Infosys Ltd


BSE: 500209 | NSE: INFY | ISIN: INE009A01021 
Market Cap: [Rs.Cr.] 191,816 | Face Value: [Rs.] 5
Industry: Computers - Software - Large

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Director's Report

DIRECTORS

To the members,

We are delighted to present the report on our business and operations for the yearended March 31, 2013.

1. Results of our operations

in Rs. crore, except per share

2013 2012
Income from software services and products 36,765 31,254
Software development expenses 21,662 17,835
Gross profit 15,103 13,419
Selling and marketing expenses 1,870 1,453
General and administration expenses 2,218 1,905
Operating Profit Before Interest, Depreciation, Taxes and Amortization (PBIDTA) 11,015 10,061
Interest
Depreciation 956 794
Operating profit 10,059 9,267
Other income 2,215 1,829
Net profit before exceptional item and tax 12,274 11,096
Dividend income (1) 83 578
Net profit before tax 12,357 11,674
Provision for taxation 3,241 3,204
Net profit after tax and exceptional item 9,116 8,470
Profit and Loss account balance brought forward 19,993 15,591
Intercompany dividend
Reserves on termination of Infosys Consulting Inc. (84)
Amount available for appropriation 29,109 23,977
Dividend
Interim 862 862
Special dividend 574
Final 1,550 1,263
Total dividend 2,412 2,699
Dividend tax 403 438
Amount transferred to general reserve 911 847
Balance in Profit and Loss account 25,383 19,993
Earnings Per Share (EPS) before exceptional item (2)
Basic 157.55 139.07
Diluted 157.55 139.06
EPS after exceptional item (2)
Basic 158.76 147.51
Diluted 158.76 147.50

Notes : 1 crore = 10 million

(1) Dividend received of ` 83 crore and ` 578 crore from the wholly-ownedsubsidiary, Infosys Australia Pty. Limited, during the years ended March 31, 2013 andMarch 31, 2012, respectively.

(2) Equity shares are at par value of ` 5/- each.

2. Business

Our total income increased to Rs. 36,765 crore from Rs. 31,254 crore in the previousyear, at a growth rate of 17.6%. Our software export revenues aggregated to Rs. 35,932crore, up by 17.8% from Rs. 30,514 crore in the previous year. Out of the total revenue,63.8% came from North America, 21.8% from Europe, 2.3% from India and 12.1% from the Restof the World. Our revenues from India have increased to Rs. 833 crore from Rs. 740 crore,with a growth rate of 12.6%. The share of the fixed-price component of the business was40.0%, compared to 39.3% during the previous year.

Our gross profit amounted to Rs. 15,103 crore (41.1% of revenue) as against Rs. 13,419crore (42.9% of revenue) in the previous year. The Profit Before Interest, Depreciation,Taxes and Amortization (PBIDTA) amounted to Rs. 11,015 crore (30.0% of revenue) as againstRs. 10,061 crore (32.2% of revenue) in the previous year. Sales and marketing costs were5.1% and 4.6% of our revenue for the years ended March 31, 2013 and March 31, 2012,respectively. General and administration expenses were 6.0% and 6.1% of our revenuesduring the current year and previous year, respectively. The net profit before exceptionalitem and tax wasRs. 12,274 crore (33.4% of revenue) as against Rs. 11,096 crore (35.5% ofrevenue) in the previous year. We seek long-term partnerships with our clients that willenhance their value while addressing their IT requirements. Our client-centric approachhas resulted in high levels of client satisfaction. We derived 97.8% of our consolidatedrevenues from repeat business. We, along with our subsidiaries, added 235 new clients,including a substantial number of large global corporations. The total client base at theend of the year stood at 798. The client list for the current and previous years on aconsolidated basis are as follows :

in Nos.

2013 2012
Million-dollar clients 448 399
Five-million-dollar clients 213 190
Ten-million-dollar clients 137 132
Twenty-million-dollar clients 80 79
Thirty-million-dollar clients 62 64
Forty-million-dollar clients 49 50
Fifty-million-dollar clients 40 40
Sixty-million-dollar clients 33 28
Seventy-million-dollar clients 28 23
Eighty-million-dollar clients 19 17
Ninety-million-dollar clients 17 16
Hundred-million-dollar clients 12 13
Two Hundred-million-dollar clients 3 2
Three Hundred-million-dollar clients 1

During the year 2012-13, we added 23.11 lakh sq. ft. of physical infrastructure space.The total available space as on March 31, 2013 stands at 316.44 lakh sq. ft. The number ofmarketing offices as at March 31, 2013 was 69 as compared to 65 in the previous year.

3. Subsidiaries

During the year under review, we entered into share purchase agreement with LodestoneHolding AG to purchase 100% shareholding in Lodestone Holding AG, as a result of whichLodestone Holding AG has become a 100% wholly-owned subsidiary of Infosys Limited. Thecost of acquisition is CHF 311 million. Lodestone Holding AG, headquartered in Zurich, isa global consulting firm advising international companies on strategy and processoptimization as well as IT transformation. With a value-integration approach, LodestoneHolding AG pursues a combination of management and IT consulting. Founded in 2005, thefirm has presence in 17 countries across five continents. Lodestone Holding AG's advisoryservices are primarily geared to the life science, chemical and financial servicesindustries along with the investment, automotive and consumer goods sectors. We have 10subsidiaries (excluding step-down subsidiaries) : Infosys BPO Limited; InfosysTechnologies (Australia) Pty. Limited; Infosys Technologies (China) Co. Limited; InfosysConsulting India Limited; Infosys Technologies S. de R. L. de C. V.; Infosys Technologies(Sweden) AB; Infosys Tecnologia do Brasil Ltda; Infosys Public Services Inc.; InfosysTechnologies (Shanghai) Co. Limited; and Lodestone Holding AG. We have 26 step-downsubsidiaries : Infosys BPO s.r.o.; Infosys BPO (Poland) Sp.Z.o.o; McCamish Systems LLC;

Portland Procurement Services Pty. Limited; Portland Group Pty. Limited; LodestoneManagement Consultants (Canada) Inc.; Lodestone Management Consultants Inc.; LodestoneManagement Consultants Pty. Limited; Lodestone Management Consultants (Asia Pacific)Limited (liquidated); Lodestone Management Consultants AG; Lodestone Augmentis AG; HafnerBauer & dman GmbH; Lodestone Management Consultants (Belgium) S.A.; LodestoneManagement Consultants GmbH, Austria; Lodestone Management Consultants Pte Ltd.; LodestoneManagement Consultants SAS; Lodestone Management Consultants s.r.o; Lodestone ManagementConsultants GmbH, Germany; Lodestone Management Consultants China Co., Ltd; LodestoneManagement Consultants Ltd; Lodestone Management Consultants B.V.; Lodestone ManagementConsultants Ltda; Lodestone Management Consultants sp. z.o.o.; Lodestone ManagementConsultants Portugal, Unipessoal, Lda; S.C. Lodestone Management Consultants S.R.L; andLodestone Management Consultants S.R.L.

As per Section 212 of the Companies Act, 1956, we are required to attach the, BalanceSheet, Statement of Profit and Loss and other documents of our subsidiaries. The Ministryof Corporate Affairs, Government of India vide its Circular No. 2/2011 dated February 8,2011, has provided an exemption to companies from complying with Section 212, providedsuch companies publish the audited consolidated financial statements in the Annual Report.Accordingly, the Annual Report 2012-13 does not contain the financial statements of oursubsidiaries. Please refer statement pursuant to Section 212 of the Companies Act, 1956for the summary financial performance of our subsidiaries. The audited financialstatements and related information of subsidiaries will be available on our website, www.infosys.com.These documents will also be available for inspection during business hours at ourregistered office in Bangalore, India.

