<PAGE>
Exhibit 19.1
INFOSYS TECHNOLOGIES LIMITED
Report for the half year ended September 30, 2000
[LOGO INFOSYS(R)]
<PAGE>
<TABLE>
<CAPTION>
At a glance - Indian GAAP
-----------------------------------------------------------------------------------------------------------------------
Rs. in crores, except per share data
----------------------------------------------------------------------------------------------------------------------
Quarter ended Half year ended Year ended
September 30 September 30 March 31,2000
------------------------------------------------
2000 1999 2000 1999
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the period
Total revenue 465.67 217.88 836.32 401.94 921.46
Export revenue 441.26 205.07 792.32 373.69 869.70
Operating Profit (PBIDT) 196.00 85.93 348.75 163.86 378.88
Profit after tax (PAT) from ordinary activities 154.01 65.71 275.31 126.32 285.95
PBIDT as a percentage of total revenue 42.09% 39.44% 41.70% 40.77% 41.12%
PAT (from ordinary activities) as a percentage of total 33.07% 30.16% 32.92% 31.43% 31.03%
revenue
Earnings per share (from Ordinary activities)* 23.28 9.93 41.62 19.10 43.23
Dividend per share NA NA 2.50 1.50 4.50
Dividend amount NA NA 16.54 9.92 29.76
Capital investment 114.01 38.56 199.85 59.76 159.87
At the end of the period
Total assets 1094.04 687.68 833.30
Fixed assets-net 365.19 140.42 207.34
Cash and equivalents 535.90 453.80 508.37
Working capital 683.12 546.51 612.13
Total debt - - -
Net worth 1094.04 687.68 833.30
Equity 33.08 33.07 33.08
Market capitalization 48695.68 23,589.06 59,338.17
----------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
Market capitalization is calculated by considering the Indian market price for
shares outstanding at the period / year end outstanding at the period / year end
* EPS figures have been calculated for the period and have not been annualized.
TOTAL REVENUE
(Rs. in crores)
Year ended March 31, 2000 921.46
Half year ended September 30, 1999 401.94
Half year ended September 30, 2000 836.32
Quarter ended September 30, 1999 217.88
Quarter ended September 30, 2000 465.67
EXPORTS
(Rs. in crores)
Year ended March 31, 2000 869.7
Half year ended September 30, 1999 373.69
Half year ended September 30, 2000 792.32
Quarter ended September 30, 1999 205.07
Quarter ended September 30, 2000 441.26
NET PROFIT
(Rs. in crores)
Year ended March 31, 2000 285.95
Half year ended September 30, 1999 126.32
Half year ended September 30, 2000 275.31
Quarter ended September 30, 1999 65.71
Quarter ended September 30, 2000 154.01
<PAGE>
Letter to the shareholders
--------------------------------------------------------------------------------
Dear shareholders:
We are pleased to report on another strong quarter. Under Indian GAAP, revenues
grew by 113.7% over Q2FY2000 while net profits witnessed an increase of 134.4%.
Net of separations, we added nearly 1500 employees in the quarter --highlighting
the continued vigorous growth in our business. A key driver of this performance
is the de-risked nature of the Infosys business model. Prudent risk management
policies, strong processes to monitor various risk factors, and a focus on
diversification continue to guide our business strategy. Our strong
relationships with Fortune 1000 corporations, our in-depth understanding of
their decision cycles, and our track record of customer satisfaction enabled us
to maintain topline predictability while ceaselessly improving overall revenue
productivity.
As transformation partners to traditional economy corporations, we help them
build next-generation information infrastructure for the new economy. These
engagements constitute the bulk of our e-business revenues, which, at 31.4% of
total revenues, continue to be a high-growth segment of our business. Further,
with a view to capitalizing on the unprecedented opportunities offered by the
present day environment, we continued to build expertise in high-potential
technology areas such as wireless, broadband and optical networking.
The quarter saw a strategic alliance with Microsoft Corporation to jointly
deliver e-business solutions to help companies migrate to the new economy. Our
client base continues to increase -- we partnered with 27 new clients during the
quarter. These included Eastman Chemicals, one of the top 10 global suppliers of
custom-manufactured chemicals; Fritz companies, a specialist in global
integrated logistics; ABB Alstom, global specialist in energy and transport
infrastructure; Publix Supermarkets, one of the largest supermarket chains in
the US; SignalSoft, a leading platform and applications developer of Wireless
Location Services (R); Last Mile Solutions, a spread spectrum wireless solutions
provider; NightFire Software, a leading e-infrastructure software provider for
broadband service fulfilment; and Riverstone Networks, a leading manufacturer of
switches and routers. We also continued to build long-term symbiotic
partnerships -- evidenced by our repeat business rate of 84.5% in the quarter.
Our endeavor to have access to cutting-edge technologies and business models led
us to make three strategic investments in the quarter. We invested in Vienna-
based Alpha Thinx Mobile Phone Services, which hosts interactive services for
mobile users across Europe; in Singapore-based M-Commerce Ventures, a wireless-
focussed fund promoted by the Economic Development Board, Singapore; and in Asia
Net Media, which intends to build a synergistic network of companies that
leverage under-exploited offline brands in media and entertainment by delivering
them online.
We continued to globalize our operations -- our software development center in
London became operational during the quarter, as did our marketing offices in
Hong Kong and Sydney. Our Infosys City facility in Bangalore is nearing
completion and we continue to build capacity in our other development centers in
India and abroad.
We inducted Professor Jitendra Vir Singh, Vice Dean, International Academic
Affairs, The Wharton School, University of Pennsylvania, onto the board of
directors. On your behalf, we welcome him on board and also extend our
appreciation to our fellow Infoscions who contributed to yet another successful
quarter in our history.
Sd. Sd.
Bangalore Nandan M. Nilekani N. R. Narayana Murthy
October 10, 2000 Managing Director, President Chairman and Chief
and Chief Operating Officer Executive Officer
<PAGE>
Auditors' report to the members of Infosys Technologies Limited
--------------------------------------------------------------------------------
We have audited the attached Balance Sheet of Infosys Technologies Limited (the
Company) as at September 30, 2000 and the Profit and Loss Account of the Company
for the half year and quarter 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;
(c) the Balance Sheet and Profit and Loss Account dealt with by this
report are in agreement with the books of account;
(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 Section 211(3C) 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 September 30, 2000; and
(ii) in the case of the Profit and Loss Account, of the profit for the
half year and quarter ended on that date.
3 We have also examined the attached Cash Flow Statement of the Company for
the half year and quarter ended September 30, 2000. The Statement has 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
October 10, 2000 Partner
<PAGE>
<TABLE>
<CAPTION>
Balance Sheet as at
----------------------------------------------------------------------------------------------------------------
in Rs.
-------------------------------------------------------------------------------------------------------------
September 30, 2000 September 30, 1999 March 31, 2000
-------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SOURCES OF FUNDS
SHAREHOLDERS' FUNDS
Share capital 33,07,58,335 33,06,95,500 33,07,55,000
Reserves and surplus 1060,95,95,077 654,61,29,197 800,22,73,248
-------------------------------------------------------------------------------------------------------------
1094,03,53,412 687,68,24,697 833,30,28,248
=============================================================================================================
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 435,74,18,072 201,20,83,575 284,03,05,143
Less: Depreciation 175,13,71,312 102,07,57,018 133,65,20,594
-------------------------------------------------------------------------------------------------------------
Net block 260,60,46,760 99,13,26,557 150,37,84,549
Add: Capital work-in-progress 104,58,25,080 41,28,99,285 56,96,03,505
-------------------------------------------------------------------------------------------------------------
365,18,71,840 140,42,25,842 207,33,88,054
INVESTMENTS 45,73,06,737 75,48,469 13,83,48,469
CURRENT ASSETS, LOAN AND ADVANCES
Sundry debtors 243,05,68,746 133,47,09,804 136,17,81,253
Cash and bank balances 424,28,92,315 377,68,71,030 431,79,35,730
Loans and advances 288,54,93,594 164,28,14,672 210,12,77,161
-------------------------------------------------------------------------------------------------------------
955,89,54,655 675,43,95,506 778,09,94,144
Less: Current liabilities 150,82,14,077 58,78,14,181 67,15,06,459
Provisions 121,95,65,743 70,15,30,939 98,81,95,960
NET CURRENT ASSETS 683,11,74,835 546,50,50,386 612,12,91,725
-------------------------------------------------------------------------------------------------------------
1094,03,53,412 687,68,24,697 833,30,28,248
=============================================================================================================
<CAPTION>
This is the Balance Sheet referred
to in our report of even date.
for Bharat S Raut & Co.
Chartered Accountants
<S> <C> <C> <C> <C>
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M.
