To the members,
We are delighted to present the report on our business and operations for the year
ended March 31, 2015.
1. Results of our operations
in Rs. crore , except per share data
|Income from software services and products
|Software development expenses
|Selling and marketing expenses
|General and administration expenses
|Operating profit before depreciation
|Depreciation and amortization
|Profit before exceptional item and tax
|Profit on transfer of business (1)
|Profit before tax
|Profit before minority interest and share in net profit / (loss) of associate
|Share in net profit / (loss) of associate
|Profit for the period
|Surplus - opening balance
|Dividend eliminated on consolidation of trust
|Reserves on transfer of assets and liabilities of Infosys Consulting India Limited
|Reserves on consolidation of trust
|Deconsolidation of trust (2)
|Amount available for appropriation
|Amount transferred to general reserve
|Amount transferred to other reserve (3)
|Surplus - closing balance
|Earnings Per Share (EPS) before exceptional item (4)(5)
|EPS after exceptional item (4)(5)
Notes: The above figures are extracted from the standalone and consolidated financial
statements as per Indian Generally Accepted Accounting Principles (GAAP).
1 crore = 10 million
(1) On April 15, 2014, the Board of Directors (the Board) of Infosys
authorized the Company to execute a Business Transfer Agreement and related documents with
EdgeVerve Systems Limited (EdgeVerve), subject to securing the requisite approval from
shareholders in the Annual General Meeting. Subsequently, at the Annual General Meeting
held on June 14, 2014, the shareholders authorized the Board to enter into a Business
Transfer Agreement and related documents with EdgeVerve, with effect from July 1, 2014 or
such other date as may be decided by the Board. The Company has undertaken an enterprise
valuation by an independent valuer and accordingly the business has been transferred for a
consideration of Rs. 421 crore (US $70 million) with effect from July 1, 2014. Net assets
amounting to Rs. 9 crore have also been transferred and accordingly a gain of' 412 crore
has been recorded as an exceptional item. The consideration has been settled through the
issue of fully-paid-up shares in EdgeVerve. The transfer of assets and liabilities is
accounted for at carrying values and does not have any impact on the consolidated
(2) Effective January 1, 2015, Infosys Limited Employees' Welfare Trust has been
deconsolidated consequent to SEBI (Share Based Employee Benefits) Regulations, 2014 issued
on October 28, 2014.
(3) Under the Swiss Code of Obligation, a few Lodestone subsidiaries are required
to appropriate 5% of the annual profit to legal reserve until this equals 20% of the
paid-up share capital. To the extent it does not exceed one-half of the share capital, the
general reserve may be used only to cover losses or for measures designed to sustain the
Company through difficult times, to prevent unemployment or to mitigate its consequences.
(4) Equity shares are at par value of '5/- each.
(5) The Company has allotted 57,42,36,166fully-paid-up equity shares of face
value Rs. 5/- each during the year ended March 31,2015, pursuant to a bonus issue approved
by the shareholders through a postal ballot. The record date fixed by the Board was
December 3, 2014. A bonus share of one equity share for every equity share held, and a
stock dividend of one American Depositary Share (ADS) for every ADS held, respectively,
has been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an
American Depositary Receipt holder remains unchanged. Earnings per share (EPS) of the
previous year has been adjusted for the bonus issue, in accordance with Accounting
Standard (AS) 20 - Earnings Per Share.
Revenues - standalone
Our total income on a standalone basis increased to '47,300 crore from Rs. 44,341 crore
in the previous year, at a growth rate of 6.7%. Our software export revenues aggregated to
Rs. 45,993 crore, up by 6.8% from Rs. 43,063 crore in the previous year. Out of the total
revenue, 64.0% came from North America, 21.8% from Europe, 2.8% from India and 11.4% from
the Rest of the World. On a standalone basis, our share of revenues from all parts of the
world outside North America has decreased to 36.0% in the current year from 36.9% in the
Revenues - consolidated
Our total income on a consolidated basis increased to Rs. 53,319 crore from Rs. 50,133
crore in the previous year, at a growth rate of 6.4%. Our software export revenues
aggregated to Rs. 52,035 crore, up by 6.5% from Rs. 48,839 crore in the previous year. Out
of the total revenue, 61.5% came from North America, 24.1% from Europe, 2.4% from India,
and 12.0% from the Rest of the World. A focus of our growth strategy is to expand our
business to parts of the world outside North America to diversify our revenues. On a
consolidated basis, our share of revenues from all parts of the world outside North
America decreased to 38.5% in the current year from 39.3% in the previous year.