4. Products and platforms

Infosys Products, Platforms and Solutions (PPS) are geared to drive innovation-ledgrowth for our clients that will power tomorrow's enterprise, today. Combining ourmarket-leading products – Cloud-based hosting and platform operations – ourofferings help enterprises accelerate growth, maximize profitability and increase assetefficiency. Our PPS offerings have been recognized as an industry best practice fordeveloping and managing software assets by Forrester Research, in a July 2012 report Asset-BasedIT Services Shift Service Vendors’ Operating Models. Our PPS portfolio includes :

Finacle

Finacle partners with banks to transform process, product and customer experience,arming them with ‘accelerated innovation’ that is key to building tomorrow'sbank. Our solutions address the core banking, e-banking, mobile banking, customerrelationship management, wealth management, treasury, and Islamic banking requirements ofretail, corporate and universal banks worldwide. Keeping up with global trends, Finaclealso offers new-age solutions like digital commerce for enabling cashless transactions andfinancial inclusion for banking the unbanked. With these offerings Finacleenables banks to stay ahead of changing customer demands, competition and mounting globalregulations as they transform into tomorrow's banks. The Finacle R&D unit is engagedin research and development of new technologies in the banking domain.

Today Finacle is the choice of 168 banks across 81 countries and powersoperations across 49,600 branches globally. It enables its customer banks to serve 447million accounts and 359 million consumers worldwide. Finacle is regarded asa leader in the core banking market space by industry analysts for years now. 44% of thebanks leveraging Finacle are among the World's Top 1000.

Infosys Edge suite of Products and Platforms

Infosys Edge suite of products, platforms and solutions caters to next-generationmarket needs driven by global trends, including digital consumers, emerging economies, newcommerce and healthcare. Our offerings leverage technologies in the areas of cloudcomputing, mobility, Big Data, rich media and social media. By combining products from usand our partners, Cloud-based hosting and platform operations, we help clients achieve thebusiness outcomes they seek. Infosys Edge is adopted by more than 75 global clients acrossindustries and has also won key industry recognitions.

Products

Our products include :

Infosys AssistEdge: A customer service experience product for contact centers andprovides an integrated service experience across channels including web, chat, phone andsocial media.

Infosys BigDataEdge : Empowers IT and business teams to quickly discover, analyze andact on information to drive real-time business decisions.

Flypp™: A digital experience product that includes a white-labeled applicationmarketplace which helps our partners actively engage with their consumers across digitalchannels.

Infosys Customer Self-Service Energy Manager : Helps utilities ensure customer delightthrough sustainable energy management and revitalized customer service.

SpeedSolve : A collaborative, chat-based customer support product from Infosys andAT&T to reduce call transfer rates, call handle time, and call volumes.

Infosys Digital Transformation : Helps publishers provide their digital consumers witha rich, integrated and seamless content experience.

Infosys Meter Data Management Appliance : An out-of-the-box meter data managementsolution that helps utilities streamline their meter-to-cash process and realize valuefrom their advanced metering infrastructure.

Infosys Account Origination System : Enables enterprise-class customer onboarding withdata capture and due diligence capabilities across multiple regulations.

Infosys Alert and Case Management System : Supports end-to-end management of cases,alerts, and exceptions across departments for enterprises.

Infosys Forward Compliance System : Enables enterprises to effectively manage andmonitor complex regulatory compliance requirements around Foreign Account Tax ComplianceAct (FATCA) and its various Inter-Government Agreements (IGA).

Infosys Trade Origination System : Helps companies strategically differentiate theirbrokerage services by providing their customers with a superior trading experience.

Infosys Transaction Reconciliation System : Provides end-to-end capabilities formanaging the diverse reconciliation needs of an enterprise, from source-loading toexception management and resolution.

Infosys Health Benefit Exchange : A novel, transparent, and competitive insurance hubdesigned for individuals and small businesses to buy qualified plans.

Infosys iTransform – ICD-10 Migration Suite : A suite designed to automate allstages of migration to ICD-10 and help organizations turn compliance into a competitiveadvantage.

Note : ICD-10 is the 10th revision of the International Statistical Classification ofDiseases and Related Health Problems (ICD), a medical classification list by the WorldHealth Organization (WHO).

Infosys mConnect – Multi-channel Mobile Middleware : A middleware that is designedto optimize user experience through its context-aware mobile multimode middleware acrosschannels and platforms. Infosys Omni-channel Personalization Engine : Helps retailersfoster consumer relationship by presenting personalized content to their consumers acrosschannels.

Infosys Cloud Ecosystem Hub : Helps enterprises create, adopt and manage their hybridcloud ecosystem.

Platforms

Our suite of business platforms are built around specific themes that providesignificant opportunities to enterprises. This suite drives deeper engagement with digitalconsumers, builds smarter organizations and addresses the needs of emerging markets. Ourofferings are powered by best-in-class domain expertise, IP and cloud computing. Our focusis on delivering guaranteed business outcomes that impact our client's top-line orbottom-line. We host, operate and manage these business platforms on a subscription-basedpricing model, providing our clients with rapid time-to-value.

Our platforms include :

Infosys BrandEdge: Simplifies digital marketing across the organization through acomprehensive Cloud-based platform.

Infosys CommerceEdge : Drives multi-channel commerce by enhancing consumer experience,driving traffic and increasing order value.

Infosys Credit Servicing Platform : An integrated credit servicing and asset managementplatform, for managing multiple loans and asset classes across the globe for financialinstitutions.

Infosys IT Asset Performance Management Platform : Maximizes return on IT assetinvestments by enhancing performance, and mitigating risks while optimizing costs.

Infosys SocialEdge: Helps in monetizing digital demand by harnessing the power ofsocial media to deepen consumer and employee engagement for enterprises.

Infosys Source-to-Pay Platform : Helps enterprises realize rapid and sustainablesavings across their source-to-pay lifecycle.

Infosys TalentEdge : Enables enterprises to deepen employee engagement and simplify theentire hire-to-retire lifecycle of the human resource function.

Infosys TradeEdge : Facilitates global companies to accelerate long-term growth andprofitability in emerging markets.

Infosys WalletEdge: Enables the financial ecosystem of consumers, merchants, telecoms,banks, governments, and enterprises, to process payments.

Infosys Edge suite of products and platforms has won key industry recognitions. InfosysCloud Ecosystem Hub won the 2012 Golden Peacock Award for the most innovative product /service. Our Edge suite of platforms won the NASSCOM Business Innovation Award for 2013.

5. Quality

We continue our journey of delivering value to our clients through significantinvestments in quality programs. We have adopted several external benchmarks andcertifications. Infosys is certified under various standards to meet client demands andenhance value delivery. These include TL 9000-SV, ISO 9001, AS EN 9100, ISO 20000, OHSAS18001, ISO 14001, ISO 27001 and ISO 13485 and SEI CMMi Level 5. Infosys is the first‘IT Services / BPO organization’ in India, covering multiple locations acrossIndia, to receive the ISO 22301 accredited certification awarded by British StandardsInstitution. In addition, Infosys BPO has been certified for SSAE 16 audit standard andPCI-DSS 2.0 standard across different delivery centers. Data centers in India, U.S. andAustralia which cater hosting services to us and our clients have been certified for ISO27001.

Our Quality department handles large change management initiatives to drive quality andproductivity improvements across our Company. It is managed through the Balanced Scorecardand Infosys Scaling Outstanding Performance (iSOP) program adopted from the MalcolmBaldrige National Quality Award (MBNQA).