Partner Chairman and Managing Director, President Satwalekar
Chief Executive Officer and Chief Operating Officer Director
Prof. Marti G. Subrahmanyam S. Gopalakrishnan K. Dinesh S. D. Shibulal
Director Deputy Managing Director Director Director
Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan
October 10, 2000 Director and Director Director Company Secretary
Chief Financial Officer
</TABLE>
<PAGE>
Profit and Loss Account
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------------------
Quarter ended Half year ended Year ended
----------------------------- -----------------------------
September 30, September 30, September 30, September 30, Mar 31, 2000
2000 1999 2000 1999
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INCOME
Software development services and products
Overseas 441,25,85,913 205,07,22,424 792,31,64,336 373,69,33,425 869,69,80,931
Domestic 4,83,71,864 3,22,64,605 9,30,93,590 4,87,60,599 12,62,56,042
Other income 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
---------------------------------------------------------------------------------------------------------------------------------
465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068
=================================================================================================================================
EXPENDITURE
Software development expenses 226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578
Administration and other expenses 43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282
Provision for contingencies - - - 3,33,00,000 3,33,00,000
Provision for e-inventing the Company - 3,50,00,000 - 3,50,00,000 3,50,00,000
---------------------------------------------------------------------------------------------------------------------------------
269,67,55,268 131,94,98,892 487,56,72,483 238,08,19,145 542,58,34,860
Operating profit (PBIDT) 195,99,90,126 85,93,06,572 348,74,80,592 163,86,06,559 378,88,13,208
Interest - - - - -
Depreciation 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389
Profit before tax and extraordinary items 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819
Provision for tax - earlier periods - 17,00,000 1,40,00,000 17,00,000 24,00,000
- current period 17,75,00,000 9,33,00,000 30,06,00,000 17,33,00,000 39,46,00,000
Profit after tax before extraordinary items 154,01,22,579 65,70,82,803 275,31,41,328 126,31,64,641 285,94,85,819
Effect of extraordinary item - provision no longer - - - - 7,56,70,846
required
Extraordinary income (net of tax) - - 5,49,44,000 - -
Net profit after tax and extraordinary items 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
---------------------------------------------------------------------------------------------------------------------------------
AMOUNT AVAILABLE FOR APPROPRIATION 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
---------------------------------------------------------------------------------------------------------------------------------
Dividend
Interim 16,53,78,418 9,92,08,200 16,53,78,418 9,92,08,200 9,92,08,200
Final - - - - 19,84,18,210
Dividend Tax 3,63,83,252 1,09,12,902 3,63,83,252 1,09,12,902 3,27,38,905
Amount transferred - general reserve - - - - 260,47,91,350
---------------------------------------------------------------------------------------------------------------------------------
Balance in Profit & Loss Account 133,83,60,909 54,69,61,701 260,63,23,658 115,30,43,539 -
---------------------------------------------------------------------------------------------------------------------------------
154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
=================================================================================================================================
</TABLE>
This is the Profit & Loss Account
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 Deepak M.
Partner Chairman and Managing Director, President and Satwalekar
Chief Executive Officer Chief Operating Officer Director
Prof. Marti G. Subrahmanyam S. Gopalakrishnan K. Dinesh S. D. Shibulal
Director Deputy Managing Director Director Director
Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan
October 10, 2000 Director and Director Director Company Secretary
Chief Financial Officer
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Schedules to the Profit and Loss Account for the
-----------------------------------------------------------------------------------------------------------------------------------
in Rs.
-----------------------------------------------------------------------------------------------------------------------------------
Quarter ended Half year ended Year ended
-----------------------------------------------------------
September 30, September 30, September 30, September 30, March 31, 2000
2000 1999 2000 1999
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OTHER INCOME
Interest received on deposits with banks and others 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106
(Tax deducted at source Rs. 42,26,973; Rs. 37,61,871;
Rs. 1,11,29,180; Rs. 52,48,295; Rs. 1,67,51,195
respectively)
Sale of special import licenses 6,77,431 1,29,96,393 6,77,431 1,29,96,393 2,02,31,549
Profit on sale of fixed assets - 4,16,230 - 4,63,777 8,73,015
Miscellaneous income 70,50,359 7,08,917 94,17,211 30,76,486 41,00,350
Exchange differences * 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
-----------------------------------------------------------------------------------------------------------------------------------
19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
===================================================================================================================================
* arising on translation of foreign currency deposits maintained abroad includes a realized gain of
Rs. 3,53,92,000 during the quarter ended September 30, 2000. (Prior periods/ year: Rs. Nil)
SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including overseas staff expenses 158,42,78,274 73,71,21,957 290,01,81,382 132,43,61,020 307,54,46,295
Staff welfare 1,73,06,377 1,01,02,147 3,24,11,865 1,97,02,371 4,93,07,308
Contribution to provident and other funds 7,43,79,574 4,04,04,539 16,93,51,595 6,09,67,314 22,08,36,923
Foreign travel expenses 35,90,06,400 19,44,34,563 66,11,53,479 37,35,69,658 84,09,02,293
Consumables 1,04,12,879 47,39,041 1,95,07,075 1,06,07,532 2,70,06,251
Cost of software packages
for own use 12,25,78,520 6,00,62,634 19,79,84,826 9,28,54,660 16,53,57,382
for banking product 49,60,448 24,53,002 1,33,11,277 40,65,059 2,84,48,397
Computer maintenance 1,23,01,888 61,45,308 2,71,11,288 1,00,78,359 3,27,43,350
Communication expenses 5,24,77,651 5,64,28,375 9,94,83,388 9,47,60,089 17,31,23,718
Consultancy charges 1,85,64,421 79,52,464 2,98,55,683 1,40,86,504 2,85,50,034
Provision for post-sales client support 82,28,718 1,09,23,398 80,48,558 1,75,96,154 2,09,62,627
-----------------------------------------------------------------------------------------------------------------------------------
226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578
===================================================================================================================================
ADMINISTRATION AND OTHER EXPENSES
Travelling and conveyance 4,97,87,265 1,64,00,037 7,70,39,464 2,71,78,379 7,68,26,394
Rent 3,68,42,809 2,37,09,030 6,95,37,037 4,42,39,431 10,34,93,593
Telephone charges 3,59,58,729 1,07,93,680 6,50,89,763 2,45,99,217 5,93,95,252
Professional charges 3,86,42,679 1,69,66,773 6,42,07,750 2,94,93,829 7,55,68,079
Office maintenance 2,94,09,238 97,79,872 5,67,21,754 1,81,88,757 5,81,01,381
Brand building 3,92,19,123 - 5,01,77,269 - 99,17,816
Provision for bad and doubtful debts 4,51,07,005 70,23,453 4,91,94,461 1,90,43,237 94,03,099
Power and fuel 2,51,75,524 1,00,90,670 4,58,26,006 2,01,08,110 5,01,41,466
Printing and stationery 1,10,57,396 70,99,944 3,61,24,297 1,53,91,827 2,76,70,902
Donations 1,70,01,694 1,01,86,367 3,28,09,063 1,41,86,367 3,49,27,871
Advertisements 1,75,71,241 68,68,674 2,88,75,539 1,12,36,927 2,12,41,343
Marketing expenses 1,75,21,259 53,93,530 2,28,51,535 1,30,53,262 3,14,93,837
Repairs to building 58,28,166 13,87,841 1,40,82,937 40,04,836 1,13,44,232
Insurance charges 72,76,793 49,72,795 1,25,66,191 90,30,631 2,41,35,289
Rates and taxes 62,78,668 37,24,887 98,42,999 57,43,646 1,03,80,848
Postage and courier 47,28,893 25,29,800 96,06,851 61,99,736 1,37,56,638
Commission charges 67,61,132 - 90,25,721 34,84,800 64,70,454
Books and periodicals 50,60,324 8,34,026 89,14,545 21,48,750 77,13,886
Repairs to plant and machinery 39,97,679 27,39,781 73,83,941 41,49,262 84,12,905
Research grants 25,00,000 25,00,000 50,00,000 25,00,000 1,03,00,000
Managerial remuneration 24,00,000 6,00,000 48,00,000 12,00,000 48,17,800
Bad debts written off 27,70,254 - 27,70,254 - 1,59,20,938
Bank charges and commission 3,94,040 8,08,085 9,24,343 17,62,932 42,21,668
Bad loans and advances written off - 3,46,577 - 3,46,577 3,13,050
Auditor's remuneration
- audit fees 4,47,000 4,67,500 8,93,250 8,92,500 17,85,000
- certification charges - - - - 2,00,000
- other services - - - - 4,50,000
- out-of-pocket expenses 50,000 50,000 1,00,000 1,00,000 2,00,000
Other miscellaneous expenses 2,04,73,207 84,58,142 3,29,07,097 1,15,87,412 1,62,46,541
-----------------------------------------------------------------------------------------------------------------------------------
43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282
===================================================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of Cash Flows
-----------------------------------------------------------------------------------------------------------------------------------
in Rs.