Profits - standalone
Our gross profit on a standalone basis amounted to Rs. 19,472 crore (41.2% of revenue),
as against Rs. 17,603 crore (39.7% of revenue) in the previous year. Sales and marketing
costs were 5.4% of our revenue for each of the years ended March 31, 2015 and March 31,
2014. General and administration expenses were 6.3% and 6.0% of our revenues during the
current year and previous year, respectively. The operating profit before depreciation
amounted to Rs. 13,962 crore (29.5% of revenue), as against Rs. 12,527 crore (28.3% of
revenue) in the previous year. The profit before exceptional item and tax was Rs. 16,386
crore (34.7% of revenue), as against Rs. 14,002 crore (31.6% of revenue) in the previous
Profits - consolidated
Our gross profit on a consolidated basis amounted to Rs. 21,485 crore (40.3% of
revenue), as against Rs. 19,329 crore (38.6% of revenue) in the previous year. Sales and
marketing costs were 5.5% and 5.2% of our revenue for the years ended March 31, 2015 and
March 31, 2014, respectively General and administration expenses were 6.9% and 6.7% of our
revenues during the current year and previous year, respectively. The Operating Profit
before Depreciation amounted to Rs. 14,871 crore (27.9% of revenue), as against Rs. 13,381
crore (26.7% of revenue) in the previous year. The profit before tax was Rs. 17,284 crore
(32.4% of revenue), as against Rs. 14,728 crore (29.4% of revenue) in the previous year.
Capital expenditure on tangible assets - standalone
This year, on a standalone basis, we capitalized '2,540 crore. This comprises Rs. 694
crore for investment in computer equipment, Rs. 3 crore on vehicles and the balance of Rs.
1,843 crore on infrastructure investments.
In the previous year, we capitalized Rs. 2,381 crore. This comprised Rs. 672 crore for
investment in computer equipment, Rs. 3 crore on vehicles and the balance of Rs. 1,706
crore on infrastructure investments.
Capital expenditure on tangible assets - consolidated
On a consolidated basis, we capitalized Rs. 2,673 crore in the current year. This
comprises Rs. 778 crore for investment in computer equipment, Rs. 6 crore on vehicles, and
the balance of Rs. 1,889 crore on infrastructure investments.
In the previous year, we capitalized Rs. 2,533 crore. This comprised Rs. 759 crore for
investment in computer equipment, Rs. 11 crore on vehicles, and the balance of Rs. 1,763
crore on infrastructure investments.
We continue to be debt-free and maintain sufficient cash to meet our strategic
objectives. We understand that liquidity in the Balance Sheet has to balance between
earning adequate returns and the need to cover financial and business risks. Liquidity
enables us to make a rapid shift in direction, if there is a market demand. During fiscal
2015, internal cash flows have more than adequately covered working capital requirements,
capital expenditure, investment in subsidiaries and dividend payments. As on March 31,
2015, on a standalone basis, we had liquid assets of Rs. 29,705 crore, as against Rs.
28,149 crore at the previous year end. On a consolidated basis, we had liquid assets of
Rs. 32,543 crore at the current year-end, as against Rs. 30,277 crore at the previous year
end. These funds comprise deposits with banks and highly rated financial institutions,
liquid mutual funds, fixed maturity plans, certificates of deposit, tax-free bonds and
government bonds. The details of the tax-free bonds and government bonds are disclosed
under the non-current investments section in the financial statements in this
The Board, in its meeting held on April 24, 2015, decided to revise and increase the
dividend payout ratio to up to 50% of post-tax consolidated profits effective fiscal 2015
from the existing cap of up to 40%.
The Board, in its meeting held on October 10, 2014, declared an interim dividend of Rs.
30/- per equity share (not adjusted for bonus issue). Further, the Board, in its meeting
held on April 24, 2015, has recommended a final dividend of Rs. 29.50/- per equity share
(equivalent to Rs. 14.75/- per share post the 1:1 bonus issue, if the 1:1 bonus issue
approved by members, pursuant to the Postal Ballot Notice dated April 24, 2015) for the
financial year ended March 31, 2015. The proposal is subject to the approval of
shareholders at the Annual General Meeting to be held on June 22, 2015.
The total dividend appropriation (excluding dividend tax) for the current year is Rs.
5,111 crore, as against Rs. 3,618 crore in the previous year. Dividend (including dividend
tax) as a percentage of consolidated net profit after tax is 49.8%, as compared to 39.7%
in the previous year.