Our Quality department has ensured that process and technology capability is built todeliver the offerings in alignment with our Company strategy. The Quality department hasbeen instrumental in building capability for program management of businesstransformation, PPS, cloud and mobility service, etc. Further, Quality department hasdeveloped accelerators and enablers with integrated methodology, tools and reusableassets. It has also provided service delivery platforms for key offerings.

We continue to fine-tune our ‘Business Value Articulation’ (BVA) framework,which ensures alignment of our approaches to deliver and maximize value to our clients.Our ‘Business Value Realization’ program is an initiative comprising frameworks,methodologies, processes and systems, to promote articulation and assurance of businessvalue for various engagements. We leveraged this BVA program extensively across services /domains and were able to make a substantial impact on our clients' business value. Theprocess excellence and transformation program has delivered significant benefit acrossmultiple service lines.

Our Quality department is spearheading various key initiatives and driving excellenceacross the organization. We proactively adopted the latest external and internal industrybest practices. We have institutionalized the incremental and breakthrough improvements byadopting customized programs on Six-sigma and lean methodologies for IT. This has resultedin improving the efficiency and impacted effectiveness in IT services / operations leadingto significant savings for our clients.

6. Infosys Labs

Infosys Labs focuses on defining and driving the research and innovation agenda for us.It is a dedicated research group comprising technology and domain-focused members. AtInfosys Labs, we have identified large, multidisciplinary problem spaces that embody thechallenges faced by our clients and we are creating technology solutions to solve them.

Infosys Labs has set up a ‘Center of Innovation for Tomorrow's Enterprise’(CITE) which manages the research on the seven core themes for Building Tomorrow'sEnterprise. The themes are focused on Digital Consumers, Emerging Economies, HealthcareEconomy, Sustainable Tomorrow, New Commerce, Smarter Organizations and PervasiveComputing.

Our Enterprise Technology Research group focuses on topics such as semantic technology,context aware systems, intelligent sensing, multi-channel convergence, large data modelingand simulation, next generation computing platform visualization, and immersiveexperiences.

Our Center for Services Innovation focuses on software engineering aspects likesoftware dependability, preventive maintenance, distributed service delivery,modernization and automation and optimization.

Infosys Labs is structured to deliver value to clients and Infosys business groupsalong the dimensions of Optimization, Transformation and Innovation.

We have set up innovation centers with a number of our clients, university partners,technology partners and industry research consortiums.

We focus on developing Intellectual Property (IP) assets that will enable new anddifferentiated products, platforms, solutions and services for our business groups.

This year, over 334 articles were published by Infosys Labs' researchers in leadingjournals, magazines, books and conference proceedings. Infosys Labs Briefings, ourhighly respected peer-reviewed journal, published issues in areas such as Big Data andmodel-based software engineering.

We collaborate with leading national and international universities such as theUniversity of Southern California, University of Cambridge, University of Illinois atUrbana-Champaign, Indian Institute of Technology Bombay – Monash Research Academy,Purdue University, Queens University Belfast, Indraprastha Institute of InformationTechnology, Delhi, Indian Institute of Science, Bangalore, Indian Institute of InformationTechnology, Bangalore. Last year, we collaborated with institutions like National ICTAustralia (NICTA) and Office of the Chief Scientist of Israel. We are a member of severalglobal research consortia, including India-U.K. Advanced Technology Centre of Excellencein Next Generation Networks, Systems and Services, and Smart Services Cooperative ResearchConsortium, Australia.

This fiscal, Infosys Labs' IP Cell filed 97 unique patent applications in the U.S.Patent and Trademark Office (USPTO), the Indian Patent Office and other jurisdictions. Theaggregate unique patent applications filed stand at 532 and are under various stages ofprocessing. The total number of patents granted is 87.

7. Branding

The Infosys brand is a key intangible asset of the Company. Our brand promise –Building Tomorrow's Enterprise – communicates the value we bring to our clients. Itis the expression of how we provide insight on what's ahead and then partner with clientsto help them transform and thrive in a changing world. We do this by uncoveringopportunities for innovation-led growth through strategic consulting and co-creatingdisruptive solutions. We then enable clients to sustain that advantage with smarteroperations. It is the unfailing delivery of our brand promise that makes us the righttechnology partner for clients, from over 30 countries. The Infosys brand has beenrecognized by leading publications and independent industry bodies globally. To name justa few, we are :

• Ranked 19th position in a survey of innovative companies based on an‘innovation premium’ principle of stock market valuation

• Ranked first globally for our corporate governance practices by IR GlobalRankings (IRGR)

• Accorded the top position in the National Council for Work Experience (NCWE)Awards 2013, making us one of the U.K.'s best internship providers

• Recognized as one of the ‘Achievers 50 Most Engaged Workplaces™’in the United States (U.S.)

We are regularly rated by global industry analysts as a leader in key services andsolutions across domains.

Refer to the Awards and recognition section below for more details.

Our marketing reach extends globally through advertisements, web initiatives and socialmedia conversations. We promote our brand through trade and general publications. Weparticipate in premier business and industry events around the world. Confluence, ourflagship client event, is consistently well-attended and highly-rated by our client andindustry attendees.

8. A wards and recognition

In 2012-13, as in the years preceding, we earned a number of awards and honors fromvarious industry bodies and media organizations across the globe. Some of the significantawards are :

• Infosys and British Telecom jointly won the prestigious Global Telecoms BusinessInnovation Award 2012 under the Business Service Innovation category.

• The Infosys – RioTinto relationship won the Outsourcing Excellence Award,for Best New Process / Application from Outsourcing Center, an Alsbridge company.

• We were awarded the Pegasystems Excellence in Solution Development Award for thebest-in-class insurance service delivery platform.

• Spirit AeroSystems recognized Infosys with the Platinum Award for consistenthigh-quality engineering services.

• We received the 2012 IT Partner of the Year Award from Analog Devices, a globalleader in high-performance semiconductors for signal processing applications.

• The Asian Banker Technology Implementation Awards 2012 awarded Finaclealong with DBS Bank as the Best Core Banking Implementation for Regional and InternationalBanks Award.

• Another Finacle client, ING Vysya Bank won the Best CorporateInternet Banking Initiative Award.

• Finacle also jointly won first place in the Core Banking TechnologyProvider of the Year category at the Banker's Innovation in Banking Technology Awards,2012.

• We have been identified as one of the top 25 performers in the Caring forClimate Initiative by United Nations Global Compact (UNGC) and UN Environment Program.

• We have also been recognized as an innovation leader in India in KPMG's 2012Global Technology Innovation Survey.

• We were recognized as one of the Achievers 50 Most Engaged Workplaces™ inthe U.S. for our leadership and innovation towards engaging employees.

• We were ranked second in the 2012 Global Outsourcing 100 List compiled annuallyby the International Association of Outsourcing Professionals (IAOP) for our performanceacross all four survey assessment categories, namely, size and growth, customerreferences, organizational competencies, and management capabilities.

• For the second consecutive year, we have won the P&G Global BusinessServices Organization's External Business Partner Excellence Award for the quality of ourexecution, commitment to relationship and work with P&G's ecosystem of partners andco-creating innovation.

• Infosys China has been listed among the Top 10 Global Service Providers in Chinaby the China Council for International Investment Promotion for the second consecutiveyear.

• Infosys BPO won the Award for Innovation in Learning at the Best Learning andDevelopment Awards 2012.

• Infosys BPO won the Golden Peacock HR Excellence Award 2012.