-----------------------------------------------------------------------------------------------------------------------------------
Quarter ended September 30, Half year ended September 30, Year ended
------------------------------------------------------------
2000 1999 2000 1999 March 31, 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash flows from operations
Profit before tax 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819
Other Income (18,80,59,827) (8,16,96,895) (33,68,00,507) (21,71,95,024) (36,62,06,181)
Loss (profit) on sale of fixed assets 8,720 (4,16,230) 53,829 (4,63,777) (8,73,015)
Increase (decrease)in provision for contingencies - - - 3,33,00,000 (6,66,00,000)
Increase (decrease) in provision for e-inventing the
Company - 3,50,00,000 (39,00,977) 3,50,00,000 39,00,977
Depreciation, depletion and amortization 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389
Decrease (increase) in sundry debtors (14,65,76,914) (26,71,34,722) (106,87,87,493) (48,95,21,379) (51,65,92,828)
Decrease (increase) in loans and advances (5,07,48,178) (8,30,09,030) (13,17,94,697) (17,73,97,884) (41,49,70,588)
Increase (decrease) in current liabilities and
provisions 34,84,56,392 4,17,59,020 76,19,16,176 17,70,67,854 42,26,37,450
Income taxes paid (23,58,99,316) (10,92,26,480) (32,25,31,791) (13,84,37,481) (35,53,53,877)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash from operations 168,71,71,003 39,45,82,235 238,56,35,132 86,09,58,868 249,47,55,146
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing
Proceeds from conversion of options - - 10,01,506 - 1,76,25,277
Expenses relating to issue of American Depositary
Shares - (3,26,400) - (2,05,30,090) (2,35,06,514)
Expenses relating to issue of ADS linked stock options - - - - (1,01,93,113)
Dividends paid (including dividend tax) - - (22,02,44,213) (8,91,36,007) (19,92,57,109)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing - (3,26,400) (21,92,42,707) (10,96,66,097) (21,53,31,459)
-----------------------------------------------------------------------------------------------------------------------------------
Cash flows from investing
Income from investments 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106
Proceeds of sale of fixed assets 1,87,023 4,20,448 2,37,761 5,71,709 10,20,400
Purchase of fixed assets (114,01,44,667) (38,55,70,016) (199,85,14,640) (59,76,16,481) (159,87,03,617)
Other long-term investments (9,56,09,608) - (22,96,18,268) - (13,08,00,000)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing (114,43,28,846) (31,99,08,996) (206,20,92,041) (47,76,08,449) (146,16,04,111)
-----------------------------------------------------------------------------------------------------------------------------------
Effect of exchange differences on translation of
foreign currency deposit maintained abroad 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
Total increase (decrease) in cash and cash equivalents
during the period 63,96,63,578 9,08,03,162 27,52,97,785 37,14,43,023 91,71,46,651
Cash and cash equivalents at the beginning of the
period 471,93,71,802 444,72,30,805 508,37,37,595 416,65,90,944 416,65,90,944
-----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note: During the half year ended September 30, 2000, the Company transferred
intellectual property rights in Onscan - a web focussed wireless-enabled
notification product, to Onscan Inc., USA, a company incubated by Infosys as
part of its ongoing effort to encourage and promote entrepreneurs amongst its
employees. The product was transferred for a gross consideration of Rs. 8.93
crore (US$ 2 million) received as equity, preferred voting and preferred non-
voting securities in Onscan Inc. and accordingly, is not considered in this
statement of cash flows.
This is the Cash Flow Statement 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 Deepak M. Satwalekar
Partner Chairman and Managing Director, President and Director
Chief Executive Officer Chief Operating Officer
Prof. Marti G. S. Gopalakrishnan K. Dinesh S. D. Shibulal
Subrahmanyam Deputy Managing Director Director Director
Director
Place: Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan
Date: October 10, 2000 Director and Director Director Company Secretary
Chief Financial Officer
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Statement of Cash Flows
-------------------------------------------------------------------------------------------------------------------------
in Rs
------------------------------------------------------------------------------------------------------------------------------------
Quarter ended September 30, Half year ended September 30, Year ended
--------------------------------------------------------------
2000 1999 2000 1999 March 31, 2000
------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of Balance Sheet items with cash flow items
<S> <C> <C> <C> <C> <C>
1. Loans and advances
As per Balance sheet 288,54,93,594 164,28,14,672 288,54,93,594 164,28,14,672 210,12,77,161
Less: Deposits with financial institutions/body (111,61,43,065) (76,11,62,937) (111,61,43,065) (76,11,62,937) (76,58,01,865)
corporate, included in cash equivalents
Advance income taxes considered separately (84,61,76,889) (32,78,45,496) (84,61,76,889) (32,78,45,496) (54,40,96,353)
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 92,31,73,640 55,38,06,239 92,31,73,640 55,38,06,239 79,13,78,943
statement
---------------------------------------------------------------------------------------------------------------------------------
2. Additions to fixed assets
As per Balance sheet 62,47,78,371 11,48,32,169 152,22,93,065 33,35,52,996 117,79,35,912
Add: Closing capital work-in-progress 104,58,25,080 41,28,99,285 104,58,25,080 41,28,99,285 56,96,03,505
Less: Opening capital work-in-progress (53,04,58,784) (14,21,61,438) (56,96,03,505) (14,88,35,800) (14,88,35,800)
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 114,01,44,667 38,55,70,016 199,85,14,640 59,76,16,481 159,87,03,617
statement
---------------------------------------------------------------------------------------------------------------------------------
3. Cash and cash equivalents
As per Balance sheet 424,28,92,315 377,68,71,030 424,28,92,315 377,68,71,030 431,79,35,730
Add: Deposits with financial institutions/body 111,61,43,065 76,11,62,937 111,61,43,065 76,11,62,937 76,58,01,865
corporate (as per 1 above)
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595
statement
---------------------------------------------------------------------------------------------------------------------------------
4. Income taxes paid
As per Profit and Loss Account 17,75,00,000 9,50,00,000 31,46,00,000 17,50,00,000 39,70,00,000
Add: Provision for tax on sale of intellectual - - 3,43,96,000 -
property rights
Decrease(increase) in balance in provision (15,70,48,745) (9,50,05,897) (32,85,44,745) (17,33,27,793) (39,46,62,254)
for taxes account
Increase(decrease) in balance in advance 21,54,48,061 10,92,32,377 30,20,80,536 13,67,65,274 35,30,16,131
income tax account
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 23,58,99,316 10,92,26,480 32,25,31,791 13,84,37,481 35,53,53,877
statement
---------------------------------------------------------------------------------------------------------------------------------
5. Other income
As per Profit and Loss Account 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
Less: Income from operating activities (77,27,790) (1,37,05,310) (1,00,94,642) (1,60,72,879) (2,43,31,899)
Profit on sale of fixed asset considered - (4,16,230) - (4,63,777) (8,73,015)
separately
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 18,80,59,827 8,16,96,895 33,68,00,507 21,71,95,024 36,62,06,181
statement
---------------------------------------------------------------------------------------------------------------------------------
6. Current liabilities and provisions
As per Balance sheet 272,77,79,820 128,93,45,120 272,77,79,820 128,93,45,120 165,97,02,419
Less: Provision for taxation considered
separately (95,45,64,487) (40,46,85,281) (95,45,64,487) (40,46,85,281) (62,60,19,742)
Provision for dividend considered
separately (16,53,78,418) (9,92,08,200) (16,53,78,418) (9,92,08,200) (19,84,18,210)
Provision for dividend tax considered (363,83,252) (1,09,12,902) (363,83,252) (1,09,12,902) (2,18,26,003)
separately
Provision for contingencies - (9,99,00,000) - (9,99,00,000)
Provision for e-inventing the company - (3,50,00,000) - (3,50,00,000) (39,00,977)
---------------------------------------------------------------------------------------------------------------------------------
Balance considered for preparing the cash flow 157,14,53,663 63,96,38,737 157,14,53,663 63,96,38,737 80,95,37,487
statement
---------------------------------------------------------------------------------------------------------------------------------
This is the Cash Flow Statement referred
to in our report of even date.
for Bharat S Raut & Co.
Chartered Accountants
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Satwalekar
Partner Chairman and Managing Director, President and Director
Chief Executive Officer Chief Operating Officer
Prof. Marti G. S. Gopalakrishnan K. Dinesh S. D. Shibulal
Subrahmanyam Deputy Managing Director Director Director
Director
Place: Bangalore T. V. Mohandas Pai Phaneesh Murthy Srinath Batni V. Viswanathan
Date: October 10, 2000 Director and Director Director Company Secretary
Chief Financial Officer
</TABLE>
9
<PAGE>
1. Significant accounting policies and notes on accounts
________________________________________________________________________________
Company overview
Infosys Technologies Limited ("Infosys" or "the Company") is a publicly
held company providing information technology ("IT") solutions principally
to Fortune 1000 and emerging new economy companies. Infosys' range of
services includes IT consulting, IT architecture, application development,
e-commerce and Internet consulting, and software maintenance. In addition,
the Company develops and markets certain software products. Headquartered
in Bangalore, India, Infosys has 17 state-of-the-art offshore software
development facilities located throughout India that enables it to provide
high quality, cost-effective services to clients in a resource-constrained
environment. The Company also maintains offices in North America, Europe
and Asia.
1.1 Significant accounting policies
1.1.1 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")
comprising 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 of the Company ("Management") make estimates
and assumptions that affect the reported amounts of revenue and expenses of
the period, reported balances of assets and liabilities and disclosures
relating to contingent assets and liabilities as of the date of the
financial statements. Examples of such estimates include 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.
1.1.2 Revenue recognition
Revenue from software development on time-and-materials contracts is
recognized based on software developed and billed to clients as per the
terms of specific contracts. On fixed-price contracts, revenue is
recognized based on milestones achieved as specified in the contracts on
the percentage-of-completion basis. Revenue from rendering Annual Technical
Services ("ATS") is recognized proportionately over the period in which
services are rendered. Revenue from the sale of licenses for the use of
software applications is recognized on transfer of the title in the user
license. 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 transferred.
1.1.3 Expenditure
The cost of software purchased for use in software development and services
is charged to revenue in the year the software is acquired. Project costs
in the nature of salaries, travel and other expenses incurred on fixed
price contracts, where milestones are yet to be reached are classified as
"Costs in excess of billings" in the balance sheet. Provisions are made for
all known losses and liabilities. Provisions are made for future
unforeseeable factors that may affect the profit on fixed-price software
development contracts. The leave encashment liability of the Company is
provided on the basis of an actuarial valuation. Provisions are made
towards likely expenses for providing post-sales client support on fixed-
price contracts.
