Meeting to
answer shareholder queries;
. the audit committee should invite such of the executives, as it
considers appropriate (and particularly the head of the finance
function) to be present at the meetings of the Committee but on
occasions it may also meet without the presence of any executives
of the company. The finance director and head of internal audit and
when required, a representative of the external auditor should be
present as invitees for the meetings of the audit committee;
. the Company Secretary should act as the secretary to the committee.

These are mandatory recommendations.

The audit committee currently comprises four members who are the
independent and non-executive directors on the board. The audit
committee members are accomplished professionals from the corporate
and academic worlds.

The chairman of the committee, Mr. Deepak Satwalekar, director of HDFC
Bank Limited, is an independent director.

The chairman of the audit committee is present at the Annual General
Meeting to answer shareholder queries, if any.

The chief financial officer of the company is present at all audit
committee meetings. Both the internal and external auditors of the
company attend all audit committee meetings to brief the members. The
committee also requires the presence of various heads of departments,
on various matters concerning their departments, as and when it deems
fit.

The company secretary is the secretary of the committee.

4.3 The Committee recommends that the audit committee should meet at least
thrice a year. One meeting must be held before finalization of annual
accounts and one necessarily every six months (Mandatory
recommendation).

The audit committee meets at the end of every six months. Meetings are
held twice a year, once during October to consider the half-yearly
financial statements and the other during April to consider the annual
financial statements.

48
<PAGE>

4.4 The quorum should be either two members or one-third of the members of
the audit committee, whichever is higher and there should be a minimum
of two independent directors (Mandatory recommendation).

The audit committee consists of four members who are non-executive
directors of the company. In fiscal 2000, the prescribed quorum was
met at all meetings of the audit committee.

4.5 Being a committee of the board, the audit committee derives its powers
from the authorization of the board. The Committee recommends that
such powers should include powers:

1. To investigate any activity within its terms of reference.
2. To seek information from any employee.
3. To obtain outside legal or other professional advice.
4. To secure attendance of outsiders with relevant expertise, if it
considers necessary.

This is a mandatory recommendation.

The audit committee has all the powers as envisaged in the above
recommendation.

4.6 As the audit committee acts as the bridge between the board, the
statutory auditors and internal auditors, the Committee recommends
that its role should include the following:

. Oversight of the company's financial reporting process and the
disclosure of its financial information to ensure that the
financial statement is correct, sufficient and credible.
. Recommending the appointment and removal of the external auditor,
fixation of audit fee and also approval for payment for any other
services.
. Reviewing with management the annual financial statements before
submission to the board, focussing primarily on:

- Any changes in accounting policies and practices.
- Major accounting entries based on exercise of judgement by
management.
- Qualifications in draft audit report.
- Significant adjustments arising out of audit.
- The going concern assumption.
- Compliance with accounting standards
- Compliance with stock exchange and legal requirements
concerning financial statements.
- Any related party transactions i.e. transactions of the
company of material nature, with promoters or the
management, their subsidiaries or relatives, etc., that may
have potential conflict with the interests of company at
large.
. Reviewing with the management, external and internal auditors,
the adequacy of internal control systems.
. Reviewing the adequacy of the internal audit function, including
the structure of the internal audit department, staffing and
seniority of the official heading the department, reporting
structure, coverage and frequency of internal audit.
. Discussion with the internal auditors of any significant findings
and follow-up thereon.
. Reviewing the findings of any internal investigations by the
internal auditors into matters where there is suspected fraud or
irregularity or a failure of internal control systems of a
material nature and reporting the matter to the board.
. Discussion with external auditors, before the audit commences, of
the nature and scope of audit. Also post-audit discussion to
ascertain any area of concern.
. Reviewing the company's financial and risk management policies.
. Looking into the reasons for substantial defaults in the payments
to the depositors, debenture holders, shareholders (in case of
non-payment of declared dividends) and creditors.

This is a mandatory recommendation.

The role of the audit committee covers all the above functions. The
detailed "audit committee charter" is in the process of being adopted
by the committee.

5 Remuneration committee of the board

5.1 The Committee recommends that the board should set up a remuneration
committee to determine on their behalf and on behalf of the
shareholders with agreed terms of reference, the company's policy on
specific remuneration packages for executive directors including
pension rights and any compensation payment.

The company set up a compensation committee of the board in fiscal
1998. The overall policy of the committee is to institute such
compensation and benefits for board members, as well as for members of
the management council, which reward performance as per set criteria.
Periodic evaluation of the performance decides the variable component
of the compensation. The compensation for non-executive directors is
finalized in the full board meeting.

5.2 The Committee recommends that to avoid conflicts of interest, the
remuneration committee, which would determine the remuneration
packages of the executive directors should comprise at least three
directors, all of whom should be non-executive directors, the chairman
of committee being an independent director.

All members of the compensation committee including its chairman are
independent, non-executive directors of the company.

49
<PAGE>

5.3 The Committee therefore recommends that all the members of the
remuneration committee should be present at the meeting.

This recommendation is complied with.

5.4 The Committee recommends that the Chairman of the remuneration
committee should be present at the Annual General Meeting, to answer
the shareholder queries. However, it would be up to the Chairman to
decide who should answer the queries.

This recommendation is complied with.

5.5 The Committee recommends that the board of directors should decide the
remuneration of non-executive directors (Mandatory recommendation).

This recommendation is complied with.

5.6 The Committee recommends that the following disclosures be made in the
section on corporate governance of the annual report:

. All elements of remuneration package of all the directors i.e.
salary, benefits, bonuses, stock options, pension etc;
. Details of fixed component and performance linked incentives,
along with the performance criteria;
. Service contracts, notice period, severance fees; and
. Stock option details, if any - and whether issued at a discount
as well as the period over which accrued and over which
exercisable.

This is a mandatory recommendation.

The required information is provided later in this section.

6. Board procedures

6.1 The Committee therefore recommends that board meetings should be held
at least four times in a year, with a maximum time gap of four months
between any two meetings. The minimum information should be available
to the board (Mandatory recommendation).

The board met nine times during the financial year 1999-2000. All the
required information as recommended by the committee is placed before
the board for its consideration on a regular basis.

6.2 The Committee recommends that a director should not be a member in
more than 10 committees or act as Chairman of more than five
committees across all companies in which he is a director. Furthermore
it is a mandatory annual requirement for every director to inform the
company about the committee positions he occupies in other companies
and notify changes as and when they take place (Mandatory
recommendation).

This recommendation is complied with except for Mr. S. M. Datta who is
the chairman of seven committees and a member of twelve committees
across all companies.

7. Accounting standards and financial reporting

7.1 The recommendations contained in this section pertained to accounting
standards on consolidation, segment reporting, disclosure and
treatment of related party transactions and deferred taxation. The
Committee recommended that the Institute of Chartered Accountants of
India issue accounting standards on these areas expeditiously.

The company produces financial statements as per the requirements of
US GAAP where all the above standards are fully complied with and the
same is provided elsewhere in the report. As and when the aforesaid
accounting standards are issued in India and are made mandatory the
company would adopt the same for Indian GAAP reporting purposes. The
company is of the opinion that adoption of these standards will not
have any material adverse impact on its financial statements or
results of operations of the company.

8. Management

8.1 As a part of the disclosure related to Management, the Committee
recommends that as part of the directors' report or as an addition
there to, a Management Discussion and Analysis report should form part
of the annual report to the shareholders (Mandatory recommendation).

This information is disclosed in various parts of the annual report,
viz. Form 20-F information, the "management discussion and analysis"
section, the "segment analysis" section, and the "risk management"
section.

8.2 The Committee recommends that disclosures be made by management to the
board relating to all material financial and commercial transactions,
where they have personal interest, that may have a potential conflict
with the interest of the company at large (for e.g. dealing in company
shares, commercial dealings with bodies which have shareholding of
management and their relatives etc. (Mandatory recommendation).

This recommendation is complied with.

9. Shareholders

9.1 The Committee recommends that in case of the appointment of a new
director or re-appointment of a director the shareholders must be
provided with the following information:

. A brief resume of the director;

50
<PAGE>

. Nature of his expertise in specific functional areas; and
. Names of companies in which the person also holds the
directorship and the membership of Committees of the board.

This is a mandatory recommendation.

This recommendation is complied with.

9.2 The Committee recommends that information like quarterly results,
presentation made by companies to analysts may be put on company's
website or may be sent in such a form so as to enable the stock
exchange on which the company is listed to put it on its own website
(Mandatory recommendation).

This recommendation is complied with. The entire quarterly financial
statements as well as the annual financial statements, along with the
segmental information, are posted on the company's website. Earnings
calls with analysts and investors are broadcast live on the website
and their transcripts are posted on the website soon thereafter. Any
specific presentations made to analysts and others, which are not
available in the general domain, are also posted on the company's
website.

9.3 The Committee recommends that the half-yearly declaration of financial
performance including summary of the significant events in last
six-months, should be sent to each household of shareholders.

The company currently complies with this recommendation on a quarterly
basis. It sends quarterly audited financial statements prepared in
accordance with Indian GAAP and quarterly unaudited financial
statements prepared in accordance with US GAAP together with the
quarterly report in Form 6-K filed with the Securities and Exchange
Commission, USA to each of the shareholders.

9.4 The Committee recommends that a board committee under the chairmanship
of a non-executive director should be formed to specifically look into
the redressing of shareholder complaints like transfer of shares,
non-receipt of balance sheet, non-receipt of declared dividends etc.
The Committee believes that the formation of such a committee will
help focus the attention of the company on shareholders' grievances
and sensitize the management to redressal of their grievances
(Mandatory recommendation).

Hitherto, shareholder complaints were placed and discussed in the full
board meeting. The company has formed a board-level "investor
grievance committee" in April 2000, which will look into these issues
in future.

9.5 The Committee further recommends that to expedite the process of share
transfers the board of the company should delegate the power of share
transfer to an officer, or a committee or to the registrar and share
transfer agents. The delegated authority should attend to share
transfer formalities at least once in a fortnight (Mandatory
recommendation).

This recommendation is complied with. Currently, over 96% of our
shares are held in dematerialized form.

10. Compliance report on corporate governance

10.1 The Committee recommends that there should be a separate section on
Corporate Governance in the annual reports of companies, with a
detailed compliance report on Corporate Governance. Non-compliance of
any mandatory recommendation with reasons thereof and the extent to
which the non-mandatory recommendations have been adopted should be
specifically highlighted. This will enable the shareholders and the
securities market to assess for themselves the standards of corporate
governance followed by a company. (Mandatory recommendation).

a. Company's philosophy on code of governance

The company is committed to good corporate governance and has
benchmarked itself against global best practices. The company
provides detailed information on various issues concerning the
company's business and financial performance. The company
respects the inalienable rights of its shareholders to
information on the performance of the company and considers
itself a trustee of its shareholders.

b. Board of directors

- Composition and category of directors as of March 31, 2000 is
as follows:
--------------------------------------------------------------
Category No. of directors %
--------------------------------------------------------------
Founder directors 5 50
Non-executive, independent directors 5 50
--------------------------------------------------------------
Total 10 100
==============================================================

- Attendance of each director at the BoD meetings and the last
AGM

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Director No. of Board No. of Board Last AGM
meetings Held meetings Attended attendence
(Yes/No)
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Susim M. Datta 9 5 Yes
Deepak M. Satwalekar 9 3 Yes
Ramesh Vangal 9 3 Yes
Prof. Marti G. Subrahmanyam 9 5 Yes
</TABLE>

51
<PAGE>

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------
Director No. of Board No. of Board Last AGM
meetings Held meetings Attended attendence
(Yes/No)
---------------------------------------------------------------------------------
<S> <C> <C> <C>
Philip Yeo ** 5 - N.A.
N. R. Narayana Murthy 9 8 Yes
Nandan M. Nilekani 9 9 Yes
N. S. Raghavan * 9 9 Yes
Gopalakrishnan S. 9 9 Yes
K. Dinesh 9 9 Yes
Shibulal S. D. 9 8 Yes
--------------------------------------------------------------------------------
</TABLE>

* Retired in February 2000.

** Joined on October 29, 1999

Number of board of directors meetings held, dates on which
held

Nine board meetings were held during the year. The dates on
which the meetings were held are as follows: April 9, June
12, July 9, August 8, October 29, November 10, November 29
and December 29 in 1999, and January 11, 2000.

c. Audit committee

- Brief description of terms of reference

The audit committee is responsible for effective supervision
of the financial reporting process, ensuring financial and
accounting controls, and ensuring compliance with financial
policies of the company. The committee periodically
interacts with the statutory auditors and the internal
auditors to ascertain the quality and veracity of the
company's transactions; to review the manner in which they
are performing their responsibilities; and to discuss
auditing, internal control and financial reporting issues.
The committee provides the overall direction on the risk
management policies, including the focus of internal and
management audits. The committee has full access to
financial data and to members of the company's staff.

The committee reviews the annual and half yearly financial
statements before they are submitted to the board. The
committee also monitors proposed changes in accounting
policies, reviews internal audit functions, and discusses
the accounting implications of major transactions.

- Composition, name of members and chairperson

Mr. Deepak M. Satwalekar, Chairman
Mr. Susim M. Datta
Mr. Ramesh Vangal
Prof. Marti G. Subrahmanyam

Meetings and attendance during the year

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Director No. of committee No. of committee
meetings held meetings attended
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Deepak M. Satwalekar 2 2
Susim M. Datta 2 2
Ramesh Vangal 2 2
Prof. Marti G. Subrahmanyam 2 2
--------------------------------------------------------------------------------------------------
</TABLE>
The report of the audit committee is provided elsewhere in
the report.

d. Compensation committee

Brief description of terms of reference

The overall policy of the committee is to institute such
compensation and benefits for board members, as well as for
the members of the management council, which reward
performance as per set criteria. Periodic evaluation of the
performance decides the variable component of the
compensation.

Composition, name of members and chairperson

Prof. Marti G. Subrahmanyam, Chairman
Mr. Deepak M. Satwalekar
Mr. Ramesh Vangal
Mr. Susim M. Datta

Attendance during the year

52
<PAGE>

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
Director No. of committee No. of committee
meetings held meetings attended
--------------------------------------------------------------------------------------------------
<S> <C> <C>
Deepak M. Satwalekar 2 2
Ramesh Vangal 2 2
Susim M. Datta 2 2
--------------------------------------------------------------------------------------------------
</TABLE>

- Remuneration policy

The remuneration policy of the committee is to pay
compensation and benefits along with stock options
adequately so as to motivate and retain senior officers of
the company.

Details of remuneration to all the directors for fiscal 2000

<TABLE>
<CAPTION>
in Rs.
- -----------------------------------------------------------------------------------------------------------------------------------
Name Designation Salary Performance Commission Total Notice Severance
incentive period fee
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
N. R. Narayana Murthy Chairman and 14,60,288 1,62,300 - 16,22,588 6 months -
Chief Executive Officer
Nandan M. Nilekani Managing Director, 13,46,678 1,62,300 - 15,08,978 6 months -
President and
Chief Operating Officer
Susim M. Datta Director - - 10,90,000 10,90,000 - -
Deepak M. Satwalekar Director - - 10,90,000 10,90,000 - -
Ramesh Vangal Director - - 10,90,000 10,90,000 - -
Prof. Marti G. Subrahmanyam Director - - 10,90,000 10,90,000 - -
Philip Yeo Director - - 4,57,800 4,57,800 - -
Raghavan N. S. Joint Managing Director 10,90,452 1,38,515 - 12,28,967 - -
Gopalakrishnan S. Deputy Managing Director 12,77,700 1,62,300 - 14,40,000 6 months -
Dinesh K. Director 13,38,563 1,62,300 - 15,00,863 6 months -
Shibulal S. D. Director 12,77,700 1,62,300 - 14,40,000 6 months -
- -----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Name Designation Stock options
No. of Whether Average Option
Options issued at a exercise vesting
discount price date
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
N. R. Narayana Murthy Chairman and - - - -
Chief Executive Officer
Nandan M. Nilekani Managing Director, - - - -
President and
Chief Operating Officer
Susim M. Datta Director - - - -
Deepak M. Satwalekar Director - - - -
Ramesh Vangal Director - - - -
Prof. Marti G. Subrahmanyam Director - - - -
Philip Yeo Director - - - -
Raghavan N. S. Joint Managing Director - - - -
Gopalakrishnan S. Deputy Managing Director - - - -
Dinesh K. Director - - - -
Shibulal S. D. Director - - - -
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

Mr. N. S. Raghavan was employed for part of the year only.
He retired on February 7, 2000

The report of the compensation committee is provided
elsewhere in the report.

e. Investor grievance committee

The committee oversees the share transfers as well as takes
care of investor grievances

The members of the company's investor grievance committee
are:

Mr. Nandan M. Nilekani, Chairman
Mr. K. Dinesh
Mr. S. D. Shibulal

- Name and designation of compliance officer
T. V. Mohandas Pai, Senior Vice President - Finance &
Administration and Chief Financial Officer.

Number of shareholders complaints received, number not
solved to the satisfaction of the shareholder and number of
pending transfers

The details are provided in the "shareholders information"
section of this report.

f. General body meetings

- Location and time for the last three AGMs
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Year Date Venue Time
-----------------------------------------------------------------
<S> <C> <C> <C>
1996-97 June 7, 1997 Taj Residency, 3.00 PM
No.41/3, M. G. Road,
Bangalore, India.
1997-98 May 30,1998 -same as above- 3.00 PM
1998-99 June 12, 1999 -same as above- 3.00 PM
-----------------------------------------------------------------
</TABLE>

Whether special resolutions were put through postal ballot
last year, details of voting pattern, person who conducted
the postal ballot exercise, proposed to be conducted through
postal ballot and procedures for postal ballot.

Not applicable as the present laws do not allow postal
ballot in the Annual General Meetings.

g. Disclosures

- Disclosures on materially significant related party
transactions i.e. transactions of the company of material
nature, with its founders, the directors or the management,
their subsidiaries or relatives etc. that may have potential
conflict with the interests of company at large.

53
<PAGE>

It is provided under the paragraph "related party
transactions" elsewhere in this annual report.

Details of non-compliance by the company, penalties,
strictures imposed on the company by Stock Exchange or SEBI
or any statutory authority, on any matter related to capital
markets, during the last three years.

None.

h. Means of communication

Half-yearly report sent to each household of shareholders
Since June 1998, the company has been sending detailed
quarterly financial statements prepared under both Indian
and US GAAP requirements, along with additional information,
to shareholders.

Quarterly results - which newspapers normally published in;
any website, where displayed; whether it also displays
official news releases; and the presentations made to
institutional investors or to the analysts

The quarterly results are generally published in The
Economic Times and in the Udayavani. The entire quarterly
financial statements as well as the annual financial
statements, along with the segmental information, are posted
on the company's website (http://www.infy.com). Earnings
-------------------
calls with analysts and investors are broadcast live on the
website and their transcripts are posted on the website soon
thereafter. Any specific presentations made to analysts and
others, which are not available in the general domain, are
also posted on the company's website.

Whether the Management Discussion and Analysis section is a
part of the annual report or not It is provided elsewhere in
this annual report.

i. General shareholder information

It is provided in the "shareholders information" section of this
annual report.

10.2 The Committee also recommends that the company should arrange to
obtain a certificate from the auditors of the company regarding
compliance of mandatory recommendations and annex the certificate with
the directors' report, which is sent annually to all the shareholders
of the company. The same certificate should also be sent to the stock
exchanges along with the annual returns filed by the company
(Mandatory recommendation).

The company will follow this recommendation starting fiscal 2001, when
the corporate governance code becomes mandatory.

2. Compliance with the Cadbury Committee recommendations

The Cadbury Committee was set up in May 1991 in the United Kingdom. The
stated objective of the committee was "to help raise the standards of
corporate governance and the level of confidence in financial reporting and
auditing by setting out clearly what it sees as the respective
responsibilities of those involved and what it believes is expected of
them".

The Infosys management is committed to global levels of transparency and
disclosure. In pursuance of this, an attempt has been made to provide
voluntarily, hereunder, the information as required under the
recommendations of the Cadbury Committee on corporate governance. The
management informs the shareholders that Infosys is not, as yet, legally
required to provide this information and that this is provided for
information purposes only.

Compliance

The Cadbury Committee on corporate governance has made nineteen
recommendations. The company complies with substantially all
recommendations except that:

1. The board should consist of a majority of non-executive directors -
currently, the company has five executive directors and five
non-executive directors.

The company has set up committees of the board to focus on substantive
issues in the form of the audit committee, the compensation committee and
the nominations committee. The reports of these committees are disclosed in
this chapter.

Going concern

On the basis of current financial projections and facilities available, the
directors have a reasonable expectation that the company has adequate
resources to continue in operational existence for the foreseeable future
and, accordingly, consider that it is appropriate to adopt the going
concern basis in preparing accounts.

Bangalore Nandan M. Nilekani N. R. Narayana Murthy
April 11, 2000 Managing Director, President Chairman
and Chief Operating Officer and Chief Executive Officer

54
<PAGE>

3. Compliance report with Blue Ribbon Committee report on improving
effectiveness of corporate audit committees

The Blue Ribbon Committee was formed under the auspices of the United
States Securities and Exchange Commission to develop a series of
recommendations to enable "audit committees to function as the ultimate
guardian of investor interests and corporate accountability" and has
recommended that exchange listing requirements be amended to require audit
committees to adopt a formal written charter and review and assess it
annually. The committee had made ten recommendations. The compliance report
on the recommendations of the committee is presented below.

Recommendation 1

Adopt the following definition of independence for purposes of service on the
audit committee.

Members of the audit committee shall be considered independent if they have no
relationship to the corporation that may interfere with the exercise of their
independence from management and the corporation.

It is being complied with. None of the directors are an interested party as
defined in this recommendation.

Recommendation 2

In addition to adopting and complying with the definition of independence set
forth above for purposes of service on the audit committee, have an audit
committee comprised solely of independent directors. The Committee recommends
that the NYSE and the NASD maintain their respective current audit committee
independence requirements as well as their respective definitions of
independence

The audit committee consists only of independent, non-executive directors.

Recommendation 3

To have an audit committee comprised of a minimum of three directors, each of
whom is financially literate (as described in the section of this Report
entitled "Financial Literacy") or becomes financially literate within a
reasonable period of time after his or her appointment to the audit committee,
and further that at least one member of the audit committee have accounting or
related financial management expertise.

Infosys already complies with this requirement. The members of the
committees are highly respected and accomplished professionals in the
corporate and academic worlds.

Recommendation 4

Require the audit committee of each listed company to (i) adopt a formal written
Charter that is approved by the full board of directors and that specifies the
scope of the committee's responsibilities, and how it carries out those
responsibilities, including structure, processes, and membership requirements,
and (ii) review and reassess the adequacy of the audit committee Charter on an
annual basis.

The audit committee is in the process of adopting an "audit committee
charter".

Recommendation 5

Require the audit committee for each reporting company to disclose in the
company's proxy statement for its annual meeting of shareholders whether the
audit committee had adopted a formal written Charter, and, if so, whether the
audit committee satisfied its responsibilities during the prior year in
compliance with its Charter, which Charter shall be disclosed at least
triennially in the annual report to shareholders or proxy statement and in the
next annual report to shareholders or proxy statement after any significant
amendment to that Charter. The Committee further recommends that the SEC adopt a
"safe harbor" applicable to all disclosure referenced in this Recommendation 5.

This recommendation would be complied with once the audit committee
formally adopts the "audit committee charter".

Recommendation 6

Require that the audit committee Charter for every listed company specify that
the outside auditor is ultimately accountable to the board of directors and the
audit committee as representatives of shareholders, and that these shareholder
representatives have the ultimate authority and responsibility to select,
evaluate, and, where appropriate, replace the outside auditor (or to nominate
the outside auditor to be proposed for shareholder approval in any proxy
statement).

This recommendation would be complied with once the audit committee
formally adopts the "audit committee charter".

55
<PAGE>

Recommendation 7

Require that the audit committee Charter for every listed company specify that
the audit committee is responsible for ensuring its receipt from the outside
auditors of a formal written statement delineating all relationships between the
auditor and the company, consistent with Independence Standards Board Standard
no. 1, and that the audit committee is also responsible for actively engaging in
a dialogue with the auditor with respect to any disclosed relationships or
services that may impact the objectivity and independence of the auditor and to
take, or recommend that the full board take, appropriate action to ensure the
independence of the outside auditor.

The audit committee is in the process of adopting an "audit committee
charter".

Recommendation 8

That Generally Accepted Auditing Standards (GAAS) require that a company's
outside auditor discuss with the audit committee the auditor's judgements about
the quality, not just the acceptability, of the company's accounting principles
as applied in its financial reporting; the discussion should include such issues
as the clarity of the company's financial disclosures and degree of
aggressiveness or conservatism of the company's accounting principles and
underlying estimates and other significant decisions made by management in
preparing the financial disclosure and reviewed by the outside auditors. This
requirement should be written in a way to encourage open, frank discussion and
to avoid boilerplate.

Both the internal and external auditors have full and free access to the
audit committee, its members and the board of directors. All the issues
arising out of the internal and external auditors reports are discussed in
detail in the audit committee meetings.

Recommendation 9

Require all reporting companies to include a letter from the audit committee in
the company's annual report to shareholders and Form 10-K Annual Report
disclosing whether or not, with respect to the prior fiscal year: (i) management
has reviewed the audited financial statements with the audit committee,
including a discussion of the quality of the accounting principles as applied
and significant judgments affecting the company's financial statements; (ii) the
outside auditors have discussed with the audit committee the outside auditors'
judgements of the quality of those principles as applied and judgments
referenced in (i) above under the circumstances; (iii) the members of the audit
committee have discussed among themselves, without management or the outside
auditors present, the information disclosed to the audit committee described in
(i) and (ii) above; and (iv) the audit committee, in reliance on the review and
discussions conducted with management and the outside auditors pursuant to (i)
and (ii) above, believes that the company's financial statements are fairly
presented in conformity with Generally Accepted Accounting Principles (GAAP) in
all material respects.

The Committee further recommends that the SEC adopt a "safe harbor" applicable
to any disclosure referenced in this Recommendation 9.

It is being complied with. The necessary report is provided elsewhere in
this annual report

Recommendation 10

Require that a reporting company's outside auditor conduct a SAS 71 Interim
Financial Review prior to the company's filing of its Form 10-Q. The Committee
further recommends that SAS 71 be amended to require that a reporting company's
outside auditor discuss with the audit committee, or at least its chairman, and
a representative of financial management, in person, or by telephone conference
call, the matters described in AU Section 380, Communications With the Audit
Committee, prior to the filing of the Form 10-Q (and preferably prior to any
public announcement of financial results), including significant adjustments,
management judgement and accounting estimates, significant new accounting
policies, and disagreements with management.

Being a foreign private issuer of securities, the company files quarterly
reports on Form-6K, with the SEC. The financial statements included in
Form-6K are reviewed by the company's auditors, as per the requirements of
SAS 71.

56
<PAGE>

Report of the committees of the board
- --------------------------------------------------------------------------------

1. Compensation committee
The compensation committee met on April 10, 2000 and the following members were
present:

Prof. Marti G. Subrahmanyam, Chairman
Mr. Deepak M. Satwalekar
Mr. Ramesh Vangal
Mr. Susim M. Datta

Salaries

The committee reviewed and approved the compensation payable to the executive
directors of the company for fiscal 2001 within the overall limits approved by
the shareholders. Information on compensation and other benefits provided to
executive directors is disclosed elsewhere in this annual report. The committee
also reviewed the compensation proposed for all the management council members.
The committee believes that the proposed compensation and benefits along with
stock options is adequate to motivate and retain the senior officers of the
company.

Stock option scheme

Executive directors (excluding the founders) and the management council members
are eligible for stock options issued by the company. A statement of stock
options issued to management council members in fiscal 2000, is given below.

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Options linked to ADSs Option on equity shares
- ------------------------------------------------------------------------------------------------------------------
Name Average No. of Average No. of
exercise options exercise options
price ($) price ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basab Pradhan 89.50 5,000 - -
Phaneesh Murthy 89.50 8,000 - -
Sobha Meera P. R. 89.50 5,000 - -
Ajay Dubey - - 4,065.05 8,000
Balasubramanian P. - - 4,065.05 8,000
Balakrishnan V. - - 4,065.05 10,000
Deepak Sinha - - 4,065.05 4,000
Girish G.Vaidya - - 4,065.05 8,000
Hema Ravichandar - - 4,065.05 8,000
Mohandas Pai T. V. - - 4,065.05 14,000
Prabhu M. S. S. - - 4,065.05 6,000
Raghavan S. - - 4,065.05 10,000
Raghupati G. Bhandi - - 4,065.05 8,000
Srinath Batni - - 4,065.05 12,000
Vasudeva Rao L. - - 4,065.05 12,000
Yegneshwar S. - - 4,065.05 10,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

The options and weighted average exercise prices are adjusted to reflect the
effect of the stock split in February 2000 and have a graded vesting period over
4 years.

Independent directors

Independent directors are paid compensation not exceeding the limit specified by
statute and based on the approval of the members of the company. This is to
compensate the independent directors for the time spent and also for the
responsibilities undertaken. The table, below, discloses the compensation
payable to independent directors.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name Commission payable
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Susim M. Datta 10,90,000
Deepak M. Satwalekar 10,90,000
</TABLE>

57
<PAGE>

<TABLE>
<S> <C>
Ramesh Vangal 10,90,000
Prof. Marti G. Subrahmanyam 10,90,000
Philip Yeo 4,57,800
- ----------------------------------------------------------------------------------------------------------------------
Total 48,17,800
======================================================================================================================
</TABLE>

Save as disclosed, none of the directors had a material beneficial interest in
any contract of significance to which the company or any of its subsidiary
undertakings was a party, during the financial year.

Sd
Bangalore Prof. Marti G. Subrahmanyam
April 11, 2000 Chairman, Compensation Committee

2. Nominations committee

The nominations committee of the board met on April 10, 2000 and the following
members were present:

Mr. Susim M. Datta, Chairman
Mr. Ramesh Vangal
Prof. Marti G. Subrahmanyam

The committee considered the issue of the retirement of members of the board as
per statute. As one third of the members have to retire every year based on the
date of appointment, Mr. Nandan M. Nilekani, Mr. K. Dinesh and Mr. S. M. Datta
will retire. The committee considered their performance and recommended that
they be considered for re-appointment by the shareholders except for Mr. S. M.
Datta who chose not to be considered for re-election. Mr. Philip Yeo, Executive
Chairman of the Economic Development Board, Government of Singapore was co-opted
as an additional director during October 1999. The committee recommended that
necessary resolutions for appointing him as a director be considered by the
shareholders. The committee also dealt in length on the size of the board. As
part of the globalization process, the committee decided that the board size be
increased upto 18 members from the present size of upto 12 members. The
committee recommended that the necessary resolutions for increasing the board
size be considered by the shareholders.

Sd
Bangalore Susim M. Datta
April 11, 2000 Chairman, Nominations Committee

58
<PAGE>

3. Audit committee

The audit committee of the board met twice during the year and the following
members were present:

Mr. Deepak M. Satwalekar, Chairman
Mr. Susim M. Datta
Mr. Ramesh Vangal
Prof. Marti G. Subrahmanyam

The committee reviewed the draft of the "audit committee charter" and decided
that the same would be discussed in full in the next meeting before they
formally adopt the same. The committee reviewed the independence of both the
internal and statutory auditors and expressed its satisfaction. The committee
discussed the quality and acceptability of the accounting principles as applied
in the financial reporting of the company with the management and both the
internal and statutory auditors of the company. The committee also considered
the internal and statutory auditors views on clarity of the company's financial
disclosures and appropriateness of the company's accounting principles and
underlying estimates and other significant decisions made by management in
preparing the financial disclosures. The committee found no material discrepancy
in the financial statements.

The committee also reviewed the action taken on various items discussed in the
previous audit committee meeting. The committee reviewed the internal controls
to ensure that the accounts of the company are properly maintained and that the
transactions are in accordance with prevailing laws and regulations.

The committee found no material discrepancy or weakness in the internal control
systems of the company.

The committee also issued a letter in terms of the recommendation no. 9 of the
Blue Ribbon Committee on audit committee effectiveness and the same is provided
as an appendix to this report.
Sd
Bangalore Deepak M. Satwalekar
April 11, 2000 Chairman, Audit Committee

Appendix to the audit committee report
- --------------------------------------------------------------------------------

To the members of Infosys Technologies Limited

In connection with the March 31, 2000 financial statements prepared as per US
GAAP, the audit committee: (1) reviewed and discussed the audited financial
statements with management; (2) discussed with the auditors the matters required
by Statement on Auditing Standards No. 61; and (3) received and discussed with
the auditors the matters required by Independence Standards Board Statement No.
1. Based upon these reviews and discussions, the audit committee recommended to
the Board of Directors that the audited financial statements be included in the
Annual Report on Form 20-F filed with the Securities and Exchange Commission of
the United States of America.

Deepak M. Satwalekar Susim M. Datta
Chairman, Audit Committee Member, Audit Committee

Bangalore Ramesh Vangal Prof. Marti G. Subrahmanyam
April 11, 2000 Member, Audit Committee Member, Audit Committee

59
<PAGE>

Management statement
- --------------------------------------------------------------------------------
The financial statements are in full conformity with the requirements of the
Companies Act, 1956 and the Generally Accepted Accounting Principles (GAAP) in
India. The management of Infosys accepts responsibility for the integrity and
objectivity of these financial statements as well as for estimates and
judgements relating to matters not concluded by the year end. The management
believes that the financial statements reflect fairly the form and substance of
transactions and reasonably present the company's financial condition, and
results of operations. To ensure this, the company has installed a system of
internal controls which is reviewed, evaluated and updated on an ongoing basis.
Our internal auditors have conducted periodic audits to provide reasonable
assurance that the established policies and procedures of the company have been
followed. However, there are inherent limitations that should be recognized in
weighing the assurances provided by any system of internal controls.

The financial statements have been audited by Bharat S Raut & Co., Chartered
Accountants, the independent auditors.

The audit committee, at Infosys, meets periodically with the board of directors,
the internal auditors and the independent auditors to review the manner in which
they are performing their responsibilities, and to discuss auditing, internal
controls and financial reporting issues. To ensure complete independence, the
independent auditors and the internal auditors have full and free access to the
members of the audit committee to discuss any matter of substance.

The audit committee for 1999-2000 was:

Deepak M. Satwalekar, Chairman
Susim M. Datta
Ramesh Vangal
Prof. Marti G. Subrahmanyam

<TABLE>
<S> <C> <C> <C>
Bangalore T. V. Mohandas Pai Nandan M. Nilekani N. R. Narayana Murthy
April 11, 2000 Senior Vice President - Managing Director, President Chairman
Finance & Administration and Chief Operating Officer and Chief Executive Officer
and Chief Financial Officer
</TABLE>

60
<PAGE>

Auditors' report
- --------------------------------------------------------------------------------
To
The Members,
Infosys Technologies Limited

We have audited the attached Balance Sheet of Infosys Technologies Limited (the
company) as at March 31, 2000 and the Profit and Loss Account of the company for
the year ended on that date, annexed thereto, and report that:

1 As required by the Manufacturing and Other Companies (Auditor's Report)
Order, 1988, issued by the Company Law Board in terms of Section 227(4A) of
the Companies Act, 1956, we enclose in the Annexure a statement on the
matters specified in paragraphs 4 and 5 of the said Order.

2 Further to our comments in the Annexure referred to in paragraph (1) above:

(a) we have obtained all the information and explanations which to the
best of our knowledge and belief were necessary for the purpose of our
audit;

(b) in our opinion proper books of account as required by law have been
kept by the company so far as appears from our examination of these
books;

(d) in our opinion, the Balance Sheet and Profit and Loss Account dealt
with by this report are prepared in compliance with the accounting
standards referred to in subsection (3C) of Section 211 of the
Companies Act, 1956, to the extent applicable;

(e) in our opinion and to the best of our information and according to the
explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and
give a true and fair view:

(i) in the case of the Balance Sheet, of the state of affairs of the
company as at March 31, 2000; and

(ii) in the case of the Profit and Loss Account, of the profit for the
year ended on that date.

3 We have also examined the attached Cash Flow Statements of the company for
the year ended March 31, 2000. The Statements have been prepared by the
company in accordance with the requirements of Clause 32 of the listing
agreements entered into with the Stock Exchanges.

for Bharat S Raut & Co.
Chartered Accountants

Bangalore Balaji Swaminathan
April 11, 2000 Partner

61
<PAGE>

Annexure to the auditors' report
- --------------------------------------------------------------------------------
The Annexure referred to in paragraph 1 of the auditors' report to the members
of Infosys Technologies Limited (the company) for the year ended March 31, 2000.
We report that:

Internal controls
1. In our opinion and according to the information and explanations given to
us, having regard to the explanations that certain items purchased are of a
special nature in respect of which suitable alternative sources do not
exist for obtaining comparative quotations, there are adequate internal
control procedures commensurate with the size of the company and the nature
of its business for the purchase of computer hardware and software,
consumables, plant and machinery, equipment and other assets. The
activities of the company do not involve the sale of goods.

2. In our opinion and according to the information and explanations given to
us, in respect of the service activities, the company, commensurate with
the size and the nature of its business, has a reasonable system of:

. recording receipts, issues and consumption of materials and allocating
materials consumed to each project;

. allocating man-hours utilized to each project; and

. authorization and control over the allocation of labour costs to each
project.

3. In our opinion, the company has an internal audit system, commensurate with
its size and the nature of its business.

Fixed assets
4. The company has maintained proper records of fixed assets showing full
particulars, including quantitative details and location. The company has a
regular programme of physical verification of its fixed assets which, in
our opinion, is reasonable having regard to the size of the company and the
nature of its assets. In accordance with this programme, certain fixed
assets were physically verified by Management during the year and no
material discrepancies were identified on such verification.

5. None of the fixed assets were revalued during the year.

Inventories
6. The company has not maintained any inventories during the year and
consequently, paragraphs 4(A)(iii) to 4(A)(vi), 4(A)(xii), 4(A)(xiv),
4(A)(xvi) and 4(C)(ii) of the Manufacturing and Other Companies (Auditor's
Report) Order, 1988, are not applicable in relation to its activities.

Loans and advances
7. The parties to whom loans or advances in the nature of loans were given by
the company are regular in repaying the principal amounts as stipulated and
interest where applicable.

8. The company has not taken any loans, secured or unsecured, from companies,
firms, or other parties listed in the register maintained under Section 301
of the Companies Act, 1956, or from companies under the same management as
defined under Section 370(1B) of the Companies Act, 1956, the rate of
interest and other terms and conditions of which are, prima facie,
prejudicial to the interests of the company.

9. The company has not granted any loans, secured or unsecured, to companies,
firms, or other parties listed in the register maintained under Section 301
of the Companies Act, 1956, or to companies under the same management as
defined under Section 370(1B) of the Companies Act, 1956, the rate of
interest and other terms and conditions of which are, prima facie,
prejudicial to the interests of the company.

Related parties
10. In our opinion, and according to the information and explanations given to
us, the company has not entered into any transactions for the purchase of
goods and materials and sale of goods, materials and services, with
companies, firms, or other parties listed in the register maintained under
Section 301 of the Companies Act, 1956, and aggregating during the period
to Rs. 50,000 or more in respect of each party.

Fixed deposits
11. The company has not accepted any deposits from the public and consequently
the provisions of Section 58A of the Companies Act, 1956, and the rules
framed thereunder are not applicable.

62
<PAGE>

Staff welfare
12. Provident Fund and Employees' State Insurance dues were regularly deposited
during the year with the appropriate authorities.

13. On the basis of the examination of the books of account carried out by us
in accordance with generally accepted auditing practices and according to
the information and explanations given to us, no personal expenses of
employees or directors were charged to the profit and loss account, other
than those payable under contractual obligations or in accordance with
generally accepted business practice.

Taxation
14. According to the information and explanations given to us, there are no
undisputed amounts payable in respect of income tax, wealth tax, sales tax,
customs duty and excise duty that were outstanding as at March 31, 2000 for
a period of more than six months from the date that they became payable.

Others
15. The company is not a sick industrial company within the meaning of Section
3(1)(o) of the Sick Industrial Companies (Special Provisions) Act, 1985.

for Bharat S Raut & Co.
Chartered Accountants

Bangalore Balaji Swaminathan
April 11, 2000 Partner

63
<PAGE>

<TABLE>
<CAPTION>
Balance sheet as at March 31
- -----------------------------------------------------------------------------------------------------------------
in Rs.
- -----------------------------------------------------------------------------------------------------------------
Schedule 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOURCES OF FUNDS

SHAREHOLDERS' FUNDS
Share capital 1 33,07,55,000 33,06,95,500
Reserves and surplus 2 800,22,73,248 541,36,15,748
- -----------------------------------------------------------------------------------------------------------------
833,30,28,248 574,43,11,248
=================================================================================================================

APPLICATION OF FUNDS

FIXED ASSETS 3
Gross block 284,03,05,143 168,92,38,345
Less : Depreciation 133,65,20,594 83,09,14,934
- -----------------------------------------------------------------------------------------------------------------
Net block 150,37,84,549 85,83,23,411

Add : Capital work-in-progress 56,96,03,505 14,88,35,800
- -----------------------------------------------------------------------------------------------------------------
207,33,88,054 100,71,59,211

INVESTMENTS 4 13,83,48,469 75,48,469

CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors 5 136,17,81,253 84,51,88,425
Cash and bank balances 6 431,79,35,730 405,04,82,999
Loans and advances 7 210,12,77,161 68,35,96,522
- -----------------------------------------------------------------------------------------------------------------
778,09,94,144 557,92,67,946

Less : Current liabilities 8 67,15,06,459 42,83,42,481
Provisions 9 98,81,95,960 42,13,21,897
- -----------------------------------------------------------------------------------------------------------------
NET CURRENT ASSETS 612,12,91,725 472,96,03,568
- -----------------------------------------------------------------------------------------------------------------
833,30,28,248 574,43,11,248
=================================================================================================================

SIGNIFICANT ACCOUNTING POLICIES AND
NOTES ON ACCOUNTS 13

- -----------------------------------------------------------------------------------------------------------------
</TABLE>

The Schedules referred to above and the notes thereon form an integral part of
the Balance Sheet.

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

for Bharat S Raut & Co.
Chartered Accountants

<TABLE>
<S> <C> <C> <C> <C>
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Susim M. Datta Deepak M. Satwalekar
Partner Chairman and Managing Director, President Director Director
Chief Executive Officer and Chief Operating Officer

Ramesh Vangal Prof. Marti G. Subrahmanyam S. Gopalakrishnan
Director Director Dy. Managing Director

Bangalore K. Dinesh S. D. Shibulal T. V. Mohandas Pai V. Viswanathan
April 11, 2000 Director Director Senior Vice President Company Secretary
Finance & Administration
</TABLE>

64
<PAGE>

<TABLE>
<CAPTION>
Profit and loss account for the year ended March 31
- -----------------------------------------------------------------------------------------------------------------
in Rs.
- -----------------------------------------------------------------------------------------------------------------
Schedule 2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INCOME
Software development services and products
Overseas 869,69,80,931 500,25,40,418
Domestic 12,62,56,042 8,63,71,250
Other income 10 39,14,11,095 3,84,71,833
- -----------------------------------------------------------------------------------------------------------------
921,46,48,068 512,73,83,501
=================================================================================================================
EXPENDITURE
Software development expenses 11 466,26,84,578 261,51,74,052
Administration and other expenses 12 69,48,50,282 45,75,30,137
Provision for contingencies 3,33,00,000 6,66,00,000
Provision for e-inventing the company 3,50,00,000 -
Provision for investment in subsidiary - 7,05,95,674
- -----------------------------------------------------------------------------------------------------------------
542,58,34,860 320,98,99,863
Operating profit (PBIDT) 378,88,13,208 191,74,83,638
Interest - -
Depreciation 53,23,27,389 35,89,30,078

Profit before tax and extraordinary items 325,64,85,819 155,85,53,560
Provision for tax - earlier years 24,00,000 4,32,00,000
- current year 39,46,00,000 18,62,00,000
Profit after tax before extraordinary items 285,94,85,819 132,91,53,560
Effect of extraordinary item - provision no longer required 7,56,70,846 -
Extraordinary income (net of tax) - 2,34,54,103
Net profit after tax and extraordinary items 293,51,56,665 135,26,07,663
- -----------------------------------------------------------------------------------------------------------------
AMOUNT AVAILABLE FOR APPROPRIATION 293,51,56,665 135,26,07,663
- -----------------------------------------------------------------------------------------------------------------
Dividend
Interim 9,92,08,200 4,00,43,011
Final (proposed) 19,84,18,210 8,10,32,734
Dividend Tax 3,27,38,905 1,21,07,574
Amount transferred - capital reserve - 2,34,54,103
- general reserve 260,47,91,350 119,59,70,241
- -----------------------------------------------------------------------------------------------------------------
293,51,56,665 135,26,07,663
=================================================================================================================

SIGNIFICANT ACCOUNTING POLICIES AND
NOTES ON ACCOUNTS 13
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
The Schedules referred to above and the notes thereon form an integral part of
the Profit and Loss Account.

This is the Profit and Loss Account referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants

Ramesh Vangal Prof. Marti G. Subrahmanyam S. Gopalakrishnan
Director Director Dy. Managing Director

Bangalore K. Dinesh S. D. Shibulal T. V. Mohandas Pai V. Viswanathan
April 11, 2000 Director Director Senior Vice President - Company Secretary
Finance & Administration
</TABLE>

65
<PAGE>

AUTHORIZED
10,00,00,000 (5,00,00,000) equity shares of Rs. 5 (Rs. 10) each 50,00,00,000 50,00,00,000
- ----------------------------------------------------------------------------------------------------------------------
ISSUED, SUBSCRIBED AND PAID UP
6,61,50,700 (3,30,69,400) equity shares of
Rs. 5 (Rs. 10) each fully paid up 33,07,53,500 33,06,94,000
[Of the above, 5,78,88,200 (2,89,44,100) equity shares of
Rs. 5 (Rs. 10) each fully paid up have been issued as bonus shares
by capitalization of general reserve; 11,900 (nil) equity shares of
Rs. 5 each were issued during the year
on exercise of ADS linked stock options]
Add: Forfeited shares 1,500 1,500
- ----------------------------------------------------------------------------------------------------------------------
33,07,55,000 33,06,95,500
======================================================================================================================

2. RESERVES AND SURPLUS
Capital reserve as at April 1, 1999 5,93,54,103 3,59,00,000
Add: Transferred from Profit and Loss Account - 2,34,54,103
- ----------------------------------------------------------------------------------------------------------------------
5,93,54,103 5,93,54,103
- ----------------------------------------------------------------------------------------------------------------------

Share premium account as at April 1, 1999 319,99,15,445 41,49,51,460
Add: Received during the year
On conversion of ADS linked stock options 1,75,65,777 -
On issue of American Depositary Shares (ADS) - 295,82,78,400
- ----------------------------------------------------------------------------------------------------------------------
321,74,81,222 337,32,29,860

Less: ADS linked stock option issue expenses 1,01,93,113 -
ADS issue expenses 2,35,06,514 17,33,14,415
- ----------------------------------------------------------------------------------------------------------------------
318,37,81,595 319,99,15,445
- ----------------------------------------------------------------------------------------------------------------------

General reserve as at April 1, 1999 215,43,46,200 111,85,47,959
Less: Capitalized for issue of bonus shares - 16,01,72,000
- ----------------------------------------------------------------------------------------------------------------------
215,43,46,200 95,83,75,959

Add: Transferred from Profit and Loss Account 260,47,91,350 119,59,70,241
- ----------------------------------------------------------------------------------------------------------------------
475,91,37,550 215,43,46,200
- ----------------------------------------------------------------------------------------------------------------------
800,22,73,248 541,36,15,748
======================================================================================================================
</TABLE>

66
<PAGE>

<TABLE>
<CAPTION>
Schedules to the balance sheet as at March 31
- ------------------------------------------------------------------------------------------------------------------------------------

3. FIXED ASSETS In Rs.

- ------------------------------------------------------------------------------------------------------------------------------------
Gross block Depreciation
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
Cost as at Additions Deductions Cost As at For Deductions As at
Assets 1.4.1999 during during as at 1.4.1999 the during 31.3.200
the year the year 31.3.2000 year the year
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Land - free-hold 1,89,83,650 - - 1,89,83,650 - - - -
Land - lease-hold 8,97,76,505 10,19,92,901 - 19,17,69,406 - - - -
Buildings 28,78,62,434 30,11,47,805 - 58,90,10,239 2,34,22,774 2,88,91,457 - 5,23,14,231
Plant and machinery 31,08,06,872 20,70,83,407 3,08,646 51,75,81,633 14,04,13,479 10,98,65,780 2,23,521 25,00,55,738
Computer equipment 77,07,45,928 37,46,60,063 2,30,20,771 112,23,85,225 51,51,31,334 29,73,93,712 2,29,58,511 78,95,66,535
Furniture and fixtures 20,93,06,386 19,30,51,736 31,47,456 39,92,10,666 15,10,37,006 9,59,40,175 31,47,456 24,38,29,725
Vehicles 17,56,570 - 3,92,241 13,64,329 9,10,341 2,36,265 3,92,241 7,54,365
- ------------------------------------------------------------------------------------------------------------------------------------
Total 168,92,38,345 117,79,35,912 2,68,69,114 284,03,05,143 83,09,14,934 53,23,27,389 2,67,21,729 133,65,20,594
- ----------------------
Previous year 105,13,90,563 64,11,69,396 33,21,614 168,92,38,345 47,50,66,754 35,89,30,078 30,81,898 83,09,14,934
- ------------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- -----------------------------------------------------------
Net block
------------------------------
As at As at
Assets 31.3.2000 31.3.1999
- -----------------------------------------------------------
<S> <C> <C>
Land - free-hold 1,89,83,650 1,89,83,650
Land - lease-hold 19,17,69,406 8,97,76,505
Buildings 53,66,96,008 26,44,39,660
Plant and machinery 26,75,25,895 17,03,93,393
Computer equipment 33,28,18,685 25,56,14,594
Furniture and fixtures 15,53,80,941 5,82,69,380
Vehicles 6,09,964 8,46,229
- ----------------------------------------------------------
Total 150,37,84,549 85,83,23,411
- --------------------------
Previous year 85,83,23,411
- ----------------------------------------------------------
</TABLE>

Note: Buildings include Rs. 250 being the value of 5 shares of Rs. 50
each in Mittal Towers Premises Co-operative Society Limited.