• Infosys BPO won the Award for Institution Building at the Asia Pacific HRMCongress Awards – 2012.

• We were declared the winners of 2012 Asia's Most Admired Knowledge Enterprises(MAKE) study by Teleos, in association with the KNOW Network for the 10th time, fordeveloping knowledge-based products and services.

• Infosys BPO has been awarded the prestigious 2012 Optimas Award for‘Managing Change’, recognizing exemplary achievements in workforce managementand for successfully integrating new employees from around the globe into theorganization.

• Infosys BPO won the Gold Award for Marketing Excellence in the category of‘Marketing with Social and Interactive Media’ at the Information TechnologyServices Marketing Association (ITSMA) Awards 2012.

• We have received the Microsoft Platform Modernization Award for salesachievement for our Legacy Modernization solution, which helps customers migrate toMicrosoft platforms.

• We were awarded the National Energy Conservation Award 2012 our energyconservation efforts at our campuses in Jaipur and Pune.

• Finacle has been ranked as a long-term leader in the ForresterWave™, Global Banking Platforms, Q4 2012.

• The Institute of Directors, India, conferred the prestigious Golden PeacockAward to Infosys Cloud Ecosystem Hub, recognizing the Hub as the ‘Most InnovativeProduct / Service’ of 2012.

• The National Association of Software and Services Companies (NASSCOM) presentedtheir prestigious Business Innovation Award for 2013 to Infosys Edge for its originalconcept, business viability, scalability, R&D investments, and overall impact on theindustry.

9. Capital expenditure

This year, we capitalized Rs. 1,422 crore. This comprises Rs. 640 crore (includes Rs.62 crore transferred from Infosys Australia) for investment in computer equipment, Rs. 30crore (includes Rs. 21 crore transferred from Infosys Australia) in Intellectual Propertyrights, Rs. 1 crore on vehicles and the balance of Rs. 751 crore (includes Rs. 13 croretransferred from Infosys Australia) on infrastructure investments. We invested Rs. 145crore to acquire 119.35 acres of land in Bangalore, Hubli, Mysore, and Thiruvananthapuram.

Last year, we added Rs. 807 crore to our gross block. This comprises Rs. 245 crore forinvestment in computer equipment (includes Rs. 10 crore transferred from InfosysConsulting Inc., on its termination), Rs. 17 crore in Intellectual Property rights, Rs. 2crore on vehicles and the balance of Rs. 543 crore on infrastructure investments. Weinvested Rs. 158 crore to acquire 371 acres of land in Bangalore, Bhubaneswar, Mangalore,Nagpur and Indore.

10. Liquidity

We continue to be debt-free and maintain sufficient cash to meet our strategicobjectives. We clearly understand that the liquidity in the Balance Sheet has to balancebetween earning adequate returns and the need to cover financial and business risks.Liquidity also enables us to make a rapid shift in direction, should the market so demand.During fiscal 2013, internal cash flows have more than adequately covered working capitalrequirements, capital expenditure, investment in subsidiaries and dividend payments. As atMarch 31, 2013, we had liquid assets of Rs. 22,289 crore as against Rs. 19,898 crore atthe previous year-end. These funds have been invested in deposits with banks, highly-ratedfinancial institutions, liquid mutual funds, certificates of deposit and tax free bonds.The tax free bonds are disclosed under non-current investments.

11. Increase in share capital

During the year, we issued 6,165 shares on the exercise of stock options under the 1999Employee Stock Option Plans. As a result of this, the outstanding issued, subscribed andpaid-up equity shares increased from 57,42,30,001 as at March 31, 2012 to 57,42,36,166shares as at March 31, 2013.

12. Appropriations

Dividend

Our policy is to pay dividend of up to 30% of the consolidated net profit after tax. InOctober 2012, we paid an interim dividend of Rs. 15/- per share. We recommended a finaldividend of Rs. 27/- per share (par value of Rs. 5/- each), making in all Rs. 42/- pershare as dividend for the year.

The total dividend amount pay out (excluding dividend tax) for the current year is Rs.2,412 crore, as against Rs. 2,699 crore in the previous year. The dividend for theprevious year includes a special dividend of Rs. 10/- per share for the completion of 10years of Infosys BPO operations amounting to Rs. 574 crore. Dividend (including dividendtax) as a percentage of consolidated net profit after tax is 29.9% as compared to 29.7% inthe previous year.

The register of members and share transfer books will remain closed from June 1, 2013to June 15, 2013 (both days inclusive). Our Annual General Meeting is scheduled to be heldon June 15, 2013.

Transfer to reserves

We propose to transfer Rs. 911 crore (10% of the standalone net profit for the year) tothe general reserve. An amount of Rs. 25,383 crore is proposed to be retained in theStatement of Profit and Loss.

13. Corporate governance

We continue to be a pioneer in benchmarking our corporate governance policies with thebest in the world.

Our efforts are widely recognized by investors in India and overseas. We have undergonethe corporate governance audit by ICRA and Credit Rating Information Services of IndiaLimited (CRISIL). ICRA has rated our corporate governance practices at CGR 1 and CRISILhas assigned CRISIL GVC Level 1 rating to us.

We comply with the recommendations of the N. R. Narayana Murthy Committee on CorporateGovernance constituted by the Securities and Exchange Board of India (SEBI). For fiscal2013, the compliance report is provided in the Corporate governance report sectionof the Annual Report. The auditors' certificate on compliance with the mandatoryrecommendations of the committee is provided in the Annexure to the directors' reportsection.

We have documented our internal policies on corporate governance. In line with thecommittee's recommendations, the Management's discussion and analysis of the financialposition of the Company is provided in this Annual Report.

During the year, we continued to fully comply with the U.S. Sarbanes-Oxley Act of 2002.Several aspects of the Act, such as the Whistleblower Policy and Code of Conduct andEthics, have been incorporated in our Company policy.

14. Listing in NYSE

During the year, we withdrew the listing of our American Depositary Shares (ADSs) fromNASDAQ and listed the same in the New York Stock Exchange (NYSE) and NYSE Euronext –London and Paris. The delisting and listing is to leverage the NYSE-Euronext partnershipto seek listing in Paris and London stock exchanges which are home to many of ourinvestors, clients and employees. This will also empower our investor base and increasethe trading window available for our global investors. We believe this will support ouraspirational and strategic goals to grow the Company.

15. Conservation of energy, research and development, technology absorption, foreignexchange earnings and outgo

The particulars as prescribed under Sub-section (1)(e) of Section 217 of the CompaniesAct, 1956, read with the Companies (Disclosure of particulars in the report of the Boardof Directors) Rules, 1988, are provided in the Annexure to the directors' reportsection.

16. Particulars of employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read withthe Companies (Particulars of Employees) Rules, 1975, the names and other particulars ofemployees are set out in the Annexure to the directors' report section. However, asper the provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Annual Reportexcluding the aforesaid information is being sent to all the members of the Company andothers entitled thereto. Any member interested in obtaining such particulars may write tothe Company Secretary at the registered office of the Company. The same will also bepublished on our website, www.infosys.com

17. Directors' responsibility statement as required Section 217 (2AA) of the CompaniesAct, 1956

The financial statements are prepared in accordance with the accounting standardsissued by the Institute of Chartered Accountants of India and the requirements of theCompanies Act, 1956, to the extent applicable to us, and guidelines issued by SEBI on thehistorical cost convention as a going concern and on the accrual basis. There are nomaterial departures from prescribed accounting standards in the adoption of the accountingstandards.