1.1.4 Fixed assets
Fixed assets are stated at cost, after reducing accumulated depreciation
until the date of the balance sheet. Direct costs are capitalized until the
assets are ready for use and include financing costs relating to any
specific borrowing attributable to the acquisition of the fixed assets.
1.1.5 Capital work-in-progress
Advances paid to acquire fixed assets and the cost of assets not put to use
before the period-end, are disclosed under capital work-in-progress.
1.1.6 Depreciation
Depreciation on fixed assets is determined using the straight-line method
based on useful lives of assets as estimated by Management. Depreciation
for assets purchased/ sold during the period is proportionately charged.
Individual assets acquired for less than Rs. 5,000 are entirely depreciated
in the year of acquisition. Management estimates the useful lives for the
various fixed assets as follows:
________________________________________________
Buildings 15 years
Plant and machinery 5 years
Computer equipment 2-5 years
Furniture and fixtures 5 years
Vehicles 5 years
________________________________________________
10
<PAGE>
1.1.7 Retirement benefits to employees
1.1.7a Gratuity
In accordance with the Payment of Gratuity Act, 1972, Infosys 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, death 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' Gratuity
Fund Trust (the "Trust") in 1997, until which the Company made contributions to
a gratuity plan managed by the Life Insurance Corporation of India. Liabilities
with regard to the Gratuity Plan are determined by actuarial valuation, based
upon which, the Company contributes 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 comprise
central and state government bonds and debt instruments of government-owned
corporations.
1.1.7b Superannuation
Apart from being covered under the Gratuity Plan described above, the senior
officers of Infosys are also participants of a defined contribution plan. The
Company makes monthly contributions to the superannuation plan (the "plan")
based on a specified percentage of each covered employee's salary. The Company
has no further obligations under the Plan beyond its monthly contributions.
1.1.7c 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
Company make monthly contributions to this provident fund plan equal to a
specified percentage of the covered employee's salary.
Infosys established a Provident Fund Trust in 1996 to which a part of the
contributions are made each month. Prior thereto, the Company made contributions
to the provident fund plan administered by the Government of India. The
remainders of the contributions are made to the Government administered
provident fund. The Company has no further obligations under the provident fund
plan beyond its monthly contributions.
1.1.8 Research and development
Revenue expenditure incurred on research and development is charged off as
incurred. Capital expenditure incurred on research and development is
depreciated over the estimated useful lives of the related assets.
1.1.9 Foreign currency transactions
Sales made to overseas clients and collections deposited in foreign currency
bank accounts are recorded at the exchange rate as of the date of the respective
transactions. 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. Exchange differences are recorded when the amount actually
received on sales or actually paid when expenditure is incurred is converted
into Indian Rupee. The exchange differences arising on foreign currency
transactions are recognized as income or expense in the period in which they
arise.
Fixed assets purchased at overseas offices are recorded at cost, based on the
exchange rate as of the date of purchase. The charge for depreciation is
determined as per the Company's accounting policy. 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 also
recorded 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.
1.1.10 Investments
Investments are classified as current investments or long-term investments.
Current investments are carried at the lower of cost and fair value. Cost for
overseas investments comprises the Indian Rupee value of the consideration paid
for the investment. Provisions are recorded for any decline in the carrying
value as of the balance sheet date.
Long-term investments are carried at cost and provisions recorded to recognize
any decline, other than temporary, in the carrying value of such investment.
1.1.11 Investment in subsidiary
The investment in the subsidiary is accounted on the cost method, whereby, the
investment is carried at cost and the Company recognizes only dividends received
from the subsidiary as income in the profit and loss account. Provisions are
recorded to recognize any decline, other than temporary, in the carrying value
of the investment.
1.1.12 Income tax
Provision is made for income tax annually based on the tax liability computed
after considering tax allowances and exemptions. Provisions are recorded as
considered appropriate for matters under appeal due to disallowances or for
other reasons.
11
<PAGE>
1.2 Notes on accounts
The previous period's figures have been recast / restated, wherever to
conform to the current period's classification.
1.2.1 Capital commitments and contingent liabilities
a. The estimated amount of contracts remaining to be executed on
capital account, and not provided for (net of advances) is Rs.
121,56,43,540 as at September 30, 2000. The amount of such
contracts as at September 30, 1999 was Rs. 61,66,53,437 and as at
March 31, 2000 was Rs. 80,31,29,007.
b. The Company has outstanding guarantees and counter guarantees of
Rs. 6,51,30,000 as at September 30, 2000, to various banks, in
respect of the guarantees given by the banks in favor of various
government authorities and a customer. The guarantees and counter
guarantees outstanding as at September 30, 1999 were
Rs.1,58,84,263 and as at March 31, 2000 were Rs. 5,26,30,000.
c. Claims against the Company, not acknowledged as debts, amounted
to Rs. 8,75,532 as at September 30, 2000. Such claims, as at
September 30, 1999 were Rs. 17,91,814 and as at March 31, 2000
were Rs. 32,89,661.
1.2.2 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.
1.2.3 Managerial remuneration paid to the chairman, managing director and
whole-time directors
<TABLE>
<CAPTION>
in Rs.
------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------
2000* 1999 2000* 1999 2000
------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Salary 43,77,541 9,73,800 66,42,509 19,47,600 38,00,059
Contribution to provident fund and 4,87,061 3,09,780 8,70,466 6,19,560 12,08,855
other funds
Perquisites 10,88,801 6,32,970 18,28,674 15,78,369 37,32,482
------------------------------------------------------------------------------------------------------
</TABLE>
* includes the remuneration paid to three directors who were co-opted into
the board on May 27, 2000.
1.2.4 Managerial remuneration paid to non-whole-time directors
<TABLE>
<CAPTION>
in Rs.
------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
-----------------------------------------------------------------
2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Commission - - - - 48,17,800
Sitting fees 25,000 4,000 1,37,000 44,000 92,000
Reimbursement of expenses 2,94,513 2,25,891 4,98,674 4,56,605 10,13,703
------------------------------------------------------------------------------------------------
</TABLE>
1.2.5 Imports on CIF basis
<TABLE>
<CAPTION>
in Rs.
-----------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
------------------------------------------------------------------------
2000 1999 2000 1999 2000
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital goods 26,43,63,022 7,75,09,947 43,20,09,442 15,38,94,938 37,47,31,691
Software packages 30,54,632 1,67,09,821 92,38,916 2,08,06,798 2,54,95,652
-----------------------------------------------------------------------------------------------
</TABLE>
1.2.6 Expenditure in foreign currency (on the payments basis)
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Travel expenses 27,94,50,302 14,18,36,600 45,64,90,402 31,35,70,860 70,29,13,532
Professional charges 3,08,42,822 58,93,140 3,80,49,742 1,20,76,246 4,51,95,637
Other expenditure incurred overseas for 116,22,63,533 58,00,33,181 197,01,42,528 92,16,15,097 221,74,57,133
software development
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.7 Earnings in foreign exchange (on the receipts basis)
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income from software development 431,24,42,409 182,51,55,780 735,52,73,359 348,81,42,974 833,29,73,465
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
services and products
Interest received on deposits with banks 5,19,94,463 4,31,26,392 10,69,20,563 8,55,70,358 18,42,65,368
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.8 Depreciation on assets costing less than Rs. 5,000 each
During the six months ended September 30, 2000, the Company charged depreciation
at 100% in respect of assets costing less than Rs. 5,000 each, amounting to Rs.
10,04,17,795 (Rs. 2,27,08,905). For the three months ended September 30, 2000
the charge is Rs. 6,63,81,667 (Rs. 1,50,93,874) and for the previous year March
31, 2000 is Rs. 13,21,59,074.
1.2.9 Exchange differences
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Gains on the translation of Foreign 6,14,29,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
currency deposits
Net realized and unrealized exchange 13,21,48,664 5,24,43,677 17,31,28,032 8,86,41,299 8,76,31,024
gains - others
Total net realized and unrealized gains 19,35,78,085 6,89,00,000 34,41,25,433 18,64,00,000 18,69,58,099
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The gains on the translation of foreign currency deposits are separately
disclosed under "Other income" in the financial statements. Net realized and
unrealized exchange gains have been included in "Income from software
development services and products -overseas", except for an amount of Rs.
3,53,92,000 relating to the translation gains realized on repatriation of
certain ADS proceeds, which is also classified in the financial statements as
"Other income".
1.2.10 Research and development expenditure
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
---------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Capital 48,26,181 - 68,28,231 - 15,27,500
Revenue 4,00,76,886 2,26,17,590 7,16,59,376 3,88,51,990 8,07,35,940
Total research and development expenses 4,49,03,067 2,26,17,590 7,84,87,607 3,88,51,990 8,22,63,440
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.11 Provision for contingencies
The Company had instituted a contingency plan effective October 1, 1998 and made
a total provision of Rs. 9,99,00,000 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. For the year ended March
31, 2000, Rs. 2,42,29,154 was spent towards the Year 2000 transition effort,
which was set off against the provision and the remainder of Rs. 7,56,70,846 was
written back to the profit and loss account.
1.2.12 Provision for e-inventing the Company
The Company made a provision of Rs. 3,50,00,000 for the quarter ended September
30, 1999 towards e-inventing the Company. Until March 31, 2000 the Company had
incurred Rs. 3,10,99,023 towards e-inventing Infosys, which was set-off against
the provision earlier made. The remainder of Rs. 39,00,977 was incurred and set-
off against this provision during the first quarter of the current year.