67
<PAGE>

TRADE (UNQUOTED) - at cost No. of shares
Long- term investments
Yantra Corporation, a subsidiary company
incorporated in the USA
Common stock at $ 0.20 each, fully paid, 75,00,000 5,32,51,600 5,32,51,600
par value $ 0.01 each (75,00,000)
Series A Convertible Preferred Stock at 6,36,363 1,73,44,074 1,73,44,074
$ 0.75 each, fully paid, (6,36,363)
par value $ 0.01 each
- ------------------------------------------------------------------------------------------------------------------
7,05,95,674 7,05,95,674

Less: Provision for investment in subsidiary 7,05,95,674 7,05,95,674
- ------------------------------------------------------------------------------------------------------------------
- -
- ------------------------------------------------------------------------------------------------------------------

EC Cubed, Inc.
(Series D Convertible Preferred stock 13,00,108 13,08,00,000 -
at $ 2.3075 each fully paid up, (nil)
par value $ 0.0001 each)

JASDIC Park Company 480 75,38,109 75,38,109
(common stock at Yen 50,000 each, (480)
fully paid up)

Software Services Support Education Center Limited 1 10 10
(Equity shares of Rs. 10 each fully paid up) (1)

The Saraswat Co-operative Bank Limited 1,035 10,350 10,350
(Equity shares of Rs. 10 each fully paid up) (1,035)
- ------------------------------------------------------------------------------------------------------------------
13,83,48,469 75,48,469
==================================================================================================================

Aggregate of unquoted investments - carrying value / cost 13,83,48,469 75,48,469

5. SUNDRY DEBTORS
Debts outstanding for a period exceeding six months
Unsecured
Considered good - -
Considered doubtful 2,21,26,448 1,27,23,349

Other debts - unsecured, considered good * 136,17,81,253 84,51,88,425
- ------------------------------------------------------------------------------------------------------------------
138,39,07,701 85,79,11,774

Less: Provision for doubtful debts 2,21,26,448 1,27,23,349
- ------------------------------------------------------------------------------------------------------------------
136,17,81,253 84,51,88,425
==================================================================================================================

* Due by subsidiary - Yantra Corporation Nil 1,06,80,297
</TABLE>

68
<PAGE>

<TABLE>
<CAPTION>
Schedules to the balance sheet as at March 31
- -----------------------------------------------------------------------------------------------------------------
in Rs.
- -----------------------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
6. CASH AND BANK BALANCES
Cash on hand 13,17,773 8,80,351
Balances with scheduled banks
in current accounts * 10,16,77,272 15,18,51,331
in deposit accounts in Indian rupees 22,91,45,764 12,41,56,133
in deposit accounts in foreign currency 268,41,01,874 346,11,46,800
Balances with non-scheduled banks
in deposit accounts in foreign currency
HSBC Bank Middle East, Bahrain 66,76,98,310 -
in current accounts
ABN Amro Bank, Heerlen, Netherlands 15,69,661 19,06,318
ABN Amro Bank, Brussels, Belgium 16,26,311 -
Bank of America, Los Angeles, USA 50,60,500 7,09,257
Bank of America, Milpitas, USA 22,81,065 36,81,071
Bank of America, Palo Alto, USA 57,93,97,557 29,27,16,702
Bank of Boston, Boston, USA 16,88,886 18,01,647
Bank of Melbourne, Melbourne, Australia 2,49,124 -
Barclays Bank, London, UK 44,92,122 26,34,197
Deutsche Bank, Frankfurt, Germany 36,15,221 6,71,259
First Chicago Bank, Chicago, USA 21,98,743 25,28,864
Hongkong Bank of Canada, Toronto, Canada 22,42,324 12,68,577
Michigan National Bank, Detroit, USA 3,87,308 5,54,105
Nations Bank, Dallas, USA 1,11,76,052 11,25,702
Nations Bank, Georgia, USA 12,41,385 8,88,657
Nordbanken, Stockholm, Sweden 3,45,518 -
Nova Scotia Bank, Toronto, Canada 89,98,950 -
Seafirst Bank, Seattle, USA 17,70,378 5,19,580
Sanwa Bank, Tokyo, Japan 40,43,674 9,07,608
Summit Bank, Bridgewater, USA 16,09,958 5,34,840
- -----------------------------------------------------------------------------------------------------------------
431,79,35,730 405,04,82,999
=================================================================================================================

Maximum balance held during the year
in deposit accounts in foreign currency
HSBC Bank Middle East, Bahrain 66,76,98,310 -
in current accounts
ABN Amro Bank, Heerlen, Netherlands 19,68,084 19,55,717
ABN Amro Bank, Brussels, Belgium 16,74,689 -
Bank of America, Los Angeles, USA 59,13,227 48,32,906
Bank of America, Milpitas, USA 4,57,78,346 27,81,50,845
Bank of America, Palo Alto, USA 71,03,42,796 34,45,46,960
Bank of Boston, Boston, USA 68,26,703 56,13,937
Bank of Melbourne, Melbourne, Australia 2,92,425 -
Barclays Bank, London, UK 67,59,209 60,22,293
Deutsche Bank, Frankfurt, Germany 40,36,519 8,81,045
First Chicago Bank, Chicago, USA 49,23,828 25,42,183
Hongkong Bank of Canada, Toronto, Canada 1,89,92,669 19,90,796
Michigan National Bank, Detroit, USA 13,34,282 10,01,950
Nations Bank, Dallas, USA 1,45,77,623 14,58,595
Nations Bank, Georgia, USA 18,23,598 11,31,832
Nordbanken, Stockholm, Sweden 3,45,518 -
Nova Scotia Bank, Toronto, Canada 89,98,950 -
Seafirst Bank, Seattle, USA 24,05,174 6,97,458
Sanwa Bank, Tokyo, Japan 79,10,422 18,47,164
Summit Bank, Bridgewater, USA 35,18,916 37,29,977
</TABLE>

* includes Rs. 28,72,035 (previous year Rs. 12,98,113) being the balance in
unclaimed dividend account.

69
<PAGE>

Unsecured, considered doubtful
Deposit with a company - 1,19,02,331
Loans and advances to employees - 4,01,814
- ------------------------------------------------------------------------------------------------------------------
210,12,77,161 69,59,00,667
Less: Provision for doubtful loans and advances - 1,23,04,145
- ------------------------------------------------------------------------------------------------------------------
210,12,77,161 68,35,96,522
==================================================================================================================

* includes due by non-director officers of the company 1,35,08,825 1,41,50,902
Maximum amounts due at any time during the year 2,30,09,790 1,97,52,550

8. CURRENT LIABILITIES
Sundry creditors
for goods 4,25,90,239 31,73,360
for accrued salaries and benefits 22,44,51,291 13,13,31,791
for other liabilities:
provision for expenses 7,67,74,570 5,53,54,604
retention monies 4,91,19,373 1,80,11,974
withholding taxes payable 6,67,44,284 -
others 1,47,21,153 2,46,06,700
- ------------------------------------------------------------------------------------------------------------------
47,44,00,910 23,24,78,429
Advances received from clients 1,85,61,551 7,80,446
Unearned revenue 17,56,71,963 19,37,85,493
Unclaimed dividend 28,72,035 12,98,113
- ------------------------------------------------------------------------------------------------------------------
67,15,06,459 42,83,42,481
==================================================================================================================

9. PROVISIONS
Proposed dividend 19,84,18,210 8,10,32,734
Provision for taxation 64,78,45,745 23,94,60,761
Provision for contingencies - 6,66,00,000
Provision for e-inventing the company 39,00,977 -
Provision for post-sales client support 5,51,91,028 3,42,28,402
Provision for gratuity 8,28,40,000 -
- ------------------------------------------------------------------------------------------------------------------
98,81,95,960 42,13,21,897
==================================================================================================================
</TABLE>

70
<PAGE>

Schedules to the profit and loss account for the year ended March 31
- ------------------------------------------------------------------------------

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
10.OTHER INCOME
Interest received on deposits with banks and others
Tax deducted at source Rs. 1,67,51,195 (Rs. 21,21,726) 26,68,79,106 3,67,00,927
Sale of special import licenses 2,02,31,549 -
Profit on sale of assets 8,73,015 -
Miscellaneous income 41,00,350 17,70,906
Exchange differences * 9,93,27,075 -
-----------------------------------------------------------------------------------------------------------------
39,14,11,095 3,84,71,833
=================================================================================================================
*arising on translation of foreign currency deposits maintained abroad
11.SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including overseas staff expenses 307,54,46,295 151,56,56,923
Staff welfare 4,93,07,308 3,06,17,200
Contribution to provident and other funds 22,08,36,923 11,42,90,209
Foreign tour and travel 84,09,02,293 58,11,20,975
Consumables 2,70,06,251 1,06,44,207
Cost of software packages
for own use 16,53,57,382 14,86,91,737
for domestic software development 2,84,48,397 1,78,19,890
Provision for post-sales client support 2,09,62,627 2,19,18,587
Computer maintenance 3,27,43,350 3,29,08,467
Communication expenses 17,31,23,718 9,59,08,515
Consultancy charges 2,85,50,034 4,55,97,342
-----------------------------------------------------------------------------------------------------------------
466,26,84,578 261,51,74,052
=================================================================================================================
12.ADMINISTRATION AND OTHER EXPENSES
Travelling and conveyance 7,68,26,394 4,15,37,200
Rent 10,34,93,593 7,44,54,587
Telephone charges 5,93,95,252 5,15,34,846
Legal and professional charges 7,55,68,079 5,37,56,388
Printing and stationery 2,76,70,902 1,76,34,923
Advertisements 2,12,41,343 76,84,502
Brand building 99,17,816 -
Office maintenance 5,81,01,381 2,95,44,190
Repairs to building 1,13,44,232 1,08,24,460
Repairs to plant and machinery 84,12,905 86,47,678
Power and fuel 5,01,41,466 2,73,37,769
Insurance charges 2,41,35,289 1,28,78,968
Rates and taxes 1,03,80,848 1,16,79,290
Donations 3,49,27,871 1,49,82,357
Auditor's remuneration - audit fees 17,85,000 14,35,000
- certification charges 2,00,000 2,00,000
- other services 4,50,000 8,00,000
- out-of-pocket expenses 2,00,000 1,50,000
Bad loans and advances written off 3,13,050 -
Bad debts written off 1,59,20,938 -
Provision for bad and doubtful debts 94,03,099 (13,06,919)
Provision for doubtful loans and advances 52,94,106
Bank charges and commission 42,21,668 38,95,031
Commission charges 64,70,454 7,40,413
Other miscellaneous expenses 2,10,64,341 1,80,79,939
Marketing expenses 3,14,93,837 1,92,56,725
Postage and courier 1,37,56,638 79,15,959
Books and periodicals 77,13,886 76,72,725
Research grants 1,03,00,000 3,09,00,000
-----------------------------------------------------------------------------------------------------------------
69,48,50,282 45,75,30,137
=================================================================================================================
</TABLE>

71
<PAGE>

Schedules to the balance sheet and profit and loss account
- -------------------------------------------------------------------------------

13. SIGNIFICANT ACCOUNTING POLICIES AND NOTES ON ACCOUNTS

13.1 Significant accounting policies

13.1.1 Basis of preparation of financial statements

The financial statements are prepared under the historical cost convention,
in accordance with Indian Generally Accepted Accounting Principles
("GAAP"), the accounting standards issued by the Institute of Chartered
Accountants of India and the provisions of the Companies Act, 1956, as
adopted consistently by the company. All income and expenditure having a
material bearing on the financial statements are recognized on the accrual
basis.

The preparation of the financial statements in conformity with GAAP
requires that the management make estimates and assumptions that affect the
reported amounts of assets and liabilities, and disclosure of contingent
assets and liabilities as of the date of the financial statements, and the
reported amounts of revenue and expenses during the reporting period.
Examples of such estimates include, estimates of expected contract costs to
be incurred to complete software development, provision for doubtful debts,
future obligations under employee retirement benefit plans and the useful
lives of fixed assets. Actual results could differ from those estimates.

13.1.2 Revenue recognition

Revenue from software development on the time-and-material basis is
recognized based on software developed and billed to clients as per the
terms of specific contracts. In the case of fixed-price contracts, revenue
is recognized based on the milestones achieved as specified in the
contracts, on the percentage of completion basis. Revenue from the sale of
software products is recognized when the sale is completed with the passing
of title. Revenues from Annual Technical Services ("ATS") is recognized on
a pro-rata basis over the period in which such services are rendered.
Interest on deployment of surplus funds is recognized using the time-
proportion method, based on interest rates implicit in the transaction.
Dividend income is recognized when the right to receive dividend is
established. Revenue from the sale of special import licences is recognized
when the licences are actually sold.

13.1.3 Expenditure

Expenses are accounted on the accrual basis and provisions are made for all
known losses and liabilities. Provisions are made for future unforeseeable
factors which may affect the ultimate profit on fixed-price software
development contracts. The cost of software purchased for use in software
development and services is charged to revenue in the same year. The leave
encashment liability of the company is provided on the basis of actuarial
valuation. Provisions are made towards likely expenses on providing
post-sales client support for fixed-price contracts.

13.1.4 Fixed assets

Fixed assets are stated at the cost of acquisition, less accumulated
depreciation. Direct costs are capitalized till the assets are ready to be
put to use. These costs include financing costs relating to specific
borrowing(s) attributable to fixed assets.

13.1.5 Capital work-in-progress

Advances paid towards the acquisition of fixed assets, and the cost of
assets not put to use before the year-end, are disclosed under capital
work-in-progress.

13.1.6 Depreciation

Depreciation on fixed assets is provided using the straight-line method,
based on useful lives of assets as estimated by the management.
Depreciation is charged on a pro-rata basis for assets purchased / sold
during the year. Individual assets costing less than Rs. 5,000 are
depreciated in full in the year of purchase. The management's estimate of
useful lives for the various fixed assets is given below.

Buildings 15 years
Plant and machinery 5 years
Computer equipment 2-5 years
Furniture and fixtures 5 years
Vehicles 5 years

72
<PAGE>

13.1.7 Retirement benefits to employees

13.1.7a Gratuity

In accordance with Indian law, the company provides for gratuity, a defined
benefit retirement plan (the "Gratuity Plan") covering all employees. The
plan provides a lump sum payment to vested employees at retirement, death
or termination of employment, based on the respective employee's salary,
and the years of employment with the company.

The company has established the Infosys Technologies Limited Employees'
Gratuity Fund Trust (the "Trust"). Liabilities with regard to the Gratuity
Plan are determined by actuarial valuation, based upon which, the company
makes contributions to the Trust. Trustees administer the contributions
made to the Trust. The funds contributed to the Trust are invested in
specific designated securities as mandated by law and generally comprises
central and state government bonds, and debt instruments of government-
owned corporations.

13.1.7b Superannuation

Apart from being covered under the Gratuity Plan described above, the
senior officers of the company are also participants of a defined
contribution benefit plan. The plan is termed the superannuation plan (the
"plan") to which the company makes monthly contributions, based on a
specified percentage of each covered employee's salary. The company has no
further obligations under the plan beyond its monthly contributions .

13.1.7c Provident fund

In addition to the above benefits, all employees receive benefits from a
provident fund which is a defined contribution plan. Both the employee and
the employer make monthly contributions to this provident fund plan equal
to 12% of the covered employee's salary.

The company has established a Provident Fund Trust to which a part of the
contributions are made each month. The remainder of the contributions are
made to the Government's provident fund. The company has no further
obligations under the provident fund plan beyond its monthly contributions.

13.1.8 Research and development

Revenue expenditure incurred on research and development are charged off in
the same year in which such expenditure is incurred. Capital expenditure
incurred on research and development is depreciated over the estimated
useful life of the related assets.

13.1.9 Foreign currency transactions

Sales made to clients outside India and realizations deposited into foreign
currency bank accounts are accounted for on the basis of the exchange rate
as on the date of the transaction. Adjustments are made for any variations
in the sale proceeds on conversion into Indian currency upon actual
receipt. Expenditure in foreign currency is accounted at the exchange rate
prevalent when such expenditure is incurred. Disbursements made out of
foreign currency bank accounts are reported at a rate that approximates the
actual monthly rate. Fixed assets purchased at overseas offices are
accounted for on the basis of the actual cost incurred at the exchange rate
prevalent at the time of purchase. Depreciation is charged as per company
policy. Exchange differences arising on foreign currency transactions are
recognized as income or expense in the year in which they arise.

Current assets and current liabilities denominated in foreign currency are
translated at the exchange rate prevalent at the date of the balance sheet.
The resulting difference is accounted for in the profit and loss account.
In the case of forward contracts, the difference between the forward rate
and the exchange rate on the date of the transaction is recognized as
income or expense over the life of the contract.

13.1.10 Investments

Investments are classified into current investments and long-term
investments. Current investments are carried at the lower of the cost and
the fair value, and provision is made to recognize any decline in the
carrying value. Long-term investments are carried at cost, and provision is
made to recognize any decline, other than temporary, in the value of such
investment. Overseas investments are carried at their original rupee cost
less provision as described above.

13.1.11 Investment in subsidiary

The investment in the subsidiary is accounted on the cost method, whereby,
the company recognizes only dividends received from the subsidiary as
income. In case of losses made by the subsidiary, other than temporary,
adequate provision is made to recognize any decline in the value of the
investment.

<PAGE>

13.1.12 Income tax

Provision is made for income tax on an annual basis, under the tax-payable
method, based on the tax liability as computed after taking credit for
allowances and exemptions. In case of matters under appeal, due to
disallowances or otherwise, full provision is made when the said
liabilities are accepted by the company.

13.2 Notes on accounts

The previous year's figures have been recast / restated, wherever
necessary, to conform to the current year's classification.

13.2.1 Contingent liabilities

a. The estimated amount of contracts remaining to be executed on capital
account, and not provided for (net of advance) is Rs. 80,31,29,007 as
at March 31, 2000. The amount of such contracts as at the previous
year-end was Rs. 24,90,40,333.

b. The company has outstanding counter guarantees of Rs. 5,26,30,000 as
at March 31, 2000, to various banks, in respect of guarantees given by
the said banks in favor of various government authorities. The counter
guarantees outstanding, as at the previous year-end was Rs.
3,20,40,263.

c. Claims against the company, not acknowledged as debts, amounted to Rs.
32,89,661 as at March 31, 2000. Such claims as at the previous year-
end was Rs. 17,91,814.

13.2.2 Quantitative details

The company is engaged in the development and maintenance of computer
software. The production and sale of such software cannot be expressed in
any generic unit. Hence, it is not possible to give the quantitative
details of sales and certain information as required under paragraphs 3, 4C
and 4D of part II of Schedule VI to the Companies Act, 1956.

13.2.3 Managerial remuneration paid to the chairman, managing director
and whole-time directors.

<TABLE>
<CAPTION>
in Rs.
--------------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Salary 38,00,059 38,95,200
Contribution to provident fund and other funds 12,08,855 12,39,120
Perquisites 37,32,482 36,92,197
--------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.4 Managerial remuneration paid to non-whole-time directors

<TABLE>
<CAPTION>
in Rs.
-------------------------------------------------------------------------------------------------------------
2000 1999
--------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commission 48,17,800 24,00,000
Sitting fees 92,000 58,000
Reimbursement of expenses 10,13,703 7,58,645
--------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.5 Computation of net profit in accordance with Section 349 of the
Companies Act, 1956, and calculation of commission payable to non-
whole-time directors

Add:

1. Whole-time directors remuneration (including perquisites) 87,41,396 88,26,517
2. Directors' sitting fees 92,000 58,000
3. Commission to non-whole-time directors 48,17,800 24,00,000
4. Depreciation as per the accounts 53,23,27,389 35,89,30,078
5. Provision for bad and doubtful debts 94,03,099 -
6. Provision for Investment in subsidiary - 7,05,95,674
7. Provision for taxation 39,70,00,000 22,94,00,000
</TABLE>

74
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
381,18,67,503 199,93,63,829
============================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Less:
1. Depreciation as per Section 350 of the Companies Act, 1956 39,86,14,483 19,35,60,009
2. Profit on sale of fixed assets as per Profit and Loss Account 8,73,015 -
Net profit on which commission is payable 341,23,80,005 180,58,03,820
Commission payable to non-whole-time directors
@ 0.50% per annum of net profit 1,70,61,900 90,29,019
Commission approved by the Board 48,17,800 24,00,000
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.6 Imports on CIF basis

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capital goods 37,47,31,691 27,12,27,684
Software packages 2,54,95,652 2,69,36,735
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.7 Expenditure in foreign currency

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Travel expenses 70,29,13,532 50,72,37,245
Professional charges 4,51,95,637 2,88,63,027
Other expenditure incurred overseas for software development 221,74,57,133 109,13,62,546
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.8 Earnings in foreign exchange

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Income from software development services and products on a receipt basis 833,29,73,465 475,29,01,875
Interest received on deposits with banks 18,42,65,368 2,14,60,480
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

13.2.9 Depreciation on assets costing less than Rs. 5,000 each

During the year, the company charged depreciation at 100% in respect of assets
costing less than Rs. 5,000 each, amounting to Rs. 13,21,59,074. The
corresponding figure for the previous year was Rs. 11,37,41,697.

13.2.10 Exchange differences

During the year, realized and unrealized exchange gains amounted to Rs. 18.70
crore including Rs. 9.93 crore arising out of exchange differences on the
translation of foreign currency deposits maintained abroad. The corresponding
amounts for the previous year were Rs. 2.78 crore and Rs. Nil, respectively.
Exchange difference on translation of foreign currency deposits maintained
abroad is disclosed separately under "Other Income" in the financial statements.
The balance of realized and unrealized exchange gains amounting to Rs. 8.77
crore (previous year Rs. 2.78 crore) is included as a component of "income from
software development services and products-overseas" in the financial
statements.

13.2.11 Research and development expenditure

Research and development expenses charged to the Profit and Loss Account on both
capital and revenue accounts amounts to Rs. 8,22,63,440 (previous year Rs.
9,81,06,490). This includes Rs. 15,27,500 being the depreciation charged at 100%
in respect of R&D assets acquired during the year (previous year Rs. 30,30,000).

13.2.12 Provision for contingencies

The company had instituted a contingency plan effective October 1, 1998 to meet
any possible disruption in client support due to the Year 2000 impact on the
technology and communication infrastructure provided to the company by its
vendors. The contingency plan called for the creation of a total provision of
Rs. 20.00 crore based on an initial estimate. This provision was required to be
made over six quarters commencing October 1998. Accordingly, the company had
made a total provision of Rs. 9.99 crore up to the quarter ended June 30, 1999
(including Rs. 3.33 crore for the quarter

75
<PAGE>

ended June 30, 1999). The company had been led to believe that all its
telecommunication service providers were Year 2000 ready and therefore did not
expect significant disruption of these facilities. During the second quarter,
the company made an appraisal and re-estimated the provision required for
meeting such contingencies over the next two quarters and was of the opinion
that the provision already made was adequate for the purpose and hence no
further provision was required.

The company expended Rs. 2,42,29,154 towards support of Year 2000 transition
activities in fiscal 2000, which was set off against the provision created
earlier. The company has reversed the remainder of the provision amounting to
Rs. 7,56,70,846 as in its opinion the Year 2000 transition was completed
smoothly and this provision is no longer required. This amount is disclosed as
an extraordinary item as a component of net profit for the year in the profit
and loss account.

13.2.13 Provision for e-inventing the company

During the quarter ended September 30, 1999, the company had announced that it
may be required to incur business restructuring costs for creating knowledge
infrastructure, acquiring people with technical skills in the e-commerce area
and for e-inventing the company. This was a result of the rapid shift in
business towards e-commerce related work. Accordingly, the company made a
provision of Rs. 3.50 crore during the quarter ended September 30, 1999.
Subsequently, the company made an appraisal of the restructuring and is of the
opinion that the existing provision is adequate for the purpose. Therefore, no
further provision has been made.

During the year ended March 31, 2000, an amount of Rs. 3,10,99,023 was incurred
towards e-inventing the company and was set-off against the provision made.
After this set-off, a balance of Rs. 39,00,977 remains as provision for e-
inventing the company as on March 31, 2000.

13.2.14 Unearned revenue

Unearned revenue as of March 31, 2000 amounting to Rs. 17,56,71,963 (previous
year Rs. 19,37,85,493) primarily consists of client billings on fixed-price,
fixed-time-frame contracts for which related costs are not yet incurred.

13.2.15 Dues to Small-Scale Industrial undertakings

As of March 31, 2000, the company had no outstanding dues to small-scale
industrial undertakings.

13.2.16 Balance of unutilized money raised by issue of ADS

During the year ended March 31, 1999, the company made an Initial Public
Offering (IPO) of American Depositary Shares (ADS), of USD 70,380,000 equivalent
to Rs. 296.86 crore. The issue expenses amounted to Rs. 19.68 crore and the
amount utilized for capital investment is Rs. 136.19 crore. The balance of
unutilized money amounting to Rs. 140.99 crore is maintained in foreign currency
deposit accounts with various banks outside India.

13.2.17 ADS issue expenses

During the year ended March 31, 2000, the company received additional bills for
costs incurred during the IPO, details of which are given below:

in Rs.
------------------------------------------------------------------------------
Legal and accounting fees 1,58,02,860
Printing charges 77,03,654
------------------------------------------------------------------------------
TOTAL 2,35,06,514
------------------------------------------------------------------------------

These amounts are treated as share issue expenses and deducted from the balance
in the share premium account in these financial statements.

13.2.18 Stock options

The company currently has three stock option plans. These are summarized below.

1994 Stock Option Plan (the 1994 Plan)

As of March 31, 2000, 3,41,400 options to acquire 3,41,400 shares were
outstanding with the employees under the 1994 Plan. These options were granted
at an exercise price of Rs. 100 per option.

1998 Stock Option Plan (the 1998 Plan)

The company's 1998 Plan provides for the grant of non-statutory stock options
and incentive stock options to employees of the company. The establishment of
the 1998 Plan was approved by the Board of Directors in December 1997 and by

76
<PAGE>

the company's shareholders in January 1998. The Government of India approved the
1998 Plan, subject to a limit of $ 50 million on the aggregate value of equity
shares reserved under the 1998 Plan. Accordingly, the number of equity shares
reserved under the 1998 Plan may be reduced by the Board of Directors from time
to time to comply with this limit of $ 50 million. A total of 16,00,000 equity
shares corresponding to 32,00,000 ADSs (the Ministry of Finance, Government of
India has allowed the company to issue a maximum of 1.47 million ADSs under the
1998 Plan) are currently reserved for issuance pursuant to the 1998 Plan. These
options may be issued at an exercise price that is not less than 90% of the fair
market value of the underlying equity share on the date of the grant. The 1998
Plan will terminate in January 2008, unless terminated earlier. All options
under the 1998 Plan are exercisable for ADSs representing equity shares. A
committee of the Board of Directors administers the 1998 Plan. As of March 31,
2000, 6,89,500 options to acquire 6,89,500 ADS corresponding to 3,44,750 equity
shares were outstanding with employees. These options were granted at a weighted
average exercise price of Rs. 2,475 per option.

1999 Stock Option Plan (the 1999 Plan)

In fiscal 2000, the company instituted the 1999 Plan. The 1999 Plan was approved
by the share holders and the Board of Directors in June 1999. The 1999 Plan
provides for the issue of 66,00,000 equity shares to the employees. The 1999
Plan is administered by a Compensation Committee comprising a maximum of seven
members, the majority of whom are independent directors on the Board of
Directors. Under the 1999 Plan, options will be issued to employees at an
exercise price which shall not be less than the Fair Market Value. Fair Market
Value means the closing price of the company's shares in the stock exchange
where there is the highest trading volume on a given date and if the shares are
not traded on that day, the closing price on the next trading day. Under the
1999 Plan, options may also be issued to employees at exercise prices that are
less than Fair Market Value only if specifically approved by the members of the
company in a general meeting. As of March 31, 2000, 10,06,800 options were
outstanding with employees under the 1999 Plan. These options were granted at a
weighted average exercise price of Rs. 4,294 per option.

13.2.19 Employee Stock Option Plan (ESOP)

The Securities and Exchange Board of India (SEBI) recently issued the (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which
is effective for all stock option schemes established after June 19, 1999. In
accordance with these guidelines, the excess of the market price of the
underlying equity shares as of the date of the grant of the options over the
exercise price of the options, including up-front payments, if any is to be
recognized and amortized on a straight line basis over the vesting period.

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 proforma amounts indicated
below.

in Rs.
- -------------------------------------------------------------------------------
2000 1999
- -------------------------------------------------------------------------------
Net profit:
- - As reported 293,51,56,665 135,26,07,663
- - Adjusted pro forma 271,34,60,717 65,67,38,965
- -------------------------------------------------------------------------------

13.2.20 Provision for taxation

The company's profits from export activities are deductible from taxable income.
Further, most of the company's operations are conducted through 100% Export
Oriented Units, which are entitled to a tax holiday for a period of ten years
from the date of commencement of operations. The provision for taxation includes
taxes payable in respect of domestic income and income arising from the
company's overseas operations, primarily in the United States, Europe, Far East
and South East Asia.

13.2.21 Cash and bank balances

The cash and bank balances include interest accrued but not due on fixed
deposits amounting to Rs. 94,92,514 for the year ended March 31, 2000 (previous
year Rs. 48,60,578)

13.2.22 Loans and advances

Advances recoverable in cash or kind or for value to be received mainly comprise
of prepaid travel and per-diem expenses and advance paid to vendors towards
current assets.

77
<PAGE>

Deposits with financial institutions consists of Rs. 25,50,19,994 (previous year
Rs. 5,57,39,726) and Rs. 25,75,52,742 (previous year Rs. Nil) deposited with
Housing Development Finance Corporation Limited, and ICICI Limited,
respectively. Mr. Deepak M. Satwalekar, director of the company, is also the
Managing Director in Housing Development Finance Corporation Limited. Mr. N. R.
Narayana Murthy, Chairman and CEO of the company and Prof. Marti G.
Subrahmanyam, director of the company are also directors in ICICI Limited.
Except as directors in these financial institutions, they have no direct
interest in these transactions. "Deposit with a body corporate" consists of Rs.
25,32,29,129 (previous year Rs. 6,03,68,219) deposited with GE Capital Services
India Limited. All these financial institutions and the body corporate have AAA
rating from Credit Rating and Information Services of India Limited (CRISIL).
These amounts include interest accrued but not due amounting to Rs. 1,58,01,863
(previous year Rs. 11,07,945).

13.2.23 Current liabilities

Sundry creditors for other liabilities represent mainly the retention amount
payable to the vendors, and amounts accrued for various other operational
expenses.

13.2.24 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 outright at the 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 agreement. These amounts are disclosed
as "Land -leasehold" under "Fixed assets" in the financial statements.

13.2.25 Set off unearned revenues

The company entered into an agreement with a customer for providing software
services during the year. The company commenced the project and raised an
invoice amounting to Rs. 2,17,45,000 towards advance payment for starting the
project. This amount was initially treated as "Unearned revenues" and formed
part of accounts receivable. The client subsequently went into liquidation.
During the year, the company set off the amount receivable from the client
against the amount earlier treated as unearned revenues. Expenses incurred on
this project were not material and were expensed as incurred.

13.2.26 Income Tax demand for stock options

The Income Tax department raised a tax demand of Rs. 73.52 crore on the company
for payment of tax deductible at source on stock options granted to the
company's employees during the financial years 1996-97, 1997-98 and 1998-99. The
company has contested this tax demand by filing an appeal before the appellate
authority. However, any tax liability on stock option issued under the Employee
Stock Option Plan is adequately covered by indemnities from employees and by the
stock exercisable by them under ESOP. Consequently, employees have paid the tax
due and the entire tax demand has been discharged in full. Thus, there is no
impact on the earnings of the company on this account.

13.2.27 Stock split

The shareholders of Infosys approved the 2-for-1 split of its equity shares,
i.e., a subdivision of every equity share from the current par value of Rs. 10
into 2 equity shares of par value of Rs. 5 each, at the Extraordinary General
Meeting held on December 29, 1999. The Board of Directors of the company had
fixed February 11, 2000 as the Record Date for determining the shareholders/ADSs
holders entitled to the split. As the split has been given effect to, the same
is reflected in the financial statements as per Indian GAAP for the year ended
March 31, 2000.

78
<PAGE>

Management's discussion and analysis of financial condition and results of
operations
- -------------------------------------------------------------------------------

Overview

The financial statements have been prepared in compliance with the requirements
of the Companies Act, 1956, and Generally Accepted Accounting Principles (GAAP)
in India. The management of Infosys accepts responsibility for the integrity and
objectivity of these financial statements, as well as for various estimates and
judgements used therein. In addition to the historical information contained
herein, the following discussion includes forward-looking statements which
involve risks and uncertainties, including, but not limited to, risks inherent
in the company's growth strategy, dependence on certain clients, dependence on
availability of qualified technical consultants and other factors discussed in
this report.

A Financial condition

1. Share capital

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
March 31, 2000 March 31, 1999
Number Value (Rs.) Number Value (Rs.)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Opening balance as of April 1, 3,30,69,400 33,06,94,000 1,60,17,200 16,01,72,000
Bonus issue in March 1999 - - 1,60,17,200 16,01,72,000
Shares issued under ADS program - - 10,35,000 1,03,50,000
Effect of stock split in February 2000 3,30,69,400 - - -
Shares issued during the year upon
conversion of ADS linked stock options 11,900 59,500 - -
---------------------------------------------------------------------------------------------------------------
Closing balance as of March 31 6,61,50,700 33,07,53,500 3,30,69,400 33,06,94,000
Add: Forfeited shares - 1,500 - 1,500
---------------------------------------------------------------------------------------------------------------
Total 6,61,50,700 33,07,55,000 3,30,69,400 33,06,95,500
===============================================================================================================
</TABLE>

The company has, at present, only one class of shares. During the year, the
company subdivided its equity share of par value Rs. 10 each into two
equity shares of par value of Rs. 5 each and the same was approved by the
shareholders at the Extraordinary General Meeting held in December 1999.
Due to this, the issued, subscribed and outstanding shares increased from
3,30,69,400 shares of par value of Rs. 10 each to 6,61,38,800 shares of par
value of Rs. 5 each. The authorized share capital of the company increased
from 5,00,00,000 equity shares of Rs. 10 par value per share to
10,00,00,000 equity shares of Rs. 5 par value per share. In March 2000,
seventeen employees exercised 23,800 ADSs (equivalent to 11,900 equity
shares of par value of Rs. 5 each) issued under the 1998 Employee Stock
Option Plan. Consequently, the issued, subscribed and outstanding shares
increased by an additional 11,900 equity shares.
During the previous year 10,35,000 shares of par value of Rs. 10 each
(equivalent to 20,70,000 ADSs) were issued under the American Depositary
Shares (ADS) program at $ 34 per ADS (equivalent to $ 68 per equity share).
The ADS are listed on the NASDAQ stock exchange. In March 1999, the company
also issued 1,60,17,200 shares as bonus shares to its shareholders in the
ratio of 1:1 as approved by the shareholders in the Extraordinary General
Meeting of the company held in January 1999. To provide for the creation of
new shares, the authorized capital of the company was increased to Rs.
50,00,00,000 consisting of 5,00,00,000 shares of Rs. 10 each.

2. Reserves and surplus

The addition to the share premium account, of Rs. 1,75,65,777 during the
year, is due to the premium received on issue of 11,900 equity shares of
par value of Rs. 5 each (equivalent to 23,800 ADSs) on exercise of options
issued under the 1998 Employee Stock Option Plan at an exercise price of $
17 per ADS (adjusted for the stock split of 2:1). The reduction in the
share premium of Rs. 2,35,06,514 comprises expenses related to the issue of
ADSs during March 1999. With this, the total cost related to the issue of
American Depositary Shares (ADS) during March 1999 has been accounted for
and constitutes 6.65% of the gross issue proceeds. The break-up of the ADS
issue expenses are as follows:

79
<PAGE>

<TABLE>
<CAPTION>
in Rs.
-----------------------------------------------------------------------------------------------------------
Nature of expenses Year ended March 31, 2000 Year ended March 31, 1999 Total
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Travel expenses - 35,91,484 35,91,484
India advisor's fees - 1,48,43,142 1,48,43,142
Legal and accounting fees 1,58,02,860 1,79,01,524 3,37,04,384
Registration and filing fee - 30,86,211 30,86,211
Stamp duty - 29,88,150 29,88,150
Underwriters' spread - 14,28,61,129 14,28,61,129
Contribution received from depositary - (1,19,57,225) (1,19,57,225)
Printing expenses 77,03,654 - 77,03,654
-----------------------------------------------------------------------------------------------------------
2,35,06,514 17,33,14,415 19,68,20,929
===========================================================================================================
</TABLE>

Additionally, an amount of Rs. 1,01,93,113 incurred in connection with the
registration of the ADS linked stock option plan with the Securities and
Exchange Commission, USA, was accounted for as a reduction from the share
premium account.

In the previous year, there was an addition of Rs. 295,82,78,400 on account
of premium received on issue of 10,35,000 equity shares of par value of Rs.
10 each (equivalent to 20,70,000 ADSs) under the American Depositary Shares
(ADS) program. Such addition to the share premium account was reduced by
the cost of the issue of Rs. 17,33,14,415 comprising the underwriters
spread, legal fees, accounting fees and travel expenses, etc., representing
bills received till March 1999.

3. Fixed assets

<TABLE>
<CAPTION>
in Rs.
----------------------------------------------------------------------------------------------------------
Particulars Year ended March 31, 2000 Year ended March 31, 1999 Growth %
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Land - freehold 1,89,83,650 1,89,83,650 -
- leasehold 19,17,69,406 8,97,76,505 113.61%
Buildings 58,90,10,239 28,78,62,434 104.62%
Plant and machinery 51,75,81,633 31,08,06,872 66.53%
Computer equipment 112,23,85,220 77,07,45,928 45.63%
Furniture and fixtures 39,92,10,666 20,93,06,386 90.73%
Vehicles 13,64,329 17,56,570 (22.32%)
Total 284,03,05,143 168,92,38,345 68.14%
Less: accumulated depreciation 133,65,20,594 83,09,14,934 60.85%
Net block 150,37,84,549 85,83,23,411 75.20%
Add: capital work-in-progress 56,96,03,505 14,88,35,800 282.71%
Net fixed assets 207,33,88,054 100,71,59,211 105.87%
Depreciation as a % of total revenues 5.78% 7.00%
Accumulated depreciation as a % of gross block 47.05% 49.19%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

During the year, the company added Rs. 117,79,35,912 to its gross block of
assets, including investment in technology assets of Rs. 37,46,60,063. The
company also invested Rs. 10,19,92,901 on acquisition of land at Bangalore,
Chennai, Pune and Bhubaneswar for creating software development
infrastructure. During the year, the company operationalized new software
development centers at Bangalore and Pune and consequently the investment
in Buildings had increased by Rs. 30,11,47,805. The company also
operationalized new software development centers at Mysore, Hyderabad and
Mohali, all in India, which were operated out of leased premises. Due to
all these new centers being operationalized during the year, technology
assets, plant and machinery, and furniture and fixtures increased by Rs.
37,46,60,063, Rs. 20,70,83,407 and Rs. 19,30,51,736 respectively.

During the previous year, the company added Rs. 64,11,69,396 to its gross
block, including investment in technology assets of Rs. 28,94,72,182.

The capital work-in-progress as at March 31, 2000 and 1999 represents
advances paid towards acquisition of fixed assets, and the cost of assets
not put to use.

During the year, the company donated 282 computer systems costing Rs.
1,80,89,383 (book value Nil) to certain educational institutions and the
same is disclosed under the heading Deductions during the year, under both
Gross block and Depreciation. The same stood at Rs. 30,02,107 during the
previous year.

80
<PAGE>

The company estimates that it will be able to fund its capital acquisition
program from its internal accruals and liquid assets. The company may also
take recourse to borrowings to meet its capital expenditure, should it be
deemed necessary.

4. Investments

4.1 Yantra Corporation

---------------------------------------------------------------------------------------------------------------
Sl. Particulars Year of investment Investment Investment
No. in $ in Rs.
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Investment by way of cash remittance towards
issue of 2,500,000 shares of common stock
at $ 0.20 per share, par value of $ 0.01 per share March 31, 1996 500,000 1,73,51,600
2 Investment by way of transfer of product "EAGLE"
for a consideration of 5,000,000 shares of common stock
at $ 0.20 per share, par value of $ 0.01 per share March 31, 1997 1,000,000 3,59,00,000
3 Investment by way of cash remittance towards
issue of 2,000,000 shares of convertible preferred
stock at $ 0.75 per share, par value of $ 0.01 per share March 31, 1998 1,500,000 5,45,10,000
4 Sale of 1,363,637 shares of convertible preferred
stock at $ 1.10 per share, par value of $ 0.01 per share March 31, 1999 (1,022,728) (3,71,65,926)
5 Provision for investments March 31, 1999 (1,977,272) (7,05,95,674)
6 Balance as on March 31, 2000 - -
---------------------------------------------------------------------------------------------------------------
</TABLE>

On June 14, 1999, Yantra issued Series C Preferred stock amounting to $
15.0 million to various unrelated existing and new investors, thereby
reducing Infosys' economic interest in Yantra to approximately 25.1% on a
fully diluted basis.

4.2 EC Cubed, Inc.

During the year, an investment of $ 3,00,000 (Rs. 13,08,00,000) was made
towards the issue of 13,00,108 shares of Series D Convertible Preferred
Stock of par value of $ 0.0001 each of EC Cubed, Inc. - an existing client
of the company. This investment is part of the company's growth strategy of
investing in select companies that are in the leading edge of technology.
Such investments would enable the company to obtain access to such ideas
and technologies and at the same time bring in service revenues through
technology partnerships with investee companies. EC Cubed, Inc., is an
existing client of the company and this business relationship has witnessed
high growth in the recent past.

4.3 JASDIC Park Company

During the previous year, Infosys invested an amount of Yen 24 million (Rs.
75,38,109) towards the issue of 480 shares of JASDIC Park Company. Infosys
holds a 12.5% equity stake in JASDIC Park Company. JASDIC Park Company is
an Indo-Japanese consortium founded by Mr. Kenichi Ohmae, a well-known
management strategist, along with a few Japanese companies and three Indian
companies including Infosys. The aim of JASDIC Park Company is to provide
high-quality software services from India to the Japanese market. This is
in line with Infosys' strategy to diversify its geographic client base.

5. Sundry debtors

Sundry debtors amount to Rs. 136,17,81,253 (net of provision for doubtful
debts amounting to Rs. 2,21,26,448) as at March 31, 2000, as compared with
Rs. 84,51,88,425 (net of provision for doubtful debts amounting to Rs.
1,27,23,349) as at March 31, 1999. These debtors are considered good and
realizable. Provisions are made for all debtors outstanding for more than
180 days. Debtors as a percentage of total software revenue are 15.43% for
the year ended March 31, 2000, as compared to 16.61% for the previous year,
representing an outstanding of 56 days and 61 days of software revenue for
the respective years. The age profile is as given below:

81
<PAGE>

<TABLE>
<CAPTION>
Period in days Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
0 - 30 64.7% 58.8%
31 - 60 31.8% 24.5%
61 - 90 1.8% 10.8%
More than 90 1.7% 5.9%
- ----------------------------------------------------------------------------------------------------------------------
100.0% 100.0%
======================================================================================================================
</TABLE>

Provision for bad and doubtful debts and bad debts written off as a
percentage of sales were 0.27% and (0.03%) in fiscal 2000 and 1999,
respectively.

<TABLE>
<CAPTION>
6. Cash and bank balances in Rs.
- ----------------------------------------------------------------------------------------------------------------------
Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash balances 13,17,773 8,80,351
Bank balances in India - current accounts 10,16,77,272 15,18,51,331
- deposit accounts 22,91,45,764 12,41,56,133
- EEFC deposit accounts in $ 25,81,47,267 62,06,68,810
Bank balances - overseas- current accounts 63,39,94,737 31,24,48,384
- deposit accounts 309,36,52,917 284,04,77,990
Total cash and bank balances 431,79,35,730 405,04,82,999
Add: Deposits with financial institutions/body corporate 76,58,01,865 11,61,07,945
Total cash and cash equivalents 508,37,37,595 416,65,90,944
Cash and cash equivalents as a % of total assets 61.0% 72.5%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

The bank balances in India include both rupee accounts and foreign currency
accounts. They also include Rs. 28,72,035 and Rs. 12,98,113 in the
unclaimed dividend account for the years ended March 31, 2000 and 1999. The
deposit account represents deposits for short tenures. The bank balances in
overseas deposit accounts represents deposit of money received on
completion of the American Depositary Shares (ADS) program and is
maintained with Deutsche Bank, State Bank of India, ANZ Grindlays Bank,
Citibank and Hongkong Bank. The bank balances in overseas current accounts
are maintained to meet the expenditure of the overseas branches in USA and
other countries, and to meet project-related expenditure overseas.

7. Loans and advances
Advances recoverable in cash or in kind or for value to be received, are
primarily towards amounts paid in advance for value and services to be
received in future. Advance income tax represents payments made towards tax
liability for the years ended March 31, 2000 and 1999, and so also refunds
due for previous years. The company's liability towards income tax is fully
provided for. Deposits with financial institution and body corporate
represents surplus money deployed in the form of short-term deposits. The
details of such deposits are as under:

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------
Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Housing Development Finance Corporation Limited 25,50,19,994 5,57,39,726
GE Capital Services India 25,32,29,129 6,03,68,219
ICICI Limited 25,75,52,742 -
- ----------------------------------------------------------------------------------------------------------------------
Total 76,58,01,865 11,61,07,945
======================================================================================================================
</TABLE>

The company's treasury policy calls for investing only in highly rated
companies for short maturities with a limit on investments in individual
companies. Loans to employees are made to enable the purchase of assets by
employees and to meet any emergency requirements. These increased
significantly during the year, due to an increase in the number of
employees availing such loans, and also due to the introduction of several
new loan schemes. Other advances represent electricity deposits and
advances of a similar nature. The company has taken on lease, several
buildings for its software development centers in various cities and also
for housing its staff. The deposits paid towards the above amounting to Rs.
7,84,24,995 are shown under rent and maintenance deposits.

82
<PAGE>

8. Current liabilities

Sundry creditors for goods represent the amount payable to vendors for the
supply of goods. Sundry creditors for accrued salaries and benefits include
the provision for bonus payable to the staff, and towards the company's
liability for leave encashment valued on an actuarial basis. Sundry
creditors for other liabilities represent amounts accrued for various other
operational expenses. Retention monies represent monies withheld on
contractor payments pending final acceptance of their work. The withholding
taxes payable represents tax withheld on benefits arising out of exercise
of stock options issued under the 1998 Employee Stock Option Plan, by
various employees and the same would be paid in due course. Advances
received from clients denote monies received for the delivery of future
services. Unclaimed dividends represent dividend paid, but not encashed by
shareholders, and are represented by a bank balance of equivalent value.

9. Unearned revenue

Unearned revenue as at March 31, 2000 and 1999 consists primarily of
advance client billing on fixed-price, fixed-time-frame contracts for which
related costs were not yet incurred.