The Board of Directors accepts responsibility for the integrity and objectivity ofthese financial statements. The accounting policies used in the preparation of thefinancial statements have been consistently applied except as otherwise stated in thenotes accompanying the respective tables. The estimates and judgments related to thefinancial statements have been made on a prudent and reasonable basis, in order that thefinancial statements reflect in a true and fair manner the form and substance oftransactions, and reasonably present our state of affairs and profits for the year.

We have taken sufficient care to maintain adequate accounting records in accordancewith the provisions of the Companies Act, 1956, to safeguard the assets of the Company andto prevent and detect fraud and other irregularities.

18. Directors

The Board inducted Leo Puri as Additional Director with effect from April 11, 2013. Weseek your support in confirming his appointment as director liable to retire by rotation.

In accordance with the retirement policy for the Company's Board, Sridar A. Iyengarretired from the Board effective August 13, 2012. We place on record our deep sense ofappreciation for the services rendered by Sridar A. Iyengar during his tenure as a Boardmember.

As per Article 122 of the Articles of Association, S. D. Shibulal, Srinath Batni,Deepak M. Satwalekar, Dr. Omkar Goswami and R Seshasayee retire by rotation in theforthcoming Annual General Meeting. All of them, being eligible, seek re-appointment.

19. Auditors

The auditors, B S R & Co., Chartered Accountants, retire at the ensuing AnnualGeneral Meeting and have confirmed their eligibility and willingness to accept office, ifre-appointed.

20. Fixed deposits

We have not accepted any fixed deposits and, as such, no amount of principal orinterest was outstanding as of the Balance Sheet date.

21. Human resources management

Our employees are the most valuable assets of the Company. We encourageinnovation, meritocracy and the pursuit of excellence. We have set up a scalablerecruitment and human resources management process. We added 22,019 (gross) and 1,333(net) employees this year (excluding employees transferred within Infosys groupcompanies), taking our total strength to 1,26,397 from 1,24,789 at the end of the previousyear. The Infosys Group added 6,694 (net) and 37,036 (gross) employees this year, takingthe total strength to 1,56,688 from 1,49,994 at the end of the previous year. Ourattrition rate stands at 16.3% compared to 14.7% for the previous year. Over the lastyear, we received 3,78,994 applications from prospective employees and we continue toremain an employer of choice in the industry.

22. Education and Research

Competency development continues to be a key area of strategic focus for us. Welaunched new programs for our employees in keeping with the changes in the use oftechnology in education. We enhanced our technology led training efforts in multipleareas. With over 1,000 under videos on various topics and many multimedia artifacts forlearning, we now have a rich repository of technology-assisted learning.

During fiscal 2013, the total training provided for Infoscions was over 1.4 millionperson days. Many of our employees also took external certifications creating a large poolof certified people.

Our flagship industry-academia partnership program, Campus Connect, made significantprogress through the launch of electives to help engineering colleges run new programswithin their curricula. This has been very well received by the academia.

During fiscal 2013, we engaged with 1,700 faculty members who in turn trained 60,800students. With this, the total number of beneficiaries covered are over 8,970 facultymembers and 2,51,800 students from 358 engineering institutions.

Another program that is a testimony to our commitment to education is SPARK, a programthat exposes students in schools and colleges to the current opportunities anddevelopments in IT and aims to inspire them and raise their aspirations. As part of thisprogram, we engaged with over 1,59,800 students during the year. From its launch in 2008,the program has reached over 8,42,000 students. Over 96,570 students participated inAspirations 2020 in fiscal 2013, the coding contest we conduct for engineering students.

Our knowledge management system set a new record by winning the Global MostAcknowledged Knowledge Enterprise (MAKE) award for the ninth time.

Like previous years, our researchers continued to demonstrate their thought leadershipin several areas through their publications at global conferences and throughcontributions to book chapters and publications.

23. Infosys Leadership Institute

The Infosys Leadership Institute (ILI) was established with an aim to developworld-class corporate leaders. The institute identifies potential candidates and supportsthe development required to take on key leadership positions within the Company. ILI aimsto be a globally recognized institution that remains relevant to Infosys while advancingthe field with original thought leadership.

Over the last year, ILI has ramped up the team to 15 members in both the Leadership andOrganizational Development and Decision Solutions departments.

In fiscal 2013, ILI also showcased thought leadership through collaborations withleading researchers across the globe including pioneering a new evidence-based CharismaticLeadership course in partnership with academic partners.

24. Sustainability initiatives

Our sustainability charter is driven by our core values and ethics. Our sustainabilitythemes and actions are inextricably intertwined in our everyday business practices. Oursustainability actions rest on three pillars viz., Social contract, Resource intensity andGreen innovation.

Social contract

Today, businesses have an extended set of stakeholders – local communities, socialorganizations and the society – with the ability to influence the future of business.These stakeholders have ethical, social and environmental expectations that extend beyondfinancial goals and legal expectations – implicit social contracts that enterprisesmust honor. We believe that these social covenants are fundamental to nurturingstakeholder trust and ensuring business continuity.

Education

Campus Connect Program : This Infosys-academia flagship program, is focused on apartnership with engineering colleges, to enhance the pool of highly capable talent forgrowth requirements in the IT space. Launched in 2004, the Campus Connect program hasenabled over 8,970 faculty members and 2,51,800 students across 358 engineering colleges,till date.

Project Genesis : It is an industry-academia partnership program, focused on degreecolleges, that enables academicians to handle queries and apprehensions of students abouta career in the BPO industry. The objective of this program is to help academiciansinteract with the student community, informing and updating them on trends andtechnologies in the IT domain. It covers students from Tier 2 and Tier 3 cities in India,helping to bridge the skill gap between industry requirements and graduate education.Project Genesis has covered 3,200 faculty in 1,700 institutes, involving 1,00,000 studentsin fiscal 2013.

SPARK Program: SPARK is a volunteer-driven program that aims at raising the aspirationsof students and has the following offerings – SPARK-Rural Reach Program, SPARK-CatchThem Young, SPARK- On Campus Events and SPARK-Guru. The nation-wide program createsexcitement amongst students about Information Technology (IT), educates them about therole of IT in business, and prepares them for the opportunities that the industry has tooffer to the youth in the country. Over 8,42,000 students have benefited from this programsince its inception in 2008. The program has involved 35,644 Infosys employees asvolunteers, who invested their personal time on Saturdays for these offerings. This year,the SPARK program covered the following beneficiaries :

Particulars FY 2013 Total (1)
Events completed 607 3,577
Students 1,59,827 8,42,167
Girl students 76,212 3,40,802
Rural students 81,757 4,77,904
Faculty enabled 4,613 27,814
Employee volunteers 4,388 35,644

(1) The cumulative total since the start of the program until fiscal 2013.

Infosys won NASSCOM's NExT Practices Awards 2012, the top honor for designing andimplementing innovative programs in creating capacity and capabilities for IT and ITeStalent, through its Campus Connect and Project Genesis programs. The award recognizescompanies that have been leaders in bridging the industry's demand-supply gap andaddressing employability concerns.

Community development

Promoting the cause of health and hygiene in rural India, the Infosys Foundationinvested Rs. 10 crore and started the Parishudh Initiative. We collaborated with over 10Non-governmental Organizations (NGO) in North Karnataka since its inception 18 months ago.The Parishudh initiative has helped 10,000 families build toilets in over 300 villages andhas created opportunities for economic development through entrepreneurial development.Over 20 entrepreneurs have been encouraged to run their own business through thisinitiative. Over 50,000 people have been benefited by the Parishudh Initiative. We havealso been conducting awareness sessions to educate over three lakh families on the needfor good hygiene and sanitation. Many policy related changes aimed at the welfare of ruralcommunities have been submitted to the governments of Karnataka and India. Our team hasalso developed an easily replicable model of project management to scale up this program.