1.2.13 Unearned revenue
Unearned revenue as of September 30, 2000 amounting to Rs. 73,48,39,451
(previous period Rs. 27,75,55,705 and previous year Rs. 17,56,71,963) primarily
consists of client billings on fixed-price, fixed-time-frame contracts for which
the related costs have not yet been incurred.
1.2.14 Dues to small-scale industrial undertakings
As of September 30, 2000, the Company had no outstanding dues to small-scale
industrial undertakings (previous period Rs. nil; previous year Rs. nil).
1.2.15 Balance of unutilized money raised by issue of American Depositary Shares
During the year ended March 31, 1999, Infosys made an Initial Public Offering of
American Depositary Shares ("ADS"), of US$ 70,380,000, equivalent to Rs.
296,86,00,000. The issue expenses amounted to Rs. 19,68,00,000 and the amount
utilized for capital investments until date is Rs. 277,18,00,000. The unutilized
money as on September 30, 1999 was Rs. 140,99,00,000, which was maintained in
foreign currency deposit accounts with various banks outside India.
13
<PAGE>
1.2.16 Stock option plans
The Company currently has three stock option plans. These are summarized below.
1994 Stock Option Plan ("the 1994 Plan")
As of September 30, 2000, 3,34,200 options to acquire 3,34,200 shares were
outstanding with the employees under the 1994 Plan. These options were granted
at an exercise price of Rs. 50 per option. In addition to the above, the number
of shares earlier issued to employees subject to lock-in-period is 16,94,600
shares.
1998 Stock Option Plan ("the 1998 Plan")
The Company's 1998 Stock Option Plan ("the 1998 Plan") provides for the grant of
non-statutory stock options and incentive stock options to employees. The
establishment of the 1998 Plan was approved by the Board of Directors in
December 1997 and by the Company's shareholders in January 1998. The Government
of India approved the 1998 Plan, subject to a limit of 14,70,000 equity shares
representing 29,40,000 ADSs to be issued under the plan. A total of 16,00,000
equity shares corresponding to 32,00,000 ADSs are currently reserved for issue
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.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Number of options granted, exercised and Three months ended Six months ended Year ended
forfeited September 30, September 30, March 31,
--------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Options outstanding, 8,23,366 4,19,000 6,89,500 4,19,000 4,19,000
Beginning of period/year
Granted 85,300 - 2,32,000 - 2,94,300
Exercised Nil - 1,334 - 23,800
Forfeited 37,200 - 48,700 - -
---------------------------------------------------------------------------------------------------------------------
Options outstanding, 8,71,466 4,19,000 8,71,466 4,19,000 6,89,500
end of period/year
---------------------------------------------------------------------------------------------------------------------
Weighted average US$ 83.40 US$ 17.00 US$ 83.40 US$ 17.00 US$ 58.53
Exercise price (Rs. 3,837) (Rs. 741) (Rs. 3,837) (Rs. 741) (Rs. 2,552)
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1999 Stock Option Plan ("the 1999 Plan")
In fiscal 2000, the Company instituted the 1999 Plan. The shareholders and the
Board of Directors approved the 1999 Plan 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 is 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 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.
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
Number of options granted, exercised and Three months ended Six months ended Year ended
forfeited September 30, September 30, March 31,
--------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Options outstanding, beginning of 16,41,850 - 10,06,800 - -
period/year
Granted 2,95,450 - 9,54,100 - 10,14,500
Exercised - - - - -
Forfeited 54,300 - 77,900 - 7,700
---------------------------------------------------------------------------------------------------------------------
Options outstanding, end of period/year 18,83,000 - 18,83,000 - 10,06,800
---------------------------------------------------------------------------------------------------------------------
Weighted average exercise price Rs. 5,343 N.A. Rs. 5,343 N.A. Rs. 4,268
---------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.17 Pro-forma disclosures relating to the Employee Stock Option Plans
("ESOPs")
The Securities and Exchange Board of India (SEBI) recently issued the (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which
is applicable to 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. All
options under the 1998 and 1999 stock option plans have been issued at fair
market value, hence there are no compensation costs.
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.
14
<PAGE>
<TABLE>
<CAPTION>
in Rs.
------------------------------------------------------------------------------------------------------------------
Three months ended Six months ended Year ended
September 30, September 30, March 31,
--------------------------------------------------------------------------------
2000 1999 2000 1999 2000
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net profit:
- As reported 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
- Adjusted pro forma 148,20,22,829 60,09,10,468 269,34,93,331 115,34,29,790 271,34,60,717
------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.18 Provision for taxation
The Company's profits from export activities are deductible from taxable income.
Moreover, most of Infosys' operations are conducted through 100% Export Oriented
Units ("EOU"), 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. The Government of India has recently amended the
tax incentive available to companies operating through export oriented units.
The period of tax exemption available to such companies has been restricted to
10 consecutive years commencing from the fiscal year in which the unit commences
software development or March 31, 2000, whichever is earlier. Additionally,
export related tax deductions apart from the 100% EOU scheme earlier described
are being phased out over a period of five years ending fiscal 2004.
1.2.19 Cash and bank balances
The cash and bank balances include interest accrued but not due on fixed
deposits amounting to Rs. 1,44,56,954 for the six month period ended September
30, 2000 (previous period Rs. 23,63,996 and previous year Rs. 94,92,514).
1.2.20 Loans and advances
"Advances recoverable in cash or kind or for value to be received" mainly
comprises prepaid travel and per-diem expenses and advances to vendors for
current assets.
Deposits with financial institutions and a body corporate comprise:
<TABLE>
<CAPTION>
in Rs.
------------------------------------------------------------------------------------------------------------------
Six months ended September 30, Year ended March 31,
------------------------------------------------------------------
2000 1999 2000
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Deposits with financial institutions:
Housing Development Finance 10,16,06,063 25,47,68,334 25,50,19,994
Corporation Limited
ICICI Limited 50,84,73,016 25,32,64,877 25,75,52,742
Deposits with body corporate:
G E Capital Services India Limited 50,60,63,986 25,31,29,726 25,32,29,129
----------------------------------------------------------------------------------------------------------------
</TABLE>
The above amounts include interest accrued but not due amounting to Rs.
1,61,10,876 (corresponding previous period Rs. 1,11,30,744 and previous year Rs.
1,58,01,863).
The financial institutions and the body corporate have AAA rating from Credit
Rating and Information Services of India Limited ("CRISIL").
Mr. Deepak M Satwalekar, Director, is the Managing Director of HDFC. Mr. N R
Narayana Murthy, Chairman and CEO, and Professor Marti G. Subrahmanyam,
Director, are also directors in ICICI Limited. Except as directors in these
financial institutions, these persons have no direct interest in these
transactions.
1.2.21 Current liabilities
Sundry creditors for other liabilities represent mainly the retention amounts
payable to the vendors, and amounts accrued for various other operational
expenses.
1.2.22 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 agreements. These amounts are disclosed
as "Land - leasehold" under "Fixed assets" in the financial statements.
1.2.23 Transfer of intellectual property rights
During the first quarter of the current fiscal, the Company transferred its
intellectual property rights in Onscan - a web-focussed wireless-enabled
notification product, to Onscan Inc., USA, a company incubated by Infosys as
part of its ongoing effort to encourage and promote budding entrepreneurs among
its employees. The product was transferred for a gross consideration of Rs.
8,93,40,000 (US$ 2 million), received as equity, preferred voting and preferred
non-voting securities in Onscan Inc. The income arising out of the transfer of
Rs. 5,49,44,000 (net of tax) is disclosed as an extraordinary item.
15
<PAGE>
1.2.24 Investments
Alpha Thinx Mobile Phone Services AG, Austria
During the current quarter, the Company invested Rs. 2,20,98,608 (equivalent to
(Euro)555,800) and acquired 27,790 bearer shares of nominal value (Euro)1 each,
at an issue price of (Euro)20 per share in Alpha Thinx Mobile Phone Services AG
("Alpha Thinx"), a Vienna-based company. Alpha Thinx operates in the wireless
Internet space and plans to host interactive services for mobile users across
Europe.
Asia Net Media BVI Ltd., the British Virgin Islands
During the current quarter, the Company invested Rs. 6,84,75,000 (equivalent to
US$ 1,500,000) and acquired 3,00,00,000 Ordinary Shares of par value US$ 0.01
each, at an issue price of US$ 0.05 per Ordinary Share in Asia Net Media BVI
Limited ("Asia Net"). Asia Net intends to leverage under-exploited offline
brands in media and entertainment by delivering them through online channels and
to establish a synergistic network of companies in this space.
16
<PAGE>
CiDRA Corporation, USA
During the first quarter of the current fiscal the Company made a strategic
investment of Rs. 13,40,08,660 comprising 33,333 fully paid Series D Convertible
Preferred Stock, par value of US$ 0.01 each, at US$ 90 each in CiDRA
Corporation, USA. CiDRA Corporation is a developer of photonic devices for high-
precision wavelength management and control for next-generation optical
networks.
M-Commerce Ventures Pte. Ltd., Singapore
During the period, the Company agreed to invest Singapore $ ("S$") 1,000,000 in
M-Commerce Ventures Pte. Ltd ("MCV"), a Singapore based venture fund. As at
September 30, 2000, the Company made an investment of Rs. 50,36,000 (equivalent
to S$ 200,000), and acquired 20 capital units in MCV. Each unit in MCV
represents one ordinary share of S$ 1 each, issued at par, and nine redeemable
preference shares at a par value of S$ 1 each, with a premium of S$ 1,110 per
redeemable preference share. MCV is promoted by the Economic Development Board,
Singapore and intends to focus on companies offering mobile portals, personal
information management and messaging, bandwidth optimization and other key
enablers of m-commerce.