10. Provisions

Provisions for taxation represent estimated income tax liabilities, both in
India and abroad, and tax on dividend for the years ended March 31, 2000
and 1999. The tax provisions and the corresponding advance tax payments
will be set off upon completion of the related assessments. Proposed
dividend represents the final dividend recommended to the shareholders by
the board of directors, and would be paid after the Annual General Meeting,
upon approval by the shareholders.
The company had instituted a contingency plan effective October 1, 1998 to
meet any possible disruption in client support due to the Year 2000 impact
on the technology and communication infrastructure provided to the company
by its vendors. The contingency plan called for the creation of a total
provision of Rs. 20.00 crore based on an initial estimate. This provision
was required to be made over six quarters starting October 1998.
Accordingly, the company had made a total provision of Rs. 9.99 crore up to
the quarter ended June 30, 1999. At this time, the company was led to
believe that all its telecommunication service providers were Year 2000
ready, and therefore did not expect significant disruption of these
facilities. During the second quarter of this fiscal year, the company made
an appraisal and re-estimated the provision required for meeting such
contingencies over the next two quarters and was of the opinion that the
provision already made was adequate for the purpose and hence no further
provision was required. During the year an amount of Rs. 2,42,29,154 was
spent towards support for the Year 2000 transition activities and the same
was set off against the provision made earlier. After such set-off, a
balance of Rs. 7,56,70,846 remained in the provision account that was
reversed as this provision is no longer required. The Year 2000 transition
is completed smoothly and the company does not see any material impact due
to this, going forward.
The company has been preparing to leverage the opportunities offered by the
e-commerce marketplace, and has taken the necessary steps to do so. This
required that the company incur business restructuring costs towards
creating a knowledge infrastructure, acquiring people with technical skills
in the e-commerce area and e-inventing the company. Accordingly, the
company made a provision of Rs. 3.50 crore during the quarter ended
September 30, 1999. An amount of Rs. 3,10,99,023 was incurred towards
e-inventing the company and was set-off against this provision. After this
set-off, a balance of Rs. 39,00,977 remains as a provision for e-inventing
the company as on March 31, 2000. The same may be spent during the ensuing
year.

The provision for gratuity represents the excess of gratuity liability as
per the actuarial valuation as of March 31, 2000 and the amount funded to
the trust. The trust was fully funded with that amount as of the date of
signing this balance sheet.

83
<PAGE>

B. Results of operations

1. Income

The growth in export income is due to an all round growth in various
segments of the business mix.

The segmentation of export income is as follows:

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Revenues by project type Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed price 31.50% 36.70%
Time and material 68.50% 63.30%
- ----------------------------------------------------------------------------------------------------------------------
Total 100.00% 100.00%
======================================================================================================================
- ----------------------------------------------------------------------------------------------------------------------
Revenues by location Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revenues
Onsite 48.50% 41.30%
Offshore 51.50% 58.70%
- ----------------------------------------------------------------------------------------------------------------------
Total 100.00% 100.00%
======================================================================================================================
<S> <C> <C>
Person-months
Onsite 32.50% 25.00%
Offshore 67.50% 75.00%
- ----------------------------------------------------------------------------------------------------------------------
Total 100.00% 100.00%
======================================================================================================================
</TABLE>

Details of geographical and business segmentation of revenues are provided
elsewhere in this report.

2. Expenditure

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------
Particulars Year ended March 31, 2000 Year ended March 31, 1999 Growth %
- ----------------------------------------------------------------------------------------------------------------------
Amount % Amount %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total revenues 921,46,48,068 100.00 512,73,83,501 100.00 79.71
Expenditure:
Software development expenses 466,26,84,578 50.60 261,51,74,052 51.00 78.29
Administration and other expenses 69,48,50,282 7.54 45,75,30,137 8.92 51.87
Provision for contingencies 3,33,00,000 0.36 6,66,00,000 1.30 (50.00)
Provision for e-inventing the company 3,50,00,000 0.38 - - -
Provision for investment in subsidiary - - 7,05,95,674 1.38 -
Total operating expenses 542,58,34,860 58.88 320,98,99,863 62.60 69.03
Operating profit 378,88,13,208 41.12 191,74,83,638 37.40 97.59
Interest - - - - -
Depreciation 53,23,27,389 5.78 35,89,30,078 7.00 48.31
Profit before tax 325,64,85,819 35.34 155,85,53,560 30.40 108.94
Provision for tax 39,70,00,000 4.31 22,94,00,000 4.48 73.06
Profit after tax 285,94,85,819 31.03 132,91,53,560 25.92 115.14
Effect of extraordinary item -
provision no longer required 7,56,70,846 0.82 - - -
Extraordinary income - - 2,34,54,103 0.46 -
Net profit for the year 293,51,56,665 31.85 135,26,07,663 26.38 117.00
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

84
<PAGE>

<TABLE>
<CAPTION>
2.1 Software development expenses in Rs.
- ----------------------------------------------------------------------------------------------------------------------
Particulars Year ended March 31, 2000 Year ended March 31, 1999 Growth %
- ----------------------------------------------------------------------------------------------------------------------
Amount % Amount %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salaries and bonus 307,54,46,295 33.38 151,56,56,923 29.56 102.91
including overseas staff expenses
Staff welfare 4,93,07,308 0.54 3,06,17,200 0.60 61.04
Contribution to provident and other funds 22,08,36,923 2.40 11,42,90,209 2.23 93.22
Foreign tour and travel 84,09,02,293 9.13 58,11,20,975 11.33 44.70
Consumables 2,70,06,251 0.29 1,06,44,207 0.21 153.72
Cost of software packages
- for own use 16,53,57,382 1.79 14,86,91,737 2.90 11.21
- for domestic software development 2,84,48,397 0.31 1,78,19,890 0.35 59.64
Provision for post-sales client support 2,09,62,627 0.23 2,19,18,587 0.43 (4.36)
Computer maintenance 3,27,43,350 0.36 3,29,08,467 0.64 (0.50)
Communication expenses 17,31,23,718 1.88 9,59,08,515 1.86 80.51
Consultancy charges 2,85,50,034 0.31 4,55,97,342 0.89 (37.39)
- ----------------------------------------------------------------------------------------------------------------------
466,26,84,578 50.60 261,51,74,052 51.00
- ----------------------------------------------------------------------------------------------------------------------
Revenues 921,46,48,068 100.00 512,73,83,501 100.00
======================================================================================================================
</TABLE>

Employee costs comprise approximately 36% and 32% of total revenue for the
years ended March 31, 2000 and 1999. The increase is due to an increase in
the average number of unbilled employees during the year due to training
and bench and also a change in the onsite-offshore mix, as compared to the
previous year.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Utilization rate Year ended March 31, 2000 Year ended March 31, 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Including trainees 72.90% 78.40%
Excluding trainees 79.40% 88.20%
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Foreign tour and travel expenses, representing cost of travel abroad for
software development and marketing, constituted approximately 9% and 11% of
total revenue for the years ended March 31, 2000 and 1999, respectively.

The cost of software packages for own use represents the cost of software
packages and tools procured for internal use, to enhance the quality of its
services and also to meet the needs of software development for some of its
clients. The cost of software packages purchased for own use has increased
by approximately 11% during the year, and was approximately 2% and 3% of
the total revenues for the years ended March 31, 2000 and 1999,
respectively. The company's policy is to charge such purchases to revenue
in the year of purchase.

A major part of the company's revenue comes fromoffshore software
development. This involves the large-scale use of satellite connectivity in
order to be online with clients. This represents approximately 2% each of
total revenues for the years ended March 31, 2000 and 1999, respectively.

The company provided an amount of Rs. 2,09,62,627 and Rs. 2,19,18,587
towards post-sales client support for the year ended March 31, 2000 and
1999. This represents a provision for post-sales obligations of the company
in respect of the outstanding fixed-price projects as at the year-end.

The company also utilizes outside consultants for part of its software
development work. During the year, the company spent a sum of Rs.
2,85,50,034 towards such consultancy as compared to Rs. 4,55,97,342 during
the previous year. Usage of consultants was primarily in the area of Year
2000 conversion projects and declined during the year, due to a decline in
Year 2000 revenues. The company would use external consultants for some of
its project work on a need basis, going forward.

85
<PAGE>

2.2 Administration and other expenses

<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------
Particulars Year ended March 31, 2000 Year ended March 31, 1999 Growth %
---------------------------------------------------------------------------------------------------------------
Amount % Amount %
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Travelling and conveyance 7,68,26,394 0.83 4,15,37,200 0.81 84.96
Rent 10,34,93,593 1.12 7,44,54,587 1.45 39.00
Telephone charges 5,93,95,252 0.64 5,15,34,846 1.01 15.26
Legal and professional charges 7,55,68,079 0.82 5,37,56,388 1.05 40.58
Printing and stationery 2,76,70,902 0.30 1,76,34,923 0.34 56.91
Advertisements 2,12,41,343 0.23 76,84,502 0.15 176.42
Brand building 99,17,816 0.11 - - -
Office maintenance 5,81,01,381 0.63 2,95,44,190 0.58 96.66
Repairs to building 1,13,44,232 0.12 1,08,24,460 0.21 4.80
Repairs to plant and machinery 84,12,905 0.09 86,47,678 0.17 (2.71)
Power and fuel 5,01,41,466 0.54 2,73,37,769 0.53 83.41
Insurance charges 2,41,35,289 0.26 1,28,78,968 0.25 87.40
Rates and taxes 1,03,80,848 0.11 1,16,79,290 0.23 (11.12)
Donations 3,49,27,871 0.38 1,49,82,357 0.29 133.13
Auditors remuneration 26,35,000 0.03 25,85,000 0.05 1.93
Bad loans and advances written off 3,13,050 0.00 - - -
Bad debts written off 1,57,20,938 0.17 - - -
Provision for bad and doubtful debts 96,03,099 0.10 (13,06,919) (0.03) -
Provision for doubtful loans and advances - - 52,94,106 0.10 -
Bank charges and commission 42,21,668 0.05 38,95,031 0.08 8.39
Commission charges 64,70,454 0.07 7,40,413 0.01 773.90
Other miscellaneous expenses 2,10,64,341 0.23 1,80,79,939 0.35 16.51
Sundry marketing expenses 3,14,93,837 0.34 1,92,56,725 0.38 63.55
Postage and courier 1,37,56,638 0.15 79,15,959 0.15 73.78
Books and periodicals 77,13,886 0.08 76,72,725 0.15 0.54
Research grants 1,03,00,000 0.11 3,09,00,000 0.60 (66.67)
---------------------------------------------------------------------------------------------------------------
Total administration and other expenses 69,48,50,282 7.54 45,75,30,137 8.92 51.87
---------------------------------------------------------------------------------------------------------------
Revenues 921,46,48,068 100.00 512,73,83,501 100.00
===============================================================================================================
</TABLE>

The company incurred administration and other expenses at 7.54% of its
total revenue during fiscal 2000 as compared to 8.92% during the previous
year. Administration and other expenses as a percentage of total revenues
reduced during the year as the company is currently enjoying the benefit of
economies of scale in operations.

Rent expenses increased by approximately 39% during the year due to
additional office properties leased during the year and increases in
rentals of certain properties previously taken on lease. Telephone charges
increased by 15% due to greater usage. Legal and professional charges
increased by 41%. These charges include fees paid for availing services
such as tax consultancy, US GAAP audit, and recruitment and training, etc.
Travelling and conveyance expenses increased due to the increased levels of
business and increase in number of development centers and sales offices.
Office maintenance expenses increased by 97% due to the increased volumes
of business and operationalization of new software development centers
during the year. Insurance costs increased due to Directors and Officers
(D&O) insurance taken in the U.S. during the current year. The increase in
commission charges is due to the increased level of export income from sale
of banking products through channel partners, which increased, to Rs.
10,27,55,928 during the current year from Rs. 6,09,22,335 in the previous
year. The increase in other expenses is primarily due to an increased level
of business. The company wrote off bad debts amounting to Rs. 1,59,20,938
during the year which represented 0.18% of total software revenues.

3. Operating profits
During the current year, the company earned an operating profit (profit
before interest, depreciation and tax) of Rs. 378,88,13,208 representing
41.12% of total revenues as compared to Rs. 191,74,83,638, representing
37.40% of total revenues during the previous year. The increase was due to
an increase in per capita revenue productivity, lower rate of increase in
administration costs, broadening of the business mix and an increase in
other income. Excluding other income of Rs. 39,14,11,095 (4.25% of
revenues) in the current year as compared to Rs. 3,84,71,833 (0.75% of
revenues) in the previous year, the operating profit would have been Rs.
340,74,02,113 (38.5% of revenues) in the current year as compared to Rs.
187,90,11,805 (36.92% of revenues) in the previous year, despite a change
in the onsite-offshore mix.

86
<PAGE>

4. Interest

The company continued to be debt-free during the current year.

5. Depreciation

The company provided a sum of Rs. 53,23,27,389 and Rs. 35,89,30,078 towards
depreciation for the years ended March 31, 2000 and 1999, respectively
representing 5.78% and 7.00% respectively of total revenues. The
depreciation for the years ended March 31, 2000 and 1999, includes an
amount of Rs. 13,21,59,074 and Rs. 11,37,41,697 respectively towards 100%
depreciation on assets costing less than Rs. 5,000 each. The depreciation
as a percentage of average gross block is 23.50% and 26.19% for the years
ended March 31, 2000 and 1999 respectively.
The depreciation charge includes an amount of Rs. 15,27,500 and Rs.
30,30,000 towards depreciation provided, in full, on assets acquired for
research and development activities for the years ended March 31, 2000 and
1999, respectively.

6. Provision for tax

The company has provided for its tax liability both in India and overseas.
The present Indian corporate tax rate is 38.5% (comprising a base rate of
35% and a surcharge of 10% on the base rate). Export profits are entitled
to benefit under two schemes of the Government of India. Under the first
scheme (Section 80HHE of the Income Tax Act), the proportion of the profits
of the company attributable to export activities are deductible from the
income subject to tax. Under the second scheme, the profits attributable to
the operations of the company under the 100% export oriented unit scheme
(Software Technology Park Scheme) is entitled to a total tax holiday of ten
years. A majority of the company's software development centers enjoy the
benefits under the Software Technology Park Scheme. For the year ended
March 31, 2000 approximately 97.50% of software revenues came from software
development centers operating under the Software Technology Park Scheme.

In the budget for fiscal 2001, the Government of India proposed changes in
the tax rules relating to benefits under Section 80HHE by reducing the
amount of export profits that may be deducted for purposes of computing
taxable income, by an incremental 20% every year over the next five years.
The government has also proposed restricting the eligibility for tax
exemption for units operating under the Software Technology Park Scheme to
only those units which are operational on or before March 31, 2000. The
details of the operationalization of various software development centers
and the year to which the exemption under the Software Technology Park
Scheme is available is provided hereunder:

<TABLE>
----------------------------------------------------------------------------------------------------------
Location of the STP Year of Exemption Exemption
commencement claimed from available up to
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronics City, Bangalore 1994-1995 1996-1997 2003-2004
Mangalore 1995-1996 1998-1999 2004-2005
Punc 1996-1997 1998-1999 2005-2006
Bhubaneswar 1996-1997 1998-1999 2005-2006
Chennai 1996-1997 1998-1999 2005-2006
Bannerghatta Road, Bangalore 1997-1998 1998-1999 2006-2007
Phase I, Electronics City, Bangalore 1998-1999 1998-1999 2007-2008
Phase II, Electronics City, Bangalore 1999-2000 1999-2000 2008-2009
Hinjewadi, Punc 1999-2000 1999-2000 2008-2009
Mysore 1999-2000 1999-2000 2008-2009
Hyderabad 1999-2000 1999-2000 2008-2009
Mohali 1999-2000 1999-2000 2008-2009
----------------------------------------------------------------------------------------------------------
</TABLE>

The company has provided a sum of Rs. 24,00,000 and Rs. 4,32,00,000 during
the years ended March 31, 2000 and 1999, in respect of tax liabilities of
earlier years, consequent to the finalization of the tax assessments. The
additional liability has arisen due to certain disallowances in India which
are contested in appeal, and additional payments overseas.
The company is paying taxes in various countries in which it operates on
the income that is sourced to those countries. The break-up of provision
for taxes is as follows:

87
<PAGE>

7. Net profit

The net profit of the company from ordinary activities amounted to Rs.
285,94,85,819 and Rs. 132,91,53,560 for the years ended March 31, 2000 and
1999. This represents 31.03% and 25.92% of total revenue for the respective
years. The increase was due to an increase in per capita revenue
productivity, lower growth in administration costs, increase in other
income, broadening of the business mix and an increase in other income.
Excluding other income of Rs. 39,14,11,095 (4.25% of revenues) in the
current year as compared to Rs. 3,84,71,833 (0.75% of revenues) in the
previous year, the net profit would have been Rs. 246,80,74,724 (27.97% of
revenues) in the current year as compared to Rs. 129,06,81,727 (25.36% of
revenues) in the previous year, despite a change in the onsite-offshore
mix.

8. Excess provision, no longer required

The company instituted a contingency plan effective October 1, 1998 to meet
any possible disruption in client support due to the Year 2000 impact on
the technology and communication infrastructure provided to the company by
its vendors. The contingency plan called for the creation of a total
provision of Rs. 20.00 crore based on an initial estimate. This provision
was required to be made over six quarters starting October 1998.
Accordingly, the company had made a total provision of Rs. 9.99 crore up to
the quarter ended June 30, 1999. At this time, the company was led to
believe that all its telecommunication service providers were Year 2000
ready, and therefore did not expect significant disruption of these
facilities. During the second quarter of this fiscal year, the company made
an appraisal and re-estimated the provision required for meeting such
contingencies over the next two quarters and was of the opinion that the
provision already made was adequate for the purpose and hence no further
provision was required. During the year an amount of Rs. 2,42,29,154 was
spent towards support for the Year 2000 transition activities and the same
was set-off against the provision made earlier. After such set-off, a
balance of Rs. 7,56,70,846 remained in the provision account, which was
reversed as this provision is no longer required. The Year 2000 transition
is completed smoothly and the company does not see any material impact due
to this, going forward.

The company has been preparing to leverage the opportunity offered by
e-commerce marketplace, and has taken the necessary steps to do so. This
required that the company incur business restructuring costs for creating a
knowledge infrastructure, acquiring people with technical skills in the
e-commerce area and for e-inventing the company. Accordingly, the company
made a provision of Rs. 3.50 crore during the quarter ended September 30,
1999. An amount of Rs. 3,10,99,023 was incurred towards e-inventing the
company and was set-off against this provision. After this set-off, a
balance of Rs. 39,00,977 remains as provision for e-inventing the company
as on March 31, 2000. The same may be spent during the ensuing year.

9. Extraordinary income

During the previous year, the company sold 13,63,637 shares of its
preferred stock holding in its subsidiary, Yantra Corporation, at $ 1.10
per share. The profit of Rs. 2,34,54,103, net of tax, is disclosed as an
"extraordinary income" in the profit and loss account. This profit of Rs.
2,34,54,103 was transferred to the capital reserve from the profit and loss
account.

10. Foreign exchange differences

An amount of Rs. 18.70 crore and Rs. 2.78 crore is included in the profit
and loss accounts for the years ended March 31, 2000 and 1999,
respectively, representing the realized and unrealized exchange gains due
to currency fluctuation. This represents 2.02% and 0.54% of total revenues
for the years ended March 31, 2000 and 1999, respectively.

11. 1994 Employee Stock Offer Plan

The company instituted an Employee Stock Offer Plan (ESOP) in 1994 for all
eligible employees. Under the plan, warrants were transferred to employees
deemed eligible by the advisory board constituted for the purpose.
Accordingly, 7,50,000 warrants were issued by the company to the Infosys
Technologies Limited Employees Welfare Trust, to be held in trust and
transferred to selected employees from time to time. Warrants were issued
at Rs. 1 each and entitled the holder thereof to apply for and be issued
one equity share of par value of Rs. 10 each at a price of Rs. 100, after a
period of five years from the date of issue. The warrants and the shares to
be issued were subject to a lock-in period of five years from the date of
issue. The warrants expire on September 30, 1999, and are convertible
before their expiration. All warrants were converted into shares.

Under the ESOP scheme, the warrant holders are entitled to convert the
warrants before any bonus or rights issue. The company issued bonus shares
in the ratio of 1:1 during October 1997 and March 1999. Accordingly, the
warrant holders,

88
<PAGE>

including the Trust and the employees, were given an option to convert
their warrants and all warrants were converted into shares. They were also
issued bonus shares, being holders of shares as on the record date. The
company effected a stock-split (i.e., a subdivision of every equity share
of par value of Rs. 10 each into two equity shares of par value of Rs. 5
each) in February 2000. The number of warrants issued and shares
outstanding, after adjusting for the 2-for-1 stock split in fiscal 2000, is
given below:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
Year ended No. of Warrants Shares issued Bonus shares No. of Right to shares
March 31 employees transferred to on conversion issued on employees offered to
employees of warrants, converted employees
(Net) subject to warrants, free (Net)
lock-in from lock-in
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1996 105 2,57,200 2,57,200 5,14,400 - -
1997 151 2,04,000 2,04,000 4,08,000 - -
1998 340 5,00,400 5,00,400 5,00,400 - -
1999 1,033 7,82,000 7,82,000 7,82,000 556 3,11,400
2000 - - - - 14 30,000
----------------------------------------------------------------------------------------------------------------------
Total 1,629 17,43,600 17,43,600 22,04,800 570 3,41,400
======================================================================================================================
</TABLE>

During February 2000, the lock-in period ended in respect of 2,12,600
shares of par value of Rs. 5 each, held by 74 employees for warrants issued
in April 1995. Employees hold 17,43,600 shares of par value of Rs. 5 each
subject to lock-in and 3,41,400 rights to shares of par value of Rs. 5
each, as at March 31, 2000. 1,629 employees hold share/rights to shares as
of March 31, 2000, after discounting the employees who have received
shares/right to shares in several years.

<TABLE>
<CAPTION>
Details of net warrants/right to shares issued to employees
----------------------------------------------------------------------------------------------------------------------
Year ended March 31 No. of Warrants transferred/ No. of Warrants/Right to
Employees right to shares offered Employees Shares forfeited*
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1995 106 2,88,200 32 75,600
1996 144 3,16,000 39 58,800
1997 193 2,49,200 42 45,200
1998 368 5,40,800 28 40,400
1999 1,750 11,56,200 161 62,800
2000 14 30,000 - -
----------------------------------------------------------------------------------------------------------------------
</TABLE>

*1,41,800 shares/right to shares forfeited after the bonus issue is
included in the respective years.

<TABLE>
<S> <C>
Warrants originally allotted to ITL Employees' Welfare Trust 7,50,000
Less: Net warrants issued to eligible employees before bonus issue in October 1997 3,76,400
Warrants held by Trust immediately before bonus issue in October 1997 and converted to shares 3,73,600
Add: Bonus shares allotted to the Trust in October 1997 3,73,600
Shares held by the Trust immediately after bonus issue in October 1997 7,47,200
Add: Shares surrendered to the Trust after bonus issue in October 1997 26,500
Less: Net right to shares issued to eligible employee to eligible employees before bonus issue in March 1999 6,64,300
Shares held by the Trust immediately before bonus issue in March 1999 1,09,400
Add: Bonus shares allotted to the Trust in March 1999 1,09,400
Shares held by the Trust immediately after bonus issue in March 1999 2,18,800
Less: Net rights to shares issued to eligible employees after bonus issue in March 1999 1,64,000
Add: Shares surrendered to the Trust after the bonus issue in March 1999 13,000
Add: Rights to shares surrendered to the Trust after the bonus issue in March 1999 31,400
Less: Net rights to shares issued to eligible employees in June 1999 15,000
Shares held by the Trust immediately before stock-split (i.e., the subdivision of equity
shares of par value of Rs. 10 each into 2 equity shares of par value of Rs. 5 each) in February 2000 84,200
Add: Additional shares of par value of Rs. 5 per share allotted to the Trust in February 2000 84,200
Shares held by the Trust immediately after the split of face value to Rs. 5 per share (in February 2000) 1,68,400
Shares held by the Trust as of March 31, 2000 1,68,400
</TABLE>

12. 1998 Employee Stock Option plan (1998 plan)

One of the objectives of the ADS issue and the consequent listing on the
NASDAQ stock exchange was to institute an ADS-linked stock option plan, to
attract the best and the brightest across the world. The necessary
resolutions

89
<PAGE>

authorizing the board to formulate the scheme was approved by the
shareholders in the Extraordinary General Meeting held on January 6, 1999.
Accordingly, your directors had put in place an ADS-linked stock option
plan termed as the "1998 stock option plan". A committee of the board
administers the 1998 plan. The Government of India has approved the 1998
plan, subject to a limit of 14,70,000 equity shares of par value of Rs. 5
each representing 29,40,000 American Depositary Shares to be issued under
the plan. The plan is effective for a period of 10 years from the date of
its adoption by the board. The committee of the board shall determine the
exercise price for the ADS-linked stock option, which will not be less than
90% of the fair market value on the date of grant .

The details of the grants made (adjusted for stock-split, as applicable)
under the plan is provided below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Month of grant No. of No. of ADS Grant price at No. of No. of ADSs
employees* options issued market per ADS employees options forfeited
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
March 1999 35 4,26,000 $ 17.00 1 7,000
November 1999 53 2,32,000 $ 89.50 - -
January 2000 11 39,000 $ 168.50 - -
February 2000 7 21,100 $ 264.25 - -
March 2000 1 2,200 $ 330.00 - -
--------------------------------------------------------------------------------------------------------------
Total 107* 7,20,300 1 7,000
==============================================================================================================
</TABLE>

*Includes 10 employees who were granted ADS options twice. Therefore, the
effective number of employees granted options is 97.

During the year, 23,800 options issued under the 1998 plan were exercised
and the remaining ADS options unexercised and outstanding as at March 31,
2000 were 6,89,500.

13. 1999 Employee Stock Option Plan (1999 plan)

The shareholders and the board of directors approved the 1999 plan in June
1999. The 1999 plan provides for the issue of 66,00,000 equity shares to
employees, adjusted for the recent stock split. The 1999 plan is
administered by a compensation committee comprising a maximum of seven
members, the majority of whom were independent directors on the board of
directors. Under the 1999 plan, options were issued to employees at an
exercise price not less than the Fair Market Value. Fair Market Value means
the closing price of the company's shares on the stock exchange where there
is the highest trading volume on the date of grant and if the shares are
not traded on that day, the closing price on the next trading day. Under
the 1999 plan, options may also be granted to employees at exercise prices
that are less than the Fair Market Value only if specifically approved by
the members of the company in a general meeting.

The details of the grants made (adjusted for stock-split, as applicable)
under the plan is provided below:

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------
Month of grant No. of No. of options Grant price No. of No. of options
employees* issued Rs. employees forfeited
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
November 1999 1,167 9,53,200 4,065.05 10 4,100
January 2000 43 33,600 6,302.03 - -
February 2000 14 22,200 9,209.00 - -
March 2000 5 5,500 11,858.55 2 3,600
--------------------------------------------------------------------------------------------------------------
Total 1229* 10,14,500 12 7,700
==============================================================================================================
</TABLE>

*Includes 1 employee who was granted options twice. Therefore, the
effective number of employees granted options is 1,228.

Total employees offered stock options under 1994, 1998 and 1999 plans -
1,922.

14. Reconciliation of Indian and US GAAP financial statements

There are significant differences between the US GAAP and the Indian GAAP
financial statements. The material differences arise due to the provision
for deferred taxes, consolidation of financial statements of subsidiaries
and provision for deferred compensation due to the issue of stock options
to employees. The reconciliation of profits as per the Indian and the US
GAAP financial statements is given below.

<TABLE>
<CAPTION>
in Rs. crore
Profit as per the Indian GAAP financial statements 293.52
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Less : Expenses set-off against provisions for contingencies 2.42
Expenses set-off against provisions for e-inventing the company 3.11
Provision for gratuity Amortization of deferred stock 3.23
compensation expense Effect of extraordinary item - 22.17
provision no longer required 7.57
- ----------------------------------------------------------------------------------------------------------------------
38.50
Add : Provision for contingencies 3.33
Provision for e-inventing the company 3.50
Deferred Income tax provision 2.84
9.67
- ----------------------------------------------------------------------------------------------------------------------
Net income as per the US GAAP financial statements 264.69
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Provision for contingencies

Please refer to paragraph no. 8 of this management's discussion and
analysis of financial condition and results of operations.

The initial provision as well as subsequent reversal of excess provisions
were not accounted under US GAAP. However, the actual expenses were
accounted in the period of spending.

Provision for e-inventing the company

Please refer to paragraph no. 8 of this management's discussion and
analysis of financial condition and results of operations.

The initial provision as well as subsequent reversal of excess provisions
were not accounted under US GAAP. However, the actual expenses were
accounted in the period of spending.

Provision for gratuity

The provision for gratuity represents the excess of gratuity liability as
per the actuarial valuation as of March 31, 2000 and the amount funded with
the trust.

Amortization of deferred stock compensation

Indian GAAP did not require a company to recognize and amortize amounts
relating to the deferred stock compensation arising on issue of stock
options to employees. However, under US GAAP, APB Opinion 25 requires that
deferred stock compensation arising on issue of stock options to employees
resulting from the difference between the exercise price and the fair value
as determined by the quoted market prices of the common stock underlying
the warrants on the grant date, be accounted for.

In complying with this requirement, Infosys has charged to revenue Rs.
22.17 crore during fiscal 2000 as deferred stock compensation under US
GAAP.

Deferred income tax provision

US GAAP requires that the deferred tax assets or liabilities be recognized
for the future tax consequences of events that are recognized in an
enterprise's financial statements or tax returns. There is no such
requirement under Indian GAAP and if such requirement were in place, the
tax liability for the year would be lower by Rs. 2.84 crore.

C. Outlook: issues and risks

These have been discussed in detail elsewhere in this annual report.

90
<PAGE>

<TABLE>
<CAPTION>
Statement of cash flows for the year ended March 31
- --------------------------------------------------------------------------------------------------------------
in Rs.
- --------------------------------------------------------------------------------------------------------------
2000 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operations
Profit before tax 325,64,85,819 155,85,53,560
Other Income (36,70,79,196) (3,67,00,927)
Increase (decrease) in provision for contingencies (6,66,00,000) 6,66,00,000
Increase (decrease) in provision for e-inventing the company 39,00,977 -
Provision for investment in subsidiary - 7,05,95,674
Depreciation, depletion and amortization 53,23,27,389 35,89,30,078
Decrease (increase) in sundry debtors (51,65,92,828) (44,63,39,758)
Decrease (increase) in loans and advances (41,49,70,588) (15,32,76,222)
Increase (decrease) in current liabilities and provisions 42,26,37,450 33,82,24,214
Income taxes paid (35,53,53,877) (16,79,23,184)
- --------------------------------------------------------------------------------------------------------------
Net cash from operations 249,47,55,146 158,86,63,435
==============================================================================================================
Cash flows from financing
Proceeds from conversion of options 1,76,25,277 -
Proceeds from issue of American Depositary Shares - 296,86,28,400
Expenses relating to issue of American Depositary Shares (2,35,06,514) (17,33,14,415)
Expenses relating to issue of ADS linked stock options (1,01,93,113) -
Dividends paid (including dividend tax) (19,92,57,109) (10,20,36,824)
- --------------------------------------------------------------------------------------------------------------
Net cash from (used for) financing (21,53,31,459) 269,32,77,161
==============================================================================================================
Cash flows from investing
Income from investments 26,68,79,106 3,67,00,927
Proceeds of sale of investments (net of tax) - 6,06,20,029
Proceeds of sale of fixed assets 10,20,400 2,39,716
Purchase of fixed assets (159,87,03,617) (71,67,91,924)
Other long-term investments (13,08,00,000) (75,38,109)
- --------------------------------------------------------------------------------------------------------------
Net cash used for investing (146,16,04,111) (62,67,69,361)
==============================================================================================================

Effect of exchange differences on translation of foreign currency
deposits maintained abroad 9,93,27,075 -
Total increase (decrease) in cash and cash equivalents during the year 81,78,19,576 365,51,71,235
Cash and equivalents at the beginning of the year 416,65,90,944 51,14,19,709
- --------------------------------------------------------------------------------------------------------------
Cash and equivalents at the end of the year 508,37,37,595 416,65,90,944
==============================================================================================================
</TABLE>
This is the Cash Flow Statement referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Susim M. Datta Deepak M. Satwalekar
Partner Chairman and Managing Director, President Director Director
Chief Executive Officer and Chief Operating Officer

Ramesh Vangal Prof. Marti G. Subrahmanyam S. Gopalakrishnan
Director Director Dy. Managing Director

Bangalore K. Dinesh S. D. Shibulal T. V. Mohandas Pai V. Viswanathan
April 11, 2000 Director Director Senior Vice President - Company Secretary
Finance & Administration
</TABLE>

91
<PAGE>

1. Loans and advances
As per Balance sheet 210,12,77,161 68,35,96,522
Less : Deposits with financial institutions/body corporate,
included in cash equivalents (76,58,01,865) (11,61,07,945)
Advance income taxes considered separately (54,40,96,353) (19,10,80,222)
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 79,13,78,943 37,64,08,355
- --------------------------------------------------------------------------------------------------------------
2. Additions to fixed assets

As per Balance sheet 117,79,35,912 64,11,69,396
Add : Closing capital work-in-progress 56,96,03,505 14,88,35,800
Less : Opening capital work-in-progress (14,88,35,800) (7,32,13,272)
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 159,87,03,617 71,67,91,924
- --------------------------------------------------------------------------------------------------------------
3. Cash and cash equivalents

As per Balance sheet 431,79,35,730 405,04,82,999
Add : Deposits with financial institutions/
body corporate (as per 1 above) 76,58,01,865 11,61,07,945
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 508,37,37,595 416,65,90,944
- --------------------------------------------------------------------------------------------------------------
4. Income taxes paid

As per Profit and Loss account 39,70,00,000 22,94,00,000
Add : Decrease (increase) in balance in provision for taxes account (39,46,62,254) (15,66,52,471)
Increase (decrease) in balance in advance income tax account 35,30,16,131 9,51,75,655
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 35,53,53,877 16,79,23,184
- --------------------------------------------------------------------------------------------------------------
5. Other income

As per Profit and Loss account 39,14,11,095 3,84,71,833
Less : Income from operating activities (2,43,31,899) (17,70,906)
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 36,70,79,196 3,67,00,927
- --------------------------------------------------------------------------------------------------------------
6. Current liabilities and provisions

As per Balance sheet 165,97,02,419 84,96,64,378
Less : Provision for taxation considered separately (62,60,19,742) (23,13,57,488)
Provision for dividend considered separately (19,84,18,210) (8,10,32,734)
Provision for dividend tax considered separately (2,18,26,003) (81,03,273)
Provision for contingencies - (6,66,00,000)
Provision for e-inventing the company (39,00,977) -
Add : Effect of extraordinary item - provision no longer required 7,56,70,846 -
- --------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow statement 88,52,08,333 46,25,70,883
- --------------------------------------------------------------------------------------------------------------
</TABLE>

This is the Cash Flow
Statement referred to in
our report of even date.
for Bharat S Raut & Co.
Chartered Accountants

<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Susim M. Datta Deepak M. Satwalekar
Partner Chairman and Managing Director, President Director Director
Chief Executive Officer and Chief Operating Officer
Ramesh Vangal Prof. Marti G. Subrahmanyam S. Gopalakrishnan
Director Director Dy. Managing Director

Bangalore K. Dinesh S. D. Shibulal T. V. Mohandas Pai V. Viswanathan
April 11, 2000 Director Director Senior Vice President - Company Secretary
Finance & Administration
</TABLE>

92
<PAGE>

Balance sheet abstract and company's general business profile

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Registration details

Registration No. 13115
State Code 08
Balance Sheet Date March 31, 2000
in Rs.
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Capital raised during the year

Public issue -
Rights issue -
Bonus issue -
Private placement -
Preferential offer of shares under Employee Stock Option Plan scheme* 59,500

Position of mobilization and deployment of funds

Total liabilities 833,30,28,248
Total assets 833,30,28,248

Sources of funds

Paid-up capital 33,07,55,000
Reserves and surplus 800,22,73,248
Secured loans -
Unsecured loans -

Application of funds

Net fixed assets 207,33,88,054
Investments 13,83,48,469
Net current assets 612,12,91,725
Miscellaneous expenditure -
Accumulated losses -

Performance of company

Turnover 921,46,48,068
Total expenditure 595,81,62,249
Profit/loss before tax 325,64,85,819
Extraordinary Income 7,56,70,846
Profit/loss after tax 293,51,56,665
Earnings per share from ordinary activities 43.23
Earnings per share including extraordinary income 44.37
Dividend rate (%) 90

Generic names of principal products/services of the company

Item code no. (ITC code) 85249009.10
Product description Computer software
</TABLE>

*Issue of shares arising on the exercise of options granted to employees under
the company's 1998 ADS option plan.

<TABLE>
<S> <C> <C> <C> <C>
N. R. Narayana Murthy Nandan M. Nilekani Susim M. Datta Deepak M. Satwalekar
Chairman and Managing Director, President Director Director
Chief Executive Officer and Chief Operating Officer

Ramesh Vangal Prof. Marti G. Subrahmanyam S. Gopalakrishnan
Director Director Dy. Managing Director

Bangalore K. Dinesh S. D. Shibulal T. V. Mohandas Pai V. Viswanathan
April 11, 2000 Director Director Senior Vice President - Company Secretary
Finance & Administration
</TABLE>

93
<PAGE>

This is page is intentionally left blank.

94
<PAGE>

Financial statements for the
year ended March 31, 2000
prepared in accordance with
United States Generally Accepted Accounting Principles (US GAAP)
- --------------------------------------------------------------------------------

The illiterate of the 21st century will not be those who cannot read and
write, but those who cannot learn, unlearn, and relearn.
-Alvin Toffler

95
<PAGE>

Summary of consolidated financial data

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Five-year data
in thousands, except per share data
- ----------------------------------------------------------------------------------------------------------------------
2000 1999 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------
(Audited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Statements of income data:
Revenues $ 203,444 $ 120,955 $ 68,330 $ 39,586 $ 26,607
Cost of revenues 111,081 65,331 40,157 22,615 15,638
Gross profit 92,363 55,624 28,173 16,971 10,969
Operating expenses:
Selling and marketing expenses 9,644 4,944 3,370 1,976 1,372
General and administrative expenses 17,102 11,255 9,855 5,034 2,978
Amortization of deferred stock
compensation expense 5,118 3,646 1,520 768 361
Compensation arising from stock split - 12,906 1,047 - -
Total operating expenses 31,864 32,751 15,792 7,778 4,711
Operating income 60,499 22,873 12,381 9,193 6,258
Equity in loss of deconsolidated subsidiary - (2,086) - - -
Other income, net 9,039 1,537 801 769 1,460
Income before income taxes 69,538 22,324 13,182 9,962 7,718
Provision for income taxes 8,193 4,878 770 1,320 894
Subsidiary preferred stock dividends - - 68 - -
Net income $ 61,345 $ 17,446 $ 12,344 $ 8,642 $ 6,824
Earnings per equity share:
Basic $ 0.93 $ 0.28 $ 0.21 $ 0.15 $ 0.12
Diluted $ 0.93 $ 0.28 $ 0.20 $ 0.15 $ 0.12
Weighted equity shares used in
computing earnings per equity share:
Basic 65,660 61,379 59,574 58,073 58,068
Diluted 65,864 61,507 60,808 59,409 58,568
Cash dividend per equity share $ 0.11 $ 0.09 $ 0.04 $ 0.02 $ 0.02

Balance sheet data:
Cash and cash equivalents $ 116,599 $ 98,875 $ 15,419 $ 8,320 $ 7,769
Total assets 219,283 153,658 48,782 32,923 27,261
Total long-term debt - - - - 526
Total shareholders equity $ 198,137 $ 139,610 $ 41,146 $ 30,640 $ 23,925
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

1. The information presented above reflects the company's 2-for-1 stock split
by means of a stock dividend announced on December 20, 1998 and a 2-for-1
stock split announced on November 29, 1999.
2. The financial statements of Yantra Corporation, an erstwhile subsidiary,
were consolidated with the financial statements of the company up to
October 20, 1998 and are accounted for by the equity method thereafter.
3. The earnings per share calculations for fiscal years 2000 and 1999,
includes 2,070,000 equity shares (representing 4,140,000 ADSs) issued
during March 1999, in conjunction with the company's IPO.
4. The dividends are declared in Indian rupees. Amounts presented are
translated into U.S. dollars and are indicative. Dividends are paid from
the date of holding of shares.

96
<PAGE>

Management's discussion and analysis of financial condition and
results of operations
- --------------------------------------------------------------------------------
Investors are cautioned that this discussion contains forward-looking statements
that involve risks and uncertainties. When used in this discussion, the words
"anticipate", "believe", "estimate", "intend", "will" and "expect" and other
similar expressions as they relate to the company or its business are intended
to identify such forward-looking statements. The company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. Actual results,
performances or achievements could differ materially from those expressed or
implied in such forward-looking statements. Factors that could cause or
contribute to such differences include those described under the heading "Risk
Factors" in the prospectus filed with the Securities and Exchange Commission, as
well as the factors discussed in the Form 20-F, included in this report. Readers
are cautioned not to place undue reliance on these forward-looking statements
that speak only as of their dates. The following discussion and analysis should
be read in conjunction with the company's financial statements included herein
and the notes thereto.

1. Overview

Infosys is an India-based IT services company formed in 1981 that utilizes
an extensive offshore infrastructure to provide managed software solutions
to clients worldwide. The company's services include custom software
development, maintenance (including Year 2000 conversion) and
re-engineering services as well as dedicated offshore software development
centers (OSDC) for certain clients. From fiscal 1995 through fiscal 2000,
total revenue increased from $ 18.1 million to $ 203.4 million, the number
of the company's software professionals worldwide increased from
approximately 585 to approximately 4625, and the number of its India-based
software development centers increased from two to seventeen. The company
also operationalized one global development center at Toronto, Canada in
fiscal 2000.

The company's revenues are generated principally from software services
provided on either a fixed-price, fixed-time frame or a time-and-materials
basis. Revenues from services provided on a time-and-materials basis are
recognized in the month that services are provided and related costs are
incurred. Revenues from services provided on a fixed-price, fixed-time
frame basis are recognized upon the achievement of specified milestones
identified in the related contracts, in accordance with the percentage of
completion method. Cost of completion estimates are subject to periodic
revisions. Although the company has revised its project completion
estimates from time to time, such revisions have not, to date, had a
material adverse effect on the company's operating results or financial
condition. Since the company bears the risk of cost overruns and inflation
with respect to its fixed-price, fixed-time frame projects, the company's
operating results could be adversely affected by inaccurate estimates of
contract completion costs and dates, including wage inflation rates and
currency exchange rates that may affect cost projections. The company also
develops and markets certain software products, including banking software
that is licensed primarily to clients in Asia and Africa. Such software
products represented 2.6% of total revenues in fiscal 2000. The company
derived 78.0% of its total revenues from North America, 14.8% from Europe,
1.4% from India and 5.8% from the rest of the world in fiscal 2000.

In fiscal 2000 and fiscal 1999, the company derived 6.3% and 19.8% of its
total revenues, respectively, from Year 2000 conversion projects. In line
with its risk management policies, the company has consistently limited its
dependence on Year 2000 conversion projects, and has only accepted such
projects where there are opportunities to create long-term relationships
with its clients. The revenues from Year 2000 conversion projects were 0.9%
in the fourth quarter of fiscal 2000 and is expected to decline further in
fiscal 2001. The decline in revenues from Year 2000 conversion projections
is off-set by increase in revenues from e-commerce related projects which
increased to 13.6% in fiscal 2000 from 3.7% in fiscal 1999. The revenues
from e-commerce related projects were 18.8% in the fourth quarter of fiscal
2000.

Management believes that demand for e-business projects continues to be
strong and that this stream will be one of the major drivers for future
revenue growth. Due to shorter time-to-market considerations, e-business
projects necessitate higher interaction with clients. This results in a
higher proportion of services being performed at client sites. Services
performed at a client site typically generate higher revenues per capita,
but at lower gross margins than the same quantum of services performed at
the company's own facilities. Therefore, any increase in work at client
sites puts pressure on the margins of the company.

Cost of revenues primarily consists of salary and other compensation
expenses, depreciation, data communications expenses, computer maintenance,
cost of software purchased for internal use, certain pre-operating expenses
for new software development centers, and foreign travel expenses. The
company depreciates personal computers and servers over two years and
mainframe computers over three years. Third party software is expensed in
the period in which it is acquired.

97
<PAGE>

The company assumes full project management responsibility for each project
that it undertakes. Approximately 68% of the work on a project is performed
at the company's facilities in India, and the balance of the work is
performed at the client site. The proportions of work performed at company
facilities and at client sites varies from quarter to quarter. The company
charges higher rates and incurs higher compensation expenses for work
performed at the client site. Services performed at a client site typically
generate higher revenues per capita, but at lower gross margins, than the
same quantum of services performed at the company's facilities in India. As
a result, total revenues, cost of revenues and gross profit in absolute
terms, and as a percentage of revenues, fluctuate from quarter to quarter
based on the proportion of work performed offshore at company facilities
and at client sites, respectively.

Revenues and gross profits are also affected by employee utilization rates.
Utilization rates depend, among other factors, on the number of employees
enrolled for in-house training programs, particularly the 3-month classroom
training course provided to new employees. Since a large percentage of new
hires begin their training in the second quarter, utilization rates have
historically been lower in the second and third quarters of a fiscal year.

Selling and marketing expenses primarily consist of expenses relating to
advertisements, brand building, rentals of sales and marketing offices,
salaries of marketing personnel, and traveling and conveyance. General and
administrative expenses comprise expenses relating to communications,
finance and administration, legal and professional charges, management,
rent, salary and other compensation, travel, and miscellaneous
administrative costs.

Other income includes interest income and income from the sale of special
import licenses. Under the current export-import policy of the Government
of India, exports by Indian companies generate credits for the exporter
called "special import licenses". These credits can be sold or used for the
import of goods included on a "restricted list" maintained by the
Government of India. The value of these special import licenses has
declined over time, as the restricted list was shortened. The company's
general policy is to sell such special import licenses in the period in
which it receives such credits. However, the new export-import policy
announced by the Government of India in March 2000, has abolished the
scheme providing for benefit in the form of special import licenses to all
exporters and accordingly all exports made on or after April 1, 2000 will
not get the benefits.

The company also intends to substantially expand its software development
infrastructure in India. The company had committed $ 18.4 million towards
various capital expenditure as on March 31, 2000. The company has not yet
made contractual commitments for the majority of its budgeted capital
expenditure. The company intends to spend approximately $ 46.0 million on
various capital expenditure during fiscal 2001 and intends to use its
internal accruals to fund this expansion.

2. Results of operations

2.1 Fiscal year ended March 31, 2000 compared to fiscal year ended March 31,
1999

Revenues. Total revenues were $ 203.4 million for fiscal 2000, representing
an increase of 68.2% over total revenues of $ 121.0 million for fiscal
1999. Revenues continued to increase in all segments of the company's
services. Custom software development, re-engineering, maintenance and
software development through OSDCs formed a majority of the company's
revenues. The increase in revenues was attributable, in part, to a
substantial increase in business from certain existing clients and from
certain new clients, particularly in the insurance, banking and financial
services industries. Revenue growth was also attributable to an increase in
e-commerce related revenues which represented 13.6% of total revenues for
fiscal 2000 as compared to 3.7% of total revenues in fiscal 1999. Net sales
of Bancs2000 and other products represented 2.6% of total revenues for
fiscal 2000 as compared to 3.2% for fiscal 1999. Revenues from services
represented 97.4% of total revenues for fiscal 2000 as compared to 96.8%
for fiscal 1999. Revenues from fixed-price, fixed-time frame contracts and
from time-and-materials contracts represented 31.5% and 68.5%,
respectively, of total revenues for fiscal 2000 as compared to 36.7% and
63.3%, respectively, for fiscal 1999. Revenues from North America and
Europe represented 78.0% and 14.8%, respectively, of total revenues for
fiscal 2000 as compared to 82.0% and 9.3% respectively, for fiscal 1999.

Cost of revenues. Cost of revenues was $ 111.1 million for fiscal 2000,
representing an increase of 70.0% over the cost of revenues of $ 65.3
million for fiscal 1999. The cost of revenues represented 54.6% and 54.0%
of total revenues for fiscal 2000 and 1999, respectively. This marginal
increase in costs as a percentage of total revenues was attributable to an
increase in provision for a defined benefit plan for employees. The
increase was partially offset by a favorable business mix and a decrease in
depreciation and software expenses, which represented 7.9% of total
revenues in fiscal 2000 as compared to 10.0% of total revenues in fiscal
1999. The cost of revenues for services represented 54.3% and 53.4% of
revenues from services for fiscal 2000 and 1999, respectively. Cost of
revenues for product sales represented 65.3% and 75.8% of revenues from
product sales for fiscal 2000 and 1999, respectively.