Resource intensity

In the face of accelerated depletion of natural resources, incremental increases inresource efficiency are not sufficient and beyond a point, optimization gets prohibitivelyexpensive. Resource intensity is about doing far more with far less. It is about findingtransformational ways to de-intensify and achieve the same or better outcome using fewerresources.

In 2007, we launched our environmental sustainability initiatives and have since takengreat strides towards becoming a sustainable organization. We are committed to becomingcarbon neutral by 2017. As part of this initiative, the Company has committed to reduceits per capita electricity consumption by 50% over 2007-08 levels by 2017 and source 100%of electricity requirement from renewable resources.

In recognition of this, we were listed among top 25 performers in Caring for Climateinitiative. Launched by the United Nations Secretary General Ban Ki-moon in 2007, Caringfor Climate is the UN Global Compact (UNGC) and UN Environment Programme's initiativeaimed at advancing the role of business in addressing climate change. Caring for Climateis endorsed by nearly 400 companies from 65 countries. We are the only global consultingand technology company to make it into the top 25 performers list. For more information,refer to : http://www.infosys.com/newsroom/features/pages/caring-climate-initiative.aspx

Green innovation

Business imperatives like environmental sustenance and resource conservation areproviding new opportunities for enterprises to leverage and stimulate innovation and spurbusiness growth. Green innovation is about addressing sustainability challenges throughinnovation, differentiation, driving efficiencies and creating new avenues for growth tobecome trendsetters.

Infosys Labs, our research and innovation department continues to drive innovationacross the seven themes of our strategic direction, Building Tomorrow's Enterprise throughthe ‘Center for Innovation for Tomorrow's Enterprise’ (CITE). The institute forresearch on sustainability is part of CITE and focuses on business research in the area ofenterprise sustainability; collaborates with universities and research bodies to bring thelatest developments and thinking to our clients; partners with our business units to bringin sustainability aspects in their offerings; and designs new offerings to addressenterprise sustainability challenges.

A detailed report on our sustainability initiatives and actions is published in the BusinessResponsibility Report 2012-13and Sustainability Report 2012-13. For moredetails, visit our website, www.infosys.com

25. Employee Stock Option Plan (ESOP)

We had introduced various stock option plans for our employees. The details of optionsgranted under the 1998 Stock Option Plan (the 1998 Plan) and the 1999 Stock Option Plan(the 1999 Plan) are as follows :

1998 Plan 1999 Plan
Total grants authorized by the plan (No.) 1,17,60,000 ADS 5,28,00,000 shares
Pricing formula on date of grant Not less than 90% of fair market value Fair market value
Variation in terms NA NA
Ratio of ADS to equity shares 1 ADS = 1 equity share NA
Options granted during the year (No.)
Weighted average price per option granted (Rs.) NA NA
Options vested as at March 31, 2013 (No.)
Options exercised during the year (No.) 6,165
Total number of shares arising as a result of exercise of options 6,165
Money raised on exercise of options (Rs. crore) 1.31
Options forfeited and lapsed during the year (No.) 5,518
Total number of options in force at the end of the year (No.)
Grant to senior management
Employees receiving 5% or more of the total number of options granted during the year
Employees granted options equal to or exceeding 1% of the issued capital
Diluted EPS on issue of shares on exercise calculated in accordance with AS 20 (Before exceptional items) 157.55 157.55
Diluted EPS on issue of shares on exercise calculated in accordance with AS 20 (After exceptional items) 158.76 158.76

SEBI has issued the Employee Stock Option Scheme and Employee Stock Purchase SchemeGuidelines, 1999. This is effective for all stock option schemes established after June19, 1999. In accordance with these guidelines, the excess of the market price of theunderlying equity shares as of the date of the grant over the exercise price of theoption, including up-front payments, if any, is to be recognized and amortized on astraight-line basis over the vesting period.

We have the 1998 Stock Option Plan and 1999 Stock Option Plan, where the options areissued to the employees at an exercise price not less than the fair market value. Forfiscal 2013 and 2012 there was no stock compensation cost. During fiscal 2013 and 2012,stock options under the 1998 Plan and 1999 Plan have not been granted. Hence, the weightedaverage fair values of grant during these years are nil. All stock options under the 1998and 1999 Employees Stock Option Plans were granted at the prevalent market price on thedate of grant. Accordingly, we have calculated the compensation cost arising on account ofstock options granted using the intrinsic value method. Hence, the disclosure in terms ofClause 12.1 (n) of SEBI (Employees Stock Option Scheme and Employee Stock Purchase Scheme)Guidelines, 1999, is not applicable.

2013 2012
No. of options Weighted average exercise price (Rs.) No. of options Weighted average exercise price (Rs.)
1998 Plan
Outstanding at the beginning of the year 50,070 683
Forfeited (480) 862
Exercised (49,590) 734
Outstanding at the end of the year Nil Nil
Vested at the end of the year

Nil

Nil

1999 Plan
Outstanding at the beginning of the year 11,683 2,121 48,720 962
Forfeited (5,518) 2,121 (8,185) 430
Exercised (6,165) 2,121 (28,852) 643
Outstanding at the end of the year Nil 11,683 2,121
Vested at the end of the year Nil 7,429 2,121

Restricted Stock Unit (RSU) Plan

We have received the approval of our shareholders, through a postal ballot, toimplement a RSU Plan. The plan permits the grant of RSU, to certain eligible employees ofthe Company. The purpose of the RSU Plan is to motivate key employees and encourage themto align their individual aspiration with the objectives of the Company. We have not yetissued any units under the plan during the year ended March 31, 2013.

26. Infosys Science Foundation

The Infosys Science Foundation, a not-for-profit trust, was set up in 2009 by Infosysand some of its management to promote research in the sciences. The Infosys Prize,instituted by the foundation, recognizes exemplary research by scholars and scientistsconnected to India. It hopes to inspire young Indians to choose a vocation in scientificresearch.

The prize is given annually across six categories :

Category Areas of accomplishment
Physical Sciences Earth Sciences, Physics and Chemistry
Mathematical Sciences Mathematics and Statistics
Engineering and Computer Science All branches of Engineering
Life Sciences Biology, Medicine and Plant Science
Social Sciences Anthropology, Economics, Political
Science, Psychology and Sociology
Humanities Archeology, History, Philosophy, Legal
Theory and Literary Studies

The Infosys Prize 2012 presentation was held in New Delhi on January 3, 2013. Dr. GroHarlem Brundtland, former Prime Minister of Norway and former Director General of theWorld Health Organization, felicitated the laureates with a 22 karat gold medallion and acitation each and a prize purse of Rs. 50 lakh per category. The inaugural HumanitiesPrize was given jointly in Literary Studies and History. For more details about theInfosys Science Foundation, visit our website, www.infosys-science-foundation.com

27. Infosys Foundation

We established the Infosys Foundation in 1996, as a not-for-profit trust to support oursocial initiatives. The Foundation supports programs and organizations devoted to thewelfare of the destitute, rural poor, and economically disadvantaged sections of thesociety. The Infosys USA Foundation is active in the areas of Science, Technology,Engineering and Math (STEM) education, and the promotion of arts and culture. TheFoundation has committed a grant of US $380,000 for the New York City Science EducationInitiative of the New York Academy of Sciences (NYAS). The program is developed inassociation with the New York City Department of Youth and Community Development (DYCD) totrain and mentor students of underserved communities of New York and Citizen Schools ofNew Jersey in STEM. We have also worked with the Wayne County Community College District(WCCCD) to offer our world-renowned software development training program to growDetroit's technology talent pool.