The Register of Members and Share Transfer Books will remain closed on June 17, 2015
for the purpose of payment of the final dividend for the financial year ended March 31,
2015, and the Annual General Meeting. The Annual General Meeting is scheduled to be held
on June 22, 2015.
The Company, in December 2014, had issued bonus shares to the shareholders of the
Company in proportion of 1:1 and consequently, the paid-up share capital of the Company
increased from 57,42,36,166 to 1,14,84,72,332 shares.
Particulars of loans, guarantees or investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013
form part of the notes to the financial statements provided in this Annual Report.
Transfer to reserves
We propose to transfer Rs. 1,217 crore to the general reserve. An amount of Rs. 35,152
crore is proposed to be retained in the surplus.
We have not accepted any fixed deposits and, as such, no amount of principal or
interest was outstanding as of the Balance Sheet date.
Particulars of contracts or arrangements made with related parties
Particulars of contracts or arrangements with related parties referred to in Section
188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as Annexure 2
to the Board's report.
Material changes and commitments affecting financial position between the end of the
financial year and date of report
On April 24, 2015, the Board authorized the Company to execute a Business Transfer
Agreement and related documents with the Company's subsidiary, EdgeVerve, subject to
securing the requisite approval from shareholders through postal ballot. The proposed
transfer of the business of Finacle and Edge Services to EdgeVerve is at an estimated
consideration of up to Rs. 3,400 crore and up to Rs. 220 crore, respectively. On April 24,
2015, the Company entered into a definitive agreement to acquire Kallidus Inc. (doing
business as Skava) and its affiliate, a leading provider of digital experience solutions,
including mobile commerce and in-store shopping experiences, to large retail clients, for
a consideration of US $120 million (approximately Rs. 750 crore), including a deferred
component and retention bonus.
The Board, in its meeting held on April 24, 2015, has considered, approved and
recommended a bonus issue of one equity share for every equity share held and a stock
dividend of one American Depositary Share (ADS) for every ADS held, respectively, as on a
record date to be determined. Consequently, the ratio of equity shares underlying the ADSs
held by an American Depositary Receipt holder would remain unchanged. The bonus issue of
equity shares and ADSs will be subject to approval by the shareholders through postal
ballot, and any other applicable statutory and regulatory approvals.
Apart from these, there have been no other material changes and commitments affecting
the financial position of the Company between the end of the financial year and the date
of the report.
Variation in market capitalization
As at March 31,
|Increase / (decrease)in %
|Market capitalization ( in Rs. crore )
|Price earnings ratio (1)
|Percentage increase in the market price of the shares in comparison with the last
public offer price (2)
Notes: Data based on share prices quoted on NSE.
(1) Based on consolidated Indian GAAP financial statements.
(2) Last public offer price has been adjusted for bonus issues and stock split.
Management's discussion and analysis
In terms of the provisions of Clause 49 of the Listing Agreement, the Management's
discussion and analysis is set out in this Annual Report.
Our strategic objective is to build a sustainable organization that remains relevant to
the agenda of our clients, while generating profitable growth for our investors.
In order to do this, we will apply the priorities of our strategy renew and new
to our own business and cascade it to everything we do. This applies to our
solution and service offerings, our client and employee engagement processes, and to the
operational processes of the Company. These translate to the following strategic focus
Differentiate our solution and service offerings : In process-oriented services
infrastructure management, business process outsourcing, and software testing or
maintenance our strategy will be to embrace the concepts of automation and
artificial intelligence to improve productivity, gain higher accuracy and reduce the total
cost to clients. We are leveraging our Global Delivery Model to provide scale, quality,
expertise and cost advantages to our projects with clients. We are building differentiated
platforms such as our Edge Suite, our Finacle core banking product and the Infosys
Information Platform. We will leverage the advantages of open source technologies in
providing innovative and high cost-benefit performance solutions to our clients. We will
continue to invest in emerging mobile and digital technologies and big data analytics.
Pursue strategic alliances and acquisitions : We are developing alliances that
complement our core competencies. We are partnering with leading technology software
providers in creating, deploying, integrating and operating business solutions for our
clients. We plan to deploy our capital in making selective business acquisitions that
augment our expertise, complement our presence in certain market segments and accelerate
the execution of our strategies.
Build deep and impactful client relationships : Our strategy is to engage with clients
on their large transformative programs, both in traditional IT areas as well as for their
new digital business initiatives. We are expanding existing client relationships by
providing them a broad set of end-to-end service offerings and increasing the size, nature
and number of projects we do with them. We will acquire new clients, and increase our
presence in new geographies and market segments by investing in targeted business
development and marketing. We will invest in high-performing consulting and business
development teams and the processes and systems required to make them effective. We will
continue to ensure our brand is differentiated, global and respected.