Gross profit. As a result of the foregoing, the gross profit was $ 92.4
million for fiscal 2000, representing an increase of 66.1% over the gross
profit of $ 55.6 million for fiscal 1999. As a percentage of total
revenues, the gross profit decreased

98
<PAGE>

to 45.4% for fiscal 2000 from 46.0% for fiscal 1999. This decrease was
attributable to higher provision for a defined benefit plan for employees
which was partially offset by a favorable business mix and a decrease in
depreciation and software expenses as a percentage of total revenue due to
improved infrastructure utilization. The gross profit from the sales of
Bancs2000 and other products was $ 1.8 million for fiscal 2000, an increase
of 98.5% from the gross profit of $ 0.9 million for fiscal 1999. The gross
profit from services was $ 90.6 million for fiscal 2000, an increase of
66.0% over the gross profit of $ 54.7 million for fiscal 1999. As a
percentage of product revenues, the gross profit from product sales
increased to 34.7% for fiscal 2000 from 24.2% for fiscal 1999. As a
percentage of service revenues, the gross profit from services decreased to
45.7% for fiscal 2000 from 46.6% for fiscal 1999.

Sales and marketing expenses. Sales and marketing expenses were $ 9.6
million for fiscal 2000, an increase of 95.1% over sales and marketing
expenses of $ 4.9 million for fiscal 1999. As a percentage of total
revenues, the sales and marketing expenses increased to 4.7% for fiscal
2000 from 4.1% for fiscal 1999. The number of sales offices increased to 20
as on March 31, 2000 from 16 as on March 31, 1999. The increase in sales
and marketing expense as a percentage of revenues was due to additional
sales offices opened during the year and also increase in number of
marketing personnel which increased to 62 in fiscal 2000 from 39 in fiscal
1999.

General and administrative expenses. General and administrative expenses
were $ 17.1 million for fiscal 2000, an increase of 51.9% over general and
administrative expenses of $ 11.3 million for fiscal 1999. General and
administrative expenses were 8.4% and 9.3% of total revenue for fiscal 2000
and 1999, respectively. This decrease in general and administrative expense
as a percentage of revenues was a result of the company's ability to
increase revenues in fiscal 2000 without a corresponding increase in
management, finance, administrative, and occupancy costs.

Amortization of deferred stock compensation expense. Amortization of
deferred stock compensation expense was $ 5.1 million for fiscal 2000, a
decrease of 69.1% over amortization of deferred stock compensation expense
of $ 16.6 million for fiscal 1999. Compensation expense increased
marginally for new grants of stock purchase rights in part because of the
rising market price of the equity shares. In fiscal 1999, the company
recognized an accelerated charge of $ 12.9 million as part of the company's
1998 stock dividend. The equity shares issued to Employee Stock Option Plan
(ESOP) participants in connection with the stock dividend were not subject
to vesting and as a result, one-half of the deferred compensation expense
that would have been amortized over the remaining vesting periods for the
equity shares issued under the ESOP was accelerated and charged to expense
in fourth quarter of fiscal 1999.

Operating income. The operating income was $ 60.5 million for fiscal 2000,
an increase of 164.5% over the operating income of $ 22.9 million for
fiscal 1999. As a percentage of revenues, operating income increased to
29.7% for fiscal 2000 from 18.9% for fiscal 1999. Excluding the
amortization of deferred stock compensation expense, the operating margin
is 32.3% for fiscal 2000 as compared to 32.6% for fiscal 1999.

Other income. Other income was $ 9.0 million for fiscal 2000 as compared to
$ 1.5 million for fiscal 1999. This increase in other income was due to an
increase in interest income resulting from the investment of a larger cash
balance, partly arising out of proceeds of the ADS issue during March 1999.
The increase in other income during fiscal 2000 also included $ 0.4 million
arising out of income from sale of special import licenses and $ 2.9
million due to exchange differences on translation of foreign currency
deposits which were nil during fiscal 1999.

Provision for income taxes. Provision for income taxes was $ 8.2 million
for fiscal 2000 as compared to $ 4.9 million for fiscal 1999. The company's
effective tax rate decreased to 11.8% for fiscal 2000 as compared to 21.8%
for fiscal 1999. The effective tax rate after adjusting for a one-time
accelerated compensation charge arising out of company's 1998 stock
dividend, which reduced the pre-tax income substantially in fiscal 1999, is
13.8%. The reduction in the effective tax rate in fiscal 2000 is due to a
decrease in the Indian tax liability resulting from a higher proportion of
the company's operations qualifying for Indian tax exemptions applicable to
designated Software Technology Parks.

Net income. The net income was $ 61.3 million for fiscal 2000, an increase
of 251.6% over the net income of $ 17.4 million for fiscal 1999. As a
percentage of total revenues, the net income increased to 30.1% for fiscal
2000 from 14.4% for fiscal 1999. The net income for fiscal 2000 of $ 61.3
million is 102.1% more than $ 30.4 million in fiscal 1999, after adjusting
for a one-time accelerated compensation charge of $ 12.9 million, arising
out of company's 1998 stock dividend which reduced the net income
substantially in fiscal 1999.

2.2 Fiscal year ended March 31, 1999 compared to fiscal year ended March 31,
1998

Revenues. Total revenues were $ 120.96 million for fiscal 1999,
representing an increase of 77.1% over total revenues of $ 68.3 million for
fiscal 1998. Revenues continued to increase in all segments of the
company's services. Custom software development, re-engineering,
maintenance and software development through OSDCs formed a majority of the
company's revenues. The increase in revenues was attributable, in part, to
a substantial increase in business from certain existing clients and from
certain new clients, particularly in the manufacturing and financial
services industries. Revenue growth was also attributable to an increase in
Year 2000 conversion projects, which represented 19.8% of total revenues

99
<PAGE>

for fiscal 1999 as compared to 23.3% of total revenues for fiscal 1998. Net
sales of Bancs2000 and other products represented 3.2% of total revenues
for fiscal 1999 as compared to 5.4% for fiscal 1998. Revenues from services
represented 96.8% of total revenues for fiscal 1999 as compared to 94.6%
for fiscal 1998. Revenues from fixed-price, fixed-time frame contracts and
from time-and-materials contracts represented 36.7% and 63.3%,
respectively, of total revenues for fiscal 1999 as compared to 35.8% and
64.2%, respectively, for fiscal 1998. Revenues from North America and
Europe represented 82.0% and 9.3%, respectively, of total revenues for
fiscal 1999 as compared to 82.3% and 9.0%, respectively, for fiscal 1998.

Cost of revenues. Cost of revenues was $ 65.3 million for fiscal 1999,
representing an increase of 62.7% over the cost of revenue of $ 40.2
million for fiscal 1998. The cost of revenues represented 54.0% and 58.8%
of total revenues for fiscal 1999 and 1998, respectively. This marginal
decrease in costs as a percentage of total revenue was attributable to a
favorable business mix and a decrease in depreciation and software
expenses, which represented 10.0% of total revenues in fiscal 1999 as
compared to 12.5% of total revenue for fiscal 1998. The decrease was
partially offset by an increase in compensation rates. The cost of revenues
for services represented 53.4% and 58.9% of revenues from services for
fiscal 1999 and 1998, respectively. Cost of revenues for product sales
represented 75.8% and 57.2% of revenues from product sales for fiscal 1999
and 1998, respectively.

Gross profit. As a result of the foregoing, the gross profit was $ 55.6
million for fiscal 1999, representing an increase of 97.4% over the gross
profit of $ 28.2 million for fiscal 1998. This increase was attributable to
a favorable business mix and a decrease in depreciation and software
expenses as a percentage of total revenue due to improved infrastructure
utilization. As a percentage of total revenues, the gross profit increased
to 46.0% for fiscal 1999 from 41.2% for fiscal 1998. The gross profit from
the sales of Bancs2000 and other products was $ 0.9 million for fiscal
1999, a decrease of 47.1% from the gross profit of $ 1.7 million for fiscal
1998. The gross profit from services was $ 54.7 million for fiscal 1999, an
increase of 107.2% over the gross profit of $ 26.4 million for fiscal 1998.
As a percentage of product revenue, the gross profit from product sales
decreased to 24.2% for fiscal 1999 from 42.8% for fiscal 1998. As a
percentage of service revenues, the gross profit from services increased to
46.6% for fiscal 1999 from 41.1% for fiscal 1998.

Sales and marketing expenses. Sales and marketing expenses were $ 4.9
million for fiscal 1999, an increase of 46.7% over sales and marketing
expenses of $ 3.4 million for fiscal 1998. As a percentage of total
revenues, the sales and marketing expenses decreased to 4.1% for fiscal
1999 from 4.9% for fiscal 1998. The decrease in sales and marketing expense
as a percentage of revenues was a result of the company's ability to
increase revenues in fiscal 1999 without a corresponding increase in sales
and marketing costs.

General and administrative expenses. General and administrative expenses
were $ 11.3 million for fiscal 1999, an increase of 14.2% over general and
administrative expenses of $ 9.9 million for fiscal 1998. General and
administrative expenses were 9.3% and 14.4% of total revenues for fiscal
1999 and 1998, respectively. This decrease in general and administrative
expense as a percentage of revenues was a result of the company's ability
to increase revenues in 2000 without a corresponding increase in
management, finance, administrative, and occupancy costs.

Amortization of deferred stock compensation expense. Amortization of
deferred stock compensation expense was $ 16.6 million for fiscal 1999, an
increase of 544.9% over amortization of deferred stock compensation expense
of $ 2.6 million for fiscal 1998. Compensation expense increased in respect
of new grants of stock purchase rights in part because of the rising market
price of the equity shares. The increase in deferred stock compensation
expense also reflects the continued amortization of compensation expense
from stock purchase rights granted in prior periods.

In the third quarter of fiscal 1998, the company recognized a non-cash
compensation expense of $ 1.6 million. Charges were higher in that quarter
because additional equity shares were issued to participants in the ESOP as
part of the company's 1997 stock dividend. Since these additional equity
shares were not subject to vesting, the non-cash compensation expense for
such shares was accelerated in one quarter rather than amortized over the
remaining vesting period. In the fourth quarter of fiscal 1998, the company
recognized a non-cash compensation expense of $ 14.1 million, including an
accelerated charge of $ 12.9 million as part of the company's 1998 stock
dividend. As in fiscal 1998, the equity shares issued to ESOP participants
in connection with the stock dividend were not subject to vesting.
Consequently, one-half of the deferred stock compensation expense that
would have been amortized over the remaining vesting periods for the equity
shares issued under the ESOP was accelerated in the fourth quarter of
fiscal 1999.

Operating income. The operating income was $ 22.9 million for fiscal 1999,
an increase of 84.7% over the operating income of $ 12.4 million for fiscal
1998. As a percentage of revenues, operating income increased to 18.9% for
fiscal 1999 from 18.0% for fiscal 1998. Excluding the amortization of
deferred stock compensation expense, the operating margin is 32.6% for
fiscal 1999 as compared to 21.9% for fiscal 1998.

Other income. Other income was $ 1.5 million for fiscal 1999 as compared to
$ 0.8 million for fiscal 1998. This increase in other income was due to an
increase in interest income resulting from the investment of a larger cash
balance, partly

100
<PAGE>

arising out of proceeds of the ADS issue during March 1999, and from the
sale of Yantra preferred stock, offset in part by a decrease in income from
the sale of special import licenses during fiscal 1999, as compared to
fiscal 1998.

Provision for income taxes. Provision for income taxes was $ 4.9 million
for fiscal 1999 as compared to $ 0.8 million for fiscal 1998. The company's
effective tax rate increased to 21.8% for fiscal 1999 as compared to 5.8%
for fiscal 1998. The effective tax rate increased due to an increase in
amortization of deferred stock compensation expense which reduced the
pretax income substantially, and an increase in foreign tax liabilities
offset, in part, by a decrease in Indian tax liability resulting from a
higher proportion of the company's operations qualifying for Indian tax
exemptions applicable to designated Software Technology Parks.

Net income. The net income was $ 17.4 million for fiscal 1999, an increase
of 41.3% over the net income of $ 12.4 million for fiscal 1998. As a
percentage of total revenues, the net income decreased to 14.4% for fiscal
1999 from 18.1% for fiscal 1998.

2.3 Liquidity and capital resources

The growth of the company has been financed largely from cash generated
from operations and, to a lesser extent, from the proceeds of equity issues
and borrowings. In 1993, the company raised approximately $ 4.4 million in
gross aggregate proceeds from its initial public offering of equity shares
on Indian stock exchanges. In 1994, the company raised an additional $ 7.7
million through private placements of its equity shares with foreign
institutional investors, mutual funds, Indian domestic financial
institutions and corporations. As on March 31, 2000, the company had $
116.6 million in cash and cash equivalents, $ 137.9 million in working
capital and no outstanding bank borrowings. As on March 31, 2000, the
company also had an aggregate facility of $ 1.2 million in working capital
line of credit from two commercial banks. The company's treasury policy
calls for investing only in highly rated companies for short maturities
with a limit for individual companies. The company keeps the money both in
rupee and foreign currency accounts. The bank balances in overseas accounts
are maintained to meet the expenditure of the overseas branches in USA and
other countries, and to meet project related expenditure overseas.

Net cash provided by operating activities was $ 71.4 million, $ 40.1
million and $ 17.2 million in fiscal 2000, 1999 and 1998, respectively. Net
cash provided by operations consisted primarily of net income offset, in
part, by an increase in accounts receivable. Accounts receivable as a
percentage of total revenue, represented 15.4%, 16.6% and 15.0% for fiscal
2000, 1999 and 1998, respectively. The company's policy on accounts
receivable includes a periodic review of all such outstandings. The company
reviews the age, amount, and quality of each account receivable; the
relationship with, size of, and history of the client; and the quality of
service delivered by the company for the client to determine the
classification of an account receivable. Should the review so demand, the
company classifies accounts receivable into secured and unsecured accounts,
further subclassified between good or doubtful accounts. The company makes
provisions for all accounts receivable classified as doubtful and for all
accounts receivable that are outstanding for more than 180 days.

Prepaid expenses and other current assets increased by $ 2.4 million, $ 2.0
million and $ 0.9 million during fiscal 2000, 1999 and 1998, respectively.
The increases in fiscal 2000 and 1999 were primarily due to an increase in
rental deposits for the new software development centers and prepaid
expenses.

Unearned revenue as of March 31, 2000 and 1999 consists primarily of
advance client billings on fixed-price, fixed-time frame contracts for
which related costs were not yet incurred.

Net cash used in investing activities was $ 45.7 million, $ 17.0 million
and $ 8.4 million in fiscal 2000, 1999 and 1998, respectively. Net cash
used in investing activities in fiscal 2000 consisted primarily of $ 35.9
million for property, plant and equipment, loans to employees of $ 6.8
million and purchase of investments amounting to $ 3 million. Net cash used
in investing activities in fiscal 1999 consisted primarily of $ 16.1
million for property, plant and equipment and loans to employees of $ 2.2
million offset by sales of equity investments in Yantra Corporation, the
erstwhile subsidiary company of Infosys, amounting to $ 1.5 million. Net
cash used in investing activities in fiscal 1998 primarily consisted of $
7.9 million for property, plant and equipment.

Publicly-traded Indian companies customarily pay dividends. For fiscal
2000, the company declared and paid a dividend of $ 2.5 million, which was
paid in fiscal 2000. The board of directors also declared a dividend of $
4.6 million at their meeting held on April 11, 2000, which is subject to
the approval of the stockholders in the annual general meeting. For fiscal
1999, the company declared a dividend of $ 3.2 million, which was paid
partly in fiscal 1999 and partly in fiscal 2000. For fiscal 1998, the
company declared a dividend of $ 2.0 million, which was paid partly in
fiscal 1998 and partly in fiscal 1999.

As on March 31, 2000, the company had contractual commitments for capital
expenditure of $ 18.4 million. The company has not yet made contractual
commitments for the majority of its budgeted capital expenditure. The
company intends to spend approximately $ 46.0 million on various capital
expenditure during fiscal 2001 and the same would be

101

<PAGE>

met out of the internal accruals of the company. In the opinion of the
company, the working capital is sufficient for the company's present
requirements.

2.4 Foreign currency market risk

Market risks relating to the company's operations result primarily from
changes in interest rates and changes in foreign exchange rates. The
company's functional currency is the Indian rupee although it transacts a
major portion of its business in foreign currencies and accordingly has
foreign currency exposure through its sales in the United States and
purchases from overseas suppliers in U.S. dollars. In its U.S. operations,
the company currently does not actively hedge against exchange rate
fluctuations, although it may elect to do so in the future. Accordingly,
changes in exchange rates may have a material adverse effect on the
company's net sales, cost of services sold, gross margin and net income,
any of which alone or in the aggregate may in turn have a material adverse
effect on the company's business, operating results and financial
condition. The exchange rate between the rupee and the U.S. dollar has
changed substantially in recent years and may fluctuate substantially in
the future. During the five-year period from March 31, 1995 through March
31, 2000, the value of the rupee against the U.S. dollar declined by
approximately 38.9%. For fiscal 2000, fiscal 1999 and fiscal 1998, the
company's U.S. dollar-denominated revenues represented 88.3%, 88.1% and
90.0%, respectively, of total revenues. The company expects that a majority
of its revenues will continue to be generated in U.S. dollars for the
foreseeable future and that a significant portion of the company's
expenses, including personnel costs as well as capital and operating
expenditures, will continue to be denominated in rupees. Consequently, the
company's results of operations will be adversely affected to the extent
the rupee appreciates against the U.S. dollar. The company has sought to
reduce the effect of exchange rate fluctuations on operating results by
purchasing foreign exchange forward contracts to cover a portion of
outstanding accounts receivable on a need basis. As of March 31, 2000, the
company had no outstanding forward contracts. These contracts typically
mature within three months, must be settled on the day of maturity and may
be canceled subject to the payment of any gains or losses in the difference
between the contract exchange rate and the market exchange rate on the date
of cancellation. The company uses these instruments only as a hedging
mechanism and not for speculative purposes. There can be no assurance that
the company will purchase contracts adequate to insulate itself from
foreign exchange currency risks or that any such contracts will perform
adequately as a hedging mechanism. Devaluation of the rupee will result in
foreign currency translation losses. For example, for fiscal 2000 and
fiscal 1999, the company's foreign currency translation losses were
approximately $ 5.0 million and $ 3.5 million, respectively.

2.5 Reconciliation between the US and the Indian GAAP

There are material differences between the financial statements prepared as
per the Indian and the US GAAP. The material differences arise due to
provision for deferred taxes, accounting for stock-based compensation and
valuation of short-term investments, which are marked to market and
adjusted against retained earnings, and consolidation of accounts of
subsidiary, as required by US GAAP. The Indian GAAP does not require
provision for deferred taxes, amortization of deferred stock compensation,
consolidation of accounts of subsidiaries and only requires a provision for
diminution in the value of current investments.

Reconciliation of net income

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
2000 1999 1998
------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net profit as per Indian GAAP $ 67,775,087 $ 32,207,070 $ 16,041,966
Adjustments:
Deferred tax 850,891 625,427 707,553
Net income of subsidiary included on consolidation - (2,085,887) (1,563,718)
Provision for retirement benefits to employees (741,000) - (275,000)
Employee stock-based compensation plan
charge under APB Opinion no. 25 (5,117,635) (3,645,576) (1,046,874)
Compensation arising from stock split - (12,906,962) (1,519,739)
Provision for loss - Yantra Corporation - 1,675,060 -
Provision for contingency/e-inventing the company (net) (1,422,815) 1,576,956 -
------------------------------------------------------------------------------------------------------------
Net income as per US GAAP $ 61,344,528 $ 17,446,088 $ 12,344,188
------------------------------------------------------------------------------------------------------------
</TABLE>

102
<PAGE>

2.6 Investment in Yantra Corporation

Prior to October 20, 1998, the company owned a majority of the voting stock
of Yantra. Consequently, all of Yantra's operating losses through October
20, 1998 were recognized in the company's consolidated financial
statements. For fiscal 1998 and fiscal 1999, Yantra's losses recognized in
the company's financial statements were $ 1.6 million and $ 2.0 million,
respectively. On October 20, 1998, the company sold a portion of Yantra's
shares held by it, thereby reducing its interest to less than one-half of
the voting stock of Yantra. The company continues to own all of the
outstanding common stock of Yantra, but has no financial obligations or
commitments to Yantra and does not intend to provide Yantra with financial
support. Accordingly, Yantra's results after October 20, 1998 were not
recognized in the company's financial statements under U.S. GAAP. Yantra's
revenues were $ 1.3 million and $ 2.0 million for fiscal 1998 and for the
period ended October 20, 1998, respectively, while gross profits were $
574,000 and $ 546,000, respectively, for these same periods. Yantra's
revenues were 1.9% and 2.3% of the company's revenues for fiscal 1998 and
for the period ended October 20, 1998, respectively. Its gross profits were
2.0% and 1.4% of the company's gross profits for these same periods. Yantra
currently provides e-commerce operations solutions through
PureEcommerce(TM), a scalable web-based solution that facilitates real-time
transaction management across the extraprise. On June 14, 1999, Yantra sold
Series C Convertible Preferred Stock in the amount of $ 15 million to
unrelated existing and new investors, further reducing the company's voting
control to approximately 25%.

2.7 Principles of currency translation

In fiscal 2000, over 96% of the company's revenues were generated in U.S.
dollars and European currencies. A majority of the company's expenses were
incurred in rupees, and the balance was incurred in U.S. dollars and
European currencies. The functional currency of the company is the Indian
rupee. Revenues generated in foreign currencies are translated into Indian
rupees using the exchange rate prevailing on the dates revenues are
recognized. Expenses of overseas operations incurred in foreign currencies
are translated into Indian rupees at either the monthly average exchange
rate or the exchange rate on the date the expense is incurred, depending on
the source of payment. Assets and liabilities of foreign branches held in
foreign currency are translated into Indian rupees at the end of the
applicable reporting period. For U.S. GAAP reporting, the financial
statements are translated into U.S. dollars using the average monthly
exchange rate for revenues and expenses and the period end rate for assets
and liabilities. The gains or losses from such translation are reported as
"Other comprehensive income", a separate component of stockholders' equity.
The company expects that a majority of its revenues will continue to be
generated in U.S. dollars for the foreseeable future and that a significant
portion of the company's expenses, including personnel costs as well as
capital and operating expenditures, will continue to be denominated in
rupees. Consequently, the company's results of operations will be adversely
affected to the extent that the rupee appreciates against the U.S. dollar.

2.8 Income tax matters

The company benefits from certain significant tax incentives provided to
software firms under Indian tax laws. These incentives presently include:
(i) an exemption from payment of Indian corporate income taxes for a period
of ten consecutive years of operation of software development facilities
designated as "Software Technology Parks" (the "STP Tax Holiday"); and (ii)
a tax deduction for profits derived from exporting computer software (the
"Export Deduction"). All but one of the company's software development
facilities are located in a designated Software Technology Park. The
Government of India in its recently announced budget (which is yet to be
approved by the parliament) had amended the rules that provide for
incentives as stated above. Accordingly, the benefit under the former
scheme will not be available for all new software technology parks (STPs)
set up on or after April 1, 2000. Also, the incentive available under the
later scheme would be phased out equally over a period of five years
starting from fiscal 2001. The benefits of these tax incentive programs
have historically resulted in an effective tax rate for the company well
below statutory rates. There is no assurance that the Government of India
will continue to provide these incentives. The company pays corporate
income tax in foreign countries on income derived from operations in those
countries.

2.9 Effects of inflation

The company's most significant costs are the salaries and related benefits
for its employees. Competition in India and the United States for IT
professionals with the advanced technological skills necessary to perform
the services offered by the company have caused wages to increase at a rate
greater than the general rate of inflation. As with other IT service
providers, the company must adequately anticipate wage increases and other
cost increases, particularly on its long-term contracts. Historically, the
company's wage costs in India have been significantly lower than prevailing
wage costs in the United States for comparably-skilled employees, although
wage costs in India are presently increasing at a

103
<PAGE>

faster rate than in the United States. There can be no assurance that the
company will be able to recover cost increases through increases in the
prices that it charges for its services in the United States.

2.10 Year 2000 compliance

The company has evaluated each of its IT services and software products
and believes that each is substantially Year 2000 compliant. The company
believes that its internal systems are substantially Year 2000 compliant.
As of the date of this Annual Report, the company has not experienced any
material Year 2000 related problems. However, there can be no assurance
that modifications and upgrades made to its internal systems will be able
to anticipate all of the problems resulting from the actual impact of the
Year 2000 problem As of the date of this annual report, there has been no
disruption to the company's voice and data transmission links during the
Year 2000 transition. However there can be no assurance that the company
may not face any problems in the future. The full cost of the Year 2000
transition support was $ 0.6 million.

2.11 Accounting pronouncements

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS
133 establishes standards for the recognition and measurement of
derivatives and hedging activities. It requires an entity to record, at
fair value, all derivatives either as assets or liabilities in the balance
sheet as well as establishing specific accounting rules for certain types
of hedges. SFAS 133 is effective for all fiscal years beginning after June
15, 1999 and will be adopted by the company when required, if not earlier.
Adoption of SFAS 133 is not expected to have a material adverse effect on
the company's business, financial condition and results of operations.

3 Risk factors

3.1 Management of growth

The company has experienced significant growth in recent periods. The
company's revenues in fiscal 2000 grew 68.2% over fiscal 1999. As of March
31, 2000, the company employed approximately 4,625 software professionals
worldwide with 17 software development facilities in India, and one global
development center in Canada, operationalized in fiscal 2000, as compared
to approximately 3,160 with 11 facilities as of March 31, 1999 and 2,190
with nine facilities as of March 31, 1998. In fiscal 1999, the company
approved major expansions to its existing facilities and the building of
new facilities. The company's growth is expected to place significant
demands on its management and other resources and will require it to
continue to develop and improve its operational, financial and other
internal controls, both in India and elsewhere. In particular, continued
growth increases the challenges involved in: recruiting and retaining
sufficient skilled technical, marketing and management personnel;
providing adequate training and supervision to maintain the company's high
quality standards; and preserving the company's culture and values and its
entrepreneurial environment. The company's inability to manage its growth
effectively could have a material adverse effect on the quality of the
company's services and projects, its ability to attract clients as well as
skilled personnel, its business prospects, and its results of operations
and financial condition.

3.2 Potential fluctuations in future operating results

Historically, the company's operating results have fluctuated, and may
continue to fluctuate in future, depending on a number of factors,
including: the size, timing and profitability of significant projects; the
proportion of services that are performed at client sites rather than at
the company's offshore facilities; the accuracy of estimates of resources
and time required to complete ongoing projects, particularly projects
performed under fixed-price, fixed-time frame contracts; a change in the
mix of services provided to its clients or in the relative proportion of
services and product revenues; the timing of tax holidays and other
Government of India incentives; the effect of seasonal hiring patterns and
the time required to train and productively utilize new employees; the
size and timing of facilities expansion; unanticipated increases in wage
rates; the company's success in expanding its sales and marketing
programs; currency exchange rate fluctuations and other general economic
factors. A high percentage of the company's operating expenses,
particularly personnel and facilities, are fixed in advance of any
particular quarter. As a result, unanticipated variations in the number
and timing of the company's projects or in employee utilization rates may
cause significant variations in operating results in any particular
quarter. The company believes that period-to-period comparisons of its
results of operations are not necessarily meaningful and should not be
relied upon as indications of future performance. Due to all of the
foregoing factors, it is possible that in some future quarter the
company's operating results may be below the

104
<PAGE>

expectations of public market analysts and investors. In such event, the
market price of the equity shares and ADSs are likely to be materially
adversely affected.

3.3 Risks related to investments in Indian securities

The company is incorporated in India, and substantially all of its assets
and a substantial majority of its employees are located in India.
Consequently, the company's performance may be affected by changes in
exchange rates and controls, interest rates, Government of India policies,
including taxation policy, as well as political, social and economic
developments affecting India.

Political and economic environment. During the past decade and
particularly since 1991, the Government of India has pursued policies of
economic liberalization, including significant relaxations of restrictions
on the private sector. Nevertheless, the role of the Indian central and
state Governments in the Indian economy as producers, consumers and
regulators has remained significant. Additionally, since 1996, the
Government of India has changed three times. The current Government of
India, formed in October 1999, has announced policies and taken
initiatives that support the continuation of the economic liberalization
policies pursued by previous governments and has, in addition, set up a
special IT task force to promote the IT industry. However, the speed of
economic liberalization could change, and specific laws and policies
affecting IT companies, foreign investment, currency exchange rates and
other matters affecting investment in the company's securities could
change as well. Further, there can be no assurance that the liberalization
policies will continue in the future. A significant change in the
Government of India's economic liberalization and deregulation policies
could adversely affect business and economic conditions in India generally
and the company's business in particular. South Asia has from time to time
experienced instances of civil unrest and hostilities among neighboring
countries. Events of this nature in the future could influence the Indian
economy and could have a material adverse effect on the market for
securities of Indian companies and on the business of the company.

Government of India incentives and regulation. The company benefits from a
variety of incentives given to software firms in India, such as relief
from import duties on hardware, a tax exemption for income derived from
software exports, and tax holidays and infrastructure support for
companies, such as Infosys, operating in specially designated "Software
Technology Parks". There can be no assurance that these incentives will
continue in future. Further, there is a risk that changes in tax rates or
laws affecting foreign investment, currency exchange rates or other
regulations will render the Government of India's regulatory scheme less
favorable to the company and could adversely affect the market price of
the company's equity shares and its ADSs. Should the regulations and
incentives promulgated by the Government of India become less favorable to
the company, the company's results of operations and financial condition
could be adversely affected.

Restrictions on foreign investment. Foreign investment in Indian
securities is generally regulated by the Foreign Exchange Regulation Act,
1973. In certain emerging markets, including India, Global Depositary
Shares and ADSs may trade at a discount or premium, as the case may be, to
the underlying shares, in part because of restrictions on foreign
ownership of the underlying shares. In addition, under current Indian laws
and regulations, the Depositary cannot accept deposits of outstanding
equity shares and issue ADRs evidencing ADSs representing such equity
shares. Therefore, a holder of ADSs who surrenders ADSs and withdraws
equity shares is not permitted subsequently to deposit such equity shares
and obtain ADSs nor would a holder to whom such equity shares are
transferred be permitted to deposit such equity shares. This inability to
convert equity shares into ADSs increases the probability that the price
of the ADSs will not trade on par with the price of the equity shares as
quoted on the Indian stock exchanges. Holders who seek to sell in India
any equity shares withdrawn from the depositary facility and to convert
the rupee proceeds from such sale into foreign currency and repatriate
such foreign currency from India will have to obtain RBI approval for each
such transaction. Further, under current Indian regulations and practice,
the approval of the RBI is required for the sale of equity shares
underlying ADSs by a non-resident of India to a resident of India as well
as for renunciation of rights to a resident of India. There can be no
assurance that any such approval can be obtained.

Exchange rate fluctuations. Market risks relating to the company's
operations result primarily from changes in interest rates and changes in
foreign exchange rates. The company's functional currency is the Indian
rupee although it transacts a major portion of its business in foreign
currencies and accordingly has foreign currency exposure through its sales
in the United States and purchases from overseas suppliers in U.S.
dollars. In its U.S. operations, the company currently does not actively
hedge against exchange rate fluctuations, although it may elect to do so
in the future. Accordingly, changes in exchange rates may have a material
adverse effect on the company's net sales, cost of services sold, gross
margin and net income, any of which alone or in the aggregate may in turn
have a material adverse effect on the company's business, operating
results and financial condition. The exchange rate between the rupee and
the U.S. dollar has changed substantially in recent years and may
fluctuate substantially in the future. During the five-year period from

105
<PAGE>

March 31, 1995 through March 31, 2000, the value of the rupee against the
U.S. dollar declined by approximately 38.9%. For fiscal 2000, fiscal 1999
and fiscal 1998, the company's U.S. dollar-denominated revenues
represented 88.3%, 88.1% and 90.0%, respectively, of total revenues. The
company expects that a majority of its revenues will continue to be
generated in U.S. dollars for the foreseeable future and that a
significant portion of the company's expenses, including personnel costs
as well as capital and operating expenditures, will continue to be
denominated in rupees. Consequently, the company's results of operations
will be adversely affected to the extent the rupee appreciates against the
U.S. dollar. The company has sought to reduce the effect of exchange rate
fluctuations on operating results by purchasing foreign exchange forward
contracts to cover a portion of outstanding accounts receivable on a need
basis. As of March 31, 2000, the company had no outstanding forward
contracts. These contracts typically mature within three months, must be
settled on the day of maturity and may be canceled subject to the payment
of any gains or losses in the difference between the contract exchange
rate and the market exchange rate on the date of cancellation. The company
uses these instruments only as a hedging mechanism and not for speculative
purposes. There can be no assurance that the company will purchase
contracts adequate to insulate itself from foreign exchange currency risks
or that any such contracts will perform adequately as a hedging mechanism.
Devaluation of the rupee will result in foreign currency translation
losses. For example, for fiscal 2000 and fiscal 1999, the company's
foreign currency translation losses were approximately $ 5.0 million and $
3.5 million, respectively.

Fluctuations in the exchange rate between the rupee and the US dollar also
will affect the US dollar conversion by the Depositary of any cash
dividends paid in rupees on the equity shares represented by the ADSs. In
addition, fluctuations in the exchange rate between the Indian rupee and
the US dollar will affect the US dollar equivalent of the Indian rupee
price of equity shares on the Indian Stock Exchanges and, as a result, are
likely to affect the market prices of the ADSs in the United States, and
vice versa. Such fluctuations will also affect the dollar value of the
proceeds a holder would receive upon the sale in India of any equity
shares withdrawn from the Depositary under the Depositary Agreement. There
can be no assurance that holders will be able to convert rupee proceeds
into US dollars or any other currency or with respect to the rate at which
any such conversion could occur.

3.4 Substantial investment in new facilities

As of March 31, 2000, the company had contractual commitments of $ 18.4
million for capital expenditure and has budgeted for significant
infrastructural expansion in the near future. Since such an expansion will
significantly increase the company's fixed costs, the company's results of
operations will be materially adversely affected if the company is unable
to grow its business proportionately. Although the company has
successfully developed new facilities in the past, there can be no
assurance that the company will not encounter cost overruns or project
delays in connection with any or all of the new facilities. Furthermore,
there can be no assurance that future financing for additional facilities,
whether within India or elsewhere, would be available on attractive terms
or at all.

3.5 Restrictions on US immigration

The company's professionals who work on-site at client facilities in the
United States on temporary and extended assignments are typically required
to obtain visas. As of March 31, 2000, substantially all of the company's
personnel in the United States were working pursuant to H-1B visas (745
persons) or L-1 visas (218 persons). Although there is no limit to new L-1
petitions, there is a limit to the number of new H-1B petitions that the
United States Immigration and Naturalization Service may approve in any
government fiscal year. In years in which this limit is reached, the
company may be unable to obtain the H-1B visas necessary to bring its
critical Indian IT professionals to the United States on an extended
basis. This limit was reached in March 2000 by the US Government for its
fiscal year ended September 30, 2000 and in May 1999 for the fiscal year
ended September 30, 1999. While the company anticipated that such limit
would be reached prior to the end of the US government's fiscal year and
made efforts to plan accordingly, there can be no assurance that the
company will continue to be able to obtain a sufficient number of H-1B
visas. Changes in existing US immigration laws that make it more difficult
for the company to obtain H-1B and L-1 visas could impair the company's
ability to compete for and provide services to clients and could have a
material adverse effect on the company's results of operations and
financial condition.

3.6 Risks related to international operations

Whilst most of the company's software development facilities are currently
located in India, the company intends to develop new software development
facilities in other regions, including potentially South-East Asia, Latin
America and Europe. The company has not yet made substantial contractual
commitments to develop such new software development facilities, and there
can be no assurance that the company will not significantly alter or
reduce its proposed expansion plans. The company's lack of experience with
facilities outside of India subject the company to further risk with
regard to foreign regulation and overseas facilities management.
Increasing the number of software

106
<PAGE>

development facilities and the scope of operations outside of India
subjects the company to a number of risks, including, among other things,
difficulties relating to administering its business globally, managing
foreign operations, currency exchange rate fluctuations, restrictions
against the repatriation of earnings, export requirements and
restrictions, and multiple and possibly overlapping tax structures. Such
developments could have a material adverse effect on the company's
business, results of operations and financial condition.

3.7 Dependence on skilled personnel; risks of wage inflation

The company's ability to execute project engagements and to obtain new
clients depends, in large part, on its ability to attract, train, motivate
and retain highly skilled IT professionals, particularly project managers,
software engineers and other senior technical personnel. An inability to
hire and retain additional qualified personnel will impair the company's
ability to bid for or obtain new projects and to continue to expand its
business. The company believes that there is significant competition for
IT professionals with the skills necessary to perform the services offered
by the company. There can be no assurance that the company will be able to
assimilate and manage new IT professionals effectively. Any increase in
the attrition rates experienced by the company, particularly the rate of
attrition of experienced software engineers and project managers, would
adversely affect the company's results of operations and financial
condition. There can be no assurance that the company will be successful
in recruiting and retaining a sufficient number of replacement IT
professionals with the requisite skills to replace those IT professionals
who leave. Further, there can be no assurance that the company will be
able to redeploy and retrain its IT professionals to keep pace with
continuing changes in IT, evolving standards and changing client
preferences. Historically, the company's wage costs in India have been
significantly lower than wage costs in the United States for comparably
skilled IT professionals. However, wage costs in India are presently
increasing at a faster rate than those in the United States. In the long-
term, wage increases may have an adverse effect on the company's profit
margins unless the company is able to continue increasing the efficiency
and productivity of its professionals.

3.8 Client concentration

The company has derived, and believes that it will continue to derive, a
significant portion of its revenues from a limited number of large
corporate clients. For fiscal 2000 and fiscal 1999, the company's largest
client accounted for 7.2% and 6.4%, respectively, of the company's total
revenues and its five largest clients accounted for 30.2% and 28.4%,
respectively, of the company's total revenues. The volume of work
performed for specific clients is likely to vary from year to year,
particularly since the company is usually not the exclusive outside
software service provider for its clients. Thus, a major client in one
year may not provide the same level of revenues in a subsequent year. The
loss of any large client could have a material adverse effect on the
company's results of operations and financial condition. Since many of the
contracted projects are critical to the operations of its clients'
businesses, any failure to meet client expectations could result in a
cancellation or non-renewal of a contract. However, there are a number of
factors other than the company's performance that could cause the loss of
a client and that may not be predictable. For example, in 1995, the
company chose to reduce significantly the services provided to its then-
largest client rather than accept the price reductions and increased
company resources sought by the client. In other circumstances, the
company reduced significantly the services provided to its client when the
client either changed its outsourcing strategy by moving more work in-
house and reducing the number of its vendors, or replaced its existing
software with packaged software supported by the licensor. There can be no
assurance that the same circumstances may not arise in future.

3.9 Fixed-price, fixed-time frame contracts

As a core element of its business strategy, the company continues to offer
a significant portion of its services on a fixed-price, fixed-time frame
basis, rather than on a time-and-materials basis. Although the company
uses specified software engineering processes and its past project
experience to reduce the risks associated with estimating, planning and
performing fixed-price, fixed-time frame projects, the company bears the
risk of cost overruns, completion delays and wage inflation in connection
with these projects. The company's failure to estimate accurately the
resources and time required for a project, future rates of wage inflation
and currency exchange rates or its failure to complete its contractual
obligations within the time frame committed could have a material adverse
effect on the company's results of operations and financial condition.

3.10 Infrastructure and potential disruption in telecommunications

A significant element of the company's business strategy is to continue to
leverage its various software development centers in Bangalore,
Bhubaneswar, Chennai, Mangalore, Pune, Hyderabad, Mohali and Mysore, India
and to expand the number of such centers in India as well as outside
India. The company believes that the use of a strategically located

107
<PAGE>

network of software development centers will provide the company with cost
advantages, the ability to attract highly skilled personnel in various
regions, the ability to service clients on a regional and global basis,
and the ability to provide 24-hour service to its clients. Pursuant to its
service delivery model, the company must maintain active voice and data
communication between its main offices in Bangalore, the offices of its
clients, and its other software development facilities. Although the
company maintains redundant software development facilities and satellite
communications links, any significant loss of the company's ability to
transmit voice and data through satellite and telephone communications
would have a material adverse effect on the company's results of
operations and financial condition.

3.11 Expected decrease in demand for Year 2000 services

Year 2000 conversion projects represented 6.3% and 19.8% of the company's
total revenue for fiscal 2000 and fiscal 1999, respectively. The high
demand for these time-sensitive projects results in pricing and margins
that are favorable to the company. The company believes that demand for
Year 2000 conversion services will diminish rapidly after fiscal 2000 as
many Year 2000 conversion solutions are implemented and tested. There can
be no assurance that the company will be successful in generating
additional business from its Year 2000 clients for other services, that
the company will be successful in replacing Year 2000 conversion projects
with other projects as the Year 2000 business declines or that margins
from any such future projects will be comparable to those obtained from
Year 2000 conversion projects. There is an additional risk that the
company may be unable to retrain and redeploy IT professionals who are
currently assigned to Year 2000 conversion projects involving legacy
computer systems after such projects are completed. Furthermore, as Year
2000 conversion projects are completed, there is a likelihood of increased
competition for other types of projects from firms formerly dependent on
Year 2000 business.

3.12 Competition

The market for IT services is highly competitive. Competitors include IT
services companies, large international accounting firms and their
consulting affiliates, systems consulting and integration firms, temporary
employment agencies, other technology companies and client in-house MIS
departments. Competitors include international firms as well as national,
regional and local firms located in the United States, Europe and India.
The company expects that future competition will increasingly include
firms with operations in other countries, potentially including countries
with lower personnel costs than those prevailing in India. Historically,
one of the company's key competitive advantages has been a cost advantage
relative to service providers in the United States and Europe. Since wage
costs in India are presently increasing at a faster rate than those in the
United States, the company's ability to compete effectively will become
increasingly dependent on its reputation, the quality of its services, and
its expertise in specific markets. Many of the company's competitors have
significantly greater financial, technical and marketing resources and
generate greater revenue than the company, and there can be no assurance
that the company will be able to compete successfully with such
competitors and will not lose existing clients to such competitors. The
company believes that its ability to compete also depends in part on a
number of factors outside its control, including the ability of its
competitors to attract, train, motivate and retain highly skilled IT
professionals, the price at which its competitors offer comparable
services, and the extent of its competitors' responsiveness to client
needs.

3.13 Dependence on key personnel

The company's success depends to a significant degree upon continued
contributions of members of the company's senior management and other key
research and development and sales and marketing personnel. The company
generally does not enter into employment agreements with its senior
management and other key personnel that provide for substantial
restrictions on such persons leaving the company. The loss of any of such
persons could have a material adverse effect on the company's business,
financial condition and results of operations.

3.14 Potential liability to clients; risk of exceeding insurance coverage

Many of the company's contracts involve projects that are critical to the
operations of its clients' businesses and provide benefits that may be
difficult to quantify. Any failure in a client's system could result in a
claim for substantial damages against the company, regardless of the
company's responsibility for such failure. Although the company attempts
to limit its contractual liability for damages arising from negligent
acts, errors, mistakes or omissions in rendering its services, there can
be no assurance the limitations of liability set forth in its service
contracts will be enforceable in all instances or will otherwise protect
the company from liability for damages. The company maintains general
liability insurance coverage, including coverage for errors or omissions;
however, there can be no assurance that such coverage will continue to be
available on reasonable terms or will be available in sufficient amounts
to cover

108
<PAGE>

one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. The successful assertion of one or more large
claims against the company that exceed available insurance coverage or
changes in the company's insurance policies, including premium increases
or the imposition of large deductible or co-insurance requirements, could
adversely affect the company's results of operations and financial
condition.

3.15 Risks associated with possible acquisitions

The company intends to evaluate potential acquisitions on an ongoing
basis. As of the date, however, the company has no understanding,
commitment or agreement with respect to any material future acquisition.
Since the company has not made any acquisitions in the past, there can be
no assurance that the company will be able to identify suitable
acquisition candidates available for sale at reasonable prices, consummate
any acquisition, or successfully integrate any acquired business into the
company's operations. Further, acquisitions may involve a number of
special risks, including diversion of management's attention, failure to
retain key acquired personnel and clients, unanticipated events or
circumstances, legal liabilities and amortization of acquired intangible
assets, some or all of which could have a material adverse effect on the
company's results of operations and financial condition. Under Indian law,
except in certain limited circumstances, the company may not make any
acquisition of, or investment in, a non-Indian company without RBI and, in
most cases, Government of India approval. Even if the company does
encounter an attractive acquisition candidate, there can be no assurance
that RBI and, if required, Government of India approval can be obtained.

3.16 Risks associated with strategic investments

The company had invested an aggregate amount of $ 3 million in strategic
investments in fiscal 2000. However, there can be no assurance that the
company will be successful in its investments and will benefit from such
investments. The loss of any of such investments could have a material
adverse effect on the company's business, financial condition and results
of operations.

3.17 Risks related to software product sales

In fiscal 2000, the company derived 2.6% of its total revenue from the
sale of software products. The development of the company's software
products requires significant investments. The markets for the company's
primary software product are competitive and currently located in
developing countries, and there can be no assurance that such a product
will continue to be commercially successful. In addition, there can be no
assurance that any new products developed by the company will be
commercially successful or that the costs of developing such new products
will be recouped. A decrease in the company's product revenues or margins
could adversely affect the company's results of operations and financial
condition. Additionally, software product revenues typically occur in
periods subsequent to the periods in which the costs are incurred for
development of such products. There can be no assurance that such delayed
revenues will not cause periodic fluctuations of the company's results of
operations and financial condition.

3.18 Restrictions on exercise of preemptive rights by ADS holders

Under the Indian Companies Act, 1956 ("Indian Companies Act"), a company
incorporated in India must offer its holders of equity shares pre-emptive
rights to subscribe and pay for a proportionate number of shares to
maintain their existing ownership percentages prior to the issuance of any
new equity shares, unless such preemptive rights have been waived by
three-fourths of the company's shareholders. US holders of ADSs may be
unable to exercise preemptive rights for equity shares underlying ADSs
unless a registration statement under the Securities Act of 1933, as
amended (the "Securities Act"), is effective with respect to such rights
or an exemption from the registration requirements of the Securities Act
is available. The company's decision to file a registration statement will
depend on the costs and potential liabilities associated with any such
registration statement as well as the perceived benefits of enabling the
holders of ADSs to exercise their preemptive rights and any other factors
the company considers appropriate at the time. No assurance can be given
that the company would file a registration statement under these
circumstances. If the company issues any such securities in future, such
securities may be issued to the Depositary, which may sell such securities
for the benefit of the holders of the ADSs. There can be no assurance as
to the value, if any, the Depositary would receive upon the sale of such
securities. To the extent that holders of ADSs are unable to exercise
preemptive rights granted in respect of the equity shares represented by
their ADSs, their proportional interests in the company would be reduced.

109
<PAGE>

3.19 Intellectual property rights

The company relies upon a combination of non-disclosure and other
contractual arrangements and copyright, trade secrets and trademark laws
to protect its proprietary rights. Ownership of software and associated
deliverables created for clients is generally retained by or assigned to
the client, and the company does not retain an interest in such software
and deliverables. The company also develops foundation and application
software products, or software "tools", which are licensed to clients and
remain the property of the company. The company has obtained registration
of INFOSYS as a trademark in India and the United States, and does not
have any patents or registered copyrights in the United States. The
company currently requires its IT professionals to enter into non-
disclosure and assignment of rights agreements to limit use of, access to,
and distribution of its proprietary information. There can be no assurance
that the steps taken by the company in this regard will be adequate to
deter misappropriation of proprietary information or that the company will
be able to detect unauthorized use and take appropriate steps to enforce
its intellectual property rights. Although the company believes that its
services and products do not infringe upon the intellectual property
rights of others, there can be no assurance that such a claim will not be
asserted against the company in future. Assertion of such claims against
the company could result in litigation, and there can be no assurance that
the company would be able to prevail in such litigation or be able to
obtain a license for the use of any infringed intellectual property from a
third party on commercially reasonable terms. There can be no assurance
that the company will be able to protect such licenses from infringement
or misuse, or prevent infringement claims against the company in
connection with its licensing efforts. The company expects that the risk
of infringement claims against the company will increase if more of the
company's competitors are able to obtain patents for software products and
processes. Any such claims, regardless of their outcome, could result in
substantial cost to the company and divert management's attention from the
company's operations. Any infringement claim or litigation against the
company could, therefore, have a material adverse effect on the company's
results of operations and financial condition.