A summary of the work done by the Foundation is provided in the Additionalinformation section in the Annual Report published on our website, www.infosys.comWe express our gratitude to the honorary trustees of the Foundation for contributing theirvaluable time and energy to its activities.

28. Green initiatives

During fiscal 2011, we started a sustainability initiative with the aim of going greenand minimizing our impact on the environment. Like the previous years, this year too weare publishing only the statutory disclosures in the print version of the Annual Reportalong with the Abridged standalone financial statements prepared in compliance withSection 219 of the Companies Act, 1956 and Clause 32 of the Listing Agreement. Additionaldetails are available on our website, www.infosys.com

29. Business Responsibility Report

SEBI, vide its circular CIR/CFD/DIL/8/2012 dated August 13, 2012, had proposed tomandate inclusion of Business Responsibility Reports as part of the Annual Report forlisted entities. According to the proposal, the report should describe measures taken bythe listed companies along with key principles enunciated in the ‘National VoluntaryGuidelines on Social, Environmental and Economic Responsibilities of Business’ framedby the Ministry of Corporate Affairs. This is intended to be adopted by companies in Indiato report their Corporate Social Responsibility (CSR) activities and initiatives. We havealways been at the forefront of voluntary disclosures to ensure transparent reporting onall matters related to our Company's governance and business operations. We hadvoluntarily published our first Business Responsibility Report 2011-12 based on SEBI'sproposal. This year too, we are publishing the report to cover aspects related to ourstrategy on CSR, green initiatives and activities taken up for the year 2012-13. TheInfosys Business Responsibility Report is available on our website, www.infosys.com

We also publish the Infosys Sustainability Report annually. Our report follows theGlobal Reporting Initiative (GRI) framework. This is a comprehensive report thatcovers all aspects of our sustainability activities pertaining to our Social contract,Resource intensity and Green innovation. The report is audited by an external auditor, DetNorske Veritas AS (DNV). We have been consistently receiving an A+ rating from GRI and DNVfor our Sustainability Reports. For more details on the Infosys Sustainability Report,visit www.infosys.com

Acknowledgments

We thank our customers, vendors, investors and bankers for their continued supportduring the year. We place on record our appreciation of the contribution made by ouremployees at all levels. Our consistent growth was made possible by their hard work,solidarity, cooperation and support.

We thank the governments of various countries where we have our operations. We alsothank the Government of India, particularly the Ministry of Communication and InformationTechnology, the Ministry of Commerce, the Ministry of Finance, the Customs and ExciseDepartments, the Income Tax Department, the Reserve Bank of India, the State Governments,the Software Technology Parks (STPs) – Bangalore, Bhubaneswar, Chandigarh, Chennai,Gurgaon, Hyderabad, Jaipur, Mangalore, Mysore, Pune, and Thiruvananthapuram and othergovernment agencies for their support, and look forward to their continued support in thefuture.

for and on behalf of the Board of Directors
S. D. Shibulal S. Gopalakrishnan
Bangalore Chief Executive Officer and Executive Co-Chairman
April 12, 2013 Managing Director of the Board

Annexure to the directors' report

a) Particulars pursuant to Companies (Disclosure of particulars in the report of theBoard of Directors) Rules, 1988

Conservation of energy

This year, the Infosys Green Initiatives team won several accolades for achievements inwater and energy efficiency. We were rated the 19th greenest company in the world by Newsweek.We won the first prize in the National Energy Conservation award in the BPO sector. We wontwo awards in the Emerson Cup 2012 for building and energy efficiency, and for newbuilding designs as well as retrofits of old buildings for improving energy efficiency.

On the green building certifications, we received a LEED Platinum rating (highestlevel) from Indian Green Building Council for our second building in Thiruvananthapuramfor its sustainable features. Additionally we received the GRIHA 5-star (highest level)green building rating from the Ministry of New and Renewable Energy for two of ourbuildings in Chennai and Hyderabad. We were the only company this year to get the GRIHA5-star rating for two of our buildings.

About two million sq. ft. of our buildings have received the highest ratings for greenbuildings in India (LEED Platinum and GRIHA 5-star) and another four million sq. ft. ofour new buildings are in various stages of green certification.

This year, we have reduced our per capita energy consumption by 11%. We have been ableto do this through integrated design principles applied to our new buildings, retrofittingour existing buildings and optimizing operations. Over the past two years, we have startedto re-engineer our air conditioning plants to the highest efficiency levels and we haveachieved a reduction of 7.2 MW in the connected load.

We are using over 50 million units of green power annually with a combination of onsiteand offsite green sources. We have an installed solar power plant capacity of 500 kW, andan additional 400 kW is being installed.

We have a comprehensive water conservation strategy which encompasses rainwaterharvesting, use of water efficient fixtures for our buildings, and 100% recycling of wastewater. This year, we have reduced our per capita water consumption by about 14%. We havecommissioned our first biogas plant in the Mysore campus to process food waste from thefood courts and generate biogas that is being used in the food court kitchens.

For details on our sustainability initiatives, visit www.infosys.com

IT infrastructure

Our operations are less energy-intensive than those in the manufacturing sector.However, we have taken significant measures to reduce IT infrastructure’s energyconsumption by adopting a multi-pronged strategy. Our Green IT strategy covers equipmentfrom end-point fabric to those in data centers and server rooms. It also employs a fulllife-cycle approach by covering the entire gamut from procurement to e-waste disposal ofIT equipment. Energy efficiency is one of our key architecting parameters, along withperformance, scalability, security and availability. This, coupled with the advantage ofperformance improvements and energy efficiency of the latest equipment deployed as per ourtechnology refresh cycle, directly contributes to optimized energy consumption.

We have deployed optimized desktop power management configuration and tools designed toschedule the shutdown of desktops. ‘Terminator’, a home grown tool, remindsusers to switch-off their computer after working hours and automatically shuts down themachine after a pre-defined time. About 96% of total desktops powered-on on a given dayare being shut down post working hours, out of which around 8% of desktops are shut downby ‘Terminator’. Also, in line with our technology refresh cycle, we havereplaced around 11,000 old desktops with new power-efficient ones this year.

Continuing adoption of latest technology concepts like virtualization, consolidationand cloud, to reduce physical footprint of servers, we have further expanded our internalprivate cloud capacity. ‘MyCloud’ used for software development and testingpurposes now has a capacity of around 6,000 virtual machines. Around 27% of instancesprovisioned on MyCloud this year were catered out of released virtual machines,facilitating a seamless reuse.

Further, deploying the next round of virtualization and consolidation of networkattached storage (NAS) filers, around 39% of NAS filers have been virtualized this year.This has reduced the power demand of NAS boxes by around 29%. In addition, we havedeployed tools that automatically check and shut down idle, project-specific serversyielding power savings.

Data centers and sever rooms, being large consumers of energy in an IT landscape, havebeen standardized using an eco-friendly room design which incorporates power and coolingbest practices. Taking forward our efforts in restructuring the existing data centers andserver rooms, we have revamped and released around 750 sq. ft. of server room / lab spacethis year. Also, using hot-cold isle separation and custom-made cages for consolidation ofracks, we have optimized air conditioning usage.

Video and Audio Conferencing (VC and AC) usage has increased steadily this year too,indirectly cutting down the travel requirements and hence, the carbon footprint. We havedoubled the VC capacity and have rolled out a new plug-in for self-booking. This hasresulted in an increase of VC usage of around 62% year-on-year. On the other hand, ACusage has increased by around 40% year-on-year.