Build a culture within the Company that delivers innovation to clients : We will create
the required environment, structures, ecosystems and economic models that will spur
innovation across the Company. We are using Design Thinking methods to elicit new problem
statements and bring together our deep knowledge of client industries and emerging
technologies to solve problems for our clients. We have allocated US $500 million towards
an innovation fund to tap into innovation networks of early stage companies and
universities to gain access to new thinking and business models. We will continue to build
a collaborative and entrepreneurial culture in the organization.
Attract and retain a global, diverse, motivated and high performing employee base : Our
employees are our biggest assets. To meet the evolving need of our clients, our priority
is to attract and engage the best talent in the right locations with the right skills. We
are fully committed to strengthening our brand to continue to be the employer of
choice. A series of measures have been initiated to empower our employees through
trust and accountability. We have overhauled our performance management system to bring in
more objectivity, created internal marketplace for employees to work on challenging
assignments, and increased the focus on providing a safe and transparent working
environment. We are guided by our value system which motivates our attitudes and actions.
Our core values are Client Value, Leadership by Example, Integrity and Transparency,
Fairness and Excellence (C-LIFE). We have invested substantially in training, which is
central to our employees' learning and career development process. We are committed to
creating a work environment that is social, fun and collaborative. We continue to provide
employees with life-long learning opportunities in a transparent and meritocratic culture.
Enhance our operational effectiveness for agility and cost : We will periodically
assess the effectiveness of our organization structure and processes to optimize it for
alignment with our strategic objectives and agility. We continually evaluate critical
cross-functional processes and benchmark them with best-in-class practices to optimize
costs and enable swift and effective response to our clients. We constantly monitor and
optimize various operational parameters such as the cost and utilization of resources,
distribution of employees around the world, the cost of operating our campuses and
optimally realizing the efficiencies of scale and the strengths of our Global Delivery
To enhance our agility in the market, sharpen our competitive differentiation and
defragment centers of excellence, we realigned our organizational structure. The
realignment is effective April 1, 2015. Our go-to-market units are organized around five
global industry segments :
Retail, CPG & Logistics
Energy, Utilities, Communications & Services
Life Sciences, Healthcare & Insurance
Apart from the five industry segments, our businesses in India, China and Japan are run
as standalone regional business units.
Our service delivery will be organized as horizontal centers of excellence or service
lines, with a focus on nurturing innovation, to drive differentiation across the industry
segments. This organization will comprise the following service lines :
Infosys Global Consulting
- Enterprise Solutions
- Infosys Digital
- Enterprise Mobility
- Custom Application Development
- Application Management Services
- Independent Validation Solutions
- Business Intelligence
- Engineering Services
- Cloud and Infrastructure Services
Our client-centric approach continues to bring us high levels of client satisfaction.
We derived 97.8% of our consolidated revenues from repeat business this fiscal. We, along
with our subsidiaries, added 221 new clients, including a substantial number of large
global corporations. Our total client base at the end of the year stood at 950. The client
segmentation for the current and previous years on a consolidated basis is as follows :
|1 million dollar +
|5 million dollar +
|10 million dollar +
|25 million dollar +
|50 million dollar +
|75 million dollar +
|100 million dollar +
|200 million dollar +
|300 million dollar +
We added 35.62 lakh sq. ft. of physical infrastructure space during the year. The total
available space as on March 31, 2015 stands at 403.68 lakh sq. ft. The number of marketing
offices as on March 31,2015 was 85, compared to 73 in the previous year.
Subsidiaries and associates
We, along with our subsidiaries, provide consulting, technology, outsourcing and
next-generation services. At the beginning of the year, we had 11 direct subsidiaries. As
on March 31, 2015, we have 13 direct subsidiaries, 29 step-down subsidiaries and one
During the year, the Board of Directors (the Board)reviewed the affairs of
the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have
prepared consolidated financial statements of the Company and all its subsidiaries, which
form part of the Annual Report. Further, a statement containing the salient features of
the financial statement of our subsidiaries in the prescribed format AOC-1 is appended as
Annexure 1 to the Board's report. The statement also provides the details of performance,
financial positions of each of the subsidiaries.
In accordance with Section 136 of the Companies Act, 2013, the audited financial
statements, including the consolidated financial statements and related information of the
Company and audited accounts of each of its subsidiaries, are av