3.20 Control by principal shareholders, officers and directors; anti-takeover
provisions

The company's officers and directors, together with members of their
immediate families, in the aggregate, beneficially own approximately
25.03% of the company's issued equity shares. As a result, such persons,
acting together, will likely still have the ability to exercise
significant control over most matters requiring approval by the
shareholders of the company, including the election and removal of
directors and significant corporate transactions. Such control by the
company's officers and directors could delay, defer or prevent a change in
control of the company, impede a merger, consolidation, takeover or other
business combination involving the company, or discourage a potential
acquiror from making a tender offer or otherwise attempting to obtain
control of the company. The Indian Companies Act and the company's
Articles of Association (the "Articles") require that: (i) at least two-
thirds of the company's directors shall serve for a specified term and
shall be subject to re-election by the company's shareholders at the
expiration of such terms; and (ii) at least one-third of the company's
directors who are subject to re-election shall be up for re-election at
each annual meeting of the company's shareholders. In addition, the
company's Articles provide that Mr. N. R. Narayana Murthy, one of the
company's principal founders and its Chairman of the Board and Chief
Executive Officer, shall serve as the company's Chairman of the Board and
shall not be subject to re-election as long as he and his relatives, own
at least 5% of the company's outstanding equity securities. Furthermore,
any amendment to the company's Articles would require the affirmative vote
of three-fourths of the company's shareholders. Finally, foreign
investment in Indian companies is highly regulated. These provisions could
delay, defer or prevent a change in control of the company, impede a
business combination involving the company or discourage a potential
acquiror from attempting to obtain control of the company.

3.21 Year 2000 compliance

The company has evaluated each of its IT services and software products
and believes that each is substantially Year 2000 compliant. The company
believes that its internal systems are substantially Year 2000 compliant.
As of the date of this Annual Report, the company has not experienced any
material Year 2000 related problems. However, there can be no assurance
that modifications and upgrades made to its internal systems will be able
to anticipate all of the problems resulting from the actual impact of the
Year 2000 problem. As of the date of this Annual Report, there has been no
disruption to the company's voice and data transmission links during the
Year 2000 transition. However there can be no assurance that the company
may not face any problems in the future. The full cost of transition
support was $ 0.6 million.

110
<PAGE>

Report of management
- -------------------------------------------------------------------------------

The management is responsible for preparing the company's financial statements
and related information that appears in this annual report. The management
believes that the financial statements fairly reflect the form and substance of
transactions, and reasonably present the company's financial condition and
results of operations in conformity with United States Generally Accepted
Accounting Principles. The management has included, in the company's financial
statements, amounts that are based on estimates and judgments, which it believes
are reasonable under the circumstances.

The company maintains a system of internal procedures and controls intended to
provide reasonable assurance, at appropriate cost, that transactions are
executed in accordance with company authorization and are properly recorded and
reported in the financial statements, and that assets are adequately
safeguarded.

KPMG audits the company's financial statements in accordance with the generally
accepted auditing standards and provides an objective, independent review of the
company's internal controls and the fairness of its reported financial condition
and results of operations.

The board of directors of Infosys has appointed an audit committee composed of
outside directors. The committee meets with the management, internal auditors,
and the independent auditors to review internal accounting controls and
accounting, auditing, and financial reporting matters.

<TABLE>
<S> <C> <C> <C>
Sd. Sd. Sd.
T. V. Mohandas Pai Nandan M. Nilekani N. R. Narayana Murthy
Bangalore Senior Vice President - Managing Director, President Chairman
April 11, 2000 Finance & Administration and Chief Operating Officer and Chief Executive Officer
and Chief Financial Officer

</TABLE>

111
<PAGE>

Independent auditors' report
- --------------------------------------------------------------------------------

The Board of Directors and Stockholders
Infosys Technologies Limited

We have audited the accompanying balance sheets of Infosys Technologies Limited
as of March 31, 2000 and 1999, and the related statements of income,
stockholders' equity and cash flows for each of the years in the three-year
period ended March 31, 2000. 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 audits.

We conducted our audits in accordance with generally accepted auditing
standards. 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 audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Infosys Technologies Limited as
of March 31, 2000 and 1999, and the results of its operations and its cash flows
for each of the years in the three-year period ended March 31, 2000, in
conformity with accounting principles generally accepted in the United States.

As discussed in Note 1.3 in the accompanying notes to the financial statements,
the financial statements of Infosys Technologies Limited's wholly owned
subsidiary, Yantra Corporation, which were consolidated with the financial
statements of the company prior to April 1, 1998, were accounted for by the
equity method in fiscal 1999.

Bangalore
April 11, 2000 KPMG

112
<PAGE>

Balance sheets as of March 31
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 116,599,486 $ 98,874,963
Trade accounts receivable, net of allowances 31,233,515 20,056,678
Prepaid expenses and other current assets 11,256,295 5,735,323
- ---------------------------------------------------------------------------------------------------------------
Total current assets 159,089,296 124,666,964
Property, plant and equipment - net 47,554,772 23,900,313
Deferred tax assets 2,566,266 1,715,375
Investments 3,177,938 177,938
Other assets 6,894,598 3,197,006
- ---------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 219,282,870 $ 153,657,596
===============================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 976,840 $ 75,305
Client deposits 425,724 18,520
Other accrued liabilities 13,835,635 8,399,800
Income taxes payable 1,878,977 955,797
Unearned revenue 4,029,173 4,598,612
- ---------------------------------------------------------------------------------------------------------------
Total current liabilities 21,146,349 14,048,034

STOCKHOLDERS' EQUITY
Common stock, $ 0.16 par value;
100,000,000 equity shares authorized, Issued and outstanding -
66,150,700 and 66,138,800 as of 2000 and 1999 8,593,510 8,592,137
Additional paid-in-capital 121,506,726 120,849,511
Accumulated other comprehensive income (14,137,933) (9,100,662
Deferred compensation - Employee Stock Offer Plan (17,598,813) (21,686,799
Retained earnings 99,773,031 40,955,375
- ---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 198,136,521 139,609,562
- ---------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 219,282,870 $ 153,657,596
===============================================================================================================
</TABLE>
See accompanying notes to financial statements.

Assets - 2000 Liabilities and stockholders' equity - 2000

[GRAPHS]

113
<PAGE>

Statements of income for the years ended March 31
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
2000 1999 1998
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES
Revenues $ 203,443,754 $ 120,955,226 $ 68,329,961
Cost of revenues 111,080,546 65,331,006 40,156,509
- ---------------------------------------------------------------------------------------------------------------
Gross profit 92,363,208 55,624,220 28,173,452
===============================================================================================================

OPERATING EXPENSES
Selling and marketing expenses 9,643,970 4,943,599 3,369,892
General and administrative expenses 17,102,550 11,255,456 9,855,600
Amortization of stock compensation expense 5,117,635 3,645,576 1,046,874
Compensation arising from stock split - 12,906,962 1,519,739
- ---------------------------------------------------------------------------------------------------------------
Total operating expenses 31,864,155 32,751,593 15,792,105
- ---------------------------------------------------------------------------------------------------------------
Operating income 60,499,053 22,872,627 12,381,347
Equity in loss of deconsolidated subsidiary - (2,085,887) -
Other income, net 9,038,792 1,536,998 800,799
- ---------------------------------------------------------------------------------------------------------------
Income before income taxes 69,537,845 22,323,738 13,182,146
Provision for income taxes 8,193,317 4,877,650 770,458
- ---------------------------------------------------------------------------------------------------------------
Net income 61,344,528 17,446,088 12,411,688
- ---------------------------------------------------------------------------------------------------------------
Preferred stock dividends - - 67,500
- ---------------------------------------------------------------------------------------------------------------
Net income available for common stockholders $ 61,344,528 $ 17,446,088 $ 12,344,188
===============================================================================================================

EARNINGS PER EQUITY SHARE
Basic $ 0.93 $ 0.28 $ 0.21
Diluted $ 0.93 $ 0.28 $ 0.20

Weighted equity shares used in computing
earnings per equity share
Basic 65,659,625 61,378,850 59,574,288
Diluted 65,863,990 61,507,380 60,807,808
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements.

[CHARTS]

114
<PAGE>

Statements of stockholders' equity
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
Equity shares Additional Comprehensive Accumulated Deferred
paid-in income other compensation -
Shares Par value capital comprehensive Employee Stock
income Offer Plan
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of March 31, 1997 58,076,800 $ 2,310,270 $ 15,712,247 $ (3,531,811) $ (3,507,715)
- ---------------------------------------------------------------------------------------------------------------------------------
Stock split - 2,028,521 - - -
Cash dividends declared - - - - -
Common stock issued upon
exercise of warrants 5,992,000 207,020 1,813,330 - -
Compensation related to
stock option grants - - 6,890,343 - (6,890,343)
Amortization of compensation
related to stock option grants - - - - 2,566,613
Comprehensive income
Net income available for
common stockholders - - - $ 12,344,188 - -
Other comprehensive income
Translation adjustment - - - (3,510,418) (3,510,418) -
- ---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income - - - $ 8,833,770 - -
- ---------------------------------------------------------------------------------------------------------------------------------

Balance as of March 31, 1998 64,068,800 4,545,811 24,415,920 (7,042,229) (7,831,445)
- ---------------------------------------------------------------------------------------------------------------------------------
Stock split - 3,800,949 - - -
Cash dividends declared - - - - -
Common stock issued 2,070,000 245,377 70,134,623 - -
ADS issue expenses - - (4,108,924) - -
Compensation related to
stock option grants - - 30,407,892 - (30,407,892)
Amortization of compensation
related to stock option grants - - - - 16,552,538
Comprehensive income
Net income available for
common stockholders - - - $ 17,446,088 - -
Other comprehensive income
Translation adjustment - - - (2,058,433) (2,058,433) -
- ---------------------------------------------------------------------------------------------------------------------------------
Comprehensive income - - - $ 15,387,655 - -
- ---------------------------------------------------------------------------------------------------------------------------------
Adjustment on deconsolidation of subsidiary - - - - -
Repayment of loan to trust - - - - -
- ---------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 1999 66,138,800 $ 8,592,137 $ 120,849,511 $ (9,100,662)$ (21,686,799)
- ---------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
Loan to trust Retained Total
earnings stockholders'
equity
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance as of March 31, 1997 $ (24,502) $ 19,681,740 $ 30,640,229
- -----------------------------------------------------------------------------------------
Stock split - (2,028,521) -
Cash dividends declared - (2,003,139) (2,003,139)
Common stock issued upon
exercise of warrants (911,863) - 1,108,487
Compensation related to
stock option grants - - -
Amortization of compensation
related to stock option grants - - 2,566,613
Comprehensive income
Net income available for
common stockholders - 12,344,188 12,344,188
Other comprehensive income
Translation adjustment - - (3,510,418)
- ----------------------------------------------------------------------------------------
Comprehensive income - - -
- ----------------------------------------------------------------------------------------

Balance as of March 31, 1998 (936,365) 27,994,268 41,145,960
- ----------------------------------------------------------------------------------------
Stock split - (3,800,949) -
Cash dividends declared - (3,152,863) (3,152,863)
Common stock issued - - 70,380,000
ADS issue expenses - - (4,108,924)
Compensation related to
stock option grants - - -
Amortization of compensation
related to stock option grants - - 16,552,538
Comprehensive income
Net income available for
common stockholders - 17,446,088 17,446,088
Other comprehensive income
Translation adjustment - - (2,058,433)
- ----------------------------------------------------------------------------------------
Comprehensive income - - -
- ----------------------------------------------------------------------------------------
Adjustment on deconsolidation of subsidiary - 2,468,831 2,468,831
Repayment of loan to trust 936,365 - 936,365
- ----------------------------------------------------------------------------------------
Balance as of March 31, 1999 - $ 40,955,375 $ 139,609,562
- ----------------------------------------------------------------------------------------
</TABLE>

115
<PAGE>

Statements of stockholders' equity (contd.)

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Equity shares Additional Comprehensive Accumulated Deferred
paid-in income other compensation-
Shares Par value capital comprehensive
income
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance as of March 31, 1999 66,138,800 $ 8,592,137 $ 120,849,511 $ (9,100,662)
- --------------------------------------------------------------------------------------------------------------------------------
Cash dividends declared - - - -
Common stock issued 11,900 1,373 405,489 -
ADS issue expenses - - (777,923) -
Compensation related to
stock option grants - - 1,029,649 -
Amortization of compensation
related to stock option grants - - - -
Comprehensive income
Net income available for common stockholders - - - $ 61,344,528 -
Other comprehensive income
Translation adjustment - - - (5,037,271) (5,037,271)
- ----------------------------------------------------------------------------------------------------------------------------------
Comprehensive income - - - $ 56,307,257 -
- ----------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2000 66,150,700 $ 8,593,510 $ 121,506,726 $(14,137,933)
- ----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Equity shares Loan to trust Retained Total
earnings Stockholders'
Employee Stock equity
Offer Plan
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance as of March 31, 1999 $(21,686,799) - $ 40,955,375 $ 139,609,562
- --------------------------------------------------------------------------------------------------------------
Cash dividends declared - - (2,526,872) (2,526,872)
Common stock issued - - - 406,862
ADS issue expenses - - - (777,923)
Compensation related to
stock option grants (1,029,649) - - -
Amortization of compensation
related to stock option grants 5,117,635 - - 5,117,635
Comprehensive income
Net income available for common stockholders - - 61,344,528 61,344,528
Other comprehensive income
Translation adjustment - - - (5,037,271)
- --------------------------------------------------------------------------------------------------------------
Comprehensive income $(17,598,813) - - -
- --------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2000 - $ 99,773,031 $ 198,136,521
- --------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.

116
<PAGE>

Statements of cash flows for the years ended March 31

Adjustments to reconcile net income to net cash
provided by operating activities
Gain on sale of property, plant and equipment (20,153) - (2,929)
Depreciation 12,268,169 8,521,009 6,121,650
Deferred tax benefit (850,891) (625,427) (707,553)
Gain on sale of investment in deconsolidated subsidiary - (620,958) -
Amortization of deferred stock compensation expense 5,117,635 16,552,538 2,566,613
Loss relating to deconsolidated subsidiary - 2,085,887 -
Subsidiary preferred stock dividend - - 67,500

Changes in assets and liabilities
Accounts receivables (11,176,837) (10,113,425) (5,268,477)
Inventories - - 11,458
Prepaid expenses and other current assets (2,390,039) (2,035,203) (924,783)
Income taxes 923,180 1,492,766 446,890
Accounts payable 901,535 (24,459) 23,507
Client deposits 407,204 (171,653) (6,537)
Unearned revenue (569,439) 4,598,612 -
Other accrued liabilities 5,435,835 3,015,104 2,482,653
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 71,390,727 40,120,879 17,154,180
==============================================================================================================================

INVESTING ACTIVITIES
Expenditure on property, plant and equipment (35,926,030) (16,123,557) (7,891,441)
Proceeds from sale of property, plant and equipment 23,555 5,704 8,079
Loans to employees (6,828,525) (2,181,715) (552,526)
Proceeds from sale of investment in deconsolidated subsidiary - 1,500,000 -
Purchase of investments (3,000,000) (177,576) -
- ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (45,731,000) (16,977,144) (8,435,888)
==============================================================================================================================

FINANCING ACTIVITIES
Proceeds from issuance of equity shares 406,862 70,380,000 2,020,350
ADR issue expenses (777,923) (4,108,924) -
Net proceeds from issuance of preferred stock by subsidiary - - 2,250,000
Payment of cash dividends (2,526,872) (2,371,673) (1,467,427)
Loan to trust - 936,365 (911,863)
- ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities (2,897,933) 64,835,768 1,891,060
==============================================================================================================================
Effect of exchange rate changes on cash (5,037,271) (2,058,433) (3,510,418)
Effect of deconsolidation on cash - (2,465,372) -
Net increase in cash and cash equivalents during the year 17,724,523 83,455,698 7,098,934
Cash and cash equivalents at the beginning of the year 98,874,963 15,419,265 8,320,331
- ------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the year $116,599,486 $ 98,874,963 $ 15,419,265
==============================================================================================================================
Supplementary information:
Cash paid towards taxes $ 7,270,137 $ 3,364,318 $ 323,568
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to financial statements.

117
<PAGE>

Notes to financial statements
- --------------------------------------------------------------------------------

1. Significant Accounting Policies

1.1 The company

Infosys Technologies Limited (the "company") is one of India's leading
information technology ("IT") services company. Infosys utilizes an
extensive offshore infrastructure to provide managed software solutions to
clients worldwide. Headquartered in Bangalore, India, the company has 17
state-of-the-art offshore software development facilities located
throughout India and one global development center in Canada, that enable
it to provide high quality, cost-effective services to clients in a
resource-constrained environment. The company's services, which are offered
on either a fixed-price, fixed-time frame or a time-and-materials basis,
include custom software development, maintenance, e-business consulting and
re-engineering services as well as dedicated offshore software development
centers for certain clients. In addition, the company develops and markets
certain software products.

1.2 Basis of preparation of financial statements

The accompanying financial statements are prepared in accordance with
United States ("US") Generally Accepted Accounting Principles ("GAAP"). All
amounts are stated in US dollars.

1.3 Principles of consolidation

The financial statements of the company were consolidated with the accounts
of its wholly owned subsidiary, Yantra Corporation ("Yantra") during fiscal
1998. On October 20, 1998, the company's voting control of Yantra declined
to approximately 47%. Accordingly, the company has followed the equity
method of accounting for Yantra since fiscal 1999. On June 14, 1999, Yantra
sold Series C Convertible Preferred Stock in the amount of $ 15 million to
unrelated existing and new investors, further reducing the company's voting
control to approximately 25%.
The company continues to own all the outstanding common shares of Yantra
but has no financial obligations or commitments to Yantra and does not
intend to provide Yantra with financial support. Accordingly, the company
recognized no losses of Yantra subsequent to October 20, 1998. The excess
of the company's previously recognized losses over the basis of its
investments in Yantra as of October 20, 1998 were credited to retained
earnings.
Yantra was incorporated in the United States in fiscal 1996 for the
development of software products in the retail and distribution areas. All
inter-company transactions between the company and Yantra are eliminated.

1.4 Use of estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities on the date of the
financial statements and the reported amounts of revenues and expenses
during the period reported. Examples of estimates include accounting for
expected contract costs to be incurred to complete software development,
allowance for uncollectible accounts receivable, future obligations under
employee benefit plans and useful lives of property, plant and equipment.
Actual results could differ from those estimates.

1.5 Revenue recognition

The company derives its revenues primarily from software services and also
from the licensing of software products. Revenue with respect to
time-and-material contracts is recognized as related costs are incurred.
Revenue from fixed-price, fixed-time frame contracts is recognized upon the
achievement of specified milestones identified in the related contracts, in
accordance with the percentage-of-completion method. Provisions for
estimated losses on uncompleted contracts are recorded in the period in
which such losses become probable based on the current contract estimates.
The company provides its clients with a three-month warranty for
corrections of errors and telephone support for all its fixed-price,
fixed-time frame contracts. Costs associated with such services are accrued
at the time related revenues are recorded.
Revenue from licensing of software products is recognized upon shipment of
products and fulfillment of acceptance terms, if any, provided that no
significant vendor obligations remain and the collection of the related
receivable is probable. When the company receives advance payments for
software products, such payments are reported as client deposits until all
conditions for revenue recognition are met. Maintenance revenue is deferred
and recognized ratably over

118
<PAGE>

the term of the underlying maintenance agreement, generally 12 months.
Revenue from client training, support and other services arising due to
the sale of software products is recognized as the services are performed.

1.6 Cash and cash equivalents

The company considers all highly liquid investments with a remaining
maturity at the date of purchase/ investment of three months or less to be
cash equivalents. Cash and cash equivalents consist of cash, cash on
deposit with banks, marketable securities and deposits with corporations.

1.7 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated
depreciation. The company computes depreciation for all property, plant
and equipment using the straight-line method. The estimated useful lives
of assets are as follows:

Buildings 15 years
Furniture and fixtures 5 years
Computer equipment 2-5 years
Plant and equipment 5 years
Vehicles 5 years

The cost of software purchased for use in software development and
services is charged to the cost of revenues at the time of acquisition.
The amount of third party software expensed during fiscal 2000, 1999 and
1998 was $ 3,816,840, $ 3,538,590 and $ 2,381,626 respectively.

Deposits paid towards the acquisition of property, plant and equipment
outstanding at each balance sheet date and the cost of property, plant and
equipment not put to use before such date are disclosed under "Capital
work-in-progress".

1.8 Impairment of long-lived assets

The company evaluates the recoverability of its long-lived assets and
certain identifiable intangibles, if any, whenever events or changes in
circumstances indicate that their carrying amounts may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison
of the carrying amount of an asset to future undiscounted net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by
which the carrying value of the assets exceeds the fair value of the
assets. Assets to be disposed are reported at the lower of the carrying
value or the fair value less cost to sell.

1.9 Research and development

Research and development costs are expensed as incurred. Software product
development costs are expensed as incurred until technological feasibility
is achieved. Software product development costs incurred subsequent to the
achievement of technological feasibility are not significant and are
expensed as incurred.

1.10 Foreign currency translation

The accompanying financial statements are reported in US dollars. The
functional currency of the company is the Indian rupee. The translation
of the Indian rupee into US dollars is performed for balance sheet
accounts using the exchange rate in effect at the balance sheet date, and
for revenue and expense accounts using a monthly simple average exchange
rate for the respective periods. The gains or losses resulting from such
translation are reported as "Other comprehensive income", a separate
component of stockholders' equity. The method for translating expenses of
overseas operations depends upon the funds used. If the payment is made
from a rupee denominated bank account, the exchange rate prevailing on
the date of the payment would apply. If the payment is made from a
foreign currency, i.e., non-rupee denominated account, the translation
into rupees is performed at the average monthly exchange rate.

1.11 Foreign currency transactions

The company enters into foreign exchange forward contracts to limit the
effect of exchange rate changes on its foreign currency receivables. Gains
and losses on these contracts are recognized as income or expense in the
statements of income as incurred, over the life of the contract.

119
<PAGE>

1.12 Earnings per share

In accordance with Statement of Financial Accounting Standards ("SFAS")
No. 128, Earnings Per Share, basic earnings per share are computed using
the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed using the weighted average
number of common and dilutive common equivalent shares outstanding during
the period, using the treasury stock method for options and warrants,
except where the result would be anti-dilutive.

1.13 Income taxes

Income taxes are accounted for using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities, and their respective
tax bases and operating loss carry-forwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect of changes in tax rates on
deferred tax assets and liabilities is recognized as income in the period
that includes the enactment date. The measurement of deferred tax assets
is reduced, if necessary, by a valuation allowance for any tax benefits of
which future realization is uncertain.

1.14 Fair value of financial instruments

The carrying amounts reflected in the balance sheets for cash, cash
equivalents, accounts receivable and accounts payable approximate their
respective fair values due to the short maturities of these instruments.

1.15 Concentration of risk

Financial instruments that potentially subject the company to
concentrations of credit risk consist principally of cash equivalents,
trade accounts receivable and hedging instruments. By their nature, all
such financial instruments involve risk including the credit risk of non-
performance by counterparties. At March 31, 2000 and 1999, in management's
opinion, there was no significant risk of loss in the event of
nonperformance of the counterparties to these financial instruments.
Exposure to credit risk is managed through credit approvals, establishing
credit limits and monitoring procedures. The company's cash resources are
invested with corporations, financial institutions and banks with high
investment grade credit ratings. Limitations are established by the
company as to the maximum amount of cash that may be invested with any
such single entity.

1.16 Retirement benefits to employees

1.16.1 Gratuity

In accordance with Indian law, the company provides for gratuity, a
defined benefit retirement plan (the "Gratuity Plan") covering all
employees. The Gratuity Plan provides a lump sum payment to vested
employees at retirement or termination of employment of an amount based on
the respective employee's salary and the years of employment with the
company. The company established the Infosys Technologies Limited
Employees' Group Gratuity Fund Trust (the "Gratuity Fund Trust") on April
1, 1997. Liabilities with regard to the Gratuity Plan are determined by
actuarial valuation, based upon which the company makes contributions to
the Gratuity Fund Trust. Trustees administer the contributions made to the
Gratuity Fund Trust. The funds contributed to the Gratuity Fund Trust are
invested in specific securities as mandated by the law and generally
consist of federal and state government bonds and the debt instruments of
government-owned corporations.

1.16.2 Superannuation

Apart from being covered under the Gratuity Plan described above, the
senior officers of the company are also participants in a defined
contribution plan maintained by the company. The plan is termed the
superannuation plan (the "plan") to which the company makes monthly
contributions based on a specified percentage of each covered employee's
salary. The company has no further obligations under the plan beyond its
monthly contributions.

1.16.3 Provident fund

In addition to the above benefits, all employees receive benefits from a
provident fund, which is a defined contribution plan. Both the employee
and the company make monthly contributions to the plan, each equal to 12%
of each covered employee's salary. The company established a provident
fund trust in August 1996, to which a part of the contributions

120
<PAGE>

are made each month. The remainder of the contributions is made to the
Government's provident fund. The company has no further obligations under
provident fund beyond its monthly contributions.

1.17 Investments

Investments where the company controls between 20% and 50% of the voting
interest are accounted for using the equity method. Investment securities
in which the company controls less than 20% voting interest are currently
classified as either "Available-for-sale securities" or "Held-to-maturity
securities". Investment securities designated as "available-for-sale" are
carried at their fair value based on quoted market prices, with unrealized
gains and losses, net of deferred income taxes, reported as a separate
component of stockholders' equity. Realized gains and losses and declines
in value judged to be other than temporary on available-for-sale
securities are included in the statements of income. The cost of
securities sold is based on the specific identification method. Held to
maturity securities are recorded at amortized cost, adjusted for the
amortization or accretion of premiums or discounts, if any. Interest and
dividend income are recognized when earned.

1.18 Stock-based compensation

The company uses the intrinsic value-based method of Accounting Principles
Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, to
account for its employee stock-based compensation plan. The company has
therefore adopted the pro forma disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation.

1.19 Dividends

Dividends are recognized on recommendation and proposal by the board of
directors.

2. Notes to Financial Statements

2.1 Cash and cash equivalents

The cost and fair values for cash and cash equivalents as of March 31,
2000 and 1999, respectively are as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cost and fair values
Cash and bank deposits $ 99,035,223 $ 96,119,672
Deposits with corporations 17,564,263 2,755,291
----------------------------------------------------------------------------------------------------------
$ 116,599,486 $ 98,874,963
==========================================================================================================
</TABLE>

2.2 Trade accounts receivable

Trade accounts receivable, as of March 31, 2000 and 1999, net of allowance
for doubtful accounts of $ 507,487 and $ 301,930, respectively amounted to
$ 31,233,515 and $ 20,056,678, respectively. The age profile of trade
accounts receivable is given below.

<TABLE>
<CAPTION>
in %
---------------------------------------------------------------------------------------------------------
Period (in days) 2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
0 - 30 64.7 58.8
31 - 60 31.8 24.5
61 - 90 1.8 10.8
More than 90 1.7 5.9
---------------------------------------------------------------------------------------------------------
100.0 100.0
=========================================================================================================
</TABLE>

Trade accounts receivable include accounts receivable from Yantra
amounting to Nil and $ 253,448 as of March 31, 2000 and 1999,
respectively.

2.3 Prepaid expenses and other current assets

Prepaid expenses and other current assets consist of the following:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
2000 1999
---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Rent deposits $ 1,798,738 $ 1,403,445
</TABLE>

121
<PAGE>

<TABLE>
<S> <C> <C>
Deposits with government organizations 721,476 172,386
Loans to employees 5,114,253 1,983,319
Prepaid expenses 3,602,334 2,120,036
Other advances 19,494 56,137
----------------------------------------------------------------------------------------------------------
$ 11,256,295 $ 5,735,323
==========================================================================================================
</TABLE>

Other advances represent advance payments to vendors for the supply of
goods and rendering of services. Deposits with government organizations
relate principally to leased telephone lines and electricity supplies.

2.4 Property, plant and equipment - net

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Land $ 4,833,786 $ 2,580,924
Buildings 13,509,409 6,831,097
Furniture and fixtures 9,156,208 4,966,929
Computer equipment 25,742,780 18,290,126
Plant and equipment 11,871,138 7,375,578
Vehicles 31,292 41,684
Capital work-in-progress 13,064,301 3,531,936
-----------------------------------------------------------------------------------------------------------
78,208,914 43,618,274
Accumulated depreciation (30,654,142) (19,717,961)
-----------------------------------------------------------------------------------------------------------
$ 47,554,772 $ 23,900,313
===========================================================================================================
</TABLE>

Depreciation expense amounted to $ 12,268,169, $ 8,521,009 and $ 6,121,650
for fiscal 2000, 1999 and 1998, respectively.

2.5 Investments

The company has purchased 1,300,108 shares of Series D Convertible
Preferred Stock, par value $ 0.0001 each ("Series D Convertible
Preferred"), of EC Cubed, Inc. ("EC Cubed"), for a consideration of $
3,000,000. EC Cubed is a dynamic application provider of business-to-
business e-commerce. The company's investment in EC Cubed is in line with
its intention to make selective strategic investments in leading-edge
companies that have the potential to yield substantial business benefits.
The Series D Convertible Preferred is convertible into Common Stock of EC
Cubed at the option of the company at any time or automatically upon the
closing of an Initial Public Offering by EC Cubed, of shares of its Common
Stock at a public offering price of not less than $ 4.615 per share and
with net proceeds aggregating at least $ 30 million.

2.6 Other assets

Other assets mainly represent the non-current portion of loans to
employees.

2.7 Related parties

The company grants loans to employees for acquiring assets such as
property and cars. Such loans are repayable over fixed periods ranging
from 1 to 100 months. The rates at which the loans have been made to
employees vary between 0% to 4%. No loans have been made to employees in
connection with equity issues. The loans are generally secured by the
assets acquired by the employees. As of March 31, 2000 and 1999, amounts
receivable from officers amounting to $ 309,835 and $ 265,669,
respectively are included in prepaid expenses and other current assets,
and other assets in the accompanying balance sheets.

The required repayments of loans by employees are as detailed below.

122
<PAGE>

<TABLE>
<S> <C> <C>
2004 861,752 394,854
2005 696,581 -
Thereafter 2,065,061 564,122
----------------------------------------------------------------------------------------------------------
Total $ 12,008,851 $ 5,180,325
==========================================================================================================
</TABLE>

The estimated fair values of related party receivables amounted to $
8,959,996 and $ 4,858,797 as of March 31, 2000 and 1999, respectively.
These amounts have been determined using available market information and
appropriate valuation methodologies. Considerable judgement is required to
develop these estimates of fair value. Consequently, these estimates are
not necessarily indicative of the amounts that the company could realize
in the market.

2.8 Other accrued liabilities

Other accrued liabilities comprise the following:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
2000 1999
----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Accrued compensation to staff $ 7,747,965 $ 3,116,559
Accrued dividends 65,872 2,146,039
Provision for post sales client support 1,265,849 829,964
Employee withholding taxes payable 1,530,832 -
Others 3,225,117 2,307,238
----------------------------------------------------------------------------------------------------------
$ 13,835,635 $ 8,399,800
==========================================================================================================
</TABLE>

2.9 Employee post-retirement benefits

2.9.1 Gratuity

The following table sets out the funded status of the Gratuity Plan and
the amounts recognized in the company's financial statements in fiscal
2000, 1999 and 1998.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------------
2000 1999 1998
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Change in benefit obligations
Benefit obligations at the beginning of the year $ 10,551,069 $ 1,804,504 $ 1,356,650
Effect of changes in assumptions used (2,142,149) 7,370,968 -
Amortization of unrecognized actuarial loss (368,548) - -
Service cost 3,418,688 657,328 330,318
Interest cost 939,603 906,157 189,931
Benefits paid (128,803) (73,983) (72,395)
Effect of exchange rate changes (1,226,652) (113,905) -
----------------------------------------------------------------------------------------------------------------------
Benefit obligations at the end of the year $ 11,043,208 $ 10,551,069 $ 1,804,504
----------------------------------------------------------------------------------------------------------------------
Change in plan assets
Fair value of plan assets at the beginning of the year $ 2,497,335 $ 680,499 $ 301,232
Effect of exchange rate changes (134,018) (48,977) -
Actual return on plan assets 404,526 179,004 41,892
Employer contributions 1,736,781 1,760,792 409,770
Benefits paid (128,803) (73,983) (72,395)
----------------------------------------------------------------------------------------------------------------------
Plan assets at the end of the year $ 4,375,821 $ 2,497,335 $ 680,499
----------------------------------------------------------------------------------------------------------------------
Funded status $ (6,667,387) $ (8,053,734) $ (1,124,005)
Excess of actual return over estimated return on plan assets 93,716 (41,723) (129,192)
Unrecognized actuarial gain - - (7,219)
Unrecognized transitional obligation 694,446 830,826 985,058
Unrecognized actuarial cost 3,141,732 7,252,766 -
----------------------------------------------------------------------------------------------------------------------
(Accrued) / prepaid benefit $ (2,737,493) $ (11,865) $ (275,358)
----------------------------------------------------------------------------------------------------------------------
</TABLE>

123
<PAGE>

Net gratuity cost for fiscal 2000, 1999 and 1998 comprises the following
components:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost $ 3,418,688 $ 657,328 $ 330,318
Interest cost 939,603 906,157 189,931
Expected return on assets (310,810) (143,038) (49,111)
Amortization of unrecognized transitional obligation 58,245 63,910 70,361
Amortization of unrecognized actuarial loss 368,548 - -
Net gratuity cost $ 4,474,274 $ 1,484,357 $ 541,499
---------------------------------------------------------------------------------------------------------------
</TABLE>

The assumptions used in accounting for the Gratuity Plan in fiscal 2000,
1999 and 1998 are set out below.

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Discount rate 10% 10% 14%
Rate of increase in compensation levels 9% 12% 7.5%
Rate of return on plan assets 10% 10% 12%
---------------------------------------------------------------------------------------------------------
</TABLE>

The company assesses these assumptions with its projected long-term plans
of growth and prevalent industry standards.

2.9.2 Superannuation

The company contributed $ 244,248, $ 145,051 and $ 99,206 to the
superannuation plan in fiscal 2000, 1999 and 1998, respectively.

2.9.3 Provident fund

The company contributed $ 1,198,772, $ 812,117 and $ 537,663 to the
provident fund in fiscal 2000, 1999 and 1998, respectively.

2.10 Preferred stock of subsidiary

In September 1997, the company's subsidiary, Yantra, sold 5,000,000 shares
of Series A Convertible Preferred Stock, par value $ 0.01 per share
("Series A Convertible Preferred") at $ 0.75 per share for $ 3,750,000 in
cash. The related offering costs of $ 49,853 were offset against the
proceeds of the issue. Of these, 2,000,000 shares were issued to the
company and 3,000,000 shares were issued to third party investors.

In August 1998, Yantra sold 4,800,000 shares of Series B Convertible
Preferred Stock, par value $ 0.01 per share ("Series B Convertible
Preferred") at $ 1.25 per share for $ 6,000,000 in cash to venture
capitalists. The related offering costs of $ 44,416 were offset against
the proceeds of the issue. In connection with this sale, Yantra issued
warrants to purchase 810,811 shares of Series B-1 Convertible Preferred
Stock, par value $ 0.01 per share ("Series B-1 Convertible Preferred"), at
$ 0.01 per share for $ 8,108 in cash. Such warrants are immediately
exercisable and expire in seven years. The exercise price of the warrants
is based upon the then current market price of the Series B-1 Convertible
Preferred at the time of exercise.
Holders of Series A Convertible Preferred vote with holders of common
stock on an as-converted basis, except as otherwise required by Delaware
law. The Series A Convertible Preferred are convertible into common stock
at a 1:1 ratio (subject to certain adjustments): (i) automatically in the
event of an initial public offering with gross proceeds of $ 10,000,000 or
more; or (ii) at any time at the holder's option. The holders of Series A
Convertible Preferred are entitled to a 6% cumulative dividend ($ 0.045
per share) and to receive additional dividends at the same rate of
dividends, if any, declared and paid on the common stock, calculated on an
as-converted basis. Upon a liquidation or sale of Yantra, holders of the
Series A Convertible Preferred are entitled to a liquidation preference of
$ 0.75 per share plus accrued and unpaid dividends; and any remaining
assets will be distributed to holders of the common stock. The Series A
Convertible Preferred is redeemable at the election of holders of 75% of
the outstanding shares of Series A Convertible Preferred at any time after
September 29, 2004 at a redemption price of $ 0.75 per share plus accrued
but unpaid dividends.
The holders of Series B and B-1 Convertible Preferred are entitled to
similar rights, privileges and restrictions as that of Series A
Convertible Preferred.
In October 1998, Infosys sold 1,363,637 shares of Series A Convertible
Preferred in Yantra, having a cost basis of $ 879,042 to a third party
investor for $ 1,500,000 thereby recognizing a gain of $ 620,958 and
reducing its voting interest in Yantra to approximately 47%. The company
presently accounts for Yantra by the equity method. Deconsolidation of
Yantra has resulted in a credit to the company's retained earnings of an
amount of $ 2,468,831

124
<PAGE>

representing the excess of Yantra's losses previously recognized by the
company, amounting to $ 4,445,903, over the company's residual investment
basis in Yantra amounting to $ 1,977,072.

2.11 Stockholders' equity

The company has only one class of capital stock referred to herein as
equity shares. In fiscal 1999, the board of directors authorized a
two-for-one stock split of the company's equity shares effected in the
form of a stock dividend. Also, in November 1999, the board of directors
authorized a two-for-one stock split of the company's equity shares
whereby each issued and outstanding equity share, par value $ 0.32 each,
was split into two equity shares, par value $ 0.16 each. All references in
the financial statements to number of shares, per share amounts and market
prices of the company's equity shares have been retroactively restated to
reflect the stock splits.

2.12 Equity shares

2.12.1 Voting

Each holder of equity shares is entitled to one vote per share.

2.12.2 Dividends

Should the company declare and pay dividends, such dividends will be paid
in Indian Rupees and pro rata from the date of holding such shares.

Indian law mandates that any dividend be declared out of distributable
profits only after the transfer of up to 10% of net income computed in
accordance with current regulations to a general reserve. Also, the
remittance of dividends outside India is governed by Indian law on foreign
exchange. Such dividend payments are also subject to applicable taxes.

2.12.3 Liquidation

In the event of any liquidation of the company, the holders of common
stock shall be entitled to receive all of the remaining assets of the
company, after distribution of all preferential amounts, if any. Such
amounts will be in proportion to the number of shares of equity shares
held by the stockholders.

2.12.4 Stock options

There are no voting, dividend or liquidation rights to the holders of
warrants issued under the company's stock option plan.

2.13 Other income, net

Other income, net, consists of the following:

2.14 Operating leases

The company has various operating leases for office buildings that are
renewable on a periodic basis at its option. Rental expense for operating
leases in fiscal 2000, 1999 and 1998 were $ 2,387,334, $ 1,770,413 and
$ 1,432,447, respectively. The operating leases are cancelable at the
company's option.

The company leases some of its office space under several non-cancelable
operating leases for periods ranging between three through ten years. The
schedule of future minimum rental payments in respect of these leases is
set out below.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Year ending March 31,
----------------------------------------------------------------------------------------------------------
<S> <C>
2001 $ 988,453
2002 959,647
2003 934,372
2004 961,093
</TABLE>

125
<PAGE>

<TABLE>
<S> <C>
2005 604,439
Thereafter 1,083,894
- ----------------------------------------------------------------------------------------------------------------------
$ 5,531,898
======================================================================================================================
</TABLE>

2.15 Research and development
General and administrative expenses in the accompanying statements of
income include research and development expenses of $ 1,904,123, $
2,819,326 and $ 1,777,703 for fiscal 2000, 1999 and 1998, respectively.

2.16 Employee Stock Offer Plans ("ESOP")

1994 Employee Stock Offer Plan (the "1994 Plan"): In September 1994, the
company established the 1994 Plan which provided for the issuance of
6,000,000 warrants (as adjusted for the stock split effective June 1997,
December 1998 and December 1999) to eligible employees. The warrants were
issued to an employee welfare trust (the "Trust") at Rs. 1 each and were
purchased by the Trust using the proceeds of a loan obtained from the
company. The Trust holds the warrants and transfers them to eligible
employees at Rs. 1 each. Each warrant entitles the holder to purchase one
of the company's equity shares at a price of Rs. 100 per share. The
warrants and the equity shares received upon the exercise of warrants are
subject to a five-year aggregate vesting period from the date of issue of
warrants to employees. The warrants expire upon the earlier of five years
from the date of issue or September 1999. The fair market value of each
warrant is the market price of the underlying equity shares on the date
of the grant.

In 1997, in anticipation of a share dividend to be declared by the
company, the Trust exercised all warrants held by it and converted them
into equity shares with the proceeds of a loan obtained from the company.
In connection with the warrant exercise and the share dividend, on an
adjusted basis, 3,011,200 equity shares were issued to employees of the
company who exercised stock purchase rights and 2,988,800 equity shares
were issued to the Trust for future issuance to employees pursuant to the
1994 Plan. Following such exercise, there were no longer any rights to
purchase equity shares from the company in connection with the 1994 Plan.
Only equity shares held by the Trust remained for future issues to
employees, subject to vesting provisions. The equity shares acquired upon
the exercise of the warrants vests 100% upon the completion of five years
of service. The warrant holders were entitled to exercise early, but the
shares received are subject to the five-year vesting period. As of March
31, 2000, the company's outstanding equity shares included 509,800 equity
shares held by the Trust of which 341,400 equity shares were allotted to
employees, subject to vesting provisions and are included in the
calculation of basic and diluted earnings per share. The remaining
168,400 equity shares were not considered outstanding for purposes of
calculating diluted earnings per share. The warrants allotted and the
underlying equity shares are not subject to any repurchase obligations by
the company.

The company has elected to use the intrinsic value-based method of APB 25
to account for its employee stock-based compensation plan. Accordingly,
in fiscal 2000, 1999 and 1998, the company recorded deferred compensation
of $ 1,029,649, $ 30,407,892 and $ 6,890,493, respectively for the
difference, on the grant date, between the exercise price and the fair
value as determined by quoted market prices of the common stock
underlying the warrants. The deferred compensation is amortized on a
straight-line basis over the vesting period of the warrants/equity
shares.

In fiscal 1999, the company declared a stock split of two equity shares
for each equity share outstanding to all its stockholders including
participants in the 1994 Plan in the form of a stock dividend and
consequently recognized an accelerated compensation charge at the time of
the stock dividend amounting to $ 12,906,962.

1998 Employee Stock Option Plan (the "1998 Plan"). The company's 1998 Plan
provides for the grant of non-statutory stock options and incentive stock
options to employees of the company. The establishment of the 1998 Plan
was approved by the board of directors in December 1997 and by the
stockholders in January 1998. The Government of India has approved the
1998 Plan, subject to a limit of 1,470,000 equity shares representing
2,940,000 American Depositary Shares ("ADS") to be issued under the 1998
Plan. Unless terminated sooner, the 1998 Plan will terminate automatically
in January 2008. All options under the 1998 Plan will be exercisable for
equity shares represented by American Depositary Shares (ADSs). The board
of directors or a committee of the board may administer the 1998 Plan. All
options under the 1998 Plan are exercisable for equity shares represented
by ADSs.

1999 Stock Option Plan (the 1999 Plan). In fiscal 2000, the Company
instituted the 1999 Plan. The stockholders and the Board of Directors
approved the 1999 Plan in June 1999. The 1999 Plan provides for the issue
of 6,600,000 equity shares to employees. The 1999 Plan is administered by
a Compensation Committee comprising a maximum of seven members, the
majority of whom are independent directors on the Board of Directors.
Under the 1999 Plan, options will be issued to employees at an exercise
price, which shall not be less than the Fair Market Value. Under the 1999
Plan,

126
<PAGE>

options may also be issued to employees at exercise prices that are less
than FMV only if specifically approved by the members of the Company in a
general meeting.

The company adopted the proforma disclosure provisions of SFAS No. 123,
Accounting for Stock-Based Compensation. Had compensation cost for the
company's stock-based compensation plan been determined in a manner
consistent with the fair value approach described in SFAS No. 123, the
company's net income and basic earnings per share as reported would have
reduced to the proforma amounts indicated below.

127
<PAGE>

The fair value of each warrant is estimated on the date of grant using the
Black-Scholes model with the following assumptions:

The activity in the warrants/equity shares of the 1994, 1998 and 1999 ESOPs in
fiscal 2000, 1999 and 1998 are set out below.

1998 Option plan:
Outstanding at the beginning
of the year 213,000 - - - - -
Granted 147,150 $ 228.60 213,000 $ 34.00 - -
Forfeited (3,500) $ 34.00 - - - -
Exercised (11,900) $ 34.00 - - -
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at the
end of the year 344,750 - 213,000 - - -
- ---------------------------------------------------------------------------------------------------------------------
Exercisable at the
end of the year 344,750 - - - -
Weighted-average fair value
of grants during the year $ 228.60 $ 34.00 - - -

1999 Option plan:
Outstanding at the beginning
of the year - - - - - -
Granted 1,014,500 $ 99.12 - - - -
Forfeited (7,700) $ 127.98 - - - -
Exercised - - - - - -
- ---------------------------------------------------------------------------------------------------------------------
Outstanding at the
end of the year 1,006,800 - - - - -
- -----------------------------------------------------------------------------------------------------------------------
Exercisable at the
end of the year 1,006,800 - - - -
Weighted-average fair value
of grants during the year $ 99.12 - - - -
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

128
<PAGE>

The following table summarizes information about stock options outstanding
as of March 31, 2000:

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Outstanding Exercisable
------------------------------------------------------------------------------------------------------------------
Range of Number of Weighted Weighted Number of Weighted
exercise Price shares arising average average shares arising average
out of options remaining exercise out of options exercise
contractual life price price
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 0.35 - $ 228.60 1,692,950 2.17 years $ 82.78 1,692,950 $ 82.78
------------------------------------------------------------------------------------------------------------------
</TABLE>

2.17 Income taxes
The provision for income taxes comprises:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
2000 1999 1998
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current taxes
Domestic taxes $ 2,505,952 $ 777,351 $ 803,116
Foreign taxes 6,538,256 4,725,726 674,895
-----------------------------------------------------------------------------------------------------------
9,044,208 5,503,077 1,478,011
-----------------------------------------------------------------------------------------------------------
Deferred taxes
Domestic taxes (850,891) (625,427) (707,553)
Foreign taxes - - -
-----------------------------------------------------------------------------------------------------------
(850,891) (625,427) (707,553)
-----------------------------------------------------------------------------------------------------------
Aggregate taxes $ 8,193,317 $ 4,877,650 $ 770,458
===========================================================================================================
</TABLE>

The tax effects of significant temporary differences that resulted in
deferred tax assets and liabilities and a description of the financial
statement items that created these differences are as follows:

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
2000 1999 1998
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deferred tax assets:
Property, plant and equipment $ 2,480,883 $ 2,315,375 $ 1,642,311
Others 195,383 - -
----------------------------------------------------------------------------------------------------------
2,676,266 2,315,375 1,642,311
Less: Valuation allowance (110,000) (600,000) -
----------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 2,566,266 $ 1,715,375 $ 1,642,311
==========================================================================================================
</TABLE>

In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not that some portion or all of
the deferred tax assets will not be realized. The ultimate realization of
deferred tax assets is dependent upon the generation of future taxable
income during the periods in which the temporary differences become
deductible. Management considers the scheduled reversal of the projected
future taxable income, and tax planning strategies in making this
assessment. Based on the level of historical taxable income and
projections for future taxable income over the periods in which the
deferred tax assets are deductible, management believes that it is more
likely than not the company will realize the benefits of those deductible
differences, net of the existing valuation differences at March 31, 2000.
The amount of the deferred tax assets considered realizable, however,
could be reduced in the near term if estimates of future taxable income
during the carry forward period are reduced.

A reconciliation of the income tax provision to the amount computed by
applying the statutory income tax rate to the income before provision for
income taxes is summarized below.