Research and Development (R&D)

The following are our R&D highlights for fiscal 2013:

• Infosys Labs collaborated with University of Illinois, Urbana-Champaign independable cloud computing to develop techniques and validation tools for high assurancecloud computing test bed.

• We signed a joint research agreement with National ICT Australia (NICTA) topartner in innovation.

• We signed an MoU with Queen's University Belfast to establish a research,education and commercialization model, to develop solutions and IP for combatting cybersecurity threats.

• The official publication of the Association for the Advancement of AI (AAAI,Spring 2012 issue) includes a detailed report on the first AAAI workshop on ActivityContext Representation organized by Infosys Labs.

• Infosys Labs was invited to hold the Activity Context-Aware System ArchitectureWorkshop at International Joint Conference on Artificial Intelligence 2013 in Beijing.

• We had a major presence in the Service Research and Innovation Institute (SRII)conference held at San Jose in July 2012.

• We played a vital role in hosting the SRII Conference 2012 at Infosys Mysore.Infoscions presented five papers and one tutorial and participated in Big Data andEU-India panels. A paper on Cloud-based next generation service and key challengeswas awarded the best paper at SRII India conference, Mysore.

• Our researchers actively participated in the sixth edition of Indian SoftwareEngineering Conference (ISEC 2013).

• Several high profile events and lectures by eminent researchers were conductedat Infosys. These included :

– IP Lecture Series by Prof. Srividhya Raghavan from the University of Oklahoma

– ‘Medical research and information technology’, a talk by Dr. PhyllisM. Wise, Vice President and Chancellor, University of Illinois at Urbana-Champaign

– ‘The Usefulness of Seemingly Useless Knowledge’, a talk by Dr. HelgaNowotny, President of the European Research Council

– ‘When and How Can We Compute Approximate Solutions to IntractableProblems’, a talk by Dr. Sanjeev Arora, Professor at Princeton University

– ‘Data, Learning and Automation’, a talk by Hugh Durrant-Whyte, CEONICTA

• We have set up a Non-Functional Requirement Lab and a Mobility Lab as part ofour product R&D investments.

Product Research and Development Center

The Product Research and Development Center was set up to accelerate design anddevelopment of our offerings through cutting-edge engineering innovation. The Centercontinues to :

• Develop products and platforms to cater to next generation market needs drivenby global mega trends, including digital consumers, emerging economies, new commerce andhealthcare

• Create Intellectual Properties (IP) around Infosys products and platforms,leveraging technologies in the areas of cloud computing, mobility, analytics and socialmedia

• Pioneer unique approaches to accelerate innovation, enhance product architectureand shorten release cycles

Education and Research

The e-commerce Research Lab of the E&R unit continues to focus on the areas of :

• Application of game theory and mechanism design to carbon economics and ITservices, and computational sustainability

• Machine learning and image processing related to face detection, facerecognition, image clustering, and virtual applications of image processing

• Data mining, Big Data aspects of large data clustering and classification, andagent-mining interaction

• Social Media analysis

• Evolutionary computation and genetic algorithms

Activity in foreign currency

• Econometric modeling

• Distributed and cloud computing

• Supply chain management and robust optimization

• Software architecture

• Education technology

‘Biologically Inspired computing’ is an upcoming field of research where weare working on new computing paradigms like peptide computing modeling. We are workingwith modeling of cognition and emotion with the objective of building more intelligentsystems.

Research and development expenditure

The R&D centers of the Company (Finacle and Infosys Labs) located at Bangalore,Bhubaneswar, Chandigarh, Chennai, Pune, Hyderabad, Mysore and Thiruvananthapuram have beenaccorded approval for weighted deduction by the Department of Scientific and IndustrialResearch (DSIR) effective November 23, 2011.

The eligible R&D revenue and capital expenditure are Rs. 247 crore and Rs. 3 crorefor the year ended March 31,2013 and Rs. 75 crore towards revenue expenditure for the yearended March 31, 2012. The overall R&D expenditure for fiscal 2013 and 2012 is asfollows :

in Rs. crore

2013 2012
Revenue expenditure 907 655
Capital expenditure 6 5
Total 913 660
R&D expenditure / total revenue (%) 2.5% 2.1%

Future plan of action

We will continue to focus on and collaborate with leading national and internationaluniversities, product vendors and technology startup companies. We are creating anecosystem to co-create business solutions on client-specific business themes.

Foreign exchange earnings and outgo

Activities relating to exports, initiatives taken to increase exports, development ofnew export markets for products and services, and export plans

We have established a substantial direct marketing network around the world, includingNorth America, Europe and Asia Pacific. These offices are staffed with sales and marketingspecialists who sell our services to large international clients.

in Rs. crore

2013 2012
Earnings 36,107 31,187
Expenditure 17,144 13,532
Net foreign exchange earnings (NFE) 18,963 17,655
NFE / Earnings (%) 52.5% 56.6%

 

for and on behalf of the Board of Directors
S. D. Shibulal S. Gopalakrishnan
Bangalore Chief Executive Officer and Managing Director Executive Co-Chairman of the Board
April 12, 2013

b) Auditors' certificate on corporate governance

The Members of Infosys Limited

We have examined the compliance of conditions of Corporate Governance by InfosysLimited (‘the Company’), for the year ended 31 March, 2013, as stipulated inClause 49 of the Listing Agreement of the Company with the stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of themanagement. Our examination was limited to procedures and implementation thereof, adoptedby the Company for ensuring the compliance of the conditions of Corporate Governance. Itis neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanationsgiven to us, we certify that the Company has complied with the conditions of CorporateGovernance as stipulated in the above-mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the futureviability of the Company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.

for B S R & Co.
Chartered Accountants
Firm's registration No. 101248W
Natrajh Ramakrishna
Bangalore Partner
April 12, 2013 Membership No. 32815
   

Peer Comparison

Company Market Cap
(Rs. in Cr.)
P/E (TTM)
(x)
P/BV (TTM)
(x)
EV/EBIDTA
(x)
ROE
(%)
ROCE
(%)
D/E
(x)
TCS 492,897.06 25.03 11.19 16.41 48.2 60.1 0.00
Infosys 191,816.26 17.99 4.56 10.87 26.1 35.6 0.00
Wipro 132,214.96 16.32 4.50 11.93 27.6 30.8 0.20
HCL Technologies 106,160.80 17.74 6.74 10.25 44.0 47.1 0.10
Tech Mahindra 49,959.58 19.82 5.82 10.50 42.1 39.6 0.13
Oracle Fin.Serv. 27,758.63 24.17 3.28 10.52 15.2 22.1 0.00
MphasiS 9,344.85 19.22 2.42 25.12 14.1 19.4 0.00
IGate Computer 7,006.46 14.73 2.08 8.41 15.8 18.7 0.00
Polaris Finan. 2,127.87 25.66 1.81 11.30 8.7 11.2 0.05
Hewlett-Packard 0.11 0.00 0.00 0.00 37.3 36.3 0.00

Futures & Options Quote

 
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Key Information

Key Executives:

N R Narayana Murthy , Executive Chairman  

K V Kamath , Director  

S D Shibulal , Managing Director & CEO  

S Gopalakrishnan , Executive Vice Chairman  


Company Head Office / Quarters:
Electronics City,
Hosur Road,
Bangalore,
Karnataka-560100
Phone : 91-80-28520261
Fax : 91-80-28520362
E-mail : investors@infosys.com
Web : http://www.infosys.com
Registrars:
Karvy Computershare Pvt Ltd
Plot No 17-24
Vittal Rao Nagar
Madhapur
Hyderabad-500081

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