1.2.25 Segment reporting
The Company's operations predominantly relate to providing IT services, which is
delivered to globally located customers.
The accounting principles that have been consistently used to record revenue,
expenditure, assets and liabilities in the individual segments are as set out in
the note on significant accounting policies.
While the primary segment reporting is already set out in detail in the
Company's balance sheet, statement of profit and loss and the various schedules
and notes thereto, the secondary disclosures are as follows:
<TABLE>
<CAPTION>
in Rs.
---------------------------------------------------------------------------------------------------------------------
Three months ended September 30, Six months ended September 30, Year ended
March 31,
-------------------------------------------------------------------------------------------
2000 1999 2000 1999 2000
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
North America 348,68,10,776 167,18,09,460 625,81,64,972 310,82,51,725 713,27,33,054
Europe 80,94,58,817 30,84,40,362 142,00,38,934 58,76,58,900 129,09,73,822
Rest of the world 25,97,02,570 11,09,73,267 51,21,11,714 19,98,18,838 52,40,04,100
India 10,07,73,231 8,75,82,375 17,28,37,455 12,36,96,241 26,69,37,092
---------------------------------------------------------------------------------------------------------------------
Total 465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068
---------------------------------------------------------------------------------------------------------------------
</TABLE>
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 geographical segments as the underlying
services are used interchangeably between reportable segments. Management
believes that it is not practicable to provide segment disclosures relating to
segment costs and expenses, and consequently segment profits or losses, since a
realistic allocation can not be made.
Moreover the fixed assets used in the Company's business or the liabilities
contracted are not identifiable to any particular reportable segment as the
fixed assets and services can be used interchangeably among segments.
Consequently, management believes that it is not practicable to provide segment
disclosures relating to total assets since a meaningful analysis based on the
available data among the various geographic segments is not possible.
1.2.26 Related party transactions
The Company entered into related party transactions during the half year with
Yantra Corporation, USA, the subsidiary of the Company and key management
personnel.
The transactions with Yantra comprise sales of Rs. 10,37,00,336 during the six
months ended September 30, 2000. The corresponding amounts for the six months
ended September 30, 1999 and the year ended March 31, 2000 were Rs. 4,80,87,782
and Rs. 11,40,18,372 respectively. The outstanding dues from the subsidiary as
set out in schedule 5, Sundry Debtors, to the financial statements.
Key management personnel are non-director officers of the Company, who have the
authority and responsibility for planning, directing and controlling the
activities of the Company. The loans and advances receivable from non-director
officers is stated in schedule 7, Loans and advances, to the financial
statements.
1.2.27 Provisions for doubtful debts
The Company normally provides for all debtor dues outstanding for 180 days or
longer after considering its historical experience, the individual
creditworthiness of the debtors and the current economic environment. In the
second quarter of fiscal 2001, the Company provided for doubtful debts of Rs.
3,64,00,351 for dues from two of its customers although these dues were less
than 180 days old, as the amounts were considered doubtful of recovery.
Management continues pursuing the parties for recovery of the dues, in part or
full.
17
<PAGE>
<TABLE>
<CAPTION>
At a glance - US GAAP
---------------------------------------------------------------------------------------------------------------------------------
US$ in millions, except as otherwise stated
---------------------------------------------------------------------------------------------------------------------------------
Three months ended September 30 Six months ended September 30 Year ended
--------------------------------------------------------------------
2000 1999 2000 1999 March 31, 2000
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
For the period
Revenues 97.94 47.94 178.20 87.67 203.44
Export revenues 96.87 47.20 176.12 86.53 200.54
Operating income 32.20 14.62 58.60 26.92 60.50
Net income 32.78 14.72 59.61 28.03 61.34
Operating income as a percentage of total
revenues 32.88% 30.48% 32.89% 30.71% 29.74%
Net income as a percentage of total 33.48% 30.70% 33.46% 31.97% 30.15%
revenues
Basic earnings per share $0.50 $0.22 $0.90 $0.42 $0.93
Dividend declared per equity share NA NA $0.05 $0.03 $0.10
Capital investments 22.99 8.72 41.14 12.97 35.93
At the end of the period
Total assets 279.89 181.22 219.28
Property, plant and equipment - net 79.37 32.22 47.55
Cash and cash equivalents 116.48 104.13 116.60
Working capital 146.05 123.27 137.94
Total debt -- -- --
Stockholders' equity 243.38 162.25 198.14
Common stock 8.59 8.59 8.59
Market capitalization 10,583.72 5,412.82 13,609.67
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
Market capitalization is calculated by considering the Indian market price for
the shares outstanding at the period / year end.
TOTAL REVENUE
(US$ in millions)
Year ended March 31, 2000 203.44
Half year ended September 30, 1999 87.67
Half year ended September 30, 2000 178.20
Quarter ended September 30, 1999 47.94
Quarter ended September 30, 2000 97.94
EXPORTS
(US$ in millions)
Year ended March 31, 2000 200.54
Half year ended September 30, 1999 86.53
Half year ended September 30, 2000 176.12
Quarter ended September 30, 1999 47.20
Quarter ended September 30, 2000 96.87
NET INCOME
(US$ in millions)
Year ended March 31, 2000 61.34
Half year ended September 30, 1999 28.03
Half year ended September 30, 2000 59.61
Quarter ended September 30, 1999 14.72
Quarter ended September 30, 2000 32.78
18
<PAGE>
Shareholder information
--------------------------------------------------------------------------------
1. 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
2. Listing fees Paid for all the above stock exchanges
for 2000-2001.
3. Listing on stock exchanges NASDAQ National Market in the United
outside India States
33 Whitehall Street, New York, NY-1004-
4087
Tel.: +1-212-709-2400, Fax: +1-212-709-
2496
4. Registered office Electronics City, Hosur Road, Bangalore
- 561 229, India.
Tel.: +91-80-852 0261, Fax: +91-80-852
0362
Homepage: www.infy.com
------------
5. 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 the three-month period
ended September 30, 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>
July 8,815 6,401 91,78,299 8,812 6,355 88,47,755 8,790 6,400 44,147
August 8,617 6,255 1,00,98,169 8,603 6,256 1,26,23,716 8,500 6,230 64,163
September 8,930 6,950 1,40,65,483 8,949 6,975 1,33,52,783 8,998 6,985 74,460
-----------------------------------------------------------------------------------------------------------------------------
Total 3,33,41,951 3,48,24,254 1,82,770
% of volume traded to average
shares outstanding for the
period 52.04% ** 54.35% ** 0.29% **
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
** The number of shares outstanding is 6,40,68,800. The equity shares
underlying the American Depositary Shares (ADSs) have been excluded for the
purpose of this calculation.
6. Par value of equity shares Rs. 5 each fully paid-up
7. Share transfers in physical form Karvy Consultants Limited
and other communication regarding Registrars and Share Transfer Agents
share certificates, dividends, T.K.N. Complex, No. 51/2, Vanivilas
change of address, etc., in India Road, Opp. National College,
may be addressed to Basavanagudi, Bangalore - 560 004,
India. Tel.: +91-80-662 1184/92/93,
Fax: +91-80-662 1169
E-mail: [email protected]
8. 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 three-
month period ended September 30, 2000 was 2,620 (previous year - 2,87,568).
100.00% of transfers (previous year - 99.79%) were completed within 15 days.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------
Three-month period ended September 30,
------------------------------------------------------------------------------------------------------------------------------
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 3 1 2,620 100.00 25 12 2,86,168 99.51
11 - 15 0 0 0 0.00 6 0 800 0.28
16 - 20 0 0 0 0.00 2 0 200 0.07
* 21 and above 0 0 0 0.00 1 2 400 0.14
------------------------------------------------------------------------------------------------------------------------------
3 1 2,620 100.00 34 14 2,87,568 100.00
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Delays beyond 21 days were due to compliance with legal requirements
9. Investors' services - complaints received during
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
Three-month period ended September 30,
------------------------------------------------------------------------------------------------------------------------------
Nature of complaints 2000 1999
------------------------------------------------------------------------------------------------------------------------------
Received Attended to Received Attended to
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Non-receipt of share certificates 0 0 0 0
2. Non-receipt of bonus shares 2 2 22 22
3. Letters from Stock Exchanges, SEBI, etc. 0 0 0 0
4. Non-receipt of dividend 22 22 16 16
------------------------------------------------------------------------------------------------------------------------------
24 24 38 38
------------------------------------------------------------------------------------------------------------------------------
</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
three-month period ended September 30, 2000 except in cases of disputes or
legal impediments.
10. Legal proceedings
The company is responding to various petitions, relating to the title to its
shares, filed by certain parties. These are unlikely to have a significant
effect on the affairs of the company.