129
<PAGE>

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
2000 1999 1998
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net income before taxes $ 69,537,845 $ 22,323,738 $ 13,182,146
Enacted tax rates in India 38.5% 35.0% 35.0%
- -------------------------------------------------------------------------------------------------------------------------------
Computed expected tax expense 26,772,070 7,813,308 4,613,751
Less: Tax effect due to non-taxable export income (24,019,942) (7,680,942) (4,493,920)
Others (271,081) 644,985 351,732
Effect of tax rate change (29,771) - (71,143)
Effect of prior period tax adjustments 54,676 - 402,696
- -------------------------------------------------------------------------------------------------------------------------------
Provision for Indian income tax 2,505,952 777,351 803,116
Effect of tax on foreign income 6,538,256 3,701,898 674,895
Effect of prior period foreign tax adjustments - 1,023,828 -
- -------------------------------------------------------------------------------------------------------------------------------
Total current taxes $ 9,044,208 $ 5,503,077 $ 1,478,011
===============================================================================================================================
</TABLE>

The provision for foreign taxes is due to income taxes payable overseas,
principally in the United States. The company benefits from certain
significant tax incentives provided to software firms under Indian tax
laws. These incentives presently include: (i) an exemption from payment
of Indian corporate income taxes for a period of ten consecutive years of
operation of software development facilities designated as "Software
Technology Parks"; and (ii) a tax deduction for profits derived from
exporting computer software. All but one of the company's software
development facilities are located in a designated Software Technology
Park. The benefits of these tax incentive programs have historically
resulted in an effective tax rate for the company well below statutory
rates.

2.18 Earnings per share

The following is a reconciliation of the equity shares used in the
computation of basic and diluted earnings per equity share:

2.19 Lines of credit

The company has a line of credit from its bankers for its working capital
requirement of $ 1,150,000 bearing interest at prime lending rates as
applicable from time to time. The prime lending rate of interest as of
March 31, 2000 was 15.8%. This line of credit is secured by inventories
and accounts receivable. The line of credit contains certain financial
covenants and restrictions on indebtedness and is renewable every 12
months. As of March 31, 2000, the company had no balance outstanding
under this facility.

2.20 Financial instruments

Foreign exchange forward contracts
The company enters into foreign exchange forward contracts to offset the
foreign currency risk arising from the accounts receivable denominated in
currencies other than the Indian rupee, primarily the US dollar. The
counter party to the company's foreign currency forward contracts is
generally a bank. Management believes that the risks or economic
consequences of non-performance by the counter party are not material to
its financial position or results of operations. There were no
significant foreign exchange gains and losses on foreign exchange forward
contracts during fiscal 2000, 1999, and 1998. As of March 31, 2000, the
company does not have any open foreign exchange forward contracts.

130
<PAGE>

2.21 Segment reporting

<TABLE>
<CAPTION>
2.21.1 Revenue by geographic area
---------------------------------------------------------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
North America $ 158,723,649 $ 99,203,989 $ 56,211,753
Europe 30,064,939 11,302,791 6,179,621
India 2,912,091 2,051,492 1,799,368
Rest of the world 11,743,075 8,396,954 4,139,219
---------------------------------------------------------------------------------------------------------
$ 203,443,754 $ 120,955,226 $ 68,329,961
=========================================================================================================
</TABLE>

SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information requires that an enterprise report a measure of profit or
loss and total assets for each reportable segment. Certain expenses such
as personnel costs, communication, depreciation on plant and machinery,
etc., which form a significant component of total expenses, are not
specifically allocable to these geographic segments as the underlying
services are used interchangeably between reportable segments. Management
believes that it is not practical to provide segment disclosures relating
to segment costs and expenses, and consequently segment profits or
losses, since a realistic allocation cannot be made. The fixed assets
used in the company's business are not identifiable to any particular
reportable segment and can be used interchangeably among segments.
Consequently, management believes that it is not practical to provide
segment disclosures relating to total assets since a realistic analysis
among the various geographic segments is not possible.

2.21.2 Significant clients

No client accounted for more than 10% of the revenues in fiscal 2000 and
1999, respectively. One client accounted for 10.5% of revenues in fiscal
1998.

2.22 Year 2000

The company provided 24x7 transition support to its internal users and
customers through a Year 2000 War Room. The full cost of the company's
Year 2000 transition support was $ 0.6 million, which was charged to
revenues in fiscal 2000. The company believes that the Year 2000
transition is complete and that there will be no more expenditure in
future towards the transition.

2.23 Commitments and contingencies

The company has outstanding performance guarantees for various statutory
purposes totaling $ 1,207,110, $ 760,329 and $ 438,429 as of March 31,
2000, 1999 and 1998, respectively. These guarantees are generally
provided to governmental agencies.

2.24 Litigation

The company is subject to legal proceedings and claims, which have
arisen, in the ordinary course of its business. These actions, when
ultimately concluded and determined, will not, in the opinion of
management, have a material effect on the results of operations or the
financial position of the company.

2.25 Post balance sheet date events

The Board of Directors of the company declared a dividend of $ 4,550,876
at their meeting held on April 11, 2000.

2.26 Recent accounting pronouncements

In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, Accounting for Derivative Instruments and Hedging Activities. SFAS
133 establishes standards for the recognition and measurement of
derivatives and hedging activities. It requires an entity to record, at
fair value, all derivatives either as assets or liabilities in the
balance sheet as well as establishing specific accounting rules for
certain types of hedges. SFAS 133 is effective for all fiscal years
beginning after June 15, 1999 and will be adopted by the company when
required, if not earlier. Adoption of SFAS 133 is not expected to have a
material adverse effect on the company's business, financial condition
and results of operations.

131
<PAGE>

2.27 Unaudited quarterly financial data

<TABLE>
<CAPTION>
in $
- ----------------------------------------------------------------------------------------------------------------------
June 30 September 30 December 31 March 31 Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000
Revenues 39,728,900 47,941,680 52,158,059 63,615,115 203,443,754
Operating income 12,306,480 14,615,011 15,692,810 17,884,752 60,499,053
Net income 13,310,879 14,720,511 15,416,928 17,896,210 61,344,528
Earnings per share
Basic 0.20 0.22 0.24 0.27 0.93
Diluted 0.20 0.22 0.24 0.27 0.93
Equity share price
High 44.04 91.56 168.75 316.84 316.84
Low 29.29 41.69 75.92 130.74 29.29

1999
Revenues 23,665,088 28,237,129 33,041,304 36,011,705 120,955,226
Operating income 6,049,541 8,181,651 10,810,441 (2,169,006) 22,872,627
Net income 4,775,766 6,159,382 9,581,679 (3,070,739) 17,446,088
Earnings per share
Basic 0.08 0.10 0.15 (0.05) 0.28
Diluted 0.08 0.10 0.15 (0.05) 0.28
Equity share price
High 14.75 15.96 17.46 40.73 40.73
Low 11.16 12.75 13.03 17.34 11.16

1998
Revenues 12,791,408 16,849,466 18,771,524 19,917,563 68,329,961
Operating income 2,528,415 3,545,491 2,845,120 3,462,321 12,381,347
Net income 2,170,029 3,634,370 2,709,337 3,830,452 12,344,188
Earnings per share
Basic 0.03 0.07 0.05 0.06 0.21
Diluted 0.03 0.07 0.04 0.06 0.20
Equity share price
High 6.67 11.03 10.16 11.56 11.56
Low 3.54 6.65 7.12 6.84 3.54
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

. The third quarter of fiscal 1998 and the fourth quarter of fiscal
1999 include charges of $ 1.5 million and $ 12.9 million,
respectively due to compensation charges arising out of stock split.
. Changes in estimates in the fourth quarter of fiscal 2000 include a
charge of $ 2.7 million ($ 0.04 per share) resulting from a change in
the estimates for gratuity calculations.
. Changes in estimates in the fourth quarter of fiscal 1999 include a
charge of $ 1.0 million ($ 0.02 per share) resulting from a change in
the effective income tax rate for the period.

132
<PAGE>

Form 20-F
- -----------------------------------------------------------------------------
Pages 133-172

<PAGE>

Shareholder information
- -----------------------------------------------------------------------------

[GRAPHIC OMITTED]

. Shareholder information
. Frequently asked questions (FAQ)
. Additional information to shareholders
- Share performance chart
- Intangible assets scoresheet
- Human resources accounting
- Value-added statement
- Brand valuation
- Balance sheet (including intangible assets)
- Economic value-added (EVA) statement
- Ratio analysis
- Statutory obligations / segment reporting
. Management structure
. A historical perspective
. Infosys Foundation

173
<PAGE>

Shareholder information

<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
1. Dates of book closure May 16, 2000 to May 27, 2000 (both days inclusive)

2. Date and venue of the 3.00 p.m. on May 27, 2000,
annual general meeting at Hotel Taj Residency,
No. 41/3, M.G. Road, Bangalore - 560 001, India.

3. Dividend payment On or after May 27, 2000, but within the statutory time limit.

4. Listing on stock exchanges Bangalore Stock Exchange Ltd.
in India at Stock Exchange Towers, No. 51, 1st Cross, J.C. Road, Bangalore - 560 027, India.
Tel.: +91-80-299 5234, Fax: +91-80-299 5242

The Stock Exchange, Mumbai
Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai - 400 001, India.
Tel.: +91-22-265 5581, Fax: +91-22-265 8121

National Stock Exchange of India Ltd. Trade
World, Senapati Bapat Marg, Lower Parel,
Mumbai - 400 013, India.
Tel.: +91-22-497 2950, Fax: +91-22-491 4275 / 85

5. Listing fees Paid for all the above stock exchanges for 1999-2000 and 2000-2001.

6. Listing on stock exchanges NASDAQ National Market in the United States
outside India 33 Whitehall Street, New York, NY-1004-4087
Tel.: +1-212-709-2400, Fax: +1-212-709-2496

7. Registered office Electronics City, Hosur Road, Bangalore - 561 229, India.
Tel.: +91-80-852 0261, Fax: +91-80-852 0362
Homepage: www.infy.com

8. Share transfers in physical form Karvy Consultants Limited
and other communication regarding Registrars and Share Transfer Agents
share certificates, dividends, and T.K.N. Complex, No. 51/2, Vanivilas Road,
change of address, etc., in India Opp. National College, Basavanagudi,
may be addressed to Bangalore - 560 004, India.
Tel.: +91-80-662 1184, Fax: +91-80-662 1169
e-mail: [email protected]
</TABLE>

9. Share transfer system
Shares sent for physical transfer are generally registered and returned
within a period of 15 days from the date of receipt, if the documents are
clear in all respects. The share transfer committee of the company meets as
often as required.

The total number of shares transferred in physical form during the year
1999-2000 was 3,35,878 (previous year - 19,79,276). 99.16% of transfers
(previous year - 85.53%) were completed within 15 days.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Year ended March 31,
- ----------------------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------------------
Transfer No. of No. of No. of No. of
period transferees (folios) shares % transferees (folios) shares %
in days New Existing New Existing
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 - 10 87 36 3,25,068 96.78 1,609 152 14,33,242 72.41
11 - 15 22 7 8,010 2.38 237 76 2,59,601 13.12
16 - 20 5 0 1,400 0.42 291 103 2,26,857 11.46
* 21 and above 5 3 1,400 0.42 108 37 59,576 3.01
119 46 3,35,878 100.00 2,245 368 19,79,276 100.00
====================================================================================================================================
</TABLE>
* Delays beyond 21
days were due to compliance with legal requirements.

174
<PAGE>

10. Stock market data relating to shares listed in India

a. The company's market capitalization is included in the computation of
the BSE-30 Sensitive Index (Sensex), the BSE Dollex and S&P CNX NIFTY
Index.

b. Monthly high and low quotations as well as the volume of shares traded
at Mumbai, National and Bangalore Stock Exchanges for 1999-2000 are:

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------
BSE NSE BgSE
-------------------------------------------------------------------------------------------------------------
High Low Volume High Low Volume High Low Volume
Rs. Rs. Nos. Rs. Rs. Nos. Rs. Rs. Nos.
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
April, 1999 2,910 2,510 18,14,254 2,910 2,511 21,59,195 * * *
May 3,325 2,580 21,08,934 3,319 2,579 20,81,333 * * *
June 3,774 3,032 18,95,197 3,770 3,015 17,16,361 * * *
July 5,960 3,622 27,22,986 5,515 3,641 24,76,873 * * *
August 5,715 4,820 17,65,916 5,740 4,780 16,50,790 5,775 4,800 570
September 7,955 5,400 15,64,028 7,960 5,406 15,77,086 7,500 5,600 147
October 8,720 6,832 23,81,639 8,875 6,845 23,23,938 8,550 6,900 4,601
November 9,750 6,590 21,87,553 9,773 6,600 26,66,213 9,750 6,450 2,126
December 14,649 9,001 23,08,042 14,527 9,031 20,80,825 14,600 9,100 1,707
January, 2000 # 16,932 11,400 27,10,915 16,875 11,325 29,20,047 16,800 11,500 3,655
February # 10,760 7,111 33,47,454 10,800 7,150 37,97,729 10,900 7,275 11,886
March # 13,813 8,800 25,96,276 13,932 8,511 29,27,328 13,975 9,106 26,087
Total 2,74,03,194 2,83,77,718 50,779
% of volume traded to average 1999-00 76.27% ** 78.09% ** 0.10%
shares outstanding 1998-99 102.41% 131.42% -
1997-98 25.49% 51.67% -
-------------------------------------------------------------------------------------------------------------
</TABLE>

* There was no trading in the shares of Infosys on the Bangalore Stock
Exchange during the period April 1999 to July 1999.
# Trading in the equity shares of par value of Rs. 5 each consequent to
the 2-for-1 stock split (i.e., a sub-division of every equity share
of par value of Rs. 10 each into two equity shares of par value of
Rs. 5 each) commenced on The Stock Exchange, Mumbai from January 27,
2000 and on National and Bangalore Stock Exchanges from January 24,
2000. Consequently, the quotations from these dates are considered on
the equity shares of par value of Rs. 5 each. The monthly high and
low quotations for January 2000 are based on both the pre and
post-split shares.
** The number of shares outstanding is 3,20,34,400 for 10 months up to
January 2000 and 6,40,68,800 for February and March 2000. The
American Depositary Shares (ADSs) have been excluded for the purpose
of this calculation.

11. Investors' services - complaints received during the year

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Year ended March 31,
------------------------------------------------------------------------------------------------------------------
Nature of complaints 2000 1999
------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
Received Attended to Received Attended to
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Non-receipt of share certificates 9 9 78 78
2. Non-receipt of bonus shares 67 67 10 10
3. Letters from Stock Exchanges, SEBI, etc. 1 1 1 1
4. Non-receipt of dividend warrants 45 45 44 44
------------------------------------------------------------------------------------------------------------------
122 122 133 133
==================================================================================================================
</TABLE>

The company has attended to most of the investors' grievances/correspondence
within a period of 10 days from the date of receipt of the same, during the
years 1999-2000 and 1998-1999, except in cases which are constrained by
disputes or legal impediments.

12. Legal proceedings
There are some pending cases relating to disputes over title to shares, in
which the company is made a party. These cases are however not material in
nature.

175
<PAGE>

13. Distribution of shareholding as on March 31

No. of equity No. of % of No. of % of No. of % of No. of % of
shares held share- share- shares share- share- share- shares share-
holders holders holding holders holders holding
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 - 100 34,563 74.63 8,15,853 1.27 2,270 23.83 60,666 0.19
101 - 200 2,560 5.53 7,29,086 1.14 1,661 17.44 3,25,240 1.02
201 - 500 2,845 6.14 12,54,656 1.96 1,884 19.78 7,43,110 2.32
501 - 1000 2,695 5.82 21,81,550 3.41 2,077 21.80 15,92,225 4.97
1001 - 5000 2,972 6.42 63,90,248 9.97 1,235 12.96 26,85,624 8.38
5001 - 10000 340 0.73 25,38,044 3.96 154 1.62 11,16,090 3.48
10001 and above 338 0.73 4,99,07,070 77.90 245 2.57 2,55,11,445 79.64
NSDL transit - - 2,52,293 0.39 - - - -
46,313 100.00 6,40,68,800 100.00 9,526 100.00 3,20,34,400 100.00
Equity shares underlying 1* 20,81,900 1* 10,35,000
American Depositary Shares
-----------------------------------------------------------------------------------------------------------------
Total 46,314 6,61,50,700 9,527 3,30,69,400
=================================================================================================================
</TABLE>

* Held by beneficial owners outside India.

14. Categories of shareholders as on March 31

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------
2000 1999
-------------------------------------------------------------------------------------------------------------------------

Category No. of Voting No. of shares No. of Voting No. of shares
shareholders Strength(%) held shareholders strength (%) held
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Individuals 43,364 26.87 1,77,74,390 8,923 25.14 83,14,380
Companies 2,220 1.78 11,75,866 323 3.60 11,89,070
FIIs 270 24.38 1,61,27,027 142 24.79 81,96,512
OCBs and NRIs 299 0.75 4,95,267 47 0.52 1,74,034
Founders and their families 23 29.30 1,93,81,960 18 29.69 98,19,600
Mutual funds, banks, FIs 137 13.39 88,61,997 73 13.13 43,40,804
NSDL transit - 0.38 2,52,293 - - -
Equity shares underlying 1* 3.15 20,81,900 1* 3.13 10,35,000
American Depositary Shares
-------------------------------------------------------------------------------------------------------------------------
Total 46,314 100.00 6,61,50,700 9,527 100.00 3,30,69,400
=========================================================================================================================
</TABLE>

* Held by beneficial owners outside India.

15. Shares under lock-in

Employee Stock Offer Plan (ESOP) 1994

Details of shares of par value of Rs. 5 each held by employees under the
Employee Stock Offer Plan (ESOP) 1994 subject to lock-in are given below.
These shares are also included in the categories of shareholders given in
(14) above.

No. of shares subject to lock-in as on March 31,

Period of lock-in No. of shares No. of employees No. of shares No. of employees
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4-5 years - - 4,07,100 1,106
3-4 years 7,82,000 1,033 2,57,200 348
2-3 years 5,00,400 340 1,06,200 156
1-2 years 2,04,000 151 1,32,600 110
0-1 years 2,57,200 105 1,11,100 76
-----------------------------------------------------------------------------------------------------------------
</TABLE>

176
<PAGE>

As on March 31, 2000, 556 employees hold rights to 3,11,400 shares of par
value of Rs. 5 each which are subject to a lock-in of 3-4 years and 14
employees hold rights to 30,000 shares of par value of Rs. 5 each which are
subject to a lock-in of 4-5 years. Currently, 1,629 employees hold shares
under the 1994 Stock Offer Plan. Shares subject to lock-in held by the
employees will be transferred back to the ITL Employees Welfare Trust if
such employees leave the services of the company before the vesting period.
As on March 31, 2000, the ITL Employees Welfare Trust holds 1,68,400 shares
of par value of Rs. 5 each. The 1994 Stock Offer Plan has since been
terminated.

Employee Stock Offer Plan (ESOP) 1998

The company established the 1998 Stock Offer Plan which provides for the
grant of non-statutory stock options and incentive stock options to the
employees of the company. This plan was approved by the board of directors
in December 1997 and by the shareholders in January 1998. The Government of
India has approved the 1998 plan, subject to a limit of 14,70,000 equity
shares of par value of Rs. 5 each representing 29,40,000 ADSs to be issued
under the plan. During the year, options were granted to 72 employees to
acquire 2,94,300 ADSs corresponding to 1,47,150 equity shares of par value
of Rs. 5 each. During the year, 17 employees exercised the options to
acquire 23,800 ADSs corresponding to 11,900 shares of par value of Rs. 5
each. As on March 31, 2000, 96 employees hold options to acquire 6,89,500
ADSs corresponding to 3,44,750 equity shares of par value of Rs. 5 each.
Details of the number of ADSs options granted and exercised are given
below.

No. of options granted and exercised

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Granted Exercised
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year No. of ADSs No. of ADSs Balance
employees (Net) employees
-----------------------------------------------------------------------------------------------------------------
1999 34 4,19,000 17 23,800 3,95,200
2000 72 2,94,300 - - 2,94,300
-----------------------------------------------------------------------------------------------------------------
Total 7,13,300 23,800 6,89,500
=================================================================================================================
</TABLE>

Employee Stock Offer Plan (ESOP) 1999

The 1999 plan was approved by the board of directors and the shareholders
in June 1999 and was instituted in fiscal 2000. The plan provides for the
issue of 66,00,000 equity shares of par value of Rs. 5 each to the
employees. During the year, options were granted to 1,228 employees to
acquire 10,14,500 equity shares of par value of Rs. 5 each. As on March 31,
2000, 1,216 employees hold options to acquire 10,06,800 shares of par value
of Rs. 5 each. Details of shares of par value of Rs. 5 each held by
employees under the Employee Stock Offer Plan (ESOP) 1999 are given below.

No. of options granted and forfeited

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Granted Forfeited
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year No. of No. of No. of No. of Balance
employees shares employees shares
-----------------------------------------------------------------------------------------------------------------
2000 1,228 10,14,500 12 7,700 10,06,800
-----------------------------------------------------------------------------------------------------------------
Total 10,14,500 7,700 10,06,800
=================================================================================================================
</TABLE>

16. Dematerialization of shares and liquidity

Your company was the first in India to pay a one-time custodial fee of Rs.
44.43 lakhs to National Securities Depositary Limited (NSDL). Consequently,
the company's shareholders do not have to pay depositary participants the
custodial fee charged by the NSDL on their holding. Over 96% of the
company's shares are now held in electronic form.

<TABLE>
<S> <C>
17. Financial calendar (tentative and subject to change)

Annual General Meeting May 27, 2000
Financial reporting for the first quarter ending June 30, 2000 July 11, 2000
Financial reporting for the second quarter ending September 30, 2000 October 10, 2000
Interim dividend payment (if any) November 2000
Financial reporting for the third quarter ending December 31, 2000 January 9, 2001
Financial results for the year ending March 31, 2001 April 11, 2001
Annual General Meeting for the year ending March 31, 2001 May 2001
</TABLE>

177
<PAGE>

<TABLE>
<S> <C>
18. Investors' correspondence in India Any queries relating to the financial statements
may be addressed to: of the company may be addressed to:
The Company Secretary, Mr. T. V. Mohandas Pai,
Investors' Service Cell, Senior Vice President (F&A) and CFO,
Infosys Technologies Ltd., Electronics City, Infosys Technologies Ltd., Electronics City,
Hosur Road, Bangalore - 561 229, India. Hosur Road, Bangalore - 561 229, India.
Tel.: +91-80-852 1518, Fax: +91-80-852 0362 Tel.: +91-80-852 0396, Fax: +91-80-852 0362
(e-mail: [email protected]) (e-mail: [email protected])

19. Reuters code- INFY.BO (BSE) Bridge code- IN;INF (BSE) Bloomberg code - INFO IN (BSE)
- INFY.NS (NSE) - IN;INFN (NSE) - NINFO IN (NSE)
- INFY.O (NASDAQ) - US;INFY (NASDAQ)

20. Stock market data relating to American Depositary Shares (ADSs)

a. ADS listed at NASDAQ National Market in the United States

b. Ratio of ADS to equity shares 2 ADS for one equity share

c. ADS symbol INFY

d. The American Depositary Shares issued under the ADS program of the company were
listed on the NASDAQ National Market in the United States on March 11, 1999. The
monthly high and low quotations as well as the volume of ADSs traded at the NASDAQ
National Market for the year ended March 31, 2000 are:
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------
High Low Volume
----------------------------------------------------------------------------------------
$ Rs. $ Rs. Nos.
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
April, 1999 45.81 3,901 39.25 3,343 1,377,200
May 50.38 4,295 41.38 3,528 1,391,700
June 61.25 5,309 48.50 4,204 1,164,400
July 121.88 10,550 57.38 4,966 2,340,200
August 107.75 9,368 79.75 6,933 853,700
September 147.75 12,878 97.81 8,525 1,201,900
October 179.50 15,552 131.00 11,350 1,712,400
November 235.00 20,398 143.00 12,412 1,314,600
December 360.00 31,313 204.13 17,755 1,479,100
January, 2000 402.00 35,054 266.00 23,195 1,648,800
February # 681.00 59,370 318.50 27,767 3,349,400
March # 375.00 32,700 180.00 15,696 4,077,500
- ------------------------------------------------------------------------------------------------
Total 21,910,900
- ------------------------------------------------------------------------------------------------
% of volume traded to total float 914.35%
</TABLE>

* 2 ADS = 1 equity share

$ have been converted into Indian rupees at the monthly closing rates.

# The 2-for-1 stock split was effective for the ADS from February 15,
2000 and the ADS quotes reflect the same from such date. The monthly
high and low quotations for February 2000 are based on both the pre and
post-split shares.

e. Premium of American Depositary Shares over the shares traded on the
Indian stock exchanges

The ADS price quoted below is in Indian rupees and has been converted at
the monthly closing rates. The NSE Share Price as on January 31, 2000 is
on the equity shares of par value of Rs. 5 each and ADS price is on the
equity shares of par value of Rs. 10 each. The NSE share price on
January 31, 2000 has been doubled to enable comparison with the ADS
price.

178
<PAGE>

[GRAPH]

f. Investor correspondence in P. R. Ganapathy
the US may be addressed to Investor Relations Officer
Infosys Technologies Limited
34760, Campus Drive
Fremont CA 94555, USA.
Tel.: +1-510-742-3030, Mobile:
+1-510-872-4412,
Fax: +1-510-742-2930, e-mail:
[email protected]

g. Name and address of the Deutsche Bank A.G.
depositary bank Corporate Trust and Agency Services
4 Albany Street
New York, NY 10006, USA.
Tel.: +1-212-250-8500,
Fax: +1-212-250-5644
Corporate Trust and Agency Services
Deutsche Bank A.G.
1 st Floor, Kodak House
222, Dr. D. N. Road
Fort, Mumbai - 400 001, India.
Tel.: +91-22-207 3262,
Fax: +91-22-207 9614

i. Name and address of the ICICI Limited
custodian in India ICICI Towers
Bandra Kurla Complex
Mumbai - 400 051, India.
Tel.: +91-22-653 1414,
Fax: +91-22-653 1164/65

179
<PAGE>

Frequently asked questions
- --------------------------------------------------------------------------------

1. What is an American Depositary Share ("ADS")?

Ans: An ADS is a negotiable certificate evidencing ownership of an
outstanding class of stock in a non-US company. ADSs are created when
ordinary shares are delivered to a custodian bank in the domestic market,
which then instructs a depositary bank in the US to issue ADSs based on a
predetermined ratio. ADSs are SEC registered securities and may trade
freely, just like any other security, either on an exchange or in the
over-the-counter market.

2. What is the difference between an ADS and a GDR?

Ans: ADSs and GDRs (Global Depositary Receipts) are the same in their
functionality - they both evidence ownership of foreign securities
deposited with a custodian bank. ADSs represent securities that are listed
in the United States, while GDRs represent securities listed outside of the
United States, typically in London.

3. Do the ADSs have voting rights?

Ans: Yes. In the event of a matter submitted to the holders of ordinary
shares for a vote, the ADS holders on record as at a particular date will
be allowed to instruct the depositary bank to exercise the vote in respect
of the equity shares representing the ADS held by them.

4. Are the ADSs entitled to cash dividends?

Ans: Yes, whenever dividends are paid to ordinary shareholders. Cash
dividends to ADS holders are declared in local currency and paid in dollars
(based on the prevailing exchange rate) by the depositary bank, net of the
depositary's fees and expenses. The dividends are paid on a pro rata basis.

5. Where and in which year was Infosys incorporated?

Ans: Infosys was incorporated at Mumbai, in the state of Maharashtra, in
India on July 2, 1981.

6. When did Infosys have its initial public offer (IPO) and what was the
initial listing price? Was there any follow-on offering?

Ans: Infosys made an initial public offer in February 1993 and was listed
on stock exchanges in India in June 1993. Trading opened at Rs. 145 per
share compared to the IPO price of Rs. 95 per share. In October 1994,
Infosys made a private placement of 5,50,000 shares at Rs. 450 each to
Foreign Institutional Investors (FIIs), Financial Institutions (FIs) and
Corporates. During March 1999, Infosys issued 2,070,000 ADSs (equivalent to
10,35,000 equity shares of par value of Rs. 10 each) at $ 34 per ADS under
the American Depositary Shares Program and the same were listed on the
NASDAQ National Market.

7. Which are the stock exchanges where Infosys shares are listed and traded?

Ans: Shares of Infosys are listed and traded in India on the Bangalore
Stock Exchange, The Stock Exchange, Mumbai, and the National Stock
Exchange. The ADSs of Infosys are traded on the NASDAQ National Market in
the US.

8. What are the Reuters, Bridge and Bloomberg codes for Infosys stock?

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Ans: Exchange Reuters code Bridge code Bloomberg code
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
The Stock Exchange, Mumbai, India INFY.BO IN;INF INFO IN
National Stock Exchange, India INFY.NS IN;INFN NINFO IN
Nasdaq, USA INFY.O US;INFY -
-----------------------------------------------------------------------------------------------------------------
</TABLE>

9. What is the Infosys ADS ratio?

Ans: Each Infosys ADS represents one-half of one ordinary equity share of
Infosys.

10. What is the symbol for Infosys ADS and where is it traded ?

Ans: The symbol is "INFY" and the same is traded on the NASDAQ National
Market in the US.

180
<PAGE>

11. When is the next earnings release? What is the fiscal year of Infosys?

Ans: The tentative dates of earnings releases are given below. The earnings
release date will also be posted on the website www.infy.com, after
------------
announcement to the stock exchanges.

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Earnings release date (tentative and subject to change)
-----------------------------------------------------------------------------------------------------------------
<S> <C>
First quarter ending June 30, 2000 July 11, 2000
Second quarter ending September 30, 2000 October 10, 2000
Third quarter ending December 31, 2000 January 9, 2001
Year ending March 31, 2001 April 11, 2001
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The fiscal year of the company is the period of 12 months starting April 1,
every year.

12. What is the employee strength of Infosys?

Ans: As of March 31, 2000, Infosys had 5,389 employees, as compared to
3,766 on March 31, 1999, on a full-time basis.

The distribution of the employees is:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Software development including trainees 4,623 85.79% 3,158 83.86%
Support services 766 14.21% 608 16.14%
-----------------------------------------------------------------------------------------------------------------
Total 5,389 100.00% 3,766 100.00%
-----------------------------------------------------------------------------------------------------------------

The gender classification of employees is:
Male 4,558 84.58% 3212 85.29%
Female 831 15.42% 554 14.71%
-----------------------------------------------------------------------------------------------------------------
Total 5,389 100.00% 3,766 100.00%
-----------------------------------------------------------------------------------------------------------------

The age profile of employees is:
-----------------------------------------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------------------------------------
Between 20 and 25 years 3,057 57% 1,955 52%
Between 26 and 30 years 1,659 31% 1,286 34%
Between 31 and 40 years 579 11% 448 12%
Between 41 and 50 years 83 1% 68 2%
Between 51 and 60 years 11 - 9 -
-----------------------------------------------------------------------------------------------------------------
Total 5,389 100.00% 3,766 100.00%
-----------------------------------------------------------------------------------------------------------------
</TABLE>

13. Does Infosys issue quarterly reports?

Ans: Yes. Infosys issues audited quarterly reports conforming to the
Indian GAAP and unaudited quarterly reports conforming to the US GAAP and
the same are mailed to all shareholders.

14. How do I transfer my shares in India or change my address with the transfer
agent?

Ans: To transfer shares in physical form, you have to write to the
company's registrars: Karvy Consultants Limited, Registrars and Share
Transfer Agents, T.K.N. Complex, No. 51/2, Vanivilas Road, Opp. National
College, Basavanagudi, Bangalore - 560 004, India. Tel.: +91-80-662 1184,
Fax: +91-80-662 1169, e-mail: [email protected] or write to:

The Company Secretary, Infosys Technologies Limited, Electronics City,
Hosur Road, Bangalore - 561 229, India.
Tel.: +91-80-852 1518, Fax: +91-80-852 0362.

You can also address your queries to the e-mail id: [email protected].
Transfer of shares in electronic form are effected through your depositary
participant.

General correspondence regarding shares may be addressed to the company's
registrars, Karvy Consultants Limited, or to The Company Secretary, Infosys
Technologies Limited.

181
<PAGE>

15. Who are the depositary and custodian for the ADS program?

Ans: Depositary Deutsche Bank A.G.
Corporate Trust and Agency Services
4 Albany Street
New York, NY 10006, USA.
Tel.: +1-212-250-8500,
Fax: +1-212-250-5644

Custodian ICICI Limited,
ICICI Towers
Bandra Kurla Complex
Mumbai - 400 051, India.
Tel.: +91-22-653 1414,
Fax: +91-22-653 1164/65

16. What is the history of bonus issues (equivalent to stock split in the form
of stock dividend) and stock split at Infosys?

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Ans: Year 1986 1989 1991 1992 1994 1997 1999 2000
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bonus issue ratio 1:1 1:1 1:1 1:1 1:1 1:1 1:1 -
-----------------------------------------------------------------------------------------------------------------
Stock split ratio 2 for 1 2 for 1 2 for 1 2 for 1 2 for 1 2 for 1 2 for 1 2 for 1
-----------------------------------------------------------------------------------------------------------------
</TABLE>

The company completed a 2-for-1 stock split (i.e., a subdivision of every
equity share of par value of Rs. 10 each into two equity shares of par
value of Rs. 5 each) during fiscal 2000.

17. How many software development centers does Infosys have?

Ans: Infosys has 18 development centers, of which 17 are in India - seven
in Bangalore, two each in Chennai, Mangalore and Pune, and one each in
Bhubaneswar, Hyderabad, Mohali and Mysore. Infosys has a Global Development
Center in Toronto, Canada. In addition, there are two Proximity Development
Centers in Fremont and Boston in the US.

18. How many marketing offices does Infosys have?

Ans: There are 20 marketing offices, of which 9 are located in the US, one
each in the UK, Germany, Canada, Japan, Belgium, Sweden and Australia, and
four in India.

19. What was the employee strength and revenue growth since 1995?

Ans: The employee strength and revenue growth since 1995 were as follows:
As per US GAAP

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Fiscal year ended Total no. of Growth Net revenues Growth Net income Growth
March 31 employees % in $ % in $ %
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 903 58 18,105,010 90 3,963,367 48
1996 1,172 30 26,607,009 47 6,823,637 72
1997 1,705 45 39,585,919 49 8,642,002 27
1998 2,605 53 68,329,961 73 13,863,927* 60
1999 3,766 45 120,955,226 77 30,353,050* 119
2000 5,389 43 203,443,754 68 61,344,528 102
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

* This excludes a one-time deferred stock compensation expense arising from
stock split amounting to $ 12,906,962 and $ 1,519,739 in fiscal 1999 and
1998, respectively.

As per Indian GAAP

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------
Fiscal year ended Total no. of Growth Revenue Growth PAT* Growth
March 31 employees % in Rs. lakhs % in Rs. lakhs %
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1995 903 58 57,70.43 92 13,32.44 65
1996 1,172 30 93,41.34 62 21,00.94 58
1997 1,705 45 143,80.77 54 33,68.06 60
1998 2,605 53 260,36.57 81 60,36.33 79
1999 3,766 45 512,73.84 97 132,91.54 120
2000 5,389 43 921,46.48 80 285,94.86 115
-----------------------------------------------------------------------------------------------------------------
</TABLE>

* From ordinary activities

182
<PAGE>

20. Does Infosys pay dividend? What is the dividend payment policy of Infosys?

Ans: Currently, Infosys pays dividend to its shareholders. The current
dividend policy is to distribute up to 20% of the PAT as dividend. The
board of directors reviews the dividend policy periodically.

21. How do I contact Infosys by telephone, mail or in person?

Ans: Members of the press can contact the following members of Infosys'
management for any information.

N. R. Narayana Murthy,
Chairman and Chief Executive Officer Tel: +91-80-852 0363/ 852 0399

Nandan M. Nilekani,
Managing Director, President and
Chief Operating Officer Tel: +91-80-852 0351

T. V. Mohandas Pai,
Senior Vice President
(Finance & Administration)
and Chief Financial Officer Tel: +91-80-852 0396

The Infosys corporate mailing address is:
Infosys Technologies Limited,
Electronics City, Hosur Road,
Bangalore - 561 229, India.
Tel.: +91-80-852 0261, Fax: +91-80-852 0362

For direct correspondence, the general electronic address is
[email protected].

22. Is there any investor relations contact in the US?

Ans: Mr. P. R. Ganapathy, Investor Relations Officer, is based at the
company's Fremont office and will be available at the following address to
answer any queries from investors.

Infosys Technologies Limited
34760, Campus Drive
Fremont CA 94555, USA.
Tel.: +1-510-742-3030, Mobile: +1-510-872-4412
Fax: +1-510-742-2930, e-mail: [email protected]
-------------

183
<PAGE>

Additional information to shareholders
Share performance chart
- --------------------------------------------------------------------------------
Infosys management consistently cautions that the stock price performance shown
in the graph below should not be considered indicative of potential future stock
price performance.

[GRAPH APPEARS HERE]

The share price has been adjusted for three bonus issues of 1:1 during October
1994, October 1998 and March 1999 and a stock split of 2-for-1 in February 2000.

184
<PAGE>

Additional information to shareholders (contd.)
- --------------------------------------------------------------------------------

Intangible assets scoresheet

A knowledge-intensive company leverages know how, innovation and reputation for
success in the marketplace. Hence, these attributes should be measured and
improved, year after year, to achieve the best performance. The profitability of
a knowledge firm depends on its ability to leverage the learnability of its
professionals, and in enhancing the re-usability of their knowledge and
expertise.

The stock price of a company is the result of the market's valuation of the
future earnings and growth potential of the company. Thus, the market provides a
value to the off-balance-sheet assets of the company - that is, those assets
which are invisible or which are not accounted for in the traditional financial
statements. The intangible assets of a company include its brand, products and
the ability to attract, develop and nurture a cadre of competent professionals,
and the ability to attract and retain marque clients.

Today's discerning investors take a critical look at the financial and
non-financial parameters that determine the long-term success of a company.
These new non-financial parameters challenge the usefulness of evaluating
companies solely on the traditional measures, as they appear in the financial
reports of a company. Thus, the intangible assets of the company have been
receiving considerable attention from corporate leaders.

The intangible assets of a company can be classified into four major categories
- - human resources, intellectual property assets, internal assets and external
assets.

Human resources

Human resources represent the collective expertise, innovation, leadership,
entrepreneurial and managerial skills endowed in the employees of an
organization.

Intellectual property assets

Intellectual property assets include know how, copyright, patent, products and
tools that are owned by a corporation. These assets are valued based on their
commercial potential. A corporation derives its revenues by licensing these
assets to outside users.

Internal assets

Internal assets are systems, technologies, methodologies, processes and tools
that are specific to the organization. These assets give the organization a
unique advantage over its competitors in the marketplace. These assets are not
licensed to outsiders. Examples of internal assets include methodologies for
assessing risk, methodologies for managing projects, risk policies, and
communication systems.

External assets

External assets are the market-related intangibles that enhance the fitness of
an organization for succeeding in the marketplace. Examples are customer loyalty
(reflected by the repeat business of the company) and brand value.

The score sheet

Infosys published models for valuing the two most valuable, intangible assets of
the company - human resources and the "Infosys" brand. The score sheet published
is broadly adopted from the Intangible asset score sheet provided in the book
titled The New Organizational Wealth written by Karl Erik Sveiby and published
by Berrett-Koehler Publishers Inc., San Francisco. We believe such
representation of intangible assets provides a tool to our investors for
evaluating the market-worthiness of the company.

The Infosys management cautions investors that these data are provided only as
additional information to investors. Using such reports for predicting the
future of Infosys, or any other company, is risky. The Infosys management is not
responsible for any direct, indirect or consequential losses suffered by any
person using these data.

185
<PAGE>

The Infosys intangible assets scoresheet
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Knowledge capital
- ------------------------------------------------------------------------------------------------------------------------------------
Our clients Our organization Our people
(External structure) (Internal structure) (Competence)
- ------------------------------------------------------------------------------------------------------------------------------------
1999-2000 1998-99 1999-2000 1998-99 1999-2000 1998-99
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Growth/renewal
- ------------------------------------------------------------------------------------------------------------------------------------
Revenue growth over 80 97 IT investment/ value added 7.47 11.71 Education index 15,544 10,731
previous year (%) (%) of all staff
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage of revenue from 47 49 R&D/ 1.14 2.62
image-enhancing clients value added (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Percentage of revenue 94 98 Total investment in 22.10 19.16
from exports organization/
value added (%)
- ------------------------------------------------------------------------------------------------------------------------------------
No. of new clients 99 39
added during the year
- ------------------------------------------------------------------------------------------------------------------------------------
Efficiency
- ------------------------------------------------------------------------------------------------------------------------------------
Sales/client 455 407 Average proportion 12.70 14.90 Value added per 17.71 13.69
(in Rs. lakhs) of support staff (%) software engineer
(in Rs. lakhs)
- ------------------------------------------------------------------------------------------------------------------------------------
Sales per support staff 155 107 Value added per 15.46 11.65
(in Rs. lakhs) employee (in Rs.
lakhs)
- ------------------------------------------------------------------------------------------------------------------------------------
Stability
- ------------------------------------------------------------------------------------------------------------------------------------
Repeat-business revenue/ 87 90 Average age of support staff 31.14 30.88 Average age of 26.14 26.14
total revenue (%) (Years) all employees
(Years)
- ------------------------------------------------------------------------------------------------------------------------------------
Sales from the five largest 30.2 28.4
clients/total revenue (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Sales from the ten largest 45.7 44.0
clients/total revenue (%)
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The figures above are based on Indian GAAP financial statements.

186
<PAGE>

Notes:
. Marque or image-enhancing clients are those who enhance the company's
market-worthiness. These are Fortune 500 clients, and are reference
clients for Infosys.

. Sales per client is calculated by dividing total revenue, excluding
other income, by the total number of clients.

. Repeat-business revenue is the revenue during current year from those
clients who contributed to the revenue of the company during the
previous year also.

. Value-added is the revenue of the company less payment to all
outside resources. The value-added statement is provided elsewhere
in this report.

. IT investment includes all investments in hardware and software
by the company.

. Total investment in the organization is the investment in the fixed
assets of the company.

. Average proportion of support staff is the average number of support
staff to average total staff strength of the company during the year.

. Sales per support staff is Infosys revenue divided by the average
number of support staff during the year (support staff exclude
technical support staff).

. Education index is shown as at the year-end, with primary education
calculated as 1, secondary education as 2, and tertiary education
as 3.

Clients

The growth in revenue is 80% this year, compared to 97%, in the previous year.
The most valuable intangible asset of Infosys is its client base. Marque
clients or image-enhancing clients contributed around 47% of revenue this year
as compared to 49% in the previous year. They reduce our marketing costs.

The high percentage -87%- of revenue from repeat orders during the current
year is an indication of the satisfaction and loyalty of the clients. The
top 5 and 10 clients contributed around 30% and 46% respectively, of the
company's revenue during the current year as compared with 28% and 44%
respectively, during the previous year. The company's strategy
is to increase its client base, and reduce the risk of depending on a few large
clients. During 1999-2000, the company added 99 new clients.

Organization

During the current year, Infosys invested around 7.47% of the value-added on its
IT infrastructure and 1.14% of the value-added on R&D activities. However,
due to increased value addition by Infosys employees during the current year,
the investment on IT and R&D has decreased in percentage terms.

A young, fast-growing organization requires efficiency in the area of support
services. The sales per support staff, as well as the proportion of support
staff to the total organizational staff, have shown improvements over the
previous year.

The average age of the support employees is 31.14 years, as against the previous
year average age of 30.88 years. This parameter is an indicator of the stability
of support staff.

People

Infosys is in a people-oriented business. The education index of employees
has gone up substantially to 15,544 from 10,731. This reflects the quality of
employees at Infosys. The value-added per software engineer and the value-
added per employee show an increasing trend. Moreover, the efficiency of the
support staff has increased, as seen by the reduction in the proportion of
support staff to total staff. The average age of employees remained same as in
the previous year at 26.14 years.

187
<PAGE>

Additional information to shareholders (contd.)
- --------------------------------------------------------------------------------

Human resources accounting
The dichotomy in accounting between human and non-human capital is fundamental.
The latter is recognized as an asset and is therefore recorded in the books and
reported in the financial statements, whereas, the former is totally ignored by
accountants. The definition of wealth as a source of income inevitably leads to
the recognition of human capital as one of several forms of wealth such as
money, securities and physical capital.

The Lev & Schwartz model has been used by Infosys to compute the value of the
human resources as at March 31, 2000. The evaluation is based on the present
value of the future earnings of the employees and on the following assumptions:

1. Employee compensation includes all direct and indirect benefits earned both
in India and abroad.

2. The incremental earnings based on group/age have been considered.

3. The future earnings have been discounted at 22.29% (previous year - 25.32%),
this rate being the cost of capital for Infosys. Beta has been assumed at
1.48 based on average beta for software stocks in the US.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
As of March 31 2000 1999
- -------------------------------------------------------------------------------------------
No. of Value of No. of Value of
employees human resources employees human resources
(in Rs. lakhs) (in Rs. lakhs)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Production 4,292 1,96,513.84 2,854 769,84.25
Support - technical* 450 8,165.20 389 71,68.97
- others 647 19,062.73 523 104,16.52
- -------------------------------------------------------------------------------------------
5,389 2,23,741.77 3,766 945,69.74
===========================================================================================
</TABLE>
* Note: Support - technical includes trainees, employees in R&D activities and
support personnel allocated to production.

<TABLE>
<CAPTION>
<S> <C> <C>
Number of employees 5,389 3,766
Value of human resources 2.23,741.77 945,69.74
Total revenue 921,46.48 512,73.84
Software revenue 882,32.37 508,89.12
Employee cost 334,55.91 166,05.64
Value-added excluding extraordinary income 723,30.70 374,11.49
Net profits excluding extraordinary income 285,94.86 132,91.54
Total revenue/human resources value (ratio) 0.41 0.54
Total software revenue/human resources value (ratio) 0.39 0.54
Value-added/human resources value (ratio) 0.32 0.40
Value of human resources per employee 41.52 25.11
Employee cost/human resources value (%) 14.95% 17.56%

Return on human resources value (%) 12.78% 14.05%
</TABLE>

<TABLE>
<CAPTION>
Value-added statement in Rs. lakhs
- ----------------------------------------------------------------------------------------------------------------------
Year ending March 31 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Total revenue 921,46.48 512,73.84
Less:
Software development expenses (other than employee costs and
provision for post-sales client support) 129,61.31 93,26.92
Administration expenses (other than provisions) 68,54.47 45,35.43
- ----------------------------------------------------------------------------------------------------------------------
Sub-total 198,15.78 138,62.35
- ----------------------------------------------------------------------------------------------------------------------
Total value-added 723,30.70 374,11.49
======================================================================================================================
Applied to meet
Employee costs 334,55.91 166,05.64
Provision for post-sales client support 209.63 219.19
Provision for bad and doubtful debts and doubtful loans and advances 94.03 39.87
Provision for contingencies 333.00 666.00
Provision for e-inventing the company 350.00 -
Provision for investment in subsidiary - 705.96
Income tax 39,70.00 2,294.00
Dividend (including dividend tax) 33,03.65 13,31.83
Retained in business 306,14.48 155,49.00
- ----------------------------------------------------------------------------------------------------------------------
723,30.70 374,11.49
======================================================================================================================
</TABLE>

The figures above are based on Indian GAAP financial statements.

188
<PAGE>

Additional information to shareholders (contd.)
- --------------------------------------------------------------------------------

Brand valuation

The strength of the invisible

A balance sheet discloses the financial position of a company. The financial
position of an enterprise is influenced by the economic resources it controls,
its financial structure, liquidity and solvency, and its capacity to adapt to
changes in the environment. However, it is becoming increasingly clear that
intangible assets have a significant role in defining the growth of a hi-tech
company. So quite often the search for the added value invariably leads us back
to understanding, evaluating and enhancing the intangible assets of the
business.

From time to time, Infosys has used various models for evaluating assets off the
balance sheet to bring certain advances in financial reporting from the realm of
research to the notice of the shareholders. Such an exercise also helps the
Infosys management in understanding the components that make up goodwill. The
aim of such modeling is to lead the debate on the balance sheet of the next
millennium. The Infosys management cautions the investors that these models are
still the subject of debate among researchers, and using such models and data in
predicting the future of Infosys, or any other company, is risky, and that the
Infosys management is not responsible for any direct, indirect or consequential
losses suffered by any person using these models or data.

Valuing the brand

A brand is much more than a trademark or a logo. It is a "trustmark" - a promise
of quality and authenticity that clients can rely on. Brand equity is the value
addition provided to a product or company by its brand name. It is the financial
premium that a buyer is willing to pay for the brand over a generic or less
worthy brand. Brand equity is not created overnight. It is the result of
relentless pursuit of quality in manufacturing, selling, service, advertising
and marketing. It is the integral of client experiences in dealing with the
company and its services over a sustained period.

Corporate brands and service brands are often perceived to be interchangeable.
Both types of brands aim at the enhancement of confidence and the reduction of
uncertainty in the quality of what the company offers. Therefore, companies rely
heavily on the image and personality they create for their brands, to
communicate these qualities to the marketplace.

The task of measuring brand value is a complex one. Several models are available
for accomplishing this. The most widely used one is the brand-earnings-multiple
model. There are several variants of this model. For example, the Financial
World magazine has used a variant of this model in the July 1996 issue and
valued the Microsoft brand at $ 5.63 billion, while the market capitalization of
the company was around $ 60 billion on the date of brand valuation.

Goodwill is a nebulous accounting concept that is defined as the premium paid to
tangible assets of a company. It is an umbrella concept that transcends
components like brand equity and human resources, and is the result of many
corporate attributes including core competency, market leadership, copyrights,
trademarks, brands, superior earning power, excellence in management,
outstanding work-force, competition, longevity and so on.

The management has adapted the generic brand-earnings-multiple model (given in
the article on Valuation of Trademarks and Brand Names by Michael Birkin in the
book Brand Valuation, edited by John Murphy and published by Business Books
Limited, London) to value its corporate brand "Infosys". The methodology
followed for valuing the brand is as given below:

1. Determine brand earnings

To do this,

. Determine brand profits by eliminating the non-brand profits from the
total profits of the company

. Restate the historical profits at present-day values

. Provide for the remuneration of capital to be used
for purposes other than promotion of the brand

. Adjust for taxes.

2. Determine the brand-strength or brand-earning multiple

Brand-strength multiple is a function of a multitude of factors like
leadership, stability, market, internationality, trend, support and
protection. These factors have been evaluated on a scale of 1 to 100,
internally by the Infosys management, based on the information available
within the company.

190
<PAGE>

3. Compute the brand value by multiplying the brand earnings with the multiple
derived in step 2 above. The computation is as follows:

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------
Year ended March 31, 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PBIT 325,64,85,819 155,85,53,560 65,86,33,079
Less: non-brand income 35,22,69,985 3,46,24,650 2,43,75,414
- ----------------------------------------------------------------------------------------------------------------
Adjusted profit 290,42,15,834 152,39,28,910 63,42,57,665
Inflation compound factor at 8% 1.000 1.087 1.181
Present value of profits for the brand 290,42,15,834 165,65,10,725 74,90,58,302
Weightage factor 3 2 1
Weighted profits 871,26,47,501 331,30,21,451 74,90,58,302
Three-year average weighted profits 212,91,21,209
Remuneration of capital
(5% of average capital employed) 35,19,33,487
Brand-related profits 177,71,87,722
Tax at 38.5% 68,42,17,273
Brand earnings 109,29,70,449
Multiple-applied 48.00
Brand value 5246,00,00,000
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Assumptions

1. Total revenue excluding the other income after adjusting for cost of
earning such income is brand revenue, since this is an exercise to
determine the brand value of Infosys as a company and not for any of
its products or services.

2. Inflation is assumed at 8% per annum.

3. 5% of the average capital employed is used for purposes other than
promotion of the brand.

4. Tax rate is at 38.5%.

5. The earnings multiple is based on the ranking of Infosys against the
industry average based on certain parameters (exercise undertaken
internally and based on available information).

6. The figures above are based on Indian GAAP financial statements.

Thus, it is interesting to note that while Infosys has a market capitalization
of Rs. 59,338.17 crore as on March 31, 2000, the value of the "Infosys" brand
alone is estimated at Rs. 5,246.00 crore.

191
<PAGE>

Additional information to shareholders (contd.)
- -------------------------------------------------------------------------------

Balance sheet (including intangible assets) as at March 31, 2000
in Rs.
- ------------------------------------------------------------------------------
SOURCES OF FUNDS

Shareholders' funds
Share capital 33,07,55,000
Reserves and surplus
Share premium account 318,37,81,595
Capital reserves 7483,42,00,000
Other reserves 481,84,91,653
- ------------------------------------------------------------------------------
8316,72,28,248
==============================================================================

APPLICATION OF FUNDS

Fixed assets
Tangible assets - at cost 284,03,05,143
Less :Depreciation 133,65,20,594
- ------------------------------------------------------------------------------
Net block 150,37,84,549

Add :Capital work-in-progress 56,96,03,505
- ------------------------------------------------------------------------------
207,33,88,054

Intangible assets
Brand equity 5246,00,00,000
Human resources 2237,42,00,000

Investments 13,83,48,469

Current assets, loans and advances
Sundry debtors 136,17,81,253
Cash and bank balances 431,79,35,730
Loans and advances 210,12,77,161
- ------------------------------------------------------------------------------
778,09,94,144
Less :Current liabilities 67,15,06,459
Provisions 98,81,95,960
- ------------------------------------------------------------------------------
Net current assets 612,12,91,725
- ------------------------------------------------------------------------------
8316,72,28,248
==============================================================================

Notes:

1. This balance sheet is provided for the purpose of information only. The
management accepts no responsibility for any direct, indirect or
consequential losses or damages suffered by any person relying on the same.

2. Capital reserves include the value of the "Infosys" brand and human
resources.

3. The figures above are based on Indian GAAP financial statements.

192
<PAGE>

Additional information to shareholders (contd.)
- -------------------------------------------------------------------------------

Economic value-added (EVA) statement

Economic value-added, measures the profitability of a company after taking into
account the cost of all capital including equity. It is the post-tax return on
capital employed (adjusted for the tax shield on debt) minus the cost of capital
employed. It is those companies which earn higher returns than cost of capital,
that create value. Those companies which earn lower returns than cost of capital
are deemed destroyers of shareholder value.

Economic value-added analysis

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Year ended March 31, 2000 1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Average capital employed (Rs. in lakhs) 70,386.70 245,41.61 142,89.67 98,46.75
2. Average debt/total capital (%) - - - 2.16
3. Beta variant 1.48 1.48 1.48 1.48
4. Risk-free debt cost (%) 10.45 12.00 12.15 13.60
5. Market premium 8.00 9.00 10.00 10.00
6. Cost of equity (%) 22.29 25.32 26.95 28.40
7. Cost of debt (post tax) (%) NA NA NA 7.70
8. Weighted average cost of capital (WACC) (%) 22.29 25.32 26.95 27.97
9. PAT as a percentage of average capital employed (%) 40.63 54.16 42.24 33.91

10. Economic value-added (EVA) (in Rs. lakhs)
Operating profit
(PBT excluding extraordinary income) 325,64.86 155,85.54 65,86.33 38,93.03
Less: tax 39,70.00 22,94.00 5,50.00 5,54.00
Less: cost of capital 156,89.19 62,13.94 38,51.07 27,54.34
Economic value-added 129,05.67 70,77.60 21,85.26 5,84.69

11. Enterprise value (in Rs. lakhs)
Market value of equity 59338,17.00 9672,79.95 2963,42.20 731,04.17
Less: cash and cash equivalents 508,37.38 416,65.91 51,14.20 28,77.82
Add: debt - - - -
Enterprise value 58829,79.62 9256,14.04 2912,28.00 702,26.35
12. Ratios
EVA as a percentage of average capital employed (%) 18.34 28.84 15.29 5.94
Enterprise value / average capital employed 83.58 37.72 20.38 7.13
</TABLE>

Notes:

1. The cost of equity is calculated by using the following formula:

return on risk-free investment + expected risk premium on equity
investment adjusted for the average beta variant for software stocks in
the US

2. The figures above are based on Indian GAAP financial statements.
Relationship between PAT as a percentage of average capital employed and
economic value-added (EVA)

[GRAPHIC]

193
<PAGE>

Additional information to shareholders (contd.)
- -------------------------------------------------------------------------------

Ratio analysis for the year ended March 31

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
2000 1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ratios - financial performance
Export revenue / total revenue (%) 94.38 97.57 96.38
Domestic revenue / total revenue (%) 1.37 1.68 2.57
Other income / total revenue (%) 4.25 0.75 1.04
Employee costs / total revenue (%) 36.31 32.39 36.00
Administration expenses / total revenue (%) 7.54 8.92 11.73
Operating expenses / total revenue (%) 58.88 62.60 65.97
Depreciation / total revenue (%) 5.78 7.00 8.74
Tax / total revenue (%) 4.31 4.47 2.11
Tax / PBT (%) 12.19 14.72 8.35
EBIDTA / total revenue (%) 41.12 37.40 34.03
PAT from ordinary activities / total revenue (%) 31.03 25.92 23.18
PAT from ordinary activities / average net worth (%) 40.63 54.16 42.24
ROCE (PBIT / average capital employed) (%) 46.27 63.51 46.09
Return on invested capital (%) 111.68 86.30 57.64
Capital output ratio 1.31 2.09 1.82
Invested capital output ratio 3.82 3.39 2.53
Value-added / total revenue (%) 78.50 72.96 71.36
Enterprise-value / total revenue 63.84 18.06 11.19
Ratios - balance sheet
Debt-equity ratio 0.00 0.00 0.00
Debtors revenue (days) 56 61 57
Current ratio 4.69 6.57 4.78
Cash and equivalents / total assets (%) 61.00 72.51 29.57
Cash and equivalents / total revenue (%) 55.17 81.26 19.64
Depreciation for the year / average gross block (%) 23.50 26.19 25.79
Technology investment / total revenue (%) 5.86 8.55 10.08
Ratios - growth
Growth in export revenue (%) 73.85 99.35 100.30
Growth in total revenue (%) 79.71 96.93 81.05
Operating expenses growth (%) 69.03 86.89 83.20
Operating profit growth (%) 97.59 116.39 77.02
Net profit (from ordinary activities) growth (%) 115.14 120.19 79.22
Per share data
Earnings per share (Rs.) (excluding extraordinary income) 43.23 20.10 9.13
Earnings per share (Rs.) (including extraordinary income) 44.37 20.45 9.13
Cash earnings per share (Rs.) (excluding extraordinary income) 51.27 25.53 12.56
Cash earnings per share (Rs.) (including extraordinary income) 52.42 25.88 12.56
Dividend (%) 90.00 75.00 60.00
Dividend per share (Rs.) 4.50 3.75 3.00
Book value (Rs.) 125.97 86.84 26.14
Dividend payout (%) 11.55 10.02 12.81
Price / earnings, end of year 207.50 72.76 50.66
Price / cash earnings, end of year 174.96 57.29 36.83
Price / book value, end of year 71.21 16.84 17.69
Price / total revenue, end of year 64.40 18.90 11.75
EPS growth (%) 115.07 120.15 79.37
PE / EPS growth 1.80 0.61 0.64
Dividend / adjusted public offer price (%) 76.00 63.00 51.00
Market price / adjusted public offer price (%) 151076 24632 7790
- -----------------------------------------------------------------------------------------------------------------
</TABLE>

Note:

The ratio calculations are based on Indian GAAP and exclude extraordinary
income.

194
<PAGE>

Ratio analysis

[GRAPH]

Ratio analysis is amongst the best tools available to analyze the financial
performance of a company. It allows inter-company and intra-company comparison
and analysis. Ratios also provide a bird's eye view of the financial condition
of the company. The ratios analyzed are based on Indian GAAP.

Financial performance

[GRAPH]

Exports have grown by 74% during the year, as against 99% in the previous year.
Export revenue is from various parts of the globe and is well-segmented.
Segmental analysis of the revenue is provided elsewhere in this report. During
the year ended March 31, 2000, exports constituted 94% of total revenue as
compared to 98% during the previous year. USA continued to be a major market.
Domestic revenue was 1% of total revenue as compared to 2% during the previous
year.

[GRAPH]

Manpower costs were approximately 36% of total revenue as against 32% during the
previous year. Administration expenses were approximately 8% and 9% during the
years ended March 31, 2000 and 1999.

Depreciation was at 6% of total revenue as compared to 7% during the previous
year. Depreciation to average gross block was at 24% as compared to 26% during
the previous year.

Income tax expense was approximately 4% of total revenue during the years ended
March 31, 2000 and 1999. Income tax expense includes a provision of Rs. 24 lakhs
for earlier years.

Profit after tax from ordinary activities was 31% of total revenue as against
26% during the previous year.

Balance sheet analysis

[GRAPH]

The key ratios affecting the performance of the company's financial condition
are discussed below:

1. Return on average net worth

Return on average net worth is 41% as against 54% during the previous year.
As the company is maintaining around 61% of its assets in liquid funds,
where the returns are less, the above figures need further analysis. If the
average liquid assets are adjusted against the average net worth and
revenue earned from liquid assets after tax are adjusted against net
profit, return on invested capital stands at 112% as compared to 86% during
the previous year.

2. Debt-equity ratio

The company funds its short-term and long-term cash requirements primarily
out of internal accruals. As on March 31, 2000, the company was debt-free.

3. Current ratio

Current ratio is 4.69 as compared to 6.57 as on March 31, 1999.

4. Capital output ratio

Capital output ratio is 1.31 compared to 2.09 for the previous year.
Invested capital output ratio is 3.82 compared to 3.39 for the previous
year.

195
<PAGE>

[GRAPH] [GRAPH] [GRAPH]

5. Value-added to total revenue

Value-added to total revenue is 79% compared to 73% for the previous year.
This is primarily due to higher margins. Details are given elsewhere in
this report.

6. Enterprise value to total revenue

Enterprise value to total revenue is 64 times as compared to 18 times in
the previous year.

Per share data

Per share data for the years 2000, 1999 and 1998 have been restated on par value
of Rs. 5 per share, and adjusted for bonus issues during the previous years.
Earnings per share (EPS) is Rs. 43.23 compared to Rs. 20.10 for the previous
year. Cash earnings per share is Rs. 51.27 compared to Rs. 25.53 during the
previous year. This is due to higher cash generation due to higher value
addition. Book value per share has also increased to Rs. 126 as against Rs. 87
on March 31, 1999. Dividend payout ratio for the years ended March 31, 2000 and
1999, was 12% and 10%.

The P/E to EPS growth was approximately 1.80 compared to 0.61 for the previous
year. This represents the valuation of the company in comparison to its growth
in earnings.

Appreciation in the Infosys share price (adjusted for bonus issues in 1994, 1997
and 1999 and stock split of two for one in 2000), over the public issue price,
is more than 151076%. Since the public issue, the market capitalization of the
company has grown to Rs. 59,338 crore, as on March 31, 2000, from the public
issue valuation of Rs. 31.84 crore during February 1993.

[GRAPH] [GRAPH] [GRAPH]

196
<PAGE>

Additional information to shareholders (contd.)
- -------------------------------------------------------------------------------

Statutory obligations

The company has established Software Technology Parks - 100% export-oriented
units - for the development of software at Electronics City, Koramangala, BTM
Layout, J. P. Nagar and Manipal Center at Bangalore as well as at Mangalore,
Pune, Chennai, Bhubaneswar, Hyderabad, Mohali and Mysore (all in India). Certain
capital items purchased for these centers are eligible for 100% customs and
excise duty exemption, subject to fulfillment of stipulated export obligations,
namely, five times the value of duty-free imports of capital goods, or duty-free
purchase of goods subject to excise, over a period of 5 years on a yearly basis.
The export obligation on the wage bill was removed recently.
The non-fulfillment of export obligations may result in penalties as stipulated
by the government which may have an impact on future profitability. The table
showing the export obligation, and the export obligation fulfilled by the
company, on a global basis, for all its STP units together, is given here under:

in Rs.
- --------------------------------------------------------------------------------
Year ended Export Export Excess/ Cumulative
March 31 obligation obligation (shortfall) excess/
fulfilled (shortfall)
- --------------------------------------------------------------------------------

1993 11,07,019 28,25,575 17,18,556 17,18,556
1994 2,69,45,277 8,04,57,379 5,35,12,102 5,52,30,658
1995 7,70,12,146 15,63,56,751 7,93,44,605 13,45,75,263
1996 28,42,90,379 47,64,44,106 19,21,53,727 32,67,28,990
1997 39,67,03,285 68,93,56,837 29,26,53,552 61,93,82,542
1998 73,55,63,113 142,41,27,171 68,85,64,058 130,79,46,600
1999 124,97,81,528 305,51,10,194 180,53,28,666 311,32,75,266
2000 106,87,69,005 493,45,83,400 386,58,14,395 697,90,89,661
- --------------------------------------------------------------------------------
384,01,71,752 1081,92,61,413 697,90,89,661
================================================================================

The total customs duty exempted on both computer software and hardware imported
by the company since 1993 amounts to Rs. 56.28 crore.

The company has fulfilled its export obligations on a global basis for all its
operations under the Software Technology Park Scheme (STP). However, in case of
STPs operationalized during the year, the export obligation will be met in the
future years. On a forward basis, the company's management is confident of
fulfilling all its export obligations.

Taxation

The economic reforms program of the government has enhanced the velocity of
business for companies in India. Being one of the signatories to the World Trade
Organization, India is committed to reducing import tariff levels, thereby
exposing the Indian entrepreneurs to global competition. The present Indian
corporate tax rate is 38.5% (comprising a base rate of 35% and a surcharge of
10% on the base rate). Export profits are entitled to benefits under two schemes
of the government. Under the first scheme (Section 80HHE), the profits of the
company attributable to export activities are deductible from the total taxable
income. Under the second scheme (STP Scheme), the profits attributable to
operations of the company under the 100% export-oriented unit scheme are
entitled to a tax holiday during the first ten years, starting from the date of
commencement of operations.

In the budget for fiscal 2001, the Government of India proposed changes in the
tax rules relating to benefits under Section 80HHE by reducing the amount of
export profits that may be deducted for purposes of computing taxable income, by
an incremental 20% every year over the next five years. The government has also
proposed restricting the eligibility for tax exemption for units operating under
the Software Technology Park Scheme to only those units which are operational on
or before March 31, 2000. The details of the operationalization of various
software development centers and the year to which the exemption under the
Software Technology Park Scheme is available is provided hereunder:

197
<PAGE>

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Location of the STP Year of commencement Exemption Exemption
claimed from available upto
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronics City, Bangalore 1994-1995 1996-1997 2003-2004
Mangalore 1995-1996 1998-1999 2004-2005
Pune 1996-1997 1998-1999 2005-2006
Bhubaneswar 1996-1997 1998-1999 2005-2006
Chennai 1996-1997 1998-1999 2005-2006
Bannerghatta Road, Bangalore 1997-1998 1998-1999 2006-2007
Phase I, Electronics City, Bangalore 1998-1999 1998-1999 2007-2008
Phase II, Electronics City, Bangalore 1999-2000 1999-2000 2008-2009
Hinjewadi, Pune 1999-2000 1999-2000 2008-2009
Mysore 1999-2000 1999-2000 2008-2009
Hyderabad 1999-2000 1999-2000 2008-2009
Mohali 1999-2000 1999-2000 2008-2009
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

The government may reduce or eliminate the tax exemptions provided to Indian
exporters in the near future. This may result in the export profits of the
company being fully taxed, and may adversely affect the post-tax profits of the
company in the future. This is expected to be tackled by increasing the per
capita revenue productivity and moving up the value chain. On a full-tax-paid
basis, without any duty concessions on equipment, hardware and software, the
company's post-tax profits for the relevant years is estimated as given below.

<TABLE>
<CAPTION>
in Rs.
- ----------------------------------------------------------------------------------------------------------------------
Year ended March 31 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Profit before tax (excluding extraordinary items) 325,64,85,819 155,85,53,560 65,86,33,079
Less: Additional depreciation to be 12,74,89,362 8,43,54,215 6,60,77,136
provided on duty waiver for computer equipment
Reduction in other income 3,24,71,664 1,52,47,181 98,21,728
Adjusted profit before tax 309,65,24,793 145,89,52,164 58,27,34,215
Less: Income tax on full tax basis 128,00,91,259 63,07,51,956 24,53,97,021
Adjusted profit after tax 181,64,33,534 82,82,00,208 33,73,37,194
Adjusted earnings per share 1 27.46 12.52 5.10
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

1. The earnings per share for earlier years has been restated on par value
of Rs. 5 per share and adjusted for bonus issues during the previous
years.

2. The figures above are based on Indian GAAP financial statements.
However, it may be noted that this is only an academic exercise. The
company has provided for income tax in full in the respective years and
there is no carried-forward liability on this account.

Segment reporting

The geographical segment information given below is on the basis of markets and
not on the source of revenue.

<TABLE>
<CAPTION>
By geographical area in Rs. lakhs
- ----------------------------------------------------------------------------------------------------------------------
2000 % 1999 % 1998 %
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue
North America 71,327.35 77 41,739.11 82 21,224.46 81
Europe 12,909.74 14 4,753.03 9 2,317.20 9
Rest of the World 5,240.03 6 3,533.26 7 1,552.10 6
India 2,669.36 3 1,248.43 2 942.81 4
- ----------------------------------------------------------------------------------------------------------------------
92,146.48 100 51,273.83 100 26,036.57 100
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

The figures above are based on Indian GAAP financial statements.

Approximately 77% of Infosys revenue comes from North America, which includes
USA and Canada, and the remaining from Europe and other markets. Revenue from
North America increased by 71% during the year, compared with the previous year.
Revenue from the European markets have increased by 172% compared to the
previous year. As a percentage of total revenue, the contribution from European
markets has increased to 14% compared with the previous year. Revenue from India
represented 3% of the total revenue compared with 2% of the total revenue during
the previous year. Revenue from the rest of the world has decreased to around 6%
of the total revenue for the current year from 7% of the total revenue for the
previous year.

198
<PAGE>

By geographical area 2000 By geographical area 1999

[GRAPH APPEARS HERE]

The dependence on a single market for substantial part of the revenue is prone
to risk. Infosys has a de-risking strategy to increase its share of business
from the European, Japanese and other markets, thereby, reducing its predominant
dependence on the American market.

<TABLE>
<CAPTION>
By business segments in Rs. lakhs
- -------------------------------------------------------------------------------------------------------------
2000 % 1999 % 1998 %
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue

Branded services 5,895.00 6 11,321.57 22 6,646.09 26
Products 2,290.12 2 1,444.89 3 1,045.62 4
Software development and maintenance 80,047.26 88 38,122.66 74 18,074.03 69
Treasury 3,914.10 4 384.71 1 270.83 1
- -------------------------------------------------------------------------------------------------------------
92,146.48 100 51,273.83 100 26,036.57 100
=============================================================================================================
</TABLE>

Today, a major part of the company's revenue comes from software development and
maintenance services. Revenue from branded services is around 6% of the total
revenue, compared to around 22% of the total revenue during the previous year.
The company's policy is not to depend on any single business segment for a large
part of its business. In line with this de-risking strategy, the company has
limited its revenue from Year 2000 service to 25% of the total revenue for a
given year. During the year, the contribution from Year 2000 projects is around
6%. Revenue from products were approximately around 2% of the total revenue
compared to 3% during the previous year. Revenue from software development and
maintenance have shown substantial growth at more than 110% compared with the
previous year.
The figures above are based on Indian GAAP financial statements.

By business segments 2000 By business segments - 1999

[GRAPH APPEARS HERE]

199
<PAGE>

Management structure
- --------------------------------------------------------------------------------

[ORGANIZATIONAL CHART]

200
<PAGE>

A historical perspective
- --------------------------------------------------------------------------------

in Rs. crore except per share data, other information and ratios
- ----------------------------------------------------------------------------------------------------------------------
Particulars 1981-82 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
For the year
Revenue 0.12 30.08 57.70 93.41 143.81 260.37 512.74 921.46
Operating profit (PBIDT) - 9.71 19.86 33.95 50.06 88.61 191.75 378.88
Interest - 0.05 - - 0.61 - - -
Depreciation - 0.81 4.60 8.63 10.52 22.75 35.89 53.23
Provision for taxation - 0.76 1.94 4.31 5.25 5.50 22.94 39.70
Profit after tax from
ordinary activities 0.04 8.09 13.32 21.01 33.68 60.36 132.92 285.95
Dividend - 1.17 2.31 3.63 3.99 7.03 12.11 29.76
Return on average
networth (%) 96.88 39.61 29.71 29.53 34.96 42.24 54.16 40.63
Return on average capital
employed (PBIT/ average
capital employed) (%) 96.88 43.14 31.79 33.12 40.16 46.09 63.51 46.27

As at the end of the year
Share capital - 3.35 7.26 7.26 7.26 16.02 33.07 33.08
Reserves and surplus 0.04 25.35 55.20 72.58 105.58 156.94 541.36 800.23
Loan funds - - 6.34 4.26 - - - -
Gross block - 8.27 25.32 46.86 71.29 105.14 168.92 284.03
Capital investment - 7.13 25.23 15.55 27.31 34.41 71.68 159.87
Net current assets 0.06 13.94 32.47 41.17 54.20 97.23 472.96 612.13
Debt-equity ratio - - 0.10 0.05 - - - -
Market capitalization NA 191.02 348.42 355.67 731.04 2,963.42 9,672.80 59,338.17

Per share data
Earnings from ordinary activities
(Rs.)* - 1.22 2.01 3.18 5.09 9.13 20.10 43.23
Dividend per share (Rs.)** - 1.75 2.25 2.50 2.75 3.00 3.75 4.50
Book value (Rs.)* - 4.34 9.44 12.07 17.06 26.15 86.84 125.97

Other information
Number of shareholders 7 6,033 6,526 6,909 6,414 6,622 9,527 46,314

Credit rating from Crisil
Commercial paper - - "P1+" "P1+" "P1+" "P1+" "P1+" "P1+"
Non-convertible debentures - - "AA" "AA" "AA" "AA" "AA" "AA"
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Note: The above figures are based on Indian GAAP.
* Figures for the earlier years have been restated on par value of
Rs. 5 per share and adjusted for bonus issues in previous years.
** Calculated on a per share basis, not adjusted for bonus issues in previous
years.

201
<PAGE>

A historical perspective (contd.)
- --------------------------------------------------------------------------------

[GRAPH] [GRAPH]

Revenue Operating profit
in Rs. crore in Rs. crore

[GRAPH] [GRAPH]

Profit after tax Market capitalization
from ordinary activities in Rs. crore
in Rs. crore

[GRAPH] [GRAPH]

Earning per share Book value
from ordinary activities in Rs.
in Rs.

202
<PAGE>

Infosys Foundation
- --------------------------------------------------------------------------------
A strong sense of responsibility is among the core values of Infosys. This
translates to a commitment to help people and communities, a commitment to
enhance the living conditions of the rural population, and a commitment to
improve education.

In fiscal 2000, Infosys Foundation kept up its commitment to the rural poor, the
underprivileged and to the cause of education. Besides, it also helped promote
Indian arts and culture.

The following are some of the projects undertaken by the Infosys Foundation
during the year.

1. Initiatives for the rural poor and the underprivileged

Construction of an orphanage commenced at the Maharshi Karve Stree
Shikshana Samsthe, Karvenagar, Pune.

Construction of an orphanage at Kalahandi, Orissa is progressing
satisfactorily and is expected to be completed by December 2000.

The cyclone in Orissa devastated the state and left several hundreds
homeless. Based on inputs from Infosys' office in Bhubaneswar, the
Foundation released funds for the construction of shelters.

The Foundation has worked hard to rehabilitate destitutes in Athani and
Mysore. The Foundation has also released a sum of Rs. 30 lakhs for the
upliftment of destitutes in four states - Karnataka, Tamil Nadu, Orissa and
Maharashtra. Destitutes, tribals, platform-dwelling children and blind
students are the beneficiaries of this ongoing program. A substantial sum
has been spent in distributing sewing machines to destitutes in Bangalore,
Gulbarga and Belgaum.

The Foundation also contributed substantially to the Bangalore Hospice
Trust which works to ease the suffering of terminally ill cancer patients.

2. Healthcare for the poor

The 6000 sq. ft. Mahabodhi Casualty and Burns Ward at Victoria Hospital,
Bangalore was air-conditioned. The new ward was inaugurated by the then
Karnataka Governor H. E. Kurshed Alam Khan. This hospital, run by the
Government of Karnataka, caters to poor patients from all over the state.

Ultrasound scanners were donated to the Bowring Hospital, Bangalore and the
Ramakrishna Sevashram, Ponnampet.

Two ambulances were donated this year -one to Kalahandi in Orissa and the
other to the Swami Shivananda Memorial Trust at Pattamadai in Tamil Nadu.

A hearse was donated to Gadag District in Karnataka.

Construction of a dharmashala - a free ward - for cancer patients availing
treatment at the Kidwai Memorial Institute of Oncology was launched during
the year.

An Iris Green Laser Photocoagulator was donated to The Lions Club at Miraj,
which helps destitutes get medical treatment.

3. Education

More often than not, rural children do not have access to high-quality
facilities for education. The Foundation believes that every school should
have its own library. The Shalegondu Granthalaya program has been extremely
successful since it was started in 1997-98. Zealous volunteers in
Maharashtra and Orissa have been identified to help coordinate the project.
The 2222nd Library was recently set up by the Foundation - which also
celebrated the setting up of libraries in more than 2400 schools across the
country.

Most rural schools can barely boast of a blackboard. The Infosys Foundation
and the National Education Society have, in the course of the year, begun
setting up the first Infosys Science Center at Hosur Village near
Gauribidanur in Kolar district.

The Foundation has also donated Rs. 5 lakhs for the construction of a
Shishuvihar for the Vidyananda Gurukula school which works to improve the
lot of destitute children. A number of scholarships have been awarded to
children coming from economically backward families.

4. Arts and culture

The Infosys Foundation strongly believes in preserving those arts and
cultural activities of India which are under threat of fading out. A puppet
show was conducted in January 2000 to help promote and preserve this dying
art. Besides this, the Foundation was also involved in promoting the art of
Gamaka. Kavya Pushpanjali, a Gamaka contest was conducted by the Gamaka
Kala Parishat at the Gayana Samaja in Bangalore in association with the
Foundation. The Foundation also helped the Dr. Kota Shivram Karanth
Memorial trust promote Kannada literature. Yoga, the art of living a
healthy life, is also being promoted by the Foundation.

203
<PAGE>

Bangalore G. R. Nayak Sudha N. Murty N. S. Raghavan
April 11, 2000 Trustee Trustee Trustee

204
<PAGE>

Financial statements
prepared in substantial compliance
with GAAP requirements of various countries
- --------------------------------------------------------------------------------

[GRAPHIC]

Thanks to the opening up of the financial sectors in most nations and the
integration of the world economy, investors today have a wide choice of capital
markets to invest in across the globe. Thus, the global investor must have
access to information about the performance of any company, in any market that
he/she chooses to invest in. Advances in technology provide desktop access to
all companies that have a desire to source capital from the global capital pool.
However, differences in language, accounting practices and reporting in various
countries make a performance evaluation of the investee company rather investor-
unfriendly.

The strength of a global company is its ability to access capital at the lowest
cost from investors globally. Companies that are successful in sourcing global
capital are very global-investor-friendly. Such companies study the needs of
global investors and publish the company's financial information in a language
and form which is understood by investors in their language and as per their
standards. In the process, financial statistics may have to be restated and
financial terminology may need to be translated. In a globalized world,
financial information of such successful corporations moves rapidly across
national boundaries. Indeed, a key issue in international financial analysis is
the restatement and translation of financial reports that describe operations
conducted in one environment, but which are the subject of review and analysis
in another.

As an investor-friendly company committed to high-quality of disclosure to our
global investors, we have voluntarily reformatted our financial statements to be
in substantial compliance with the local GAAP requirements of 6 countries,
besides that of USA and India (which information appears separately elsewhere).
We have also translated the financial reports into the national language of
these countries (where applicable). The countries are - Australia, Canada,
France, Germany, the United Kingdom and Japan. These reports are unaudited.

These unaudited consolidated profit and loss accounts and balance sheets have
been prepared by converting the various financial parameters reported in the
audited income statement of Infosys (according to the Indian GAAP), including a
consolidation of subsidiary financial information, into respective currencies.
In addition, adjustments have been made for differences in accounting principles
and in formats, between India and these countries, if any.

In the event of a conflict in interpretation, the audited Indian version of the
financial statements should be considered. The Infosys management cautions the
investors that these reports are provided only as additional information to our
global investors. Using such reports for predicting the future of Infosys, or
any other company, is risky. The Infosys management is not responsible for any
direct, indirect or consequential losses suffered by any person using these
financial statements or data.

205
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Australia
- --------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with Australian GAAP
(Unaudited):

Balance sheet

<TABLE>
<CAPTION>
Infosys Technologies Limited as at March 31 Australian dollars
- -----------------------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash 193,445,114 156,462,296
Receivables 51,818,160 31,738,206
Investments - -
Other 14,726,981 7,563,247
- -----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 259,990,255 195,763,749
- -----------------------------------------------------------------------------------------------------------------

NON-CURRENT ASSETS
Receivables - -
Investments 5,264,401 2,934,440
Property, plant and equipment 78,896,045 37,820,474
Intangibles - -
Other 15,696,107 7,773,479
- -----------------------------------------------------------------------------------------------------------------
TOTAL NON-CURRENT ASSETS 99,856,553 48,528,393
- -----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 359,846,808 244,292,142
=================================================================================================================

CURRENT LIABILITIES
Trade creditors 1,620,633 119,165
Unearned revenues 6,684,626 7,276,962
Provisions 31,278,580 13,321,368
- -----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 39,583,839 20,717,495
- -----------------------------------------------------------------------------------------------------------------

NON-CURRENT LIABILITIES
Borrowings - -
Provisions - -
- -----------------------------------------------------------------------------------------------------------------
TOTAL NON-CURRENT LIABILITIES - -

TOTAL LIABILITIES 39,583,839 20,717,495
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS 320,262,969 223,574,647
=================================================================================================================

SHAREHOLDERS' EQUITY
Share capital 12,990,002 12,987,854
Reserves 307,272,967 210,586,793
Retained profits - -
Shareholders' equity attributable to members of the company 320,262,969 223,574,647
Convertible preferred stock - -
- -----------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 320,262,969 223,574,647
=================================================================================================================
</TABLE>

206
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Australia
- --------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with Australian GAAP
(Unaudited):

Profit and loss account

<TABLE>
<CAPTION>
Infosys Technologies Limited for the year ended March 31 Australian dollars
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operating revenue 332,658,775 196,753,013
Operating profit before abnormal items and Income tax 116,864,622 65,070,961
Abnormal items - 1,007,448
- ---------------------------------------------------------------------------------------------------------------
Operating profit before income tax 116,864,622 66,078,409
- ---------------------------------------------------------------------------------------------------------------

Income tax expense/ (benefit) attributable to
Operating profit 13,001,320 7,787,615
Abnormal items - -
- ---------------------------------------------------------------------------------------------------------------
Income tax expense/ (benefit) for the year 13,001,320 7,787,615
- ---------------------------------------------------------------------------------------------------------------
Operating profit after income tax 103,863,302 58,290,794
Outside equity interests in operating profit after income tax - 3,364,954

Operating profit after income tax attributable to
members of Infosys Technologies Limited 103,863,302 54,925,840
Dividend on preferred stock - -
Retained profits at the beginning of the financial year - -
Aggregate of amounts transferred from reserves - -
- ---------------------------------------------------------------------------------------------------------------
Total available for appropriation 103,863,302 54,925,840
Dividends provided for or paid 11,926,546 5,110,641
Aggregate of amounts transferred to reserves 91,936,756 49,815,199
- ---------------------------------------------------------------------------------------------------------------
Retained profits at the end of the financial year - -
- ---------------------------------------------------------------------------------------------------------------

Basic earnings per share 1.58 0.95
Diluted earnings per share 1.58 0.95
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

Notes:

1. The company's financial statements are prepared in Indian rupees, the
reporting currency. These financial statements have been prepared by
translating revenue and expenditure at average rate during the year;
current assets, current liabilities, Property, plant and equipment,
long-term borrowings at year-end rate; and accretions to stockholders'
equity at an average rate for the year. The difference arising on
translation is shown under Reserves.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
2. Exchange rates used: 2000 1999
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Average exchange rate used 1 AUD = Rs. 27.70 1 AUD = Rs. 26.06
Closing exchange rate used 1 AUD = Rs. 26.28 1 AUD = Rs. 26.63
- ----------------------------------------------------------------------------------------------------------------

3. Reconciliation between the Indian GAAP and the Australian GAAP statements: Australian dollars
- ----------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------
Net income as per Indian GAAP in Rs. 2,935,156,665 1,352,607,663
Net income as per Indian GAAP in A$ 105,962,334 51,903,594
Less : Net income of subsidiary included on consolidation - (3,364,954)
Provision for gratuity (1,166,339) -
Extra-ordinary income (2,731,799) -
Expenses against provisions for contingencies
and e-inventing the company (1,997,407) -

Add : Provision for deferred taxes 1,330,810 1,122,592
Provision for contingencies and e-inventing the company 2,465,703 2,555,641
Provision for investment in subsidiary - 2,708,967
Net income as per Australian GAAP 103,863,302 54,925,840
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

207
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Canada

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with Canadian GAAP
(Unaudited)

Balance sheet Canadian dollars
- ----------------------------------------------------------------------------------------------------------------------
March 31 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents 169,457,920 150,854,125
Accounts receivable 45,392,708 30,600,595
Inventories - -
Prepaid expenses and other assets 12,900,836 7,292,153
- ----------------------------------------------------------------------------------------------------------------------
227,751,464 188,746,873

Property, plant and equipment 69,112,935 36,464,852
Investments 4,611,616 2,829,259
Deferred taxes 3,729,640 2,617,158
Other assets 10,020,149 4,877,691
- ----------------------------------------------------------------------------------------------------------------------
315,225,804 235,535,833
======================================================================================================================

Liabilities and shareholders' equity
Current liabilities
Accounts payable 1,419,675 114,894
Accrued liabilities 26,781,318 12,815,626
Current portion of long-term obligations - -
Advances received from clients 618,718 28,257
Unearned revenue 5,855,732 7,016,129
- ----------------------------------------------------------------------------------------------------------------------
34,675,443 19,974,906

Long-term obligations - -
- ----------------------------------------------------------------------------------------------------------------------
34,675,443 19,974,906

Minority interest - -
Share capital
Common shares - 66,150,700 outstanding 12,363,410 12,361,388
(1999 - 66,138,800 outstanding)
Additional paid-in capital 116,801,747 117,349,958
Accumulated foreign currency translation adjustment (25,621,031) (4,624,266)
Retained earnings 177,006,235 90,473,847
- ----------------------------------------------------------------------------------------------------------------------
315,225,804 235,535,833
======================================================================================================================
</TABLE>

208
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Canada

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with Canadian GAAP
(Unaudited)

Statement of earnings and retained earnings Canadian dollars
- ----------------------------------------------------------------------------------------------------------------------
Year ended March 31 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Sales 299,804,179 183,186,165
Cost of sales 163,705,072 99,014,126
- ----------------------------------------------------------------------------------------------------------------------
Gross margin 136,099,107 84,172,039

EXPENSES
Selling, general and administration expenses 39,403,933 24,514,825
- ----------------------------------------------------------------------------------------------------------------------
Income from operations 96,695,174 59,657,214
Equity in loss of deconsolidated subsidiary - 3,156,612
Interest and other income 13,299,731 2,329,947
Interest expense - -
- ----------------------------------------------------------------------------------------------------------------------
Earnings before income taxes 109,994,905 58,830,549
Provision for income taxes 12,237,056 7,305,444
Dividend on preferred stock - -
Net earnings 97,757,849 51,525,105
Cash dividend declared 11,225,461 4,794,216
- ----------------------------------------------------------------------------------------------------------------------
86,532,388 46,730,889
Retained earnings, beginning of the year 90,473,847 42,177,401
Adjustment on deconsolidation of subsidiary - 7,331,288
Capitalization of profits - (5,765,731)
Retained earnings, end of the year 177,006,235 90,473,847

EARNINGS PER SHARE
Net earnings
Basic 1.49 0.84
Fully diluted 1.48 0.84
Weighted average number of shares
Basic 65,659,625 61,378,850
Fully diluted 65,863,990 61,507,380
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Notes:
1. The company's financial statements are prepared in Indian rupees, the
reporting currency. These financial statements have been prepared by
translating revenue and expenditure at an average rate for the year;
current assets, current liabilities, Property, plant and equipment,
long-term borrowings at year-end rate; and accretions to stockholders'
equity at an average rate for the year. The difference arising on
translation is shown under Accumulated foreign currency translation
adjustment.

2. Exchange rate used:

Average exchange rate used 1 CAD = Rs. 29.43 1 CAD = Rs. 27.78
Closing exchange rate used 1 CAD = Rs. 30.00 1 CAD = Rs. 27.62

3. Reconciliation between the Indian GAAP and the Canadian GAAP statements:

<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income as per Indian GAAP in Rs. 2,935,156,665 1,352,607,663
Net income as per Indian GAAP in Canadian dollars 99,733,492 48,689,981
Less : Net income/ (loss) of subsidiary included on consolidation - (3,156,612)
Provision for gratuity (1,097,778) -
Extra-ordinary income (2,571,215) -
Expenses against provisions for contingencies
And e-inventing the company (1,879,992) -
Add : Provision for deferred taxes 1,252,580 1,053,087
Provision for contingencies 2,320,762 2,397,408
Provision for investment in subsidiary - 2,541,241
Net earnings as per Canadian GAAP 97,757,849 51,525,105
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

209
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - France

- --------------------------------------------------------------------------------

Etats financiers prepares selon les principes comptables francais (non verifies)

<TABLE>
<CAPTION>
Compte de resultat FRF
- ----------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Produits d'exploitation
Vente de marchandises achetees - -
Production vendues (biens et services) 1,307,146,219 709,750,581
- ----------------------------------------------------------------------------------------------------------------------
Montant net du chiffres d'affaires 1,307,146,219 709,750,581
- ----------------------------------------------------------------------------------------------------------------------
Production stockee - -
Production immobilisee - -
Subventions d'exploitation - -
Reprises sur amortissements, provisions et transfert de charges - -
Autres produits - -
- ----------------------------------------------------------------------------------------------------------------------
Total des produits d'exploitation (I) 1,307,146,219 709,750,581
- ----------------------------------------------------------------------------------------------------------------------
Charges d'exploitation
Achat de marchandises 4,214,578 2,485,340
Variation de stocks des biens achetes - -
Achat de matieres premieres et autres approvisionnements - -
Variations de stocks de matieres premieres et approvisionnements - -
Autres achats et charges externes - -
Salaires et traitements 495,643,041 231,598,931
Dotations aux amortissements et aux provisions - -
Sur immobilisations : Dotation aux amortissements 78,863,317 50,059,983
Sur immobilisations : Dotations aux provisions - -
Sur actif circulant : Dotations aux provisions - -
Pour risques et charges: dotation sur provisions - -
Autres charges 306,834,328 194,465,826
Total des charges d'exploitation (II) 885,555,264 478,610,080
- ----------------------------------------------------------------------------------------------------------------------
Resultat d'exploitation (I-II) 421,590,955 231,140,501
- ----------------------------------------------------------------------------------------------------------------------
Quotes-parts de resultat sur operations faites en commun :
Benefice attribue ou perte transferee (III) - -
Perte attribuee ou benefices transferes (IV) - -
Produits financieres
De participations - -
D'autres valeurs mobilieres - -
Interets et produits similaires 57,986,829 5,365,668
Reprises sur provisions et transfert de charges - -
Differences positives de change - -
Produits nets sur cessions de valeurs immobilieres de placements - -
- ----------------------------------------------------------------------------------------------------------------------
Total des produits financiers (V) 57,986,829 5,365,668
- ----------------------------------------------------------------------------------------------------------------------
Charges financieres
Dotations aux amortissements et aux provisions - -
Interet et charges similaires - -
Differences negatives de change - -
Charges nettes sur cessions de valeurs mobilieres de placements - -
- ----------------------------------------------------------------------------------------------------------------------
Total des charges financieres (VI) - -
- ----------------------------------------------------------------------------------------------------------------------
Resultat financier (V-VI) 57,986,829 5,365,668
Resultat courant avant impots (I-II + III-IV + V-VI) 479,577,784 236,506,169
</TABLE>

210
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - France

<TABLE>

- ---------------------------------------------------------------------------------------------------------------
FRF
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
</TABLE>

211
<PAGE>

<TABLE>
<S> <C> <C>
Produits exceptionnels
Sur operations de gestion - 3,661,660
Sue operations en capital - -
Reprises sur provisions et transfert de charges - -
- ----------------------------------------------------------------------------------------------------------------------
Total des produits exceptionnels (VII) - 3,661,660
- ----------------------------------------------------------------------------------------------------------------------

Charges exceptionnelles
Sur operations de gestion - -
Sur operations en capital - -
Dotations aux amortissements et aux provisions - -
- ----------------------------------------------------------------------------------------------------------------------
Total des charges exceptionnelles (VIII) - -
- ----------------------------------------------------------------------------------------------------------------------

Resultat exceptionnel (VII-VIII) - 3,661,660
Participation des salaries aux fruits de l'expansion (IX) - -
Impot sur les benefices (X) 53,353,565 28,304,776
Total des produits (I + III + V + VII) 1,365,133,048 718,777,909
Total des charges (II + IV + VI + VII + IX + X) 938,908,829 506,914,856
Dividendes preciputaires - -
Participation a la perte de filiale deconsolidees - 12,230,222
Benefice ou perte 426,224,219 199,632,831
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Notes:

1. Conversion en monnaie etrangere
Les etats financiers de la societe sont prepares en roupies indiennes. Ces
etats financiers ont ete prepares par la conversion des revenues et des
depenses au taux moyen mensuel pendant l'annee; les actif et passif
circulants, les immobilisations, le materiel, les emprunts a long terme et
accroissements des fonds propres sont calcules au taux a la fin de l'annee
et les placements a long terme sont calcules selon le taux au moment du
placement. La difference provenant des conversions se trouve sous la
rubrique Reserves.