11. Distribution of shareholding as on September 30
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
2000 1999
------------------------------------------------------------------------------------------------------------------------------
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 53,505 81.46 7,42,468 1.16 6,864 44.92 4,21,642 0.66
101 - 200 2,446 3.72 4,21,787 0.66 2,060 13.48 7,92,106 1.24
201 - 500 3,097 4.71 10,94,882 1.71 2,626 17.18 19,70,820 3.08
501 - 1000 2,701 4.11 20,06,191 3.13 2,051 13.42 31,02,220 4.84
1001 - 5000 3,032 4.62 64,39,382 10.05 1,297 8.49 52,52,610 8.20
5001 - 10000 363 0.55 25,97,345 4.05 153 1.00 22,01,626 3.44
10001 and above 542 0.83 5,01,18,322 78.23 231 1.51 4,97,09,866 77.58
Shares in transit in NSDL - - 6,48,423 1.01 - - 6,17,910 0.96
------------------------------------------------------------------------------------------------------------------------------
65,686 100.00 6,40,68,800 100.00 15,282 100.00 6,40,68,800 100.00
Equity shares underlying 1* 20,82,567 1* 20,70,000
American Depositary Shares
------------------------------------------------------------------------------------------------------------------------------
Total 65,687 6,61,51,367 15,283 6,61,38,800
------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Held by beneficial owners outside India.
# Shares have been restated consequent to the 2-for-1 stock-split in
February 2000.
<PAGE>
12. Categories of shareholders as on September 30
<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 61,943 25.55 1,69,02,158 14,272 25.18 1,66,54,480
Companies 2,679 2.30 15,18,671 646 1.37 9,08,042
FIIs 346 25.27 1,67,16,870 154 25.58 1,69,18,686
OCBs and NRIs 499 0.75 4,93,441 88 0.74 4,89,816
Founders and their families 23 29.24 1,93,45,960 18 29.58 1,95,64,200
Mutual Funds, Banks, FIs 196 12.76 84,43,277 104 13.48 89,15,666
Shares in transit in NSDL - 0.98 6,48,423 _ 0.94 6,17,910
Equity shares underlying 1* 3.15 20,82,567 1* 3.13 20,70,000
American Depositary Shares
------------------------------------------------------------------------------------------------------------------------------------
Total 65,687 100.00 6,61,51,367 15,283 100.00 6,61,38,800
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Held by beneficial owners outside India.
# Shares have been restated consequent to the 2-for-1 stock-split in
February 2000.
13. Shares under lock-in
Employees 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
(12) above.
No. of shares subject to lock-in as on September 30,
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
2000 1999
-----------------------------------------------------------------------------------------------------------
Period of lock-in No. of shares No. of employees No. of shares # No. of employees
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
4-5 years - - 7,90,400 1,052
3-4 years 7,63,000 1,006 5,04,800 342
2-3 years 4,89,200 335 2,06,400 152
1-2 years 1,95,200 147 2,61,200 106
0-1 years 2,47,200 103 2,14,200 75
-----------------------------------------------------------------------------------------------------------
</TABLE>
# Shares have been restated consequent to the 2-for-1 stock-split in
February 2000.
As on September 30, 2000, 547 employees hold rights to 3,34,200 shares of
par value of Rs. 5 each which are subject to a lock-in of 3-4 years.
Currently, 1,573 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 September 30, 2000, the ITL
Employees Welfare Trust holds 2,24,600 shares of par value of Rs. 5 each.
The 1994 Stock Offer Plan has since been terminated.
Employees 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 three-month period ended September 30, 2000,
options were granted to 52 employees to acquire 85,300 ADSs corresponding to
42,650 equity shares of par value of Rs. 5 each. During the three-month
period ended September 30, 2000, there was no exercise of stock options. As
on September 30, 2000, 170 employees hold options to acquire 8,71,466 ADSs
corresponding to 4,35,733 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
----------------------------------------------------------
No. of ADSs Options No. of Balance ADSs
Period employees (Net) employees ADSs options
-----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 1999 33 4,04,200 19 24,734 3,79,466
Year ended March 31, 2000 67 2,73,500 - - 2,73,500
Quarter ended June 30, 2000 56 1,33,200 - - 1,33,200
Quarter ended September 30, 2000 53 85,300 - - 85,300
-----------------------------------------------------------------------------------------------------------------------
Total 8,96,200 24,734 8,71,466
-----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Employees 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 three-month period ended September 30, 2000, options were granted
to 2,226 employees to acquire 2,95,450 equity shares of par value of Rs. 5
each. As on September 30, 2000, 7,107 employees hold options to acquire
18,83,000 shares of par value of Rs. 5 each. Details of options held by
employees under the Employee Stock Offer Plan (ESOP) 1999 are given below.
No. of options granted and forfeited
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
Period Granted Forfeited Balance
-------------------------------------------------------
No. of No. of No. of No. of
employees options employees options
------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Year ended March 31, 2000 1,228 10,14,500 52 40,600 9,73,900
Quarter ended June 30, 2000 4,227 6,58,650 258 39,850 6,18,800
Quarter ended September 30, 2000 2,226 2,95,450 23 5,150 2,90,300
------------------------------------------------------------------------------------------------------------------
Total 19,68,600 85,600 18,83,000
------------------------------------------------------------------------------------------------------------------
</TABLE>
14. Dematerialization of shares and liquidity
Your company was the first in India to pay a one-time custodial fee of Rs.
44.43 lakh 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 97% of the
company's shares are now held in electronic form.
15. Financial calendar (tentative and subject to change)
Interim dividend payment 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>
<S> <C>
16. 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, Director (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 address: [email protected]) (e-mail address: [email protected])
</TABLE>
<TABLE>
<S> <C> <C>
17. 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)
</TABLE>
18. 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
<PAGE>
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 three-month period ended
September 30, 2000 are:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------
High Low Volume
----------------------------------------------------------------------------------------
$ Rs. $ Rs. Nos.
--------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
July 186.94 16,776 120.00 10,769 25,33,000
August 169.13 15,475 96.50 8,830 37,00,100
September 164.00 15,091 121.00 11,134 20,45,300
--------------------------------------------------------------------------------------------------------
Total 82,78,400
--------------------------------------------------------------------------------------------------------
% of volume traded to total float 198.75%*
</TABLE>
* 2 ADS = 1 equity share
$ have been converted into Indian rupees at the monthly closing rates
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 into
$ at the monthly closing rates.
Price (INR)
% Premium
<TABLE>
<CAPTION>
07-Jul 14-Jul 21-Jul 28-Jul 04-Aug 11-Aug 18-Aug 25-Aug 30-Aug 08-Sep 15-Sep 22-Sep 29-Sep
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Series2 16243 14493 13280 11666 10591 11678 13405 14457 13245 14367 13067 11687 12147
-----------------------------------------------------------------------------------------------------
Series1 8488 7770 7349 6845 6325 7236 7971 8156 7852 8583 8498 7041 7361
-----------------------------------------------------------------------------------------------------
Series3 91.36 86.53 80.71 70.43 67.45 61.38 68.17 77.26 68.68 67.38 53.76 65.98 65.01
-----------------------------------------------------------------------------------------------------
</TABLE>
* 2 ADS = 1 equity share (Source: Bloomberg)
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.
23
<PAGE>
Segment Information
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Rs. in lakhs
-------------------------------------------------------------------------------------------------------------------
Revenue by Quarter ended September 30, Half year ended September 30, Year ended
-----------------------------------------------------------------------
2000 1999 2000 1999 March 31, 2000
-------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Geographical segments
North America 34,868.11 16,718.10 62,581.65 31,082.52 71,327.35
Europe 8,094.59 3,084.40 14,200.39 5,876.59 12,909.74
Rest of the world 2,597.03 1,109.73 5,121.12 1,998.19 5,240.03
India 1,007.72 875.82 1,728.37 1,236.95 2,669.36
-------------------------------------------------------------------------------------------------------------------
46,567.45 21,788.05 83,631.53 40,194.25 92,146.48
-------------------------------------------------------------------------------------------------------------------
Business segments
Branded services - 2,096.91 - 4,243.18 5,895.00
Products 1,205.70 875.41 2,063.27 1,132.33 2,290.12
Software development and
maintenance 43,403.87 17,857.55 78,099.30 32,481.43 80,047.26
Treasury 1,957.88 958.18 3,468.96 2,337.31 3,914.10
-------------------------------------------------------------------------------------------------------------------
46,567.45 21,788.05 83,631.53 40,194.25 92,146.48
-------------------------------------------------------------------------------------------------------------------
</TABLE>
Note:
Exchange differences arising on translation of foreign currency deposits kept
abroad has been included under treasury.