<TABLE>
<S> <C> <C>
2. Taux de change utilise
Taux moyen de change utilise 1 FRF= Rs. 6.75 1 FRF=Rs. 7.17
Taux de change de cloture utilise 1 FRF= Rs. 6.32 1 FRF=Rs. 6.84
</TABLE>

3. Rapprochement entre les etats financiers etablis selon les principes
comptables indiens et francais FRF

212
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - France
- --------------------------------------------------------------------------------

Etats financiers prepares selon les principes comptables francais (non verifies)
Bilan le 31 mars, FRF

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------
Actif Brut Amortissements Net Net
ou Provisions
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Actif immobilise
Immobilisations incorporelles
Frais d'etablissements - - - -
Frais de recherche et de developpement - - - -
Fonds comercial - - - -
Autres - - - -
Avance et acomptes - - - -
- ----------------------------------------------------------------------------------------------------------------------
- - - -
Immobilisations corporelles
Terrains 33,347,003 - 33,347,003 15,900,607
Constructions 93,197,823 8,277,568 84,920,255 38,660,769
Installations techniques, materiel 259,488,426 164,497,195 94,991,231 62,281,869
Autres 63,382,119 38,700,014 24,682,105 8,642,633
Immobilisations corporelles en cours 90,127,137 - 90,127,137 21,759,620
Avances et acomptes
- ----------------------------------------------------------------------------------------------------------------------
539,542,508 211,474,777 328,067,731 147,245,498
Immobilisations financieres
Placements evalues selon la participation - - - -
Autres participations - - - -
Creances rattachees a des participations - - - -
Autres titres immobilises 21,890,581 - 21,890,581 11,424,582
Prets - - - -
Autres - - - -
- ----------------------------------------------------------------------------------------------------------------------
21,890,581 - 21,890,581 11,424,582
- ----------------------------------------------------------------------------------------------------------------------
Total de l'actif (I) 561,433,089 211,474,777 349,958,312 158,670,080
======================================================================================================================

Actif circulant
Stocks et en-cours
Matieres premieres et autres
Approvisionnements - - - -
En cours de production (biens) - - - -
En cours de production (services) - - - -
Produits intermediaires et finis - - - -
Marchandises - - - -
- ----------------------------------------------------------------------------------------------------------------------
- - - -
Prets aux employes 82,845,865 - 82,845,865 31,915,040
Creances
Creances clients et comptes rattaches - - - -
Autres 218,972,738 3,501,020 215,471,718 123,565,559
Capital souscrit-appele, non versel - - - -
Valeurs immobilieres de placement - - - -
Disponibilites 804,388,860 - 804,388,860 609,150,723
- ----------------------------------------------------------------------------------------------------------------------
1,023,361,598 3,501,020 1,019,860,578 732,716,282
Charges constatees d'avance 25,956,280 - 25,956,280 17,226,932
Total d'actif circulant (II) 1,132,163,743 3,501,020 1,128,662,723 781,858,254
Impots et taxes a repartir sur
plusieurs exercices (III) 17,703,987 - 17,703,987 10,568,116
Primes de remboursement des obligations (IV) - - - -
Ecart de conversion actif (V) - - - -
- ----------------------------------------------------------------------------------------------------------------------
Total General (I + II + III + IV + V) 1,711,300,819 214,975,797 1,496,325,022 951,096,450
======================================================================================================================
</TABLE>

213
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - France

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
FRF
- ----------------------------------------------------------------------------------------------------------------------
Passif 2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Capitaux propres
Capital social 49,251,619 49,242,804
Primes d'emission (de fusion, d'apport) 452,306,585 454,696,785
Ecart de reevaluation
Reserves (benefices non distribues)
Reserve legale
Reserve statuaires
Reserves reglementees - -
Autres 807,197,531 430,296,053
Report a nouveau - -
Resultat de l'exercice (Benefice ou perte) - -
Subventions d'investissement - -
Provisions reglementees - -
- ----------------------------------------------------------------------------------------------------------------------
Total des capitaux propres (I) 1,308,755,735 934,235,642
Autres capitaux propres
Benefice provenant de participation subordonnee - -
Avances et acomptes conditionnels - -
- ----------------------------------------------------------------------------------------------------------------------
Total des autres capitaux propres - -
Interets minoritaires - -
Provisions
Provision pour risques - -
Provisions pour charges - -
- ----------------------------------------------------------------------------------------------------------------------
Total des provisions (II) - -
Dettes
Dettes financieres
Emprunts obligatoires convertibles - -
Autres emprunts obligatoires - -
Emprunts et dettes aupres d'etablissements
de credit - -
Emprunts et dettes financiers divers - -
Avances et acomptes recus sur commande en cours 30,733,151 28,445,313
Dettes d'exploitation
Dettes fournisseurs et comptes rattaches 6,738,962 463,942
Dettes ficcales et sociales - -
Autres dettes
Dettes sur immobilisations et comptes
Rattaches - -
Autres dettes 127,126,510 51,749,648
Produits constates d'avance - -
- ----------------------------------------------------------------------------------------------------------------------
Total des dettes (III) 164,598,623 80,658,902
Interet minoritaire - -
Ecart de conversion passif (IV) 22,970,664 (63,798,094)
- ----------------------------------------------------------------------------------------------------------------------
Total General (I + II + III + IV) 1,496,325,022 951,096,450
======================================================================================================================
</TABLE>

214
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Germany
- --------------------------------------------------------------------------------

Nach den allgemeingultigen Buchfuhrungsmethoden (GAAP) erfa(beta)ter
Finanzbericht (ungepruft):

<TABLE>
<CAPTION>
Bilanz 31. Marz Zahlen in DM
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Aktiva
Immaterielle Werte - -
Reale Aktiva 97,893,676 43,468,244
Finanzielle Aktiva 6,532,033 3,372,643
- ---------------------------------------------------------------------------------------------------------------
Feste Anlagen 104,425,709 46,840,887
- ---------------------------------------------------------------------------------------------------------------

Inventare - -
Au(beta)enstande 64,295,621 36,477,705
Andere Forderungen und vermischte Aktiva 18,273,138 8,692,674
Marktbare/verkaufbare Wertschriften und Scheine - -
Flussige Mittel 240,025,382 179,826,972
- ---------------------------------------------------------------------------------------------------------------
Umlaufvermogen 322,594,141 224,997,351
- ---------------------------------------------------------------------------------------------------------------

Vorbezahlte Ausgaben und Steuerruckstellung 19,475,622 8,934,300
- ---------------------------------------------------------------------------------------------------------------
Aktiva Gesamt 446,495,472 280,772,538
===============================================================================================================

Stammaktien und Verbindlichkeiten
Zeichnungskapital 14,554,818 14,552,189
Kapitalreserven 133,930,344 134,643,284
Einkunftereserven 248,894,952 107,765,806
- ---------------------------------------------------------------------------------------------------------------
Stammaktien 397,380,114 256,961,279
- ---------------------------------------------------------------------------------------------------------------

Einlosbare Vorzugsaktien - -
Gewinnbeteiligungsscheine
(Nominale/Namensscheine) - -
Ruckstellungen/Vorbehalte fur Rente - -
andere Vorbehalte und Verbindlichkeiten 37,933,878 15,276,979

- ---------------------------------------------------------------------------------------------------------------
Vorbehalte und Verbindlichkeiten 37,933,878 15,276,979
- ---------------------------------------------------------------------------------------------------------------

Geschaftsschulden 2,010,870 136,960
Andere Verbindlichkeiten 876,372 33,683

- ---------------------------------------------------------------------------------------------------------------
Passiva 2,887,242 170,643
- ---------------------------------------------------------------------------------------------------------------
Transitorische Passiva 8,294,238 8,363,637
- ---------------------------------------------------------------------------------------------------------------
Passiva Gesamt 446,495,472 280,772,538
===============================================================================================================
</TABLE>

215
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Germany

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Nach den allgemeingultigen Buchfuhrungsmethoden (GAAP) erfa(beta)ter Finanzbericht (ungepruft):

Gewinn und verlustrechnung fur das geschaftsjahr beendet am 31. Marz Zahlen in DM
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Nettoverkaufe 389,891,161 210,808,271
Verkaufskosten 212,896,168 113,944,176
- ---------------------------------------------------------------------------------------------------------------
Bruttogewinn 176,994,993 96,864,095
Verkaufs-, Verwaltungskosten 51,244,267 28,211,344
und allgemeine Kosten
Andere Betriebseinkommen - -
Andere Betriebskosten - -
- ---------------------------------------------------------------------------------------------------------------
Betriebsgewinn 125,750,726 68,652,751
Finanzartikel 17,296,116 1,593,697
- ---------------------------------------------------------------------------------------------------------------
Ergebnisse der gewohnlichen Aktivitaten 143,046,842 70,246,448
Au(beta)erordentliches Einkommen - 1,087,577
- ---------------------------------------------------------------------------------------------------------------
Einkommen vor der Steuerung 143,046,842 71,334,025
Einkommenssteuer 15,914,121 8,407,011
Dividende zu Vorzugsaktien - -
Eigenkapital in Verlust der dekonsolidierten Tochtergesellschaft - 3,632,589
- ---------------------------------------------------------------------------------------------------------------
Nettoeinkommen 127,132,721 59,294,425
- ---------------------------------------------------------------------------------------------------------------
Zuordnung zu Reserven fur Einkunfte 112,534,165 53,777,303
Dividenden an Aktienbesitzer 14,598,556 5,517,121
Nicht zugeordnetes Gewinn - -
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

Anmerkungen:

1. Fremdwahrungumsetzung/-konvertierung
Die Rechnung der Firma wird in indische Rupien dargestellt, welche die
Wahrung fur Berichte ist. Diese Finanzauszuge werden nach der Umsetzung der
Einkunfte und Ausgaben um den durchschnittlichen Satz wahrend des Jahres,
bereitgestellt. Umlaufvermogen, kurzfristige Verbindlichkeiten, Eigentum,
Werke und Anlagen, langfristige Verpflichtungen und Ablagerungen an den
Stammaktien zum Zinssatz, der am Jahresende besteht und langfristige
Anlagen zum Zinssatz, der zur Zeit des Investitions besteht. Der
Unterschied nach der Umsetzung wird unter Reserven gezeigt.

2. Verwendete wechselkurse

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Durchschnittswechselkurs 1 DM = Rs. 22.63 1 DM = Rs. 24.14
Schlu(beta)wechselkurs 1 DM = Rs. 21.18 1 DM = Rs. 23.17
- -----------------------------------------------------------------------------------------------------------------------------

3. Beilegung zwischen indischen GAAP und deutschen GAAP Auszuge Zahlen in DM
- -----------------------------------------------------------------------------------------------------------------------------
2000 1999
- -----------------------------------------------------------------------------------------------------------------------------
Nettoeinkommen nach indischen GAAP in Rupien 2,935,156,665 1,352,607,663
Nettoeinkommen nach indischen GAAP in DM 129,702,018 56,031,800
Abzuglich: Nettoeinkommen/ (Verlust) der
Tochtergesellschaft eingeschlossen Konsolidierung - (3,632,589)
Weniger: Bereitstellung fur Gratifikation (1,427,645) -
Weniger: Au(beta)erordentliches Einkommen (3,343,829) -
Weniger: Aufwendungen gegen Bereitstellungen fur Eventualitat und
das e-Erfindung der Firma (2,444,904) -
Hinzufugen: Vorbehalte fur Steuerruckstellung 1,628,963 1,211,879
Hinzufugen: Bereitstellung fur Eventualitat und das e- Erfindung der Firma 3,018,118 2,758,907
Hinzufugen: Vorbehalte fur Investition in Tochtergesellschaft - 2,924,428
Gewinn des Geschaftsjahres nach dem deutschen GAAP 127,132,721 59,294,425
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

216
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - Japan
- --------------------------------------------------------------------------------

217
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - United Kingdom
- --------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with the UK GAAP
(Unaudited):

<TABLE>
<CAPTION>
Balance sheet as at March 31 (pound)
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Fixed assets
Tangible fixed assets 29,828,630 14,907,626
Investments 1,990,339 1,156,663
- ---------------------------------------------------------------------------------------------------------------
31,818,969 16,064,289
- ---------------------------------------------------------------------------------------------------------------

Current assets
Stocks - -
Debtors 19,591,156 12,510,190
Cash at bank and in hand 73,136,780 61,672,453
Others - advances and prepayments 9,892,527 2,981,191
Deferred tax asset 1,609,685 1,069,951
- ---------------------------------------------------------------------------------------------------------------
104,230,148 78,233,785

Creditors - amounts falling due within a year
Creditors 612,721 46,971
Dividend 2,895,846 1,338,573
Provisions and other liabilities 11,457,097 6,780,631
- ---------------------------------------------------------------------------------------------------------------
14,965,664 8,166,175
- ---------------------------------------------------------------------------------------------------------------
Net current assets 89,264,484 70,067,610
Loans and advances more than one year - 1,994,106
- ---------------------------------------------------------------------------------------------------------------
Total assets less current liabilities 121,083,453 88,126,005
- ---------------------------------------------------------------------------------------------------------------

Capital and reserves
Called-up share capital 5,249,675 5,248,820
Share premium account 47,895,413 48,127,222
Retained profits 67,938,365 34,749,963
- ---------------------------------------------------------------------------------------------------------------
Equity shareholders' funds 121,083,453 88,126,005

Convertible preferred stock - -
- ---------------------------------------------------------------------------------------------------------------
121,083,453 88,126,005
===============================================================================================================
</TABLE>

218
<PAGE>

Financial statements prepared in substantial compliance with GAAP requirements
of various countries - United Kingdom
- -------------------------------------------------------------------------------

Financial statements prepared in substantial compliance with the UK GAAP
(Unaudited):

<TABLE>
<CAPTION>
Profit and loss account for the years ended March 31 (pound)
- ---------------------------------------------------------------------------------------------------------------
2000 1999
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Turnover 126,770,646 73,295,573
Operating expenses 85,883,592 49,425,814
Operating profit 40,887,054 23,869,759
Interest receivable 5,623,722 554,110
Interest payable - -
Net interest (payable)/receivable 5,623,722 554,110
- ---------------------------------------------------------------------------------------------------------------
Profit on ordinary activities before taxation and exceptional items 46,510,776 24,423,869
Exceptional items - 378,138
Profit on ordinary activities before taxation 46,510,776 24,802,007
Taxation on profit on ordinary activities 5,174,376 2,923,019
Profit on ordinary activities after taxation 41,336,400 21,878,988
Dividend on preferred stock - -
Equity in loss of deconsolidated subsidiary - 1,263,009
Profit for the financial year 41,336,400 20,615,979
Dividends 4,746,628 1,918,239
Retained profits for the financial year 36,589,772 18,697,740
Earnings per ordinary share:
Undiluted 0.63 0.34
Diluted 0.63 0.34
- ---------------------------------------------------------------------------------------------------------------
</TABLE>

Notes:

1. The company's financial statements are prepared in Indian rupees, the
reporting currency. These financial statements have been prepared by
translating revenue and expenditure at an average rate for the year;
current assets, current liabilities, Property, plant and equipment,
long-term borrowings at year-end rate; and accretions to stockholders'
equity at an average rate for the year. The difference arising on
translation is shown under Retained profits.

2. Exchange rates used:

<TABLE>
<CAPTION>
3. Reconciliation between the Indian GAAP and the UK GAAP statements: (pound)
- ----------------------------------------------------------------------------------------------------------------------
2000 1999
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income as per Indian GAAP in Rs. 2,935,156,665 1,352,607,663
Net income as per Indian GAAP in(pound) 42,171,791 19,481,603
Less : Net income of subsidiary included on consolidation - (1,263,009)
Provision for gratuity (464,190) -
Expenses against provisions for contingency and e-inventing
The company (794,945) -
Extraordinary income (1,087,225) -
Add : provision for deferred taxes 529,647 421,356
provision for contingency and e-inventing the company 981,322 959,240
provision for investment in subsidiary - 1,016,789
Profit for the financial year as per the UK GAAP 41,336,400 20,615,979
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

219
<PAGE>

<TABLE>
Infosys Technologies Limited
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
United States Australia India

Addison Melbourne Bangalore Chennai Mohali (Chandigarh)
15305 Dallas Parkway Level 7, 505 Plot No. 44 & 97A 1st & 2nd Floor B 100, Phase VIII
Suite St Kilda Road Electronics City Alexander Square, 35 Industrial Area, SAS
100 Addison Melbourne Hosur Road Sardar Patel Road, Nagar
TX 75001 Victoria 3004 Bangalore-561 229 Guindy Mohali-160 059,
Tel.: (972) 770-0450 Tel.: 61 3 9868 1607 Tel.: (080) 8520261 Chennai-600 035 Punjab
Fax: (972) 770-0490 Fax: 61 3 9868 1652 Fax: (080) 8520362 Tel.: (044) 2300031- Tel.: (0172) 254191/92/94
40

Bellevue Belgium Reddy Building Fax: (044) 2300091 Fax: (0172) 254193
10900 NE 4th St. K-310, 1st Main
#2300 Bellevue Brussels 5th Block, Archbishop Arokia Mumbai
WA 98004 Dreve Richelle 161 Koramangala Swamy Bldg. No.85, Mittal Towers
Tel.: (425) 990 1028 Building N 1410 Bangalore-560 095 145, Santhome High `C'
Fax: (425) 990 1029 Waterloo Tel.: (080) 5530392 Road 8th Floor, Nariman
Brussels Fax: (080) 5530391 Mylapore (Santhome) Point
Cranford Tel.: 322-352-8743 Chennai-600 004 Mumbai-400 021
20 Commerce Drive Fax: 322-352-8889 Pavithra Complex Tel.: (044) 4612021 Tel.: (022) 2846490
Cranford #1, 27th Main, 2nd Fax: (044) 4956958 Fax: (022) 2846489
NJ 07016 Canada Cross
Tel.: (908) 497 1710 1st Stage, BTM No.138, Mysore
Fax: (908) 497 1770 Toronto Layout Sholinganallur SJCE-STEP
3300 Bloor Street Bangalore-560 068 Old Mahabalipuram Sree
Fremont West Centre Tower Tel.: (080) 6681755 Road Jayachamarajendra
34760 Campus Drive 11th Floor Suite Fax: (080) 6680181 Chennai-600 119 College of Engg.,
Fremont 3140 Tel.: (044) 4964304 Science and
CA 94555 Ontario M8X 2X3 Infosys Towers Technology
Tel.: (510) 742 3000 Tel.: (416) 207-3311 No. 27, Bannerghatta Hyderabad Entrepreneurs Park
Fax: (510) 742 3090 Fax: (416) 207-2087 Road I Floor, Q3 A1 Mysore-570 006
3rd Phase, J. P. Cyber Towers Tel.: (0821)
Marietta Germany Nagar HI-TEC City, 500389/90
1950 Spectrum Circle Bangalore-560 076 Madhapur Fax: (0821) 500391
#400, Marietta Frankfurt Tel.: (080) 6658667 Hyderabad-500 033
GA 30067 TOPAS 2 Fax: (080) 6658676 Tel.: (040) 3100242/ New Delhi
Tel.: (770) 857 4428 Mergenthalerallee 44-49 K30, Green Park Main
Fax: (770) 857 2258 79-8, 65760 N-403, Manipal Fax: (040) 3100243 Behind Green Park
Eschborn/Frankfurt Centre Market
Newport Beach Tel.: 49 6196 9202115 Dickenson Road Mangalore New Delhi-110 066
4590 MacArthur Fax: 49 6196 9202320 Bangalore-560 042 #16/403 Tel.: (011)
Suite 500 Tel.: (080) 5592082 Star of Bombay 6514829-30
Newport Beach Japan Fax: (080) 5588065 Complex Fax: (011) 6853366
CA 92660 3rd Floor, Kankanady
Tel.: (949) 475 0196 Tokyo Bhubaneswar Mangalore-575 002 Pune
Fax: (949) 475 0198 4F Madre Matsuda Plot #N-1/70, Tel.: (0824) 3rd Floor, 321/A/3
Bldg. Nayapalli 439401-07/434401-06 TPS III, Shankar
Oakbrook Terrace 4-13, Kioi-Cho, Adjoining Fax: (0824) 439430 Seth Road
One Tower Lane Chiyoda-Ku Planetarium on NH5, Mahatma Phule Peth
#1700 Tokyo 102-0094 Post RRL Pune-411 042
Oakbrook Terrace Tel.: 81 3-3234-3597 Bhubaneswar-751 013 Kottara Cross Tel.: (0212)
IL 60181 Fax: 81 3-3239-3300 Tel.: (0674) Kulur Ferry Road 647420/21
Tel.: (630) 573 6050 584068-71 Mangalore-575 006 Fax: (0212) 648226
Fax: (630) 573 6051 Sweden Fax: (0674) 583991 Tel.: (0824)
451485-88 Plot # 1
Quincy Stockholm Plot No.E/4 Fax: (0824) 451484 Infotech Park MIDC
Two Adams Place Stureplan 4C, 4tr Infosys City, Hinjewadi, Taluka
Quincy 114 35, Stockholm Chandaka Mulshi
MA 02169 Tel.: 44-7932-004640 Bhubaneswar-751 014 Pune-411027
Tel.: (781) 356 3100 (Mobile) Tel.: (02139)
Fax: (781) 356 3150 32801-03

Troy UK Bankers Fax: (02139) 32832
100 Liberty Center Milton Keynes ICICI Bank Ltd.
#200 West Big Beaver Suite 415, Premier
Troy, MI 48084 Suites Hongkong and Shanghai
Tel.: (248) 524 0320 Exchange House Banking Corporation
Fax: (248) 524 0321 494, Midsummer Ltd. Visit Infosys at
Boulevard www.infy.com
MK9 2EA Bank of America
Tel.: 44-1908 255 778 Send e-mail to
Fax: 44-1908 608 279 Company secretary [email protected]
V. Viswanathan
Call us at
Auditors within the U.S.
Bharat S Raut and Co. 1-800-ITL INFO
Chartered Accountants outside the U.S.
+91-80-8520261
Independent auditors
(US GAAP)
KPMG
</TABLE>

220
<PAGE>

Creative concept and design by The
Communication Design Group, Infosys
Printed at Pragati Art Printers,

Hyderabad, India

Infosys believes the information in this
document to be accurate as of its
publication date.

Infosys acknowledges the proprietary
rights in the trademarks and product
names of other companies mentioned in
this document.

221

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
Infosys Technologies Limited

We consent to the use of our reports included herein and to the reference to our
firm under the heading `Experts' in the Form 20-F.

/s/ KPMG

KPMG
Bangalore, India
April 27, 2000

<PAGE>

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR EACH OF YEARS IN THE THREE YEAR PERIOD ENDED MARCH 31,
2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S> <C> <C>
<PERIOD-TYPE> YEAR YEAR
<FISCAL-YEAR-END> MAR-31-2000 MAR-31-1999
<PERIOD-START> APR-01-1999 APR-01-1998
<PERIOD-END> MAR-31-2000 MAR-31-1999
<CASH> 116,599,486 98,874,963
<SECURITIES> 3,177,938 177,938
<RECEIVABLES> 31,741,002 20,358,608
<ALLOWANCES> 507,487 301,930
<INVENTORY> 0 0
<CURRENT-ASSETS> 159,089,296 124,666,964
<PP&E> 78,208,914 43,618,274
<DEPRECIATION> 30,654,142 19,717,961
<TOTAL-ASSETS> 219,282,870 153,657,596
<CURRENT-LIABILITIES> 21,146,349 14,048,034
<BONDS> 0 0
0 0
0 0
<COMMON> 8,593,510 8,592,137
<OTHER-SE> 189,543,011 131,017,425
<TOTAL-LIABILITY-AND-EQUITY> 219,282,870 153,657,596
<SALES> 203,443,754 120,955,226
<TOTAL-REVENUES> 212,482,546 122,492,224
<CGS> 111,080,546 65,331,006
<TOTAL-COSTS> 142,944,701 98,082,599
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 205,557 (91,869)
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 69,537,845 22,323,738
<INCOME-TAX> 8,193,317 4,877,650
<INCOME-CONTINUING> 61,344,528 17,446,088
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 61,344,528 17,446,088
<EPS-BASIC> 0.93 0.28
<EPS-DILUTED> 0.93 0.28

</TABLE>

<PAGE>

EXHIBIT 99.1

Bankers Trust Company
(Part of the Deutsche Bank Group)

April, 28 2000
DEPOSITARY RECEIPTS

Depositary's Notice of Annual General Meeting of Shareholders of Infosys
Technologies Ltd.

Issue: Infosys Technologies Ltd. / Cusip 456788108

Country: India

Meeting Details: Annual General Meeting of Shareholders - Saturday, May
27th 2000 at 3.00 P.M. at Hotel Taj Residency, No.
41/3, M.G. Road, Bangalore 560 001

Meeting Agenda: The Company's Notice of Meeting including the Agenda is
attached

Voting Deadline: On or before May 24, 2000 at 5:00PM (New York City time)

ADR Record Date: April 24, 2000

Ordinary:ADR ratio: 1 Ordinary Share : 2 ADR

In accordance with Section 4.07 of the Deposit Agreement between Infosys
Technologies Ltd ("the Company") and Bankers Trust as Depositary ("the
Depositary"), Holders of Infosys Technologies Ltd. American Depositary Shares
(ADSs) are hereby notified of the Company's Annual General Meeting. A copy of
the Notice of Meeting from the Company, which includes the agenda for such
Meeting, is enclosed.

Holders of Infosys ADSs at the close of business of the above-specified record
will be entitled, subject to any applicable provision of Indian law, of the
Deposited Securities or of the Memorandum and Articles of Association of the
Company, to instruct the Depositary as to the exercise of the voting rights, if
any, pertaining to the amount of Shares or other Deposited Securities
represented by their respective American Depositary Shares. Upon receipt of the
enclosed Voting Instruction Form, duly signed, by the above-stated deadline, the
Depositary shall notify such voting instruction to the Chairman of the Company,
or such other director that the Chairman may designate, and appoint the Chairman
or that other person designated by the Chairman as representative of the
Depositary and the Registered Holders to attend such meeting and vote the
Deposited Securities in the direction so instructed by such Registered Holder.
If the Depositary does not receive instructions from a Registered Holder, such
Registered Holder may under certain circumstances be deemed to have instructed
the Depositary to give a discretionary proxy to a person designated by the
Company to vote such Deposited Securities.

Upon the written request of a Registered Holder on such record date, received on
or before the date established by the Depositary for such purpose, the
Depositary shall endeavor insofar as is practicable and permitted under the
applicable provisions of law and of the Memorandum and Articles of Association
governing Deposited Securities of the Company to vote or cause to be voted the
amount of Deposited Securities represented by such American Depositary Shares
evidenced by such Receipt in accordance with the instructions set forth in such
request.

For the purposes of this Section 4.07, in the event that the Depositary receives
express instructions from Registered Holders to demand a poll with respect to
any matter to be voted on by Holders, the Depositary may notify the Chairman or
a person designated by the Chairman of such instructions and request the
Chairman or such designee to demand a poll with respect to such matters and the
Company agrees that the Chairman or such designee will make their reasonable
best efforts to demand a poll at the meeting at which such matters are to be
voted on and to vote such Shares in accordance with such Registered Holder's
instructions; provided, however, that prior to any demand
<PAGE>

of a poll or request to demand poll by the Depositary upon the terms set forth
herein, the Company shall, at its expense, deliver to the Depositary an opinion
of Indian counsel, reasonably satisfactory to the Depositary, stating that such
action is in conformity with all applicable laws and regulations and that the
demand for a poll by the Depositary or a person designated by the Depositary
will not expose the Depositary to any liability to any person. The Depositary
shall not have any obligation to demand a poll or request the demand of a poll
if the Company shall not have delivered to the Depositary the local counsel
Opinion set forth in this paragraph.

Under Indian law voting of Shares is by show of hands unless a poll is demanded
by a member or members present in person or by proxy holding at least one-tenth
of the total Shares entitled to vote on the resolution or by those holding paid
up capital of at least Rs. 50,000. A proxy may not vote except in a poll.

The Depositary agrees not to, and shall ensure that the Custodian and each of
their nominees does not, vote, attempt to exercise the right to vote, or in any
way make use of, for purposes of establishing a quorum or otherwise, the Shares
or other Deposited Securities represented by the American Depositary Shares
evidenced by a Receipt other than in accordance with such instructions from the
Registered Holder, or as provided below. The Depositary may not itself exercise
any voting discretion over any Shares. If the Depositary does not receive
instructions from any Registered Holder with respect to any of the Deposited
Securities represented by the American Depositary Shares evidenced by such
Registered Holder's Receipts on or before the date established by the Depositary
for such purpose, such Registered Holder shall be deemed, and the Depositary
shall deem such Registered Holder, to have instructed the Depositary to give
discretionary proxy to a person designated by the Company to vote such Deposited
Securities; provided that (x) no such discretionary proxy shall be given with
respect to any matter as to which the Company informs the Depositary (and the
Company agrees to provide such information as promptly as practicable in
writing) that (i) the Company does not wish such proxy given, (ii) substantial
opposition exists or (iii) the rights of the holders of Shares will be adversely
affected and (y) the Depositary shall not have any obligation to give such
discretionary proxy to a person designated by the Company if the Company shall
not have delivered to the Depositary the local counsel opinion and
representation letter set forth in the next paragraph.

Prior to each request for a discretionary proxy upon the terms set forth herein,
the Company shall, at its own expense, deliver to the Depositary (aa) an opinion
of Indian counsel, reasonably satisfactory to the Depositary, stating that such
action is in conformity with all applicable laws and regulations (bb) a
representation and indemnity letter from the Company (executed by a senior
officer of the Company) which (i) designates the person to whom any
discretionary proxy should be given, (ii) confirms that the Company wishes such
discretionary proxy to be given and (iii) certifies that the Company has not and
shall not request the discretionary proxy to be given as to any matter as to
which substantial opposition exists or which may adversely affect the rights of
holders of Shares.

Shares which have been withdrawn from the depositary facility and transferred on
the Company's Register of Members to a person other than the Depositary or its
nominee may be voted by such persons. However, Registered Holders who wish to
withdraw Shares to vote at a shareholders meeting may not receive sufficient
advance notice of shareholders meetings to enable them to make such withdrawal
of the Shares in time to vote at the meeting. In addition once withdrawn from
the depositary facility, Shares may not be redeposited.

For more information, contact:
Paul Martin
Bankers Trust Company
212 250 5065
212 250 5644 (fax)

<PAGE>

EXHIBIT 99.2

Infosys Technologies Limited
Electronics City, Hosur Road
Bangalore - 561 229, India.
Tel. : 91-80-852 0261
Fax : 91-80-852 0362

April 11, 2000

Dear member,

You are cordially invited to attend the Nineteenth Annual General Meeting of the
members on Saturday, May 27, 2000 at 3.00 p.m. at Hotel Taj Residency, No. 41/3,
M. G. Road, Bangalore - 560 001, India.

Notice for the meeting together with proposed resolutions is enclosed herewith.

If you need special assistance at the Annual General Meeting because of a
disability, please contact the Office of the Senior Vice President - Finance &
Administration, Infosys Technologies Limited, Electronics City, Bangalore - 561
229, India (Tel.: +91-80-852 0396).

Very truly yours,

/s/ N. R. Narayana Murthy

N. R. Narayana Murthy
Chairman and Chief Executive Officer

Encl.
<PAGE>

NOTICE

Notice is hereby given that the Nineteenth Annual General Meeting of the members
of Infosys Technologies Limited will be held on Saturday, May 27, 2000, at 3.00
p.m. at Hotel Taj Residency, No. 41/3, M.G. Road, Bangalore - 560 001, India, to
transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Balance Sheet as at March 31, 2000 and the
Profit & Loss Account for the year ended on that date and the Report of
Directors' and Auditors' thereon.

2. To declare a final dividend.

3. To appoint a director in place of Mr. Nandan M. Nilekani who retires by
rotation and is eligible for re-election.

4. To appoint a director in place of Mr. K. Dinesh who retires by rotation and
is eligible for re-election.

5. To consider the vacancy in the board due to the retirement of Mr. S. M. Datta
who retires by rotation and does not seek re-election.

6. To appoint Auditors to hold office from the conclusion of this meeting until
the conclusion of the next Annual General Meeting and to fix their
remuneration.

SPECIAL BUSINESS

7. To consider and, if thought fit, to pass with or without modifications as an
ordinary resolution, the following:

"RESOLVED THAT in accordance with the provisions of Section 198, 269, 309
and Schedule XIII and other applicable provisions, if any, of the Companies
Act, 1956, the company hereby approves the reappointment of Mr. S.
Gopalakrishnan as Deputy Managing Director for a further period of five
years with effect from October 18, 1999, on the terms and conditions as set
out in the draft agreement to be executed by Mr. S. Gopalakrishnan,
(including the remuneration to be paid in the event of loss or inadequacy
of profits in any financial year during the aforesaid period), submitted to
this meeting and for identification initialled by the Company Secretary
with liberty to the Board of Directors, to alter, vary and modify the said
reappointment/remuneration including salary, performance bonus, allowances
and perquisites in such manner as may be agreed to between the Board of
Directors and Mr. S. Gopalakrishnan within and in accordance with and
subject to the limits prescribed in Schedule XIII to the Companies Act,
1956, or any amendment or any statutory modifications thereto and if
necessary, as may be stipulated by the Central Government and as may be
agreed to accordingly between the Board of Directors and Mr. S.
Gopalakrishnan.

RESOLVED FURTHER THAT notwithstanding anything hereinabove stated where in
any financial year closing on and after April 1, 1999, the company incurs a
loss or its profits are inadequate, the company shall pay to Mr. S.
Gopalakrishnan remuneration by way of salary, performance bonus and other
allowances not exceeding a sum of Rs. 10,50,000 per annum or Rs. 87,500 per
month and in addition thereto the perquisites not exceeding the limits
specified under Para 2 of Section II, Part II of Schedule XIII to the
Companies Act 1956, or such other limits as may be prescribed by the
Government from time to time as minimum remuneration."

8. To consider and, if thought fit, to pass with or without modifications as an
ordinary resolution, the following:

"RESOLVED THAT Mr. Philip Yeo, who was co-opted as an Additional Director
of the company by the Board of Directors, who holds office under Section
260 of the Companies Act, 1956, until the date of the Annual General
Meeting and in respect of whom the company has received a notice in writing
proposing his candidature for the office of a Director, be and is hereby
appointed as a Director of the company, liable to retire by rotation."

9. To consider and, if thought fit, to pass with or without modifications as a
special resolution the following:

"RESOLVED THAT subject to the approval of the Central Government, Reserve
Bank of India and other regulatory bodies if required, the consent of the
company be and is hereby accorded for investment by Foreign Institutional
Investors, in the equity share capital of the company, either by direct
investment or by purchase or otherwise by acquiring from the market under
portfolio investment scheme on repatriation basis, subject to the condition
that such investment together with their existing holdings shall not exceed
in aggregate 40% of the paid-up equity share capital of the company or such
other limit as may be prescribed from time to time by the Central
Government and /or Reserve Bank of India or any other related authority."
<PAGE>

10. To consider and, if thought fit, to pass with or without modifications as a
special resolution the following:

"RESOLVED THAT the Articles of Association of the Company be and is hereby
altered by deleting the existing Article `106' and substituting in place and
stead thereof the following new Article `106':

Until otherwise determined by the company in a General Meeting and subject
to the provisions of Section 252 of the Act, the number of directors
(excluding Debenture Directors and Directors appointed under Article 111
hereof and Alternate Directors) shall not be less than three nor more than
eighteen."

11. To consider and, if thought fit, to pass with or without modifications as an
ordinary resolution the following:

"RESOLVED THAT pursuant to Section 258 and 259 and other applicable
provisions, if any, of the Companies Act, 1956, and subject to the approval
of the Central Government, the number of directors of the company be
increased from twelve to eighteen."

By Order of the Board
Electronics City,
Hosur Road, /s/ V. Viswanathan
Bangalore - 561 229, India. V. Viswanathan
April 11, 2000 Company Secretary
<PAGE>

NOTES:

1. A member entitled to attend and vote at the meeting is entitled to appoint a
proxy to attend the meeting and the proxy need not be a member of the
company. Under the Companies Act, 1956, voting is by show of hands unless a
poll is demanded by a member or members present in person, or by proxy
holding at least one-tenth of the total shares entitled to vote on the
resolution or by those holding paid-up capital of at least Rs. 50,000. A
proxy may not vote except in a poll.

2. An Explanatory Statement pursuant to Section 173(2) of the Companies Act,
1956 is annexed hereto.

3. The instrument appointing the proxy should be deposited at the Registered
Office of the company not less than 48 hours before the commencement of the
meeting.

4. Members/proxies should bring duly filled Attendance Slips sent herewith for
attending the meeting.

5. The Register of Directors' shareholdings, maintained under Section 307 of the
Companies Act, 1956, is available for inspection by the members at the Annual
General Meeting.

6. The Register of Contracts, maintained under Section 301 of the Companies Act,
1956, is available for inspection by the members at the Registered Office of
the company.

7. The Register of Members and Share Transfer Books will remain closed from May
16, 2000 to May 27, 2000 both days inclusive.

8. Subject to the provisions of Section 206A of the Companies Act, 1956,
dividend as recommended by the Board of Directors, if declared at the
meeting, will be payable on or after May 27, 2000 to those members whose
names appear in the Register of Members as on May 16, 2000.

9. Members are requested to address all their correspondence including change of
address, dividend mandates, etc., to the Registrar and Share Transfer Agents
- Karvy Consultants Limited, T. K. N. Complex, No. 51/2, Vanivilas Road, Opp.
National College, Basavanagudi, Bangalore - 560 004, India.

10. Members wishing to claim dividends, which remain unclaimed, are requested
to correspond with Mr. V. Viswanathan, Company Secretary at the company's
registered office for further particulars.

EXPLANATORY STATEMENT UNDER SECTION 173(2) OF THE COMPANIES ACT, 1956.

ITEM 7 & 8

The Board of Directors at their meeting held on October 08, 1999, appointed Mr.
S. Gopalakrishnan as the Deputy Managing Director of the company for a term of
five years with effect from October 18, 1999 under the provisions of Sections
198, 269, 309 and Schedule XIII and other applicable provisions of the Companies
Act, 1956.

The appointment is subject to the approval of members under Section 309 of the
Companies Act, 1956. The terms and conditions of his appointment are as
follows:

01. Period of appointment: Five years beginning with effect from October 18,
1999 and ending on October 17, 2004

02. Details of remuneration:

a) Salary per month Rs. 54,100 in the scale of Rs. 30,000 - Rs. 80,000

b) Performance bonus:

Mr. S. Gopalakrishnan, Deputy Managing Director, shall be entitled to
performance bonus based on his performance or based on his value
addition to the company, up to a maximum of 25% of salary, payable
quarterly or at such other intervals as may be decided by the Board.

c) Perquisites and allowances:

i) Housing: Furnished/unfurnished residential accommodation or house
rent allowance at 45% of salary in lieu thereof. The expenditure
incurred by the company on gas, electricity, water and furnishings
shall be valued as per Income Tax Rules, 1962.

ii) Medical reimbursement/allowance: Reimbursement of actual expenses
for self and family and/or allowances will be paid as per the
rules of the company.

iii) Leave travel concession/allowance: For self and family once in a
year, in accordance with the rules of the company.

iv) Club fees: Fees payable subject to a maximum of two clubs.

v) Personal accident insurance: As per the rules of the company.

d) Earned/privilege leave: As per the rules of the company.
<PAGE>

e) Company's contribution to provident fund and superannuation fund:

These contributions will not be included as perquisites to the extent
that these, either singly or put together, are not taxable under the
Income Tax Act.

f) Gratuity: As per the rules of the company.

g) Encashment of leave at the end of the tenure, will not be included in
the computation of the ceiling on perquisites to the extent the same
is not taxable under the Income Tax Act.

h) Use of company's car for official purposes and telephone at residence
(including payment for local calls and long distance official calls),
shall not be included in the computation of perquisites.

i) The aggregate of the salary, performance bonus, perquisites and
allowances, contribution towards provident fund and superannuation
fund taken together in respect of payment to Mr. S. Gopalakrishnan,
Deputy Managing Director, shall always be subject to the overall
ceilings laid down in Sections 198 and 309 of the Companies Act, 1956.

03. This agreement may be terminated by either party by giving six months notice
in writing of such termination.

04. If, at any time, Mr. S. Gopalakrishnan ceases to be a Director of the
company for any cause whatsoever, he shall cease to be the Deputy Managing
Director, and the agreement shall forthwith be terminated.

05. Mr. S. Gopalakrishnan, Deputy Managing Director, shall perform such duties
as shall from time-to-time be entrusted to him subject to the supervision
and control of the Board of Directors and he shall perform such other duties
as shall from time to time be entrusted to him by the Board of Directors
and/or the Chairman & Chief Executive Officer.

The company shall have the liberty to alter, vary and modify the terms and
conditions of the said reappointment and the remuneration including
commission and perquisites and the said agreement in such manner as may be
agreed to between the company and Mr. S. Gopalakrishnan, within and in
accordance with and subject to the limits prescribed in the amended
Schedule XIII to the Companies Act, 1956 or any amendment or any statutory
modifications thereto and if necessary as may be stipulated by the Central
Government and as may be agreed to accordingly between the company and Mr.
S. Gopalakrishnan, Deputy Managing Director of the company without any
further reference to the company in General Meeting.

Minimum Remuneration:

The minimum remuneration by way of salary, perquisites and other
allowances not exceeding the sum of Rs. 10,50,000/- per annum or Rs.
87,500/- per month, may also be paid to Mr. S. Gopalakrishnan in the even
of loss or inadequacy of profits in any financial year during the period
of his appointment, in addition to the perquisites not exceeding the
limits specified under Para 2 of Section II, Part II of Schedule XIII to
the Companies Act, 1956.

Memorandum of Interest:

No director except Mr. S. Gopalakrishnan is deemed to be interested or
concerned in his reappointment and remuneration payable to him as a Deputy
Managing Director.

The Abstract of the Terms of Reappointment of Mr. S. Gopalakrishnan dated
October 18, 1999 was circulated to the members pursuant to Section 302 of
the Companies Act, 1956. The terms of reappointment and payment of
remuneration to Mr. S. Gopalakrishnan as stated in this notice, may be
treated as the reproduction of such abstract under Section 302 of the
Companies Act, 1956.

The copies of relevant resolutions of the Board/company in respect of the
reappointment of Mr. S. Gopalakrishnan, as well as the draft agreement to
be entered into between the company and Mr. S. Gopalakrishnan are
available for inspection by the members at the Registered Office of the
company during working hours on any working day till the date of this
Annual General Meeting.

ITEM 8

Mr. Philip Yeo was co-opted as an Additional Director of the company with effect
from October 29, 1999, pursuant to Section 260 of the Companies Act, 1956. Mr.
Philip Yeo holds office of director upto the date of the ensuing Annual General
Meeting. The company has received notice in writing from a member alongwith a
deposit of Rs. 500/- proposing the candidature of Mr. Philip Yeo for the office
of Director under the provisions of Section 257 of the Companies Act, 1956.

None of the directors of the company other than Mr. Philip Yeo are interested in
this resolution.

ITEM 9

The investment by Foreign Institutional Investors (FIIs), in the equity of
Indian companies was permitted to the extent of 30% of the paid up equity
capital of such companies. Recently the Government of India has raised the limit
of such investments to 40% of the paid up equity capital of such companies,
subject to approval of the Board of Directors of the investee
<PAGE>

company and approval of members of the investee company by way of a special
resolution. Since the increased investment by FIIs is considered to be in the
interest of the company, the Board recommends the resolution for approval of
the members.

None of the directors of the company are concerned or interested in the
resolution.

ITEM 10 & 11

The Articles of the company has fixed the number of directors to be not less
than three and not more than twelve. It is felt that the company would benefit
from a larger Board consisting of eminent personalities from around the world
who have a varied domain expertise. In order to increase the number of directors
from twelve to eighteen the company has to secure the approval of its members in
general meeting for amending its Articles and also secure the approval of the
members to increase the permissible maximum strength of the Board. The proposed
increase in the strength of the Board is subject to the approval of the Central
Government under Section 259 of the Companies Act, 1956.

None of the directors of the company are concerned or interested in the
resolution.

The Board recommends these resolutions for the approval of the members.

By Order of the Board
Electronics City,
Hosur Road, /s/ V. Viswanathan
Bangalore - 561 229, India. V. Viswanathan
April 11, 2000 Company Secretary

ADDITIONAL INFORMATION ON DIRECTORS RECOMMENDED FOR APPOINTMENT OR SEEKING
ELECTION AT THE ANNUAL GENERAL MEETING

Following is the biographical data about the directors recommended for
appointment or are seeking re-election as a director:

S. Gopalakrishnan is a co-founder of Infosys and served as Technical Director
from 1981 to 1987. From 1987 to 1994, he was Technical Vice-President and
managed all projects at US-based KSA/Infosys, a former joint venture between the
company and Kurt Salmon Associates. From 1994 to date, he has served as a
director of Infosys. Mr. Gopalakrishnan was Head - Technical Support Services,
from 1994 to 1996, Head - Client Delivery and Technology of Infosys from 1996 to
1999, and has served as Head - Customer Service & Technology from 1999 to date.
Mr. Gopalakrishnan received an M.Sc. in Physics and an M.Tech. in Computer
Science from IIT, Chennai. Mr. Gopalakrishnan is a director in Yantra
Corporation.

Philip Yeo is the Executive Chairman of the Singapore Economic Development
Board. In June 1999, Mr. Yeo was appointed Deputy Chairman of National Science &
Technology. In September 1999, Mr. Yeo was appointed Chairman of Pidemco Land, a
subsidiary of the Singapore Technologies Group. Mr. Yeo serves as the Chairman
of Institute of Molecular & Cell Biology, the Chairman of Singapore Aerospace
Manufacturing and on the Board of INSEAD, Paris. Mr. Yeo graduated in 1970 in
Applied Science (Industrial Engineering) from the University of Toronto, Canada
under a Colombo Plan Scholarship. He later obtained a Master of Science (Systems
Engineering) from the University of Singapore in 1974. In 1976, he obtained a
Master in Business Administration from Harvard University, USA, under a
Fulbright scholarship. Mr. Yeo joined the Administrative Service in 1970 and
served in the Ministry of Defence before assuming his current appointment of
Chairman, Economic Development Board in January 1986. Mr. Yeo also served as
the first Chairman of the National Computer Board from 1981 to 1987. Mr. Yeo was
Board Member (from 1980) and Chairman of the Executive Committee of Singapore
Technologies Holdings (from 1987 to 1993). Mr. Yeo serves on the Nominations
Committee of the company.

Nandan M. Nilekani is a co-founder of Infosys and has served as a director since
1981, Head - Marketing and Sales from 1987 to 1998, Head - Banking Business Unit
from 1998 to 1999, and Managing Director, President and Chief Operating Officer
from 1999 to date. From 1981 to 1987, Mr. Nilekani was in the United States
managing the marketing and development efforts of Infosys. He is a co-founder of
NASSCOM and received a B.Tech. in Electrical Engineering from IIT Bombay. Mr.
Nilekani also serves on the Investor Grievance Committee of the company.

Infosys. From 1981 to 1990, he managed projects for Infosys in the United
States. Mr. Dinesh received an M.Sc. degree in Mathematics from Bangalore
University. Mr. Dinesh also serves on the Investor Grievance Committee of the
company.

Attendance record of the directors recommended for appointment or seeking re-
election:

- --------------------------------------------------------------------------------
Number of meetings held Number of meetings attended
- --------------------------------------------------------------------------------
Mr. S. Gopalakrishnan 9 9
Mr. Philip Yeo 5* 0
Mr. Nandan M. Nilekani 9 9
Mr. K. Dinesh 9 9
- --------------------------------------------------------------------------------
*Mr. Philip Yeo was appointed as an additional director on October 29, 1999.
Five board meetings were held since his appointment as a director.

<PAGE>

EXHIBIT 99.3

INFOSYS TECHNOLOGIES LIMITED

Registered Office
ELECTRONICS CITY, HOSUR ROAD, BANGALORE - 561 229, INDIA.

PROXY FORM

Regd. Folio No. [_] [_] [_] [_] [_] [_] [_] [_] [_]

I/We of
------------------------------------- -------------------------------------
in the district of being a member/members of the Company
-------------------------
hereby appoint of
--------------------------- -------------------------------------
in the district of or failing him/her
-------------- ------------------------------
of in the district of
------------------------------ ------------------------------

as my/our proxy to vote for me/us on my/our behalf at the NINETEENTH ANNUAL
GENERAL MEETING of the Company to be held at 3.00 p.m. on Saturday, May 27, 2000
and at any adjournment(s) thereof.

Signed this day of 2000.
-------------- --------------------------------------------

Rupee one
Signature Revenue
------------------- Stamp

Notes: This form, in order to be effective, should be duly stamped, completed
and signed and must be deposited at the Registered Office of the
Company, not less than 48 hours before the meeting.

- --------------------------------------------------------------------------------

INFOSYS TECHNOLOGIES LIMITED
Registered Office
ELECTRONICS CITY, HOSUR ROAD, BANGALORE - 561 229, INDIA.

ATTENDANCE SLIP
Nineteenth Annual General Meeting - May 27, 2000

Regd. Folio No. No. of shares held

I certify that I am a Member/Proxy for the Member of the Company.

I hereby record my presence at the NINETEENTH ANNUAL GENERAL MEETING of the
Company at Hotel Taj Residency, No. 41/3, M.G. Road, Bangalore - 560 001 at 3.00
p.m. on Saturday, May 27, 2000.

- ------------------------ ---------------------------
Member's/Proxy's name in Signature of
Member/Proxy
BLOCK Letters

Note: Please fill up this attendance slip and hand it over at the entrance of
the meeting hall. Members are requested to bring their copies of the
Annual Report to the meeting.

<PAGE>

EXHIBIT 99.4

Infosys Technologies Limited

Annual General Meeting of Shareholders
- --------------------------------------------------------------------------------

- --------------------------------------
(Name of ADR holder)

- --------------------------------------
(Number of ADRs held)

Issues presented for consideration at Voting Results
the Annual

General Meeting of Shareholders on 27
May 2000
Affirmative Negative Abstained
- --------------------------------------------------------------------------------
1. To receive, consider and adopt the
Balance Sheet as at March 31, 2000 and
the Profit & Loss Account for the year
ended on that date and the Report of
Directors' and Auditors' thereon.

- --------------------------------------------------------------------------------
2. To declare a final dividend.

- --------------------------------------------------------------------------------
3. To appoint a director in place of
Mr. Nandan M. Nilekani who retires by
rotation and is eligible for
re-election.

- --------------------------------------------------------------------------------
4. To appoint a director in place of
Mr. K. Dinesh who retires by rotation
and is eligible for re-election.

- --------------------------------------------------------------------------------
5. To consider the vacancy in the
board due to the retirement of Mr. S.
M. Datta who retires by rotation and
does not seek re-election.

- --------------------------------------------------------------------------------
6. To appoint Auditors to hold office
from the conclusion of this meeting
until the conclusion of the next
Annual General Meeting and to fix
their remuneration.

- --------------------------------------------------------------------------------
7. Approval of the re-appointment of
Mr. S. Gopalakrishnan as Deputy
Managing Director for a further period
of five years with effect from October
18, 1999.

- --------------------------------------------------------------------------------
8. Approval of the appointment Mr.
Philip Yeo as a Director of the
company, liable to retire by rotation.

- --------------------------------------------------------------------------------
9. Approval that the consent of the
company be accorded for increasing the
maximum limit of the investment by
Foreign Institutional Investors in the
equity share capital of the company.

- --------------------------------------------------------------------------------
10. Approval of the deletion of the
existing Article `106' of the Articles
of Association of the Company and the
substitution in place and stead
thereof the new Article `106'.

- --------------------------------------------------------------------------------
11. Approval that, pursuant to Section
258 and 259 and other applicable
provisions, if any, of the Companies
Act, 1956, the number of directors of
the company be increased from twelve
to eighteen.

____________________________________
(Signature)
- --------------------------------------------------------------------------------