<TABLE>
<CAPTION>
Geographical segment Business segment
quarter ended September 30, 2000 quarter ended September 30, 2000
<S> <C> <C> <C>
North America 74.9% Treasury 4.2%
Europe 2.2% Products 2.6%
India 17.3% Software development
Rest of the world 5.6% and maintenance 93.2%
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Ratio analysis
-----------------------------------------------------------------------------------------------------------------------------------
Quarter ended Half year ended Year ended
September 30, September 30, March 31,
------------------------------------------
2000 1999 2000 1999 2000
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios - Financial performance
Export revenue / total revenue (%) 94.76 94.12 94.74 92.97 94.38
Domestic revenue / total revenue (%) 1.04 1.48 1.11 1.21 1.37
Other income / total revenue (%) 4.20 4.40 4.15 5.82 4.25
Employee costs / total revenue (%) 35.99 36.15 37.09 34.96 36.31
Administration expenses / total revenue (%) 9.28 7.06 8.58 7.21 7.54
Operating expenses / total revenue (%) 57.91 60.56 58.30 59.23 58.88
Depreciation / total revenue (%) 5.20 4.92 5.02 4.99 5.78
Tax / total revenue (%) 3.81 4.36 3.76 4.35 4.31
Tax / PBT (%) 10.33 12.63 10.26 12.17 12.19
EBIDTA / total revenue (%) 42.09 39.44 41.70 40.77 41.12
PAT from ordinary activities / total revenue (%) 33.07 30.16 32.92 31.43 31.03
PAT from ordinary activities / average net worth (%) (LTM) 48.82 45.62 48.82 45.62 40.63
ROCE (PBIT/Average capital employed) (%) (LTM) 54.85 52.48 54.85 52.48 46.27
Return on invested capital (%) (LTM) 104.97 101.48 104.97 101.48 111.68
Capital output ratio (LTM) 1.47 1.48 1.47 1.48 1.31
Invested capital output ratio (LTM) 3.30 3.43 3.30 3.43 3.82
Ratios - Balance sheet
Debt-Equity ratio -- - --
Debtors turnover (Days)* 55 64 55 64 56
Current ratio 3.50 5.24 3.50 5.24 4.69
Cash and equivalents / total assets (%) 48.98 65.99 48.98 65.99 61.00
Cash and equivalents / total revenue (%) (LTM) 39.53 65.22 39.53 65.22 55.17
Depreciation / average gross block (%) (LTM) 23.60 26.06 23.60 26.06 23.50
Technology investment / total revenue (%) (LTM) 6.17 6.71 6.17 6.71 5.86
Ratios - Growth**
Export revenue (%) 115 74 112 74 74
Total revenue (%) 114 81 108 84 80
Operating expenses (%) 104 68 105 64 69
Operating profit (%) 128 104 113 122 98
Net profit (from ordinary activities) (%) 134 131 118 143 115
Per - share data (Period End)
Earnings per share from ordinary activities (Rs.) 23.28 9.93 41.62 19.10 43.23
Earnings per share (including extraordinary items) (Rs.) 23.28 9.93 42.45 19.10 44.37
Cash earnings per share from ordinary activities (Rs.) 26.95 11.55 47.96 22.13 51.27
Cash earnings per share (including extraordinary items) (Rs.) 26.95 11.55 48.79 22.13 52.42
Book value (Rs.) 165.38 103.96 165.38 103.96 125.97
Price / earning (LTM) 111.96 113.89 111.96 113.89 207.50
Price / cash earnings (LTM) 95.46 94.09 95.46 94.09 174.96
Price / book value 44.51 34.31 44.51 34.31 71.21
EPS growth (%) 134.39 131.39 117.96 142.59 115.07
PE / EPS Growth 0.83 0.87 0.95 0.80 1.80
Dividend per share 2.50 1.50 2.50 1.50 4.50
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
** Denotes growth compared with figures of the corresponding period in the
previous year.
Note: The ratio calculations are based on Indian GAAP and have
been adjusted for Stock split.
LTM- Last twelve months
25
<PAGE>
Infosys Technologies Limited
----------------------------------------------
United States
Addison
15305 Dallas Parkway
Suite 210
Addison, TX 75001
Tel.: 972 770 0450
Fax: 972 770 0490
Bellevue
10900 NE 4th St, #2300
Bellevue, WA 98004
Tel.: 425 990 1028
Fax: 425 990 1029
Cranford
20 Commerce Drive
Cranford, NJ 07016
Tel.: 908 497 1710
Fax: 908 497 1770
Fremont
34760 Campus Drive
Fremont, CA 94555
Tel.: 510 742 3000
Fax: 510 742 3090
Marietta
1950 Spectrum Circle, #400
Marietta, GA 30067
Tel.: 770 857 4428
Fax: 770 857 2258
Newport Beach
4590 MacArthur Suite 500
Newport Beach, CA 92660
Tel.: 949 475 0196
Fax: 949 475 0198
Oakbrook Terrace
One Tower Lane, #1700
Oakbrook Terrace, IL
60181
Tel.: 630 573 6050
Fax: 630 573 6051
Quincy
Two Adams Place
Quincy, MA 02169
Tel.: 781 356 3109
Fax: 781 356 3150
Troy
100 Liberty Center,
#200 West Big Beaver
Troy, MI 48084
Tel.: 248 524 0320
Fax: 248 524 0321
Australia
Melbourne
Level 7, 505 St. Kilda Road
Melbourne, Victoria 3004
Tel.: 613 9868 1607
Fax: 613 9868 1652
Fax: 613 9820 0777
Sydney
Level 4, 90 Mount Street,
North Sydney, NSW 2060
Tel.: 612 9954 0036
Fax: 612 8904 1344
Belgium
Dreve Richelle 161,
Building N
1410 Waterloo, Brussels
Tel.: 322 352 8743
Fax: 322 352 8844
Canada
5140 Yonge Street
Suite 1400
Toronto, Ontario M2N 6L7
Tel.: 416 224 7420
Fax: 416 224 7449
Germany
TOPAS 2
Mergenthalerallee, 79-81
65760 Eschborn/Frankfurt
Tel.: 49 6196 920 2115
Fax: 49 6196 920 2320
Hong Kong
16F Cheung Kong Centre
2 Queen's Road Central
Central, Hong Kong
Tel.: 852 2297 2806
Fax: 852 2297 0066
Japan
4F Madre Matsuda Bldg.
4-13, Kioi-Cho,
Chiyoda-Ku Tokyo 102-0094
Tel.: 813 3234 3597
Fax: 813 3239 3300
Sweden
Stureplan 4C, 4tr,
114 35, Stockholm
Tel.: 468 463 1112
Fax: 468 463 1114
UK
10/th/ Floor, Emerald House
7-15 Lansdowne Road
Croydon, Surrey
CR0 2BX
Tel.: 44 20 8774 3329
Fax: 44 20 8686 6631
India
Bangalore
Electronics City
Hosur Road, Bangalore 561 229
Tel.: 080 852 0261
Fax: 080 852 0362
Reddy Building
K-310, 1st Main, 5th Block
Koramangala,
Bangalore 560 095
Tel.: 080 553 0392
Fax: 080 553 0391
Pavithra Complex, #1, 27th
Main, 2nd Cross, 1st Stage
BTM Layout,
Bangalore 560 068
Tel.: 080 668 1755
Fax: 080 668 0181
Infosys Towers
No. 27, Bannerghatta Road,
3rd Phase
J. P. Nagar,
Bangalore 560 076
Tel.: 080 6588668
Fax: 080 6588676
Bhubaneswar
Plot #N-1/70, Nayapalli,
Adjoining Planetarium on
NH5, Post RRL,
Bhubaneswar 751 013
Tel.: 0674 584068 - 71
Fax: 0674 583991
Plot No. E/4 Infosys City
Chandaka
Bhubaneswar 751 014
Tel.: 0674 442 194
Chennai
1st & 2nd Floor,
Alexander Square,
35 Sardar Patel Road,
Guindy,
Chennai 600 032
Tel.: 044 2300031- 40
Fax: 044 2300091
No. 138 Sholinganallur
Old Mahabalipuram Road
Chennai 600 119
Tel.: 044 496 4304
Archbishop Arokia Swamy
Building
145, Santhome High Road
Mylapore (Santhome)
Chennai 600 004
Tel.: 044 4612021
Fax: 044 4956958
Hyderabad
#1Q3-A1, First Floor,
Cyber Tower, Hitec City
Madhapur,
Hyderabad 500 033
Tel.: 040 3100242
Fax: 040 3100243
Mangalore
#16/403 Star of Bombay
Complex
3/rd/ Floor, Kankanady
Mangalore 575 002
Tel.: 0824 439401-7 &
434401-06
Fax: 0824 439430
Kuloor Ferry Road,
Kottara Cross,
Mangalore 575 006
Tel.: 0824 451485-88
Fax: 0824 451504
Mohali (Chandigarh)
B100, Phase VIII, Industrial
Area, SAS Nagar
Mohali 160 059
Tel.: 0172 254191/92/94
Fax: 0172 254193
Mumbai
85, 'C', Mittal Towers,
8th Floor
Nariman Point,
Mumbai 400 021
Tel.: 022 2846490
Fax: 022 2846489
Mysore
Sree Jayachamarajendra
College of Engineering -
Science and Technology
Entrepreneurs Park (SJCE-
STEP), Manasagangothri
Mysore 570 006
Tel.: 0821 500001-06
Fax: 0821 511614
New Delhi
K30, Green Park Main,
Behind Green Park Market
New Delhi 110 066
Tel.: 0116514829/ 30
Fax: 011 6853366
Pune
3/rd/ Floor, 321/A/3 TPS III
Shankar Seth Road
MAhatma Phule Peth
Pune 411 042
Tel.: 0212 647420/21
Fax: 0212 648226
Plot #1, Infotech Park
MIDC
Hijawadi, Taluka Mulshi,
Pune 411 027
Tel.: 02139 32801 - 03
Fax: 02139 32832
------------------------------------------------------------------------------
-------------------------------------------------------------------------
Bankers
ICICI Bank Ltd. Visit Infosys at www.infy.com
Hongkong and Shanghai Banking
Corporation Ltd. Send e-mail to [email protected]
Bank of America
Call us at:
Company secretary within the U.S.
V. Viswanathan 1-800-ITL INFO outside the U.S.
Auditors 91-80-852 0261
Bharat S Raut and Co.
Chartered Accountants
Independent auditors
(US GAAP)
KPMG
------------------------------------------------------------------------
(C) 2000 Infosys Technologies Limited, Bangalore, India
Infosys acknowledges the proprietary rights in the trademarks and
product names of other companies mentioned in this document.
-----------------------------------------------------------------------------
26
