Beruflich Dokumente
Kultur Dokumente
Growth %
Q2 17 over
Q2 16
Sep 30,
Particulars
Revenues
Cost of sales
Gross Profit
Operating Expenses:
Selling and marketing expenses
Administrative expenses
Total Operating Expenses
Operating Profit
Other Income, net
Share in associate's profit/(loss)
Profit before income taxes
Income tax expense
Net Profit
Earnings per equity share
Basic (`)
Diluted (`)
2016
2015
Growth %
Q2 17 over
Q1 17
17,310
10,962
6,348
15,635
9,724
5,911
10.7
12.7
7.4
16,782
10,681
6,101
3.1
2.6
4.0
897
1,142
2,039
4,309
760
(3)
5,066
1,460
3,606
843
1,075
1,918
3,993
793
(1)
4,785
1,387
3,398
6.4
6.2
6.3
7.9
(4.2)
5.9
5.3
6.1
920
1,134
2,054
4,047
753
(2)
4,798
1,362
3,436
(2.5)
0.7
(0.7)
6.5
0.9
5.6
7.2
4.9
15.77
15.77
14.87
14.87
6.1
6.1
15.03
15.03
4.9
4.9
Page 1 of 7
Sep 30,
2016
Growth %
2015
34,091
21,643
12,448
29,989
18,847
11,142
13.7
14.8
11.7
1,817
2,276
4,093
8,355
1,513
(5)
9,863
2,822
7,041
1,663
2,038
3,701
7,441
1,551
(1)
8,991
2,562
6,429
9.3
11.7
10.6
12.3
(2.5)
9.7
10.1
9.5
30.81
30.80
28.13
28.13
9.5
9.5
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
Sep 30,
Particulars
Revenues
Cost of sales
Gross Profit
Operating Expenses:
Selling and marketing expenses
Administrative expenses
Total Operating Expenses
Operating Profit
Other Income, net
Share in associate's profit/(loss)
Profit before income taxes
Income tax expense
Net Profit
Earnings per equity share
Basic ($)
Diluted ($)
2016
Growth %
Q2 17 over
Q2 16
2015
Growth %
Q2 17 over
Q1 17
2,587
1,638
949
2,392
1,488
904
8.2
10.1
5.0
2,501
1,592
909
3.5
2.9
4.5
134
171
305
644
114
(1)
757
218
539
129
165
294
610
121
731
212
519
3.9
3.6
3.7
5.6
(5.8)
3.6
2.8
3.8
137
170
307
602
112
714
203
511
(2.2)
0.6
(0.7)
7.0
1.8
6.1
7.4
5.5
0.24
0.24
0.23
0.23
3.8
3.8
0.22
0.22
5.5
5.5
Sep 30,
2016
Growth %
2015
Revenues
5,088
4,647
9.5
Cost of sales
3,231
2,922
10.6
Gross Profit
1,857
1,725
7.6
271
258
5.0
Administrative expenses
340
316
7.6
Operating Expenses:
611
574
6.4
1,246
1,151
8.3
226
240
(5.8)
(1)
1,471
1,391
5.8
421
396
6.3
1,050
995
5.6
Basic ($)
0.46
0.44
5.6
Diluted ($)
0.46
0.44
5.6
Operating Profit
Other Income, net
Share in associate's profit/(loss)
Profit before income taxes
Income tax expense
Net Profit
Earnings per equity share
Page 2 of 7
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
LTM
Sep 30, 2015
63.3
22.9
2.3
11.5
100.0
LTM
62.4
14.4
19.5
8.3
9.1
3.5
4.9
2.7
32.1
5.5
3.0
2.1
0.4
100.0
62.3
14.0
19.6
8.7
9.0
3.3
4.9
2.8
32.8
4.9
2.8
1.0
1.1
100.0
62.8
15.6
18.1
8.4
9.2
3.7
4.9
2.9
32.1
5.1
3.0
1.7
0.4
100.0
Sep 30,
2016
Sep 30,
2015
62.0
14.5
19.1
8.1
9.1
3.5
4.9
2.8
32.8
5.2
3.1
1.7
0.4
100.0
62.4
14.3
19.7
8.3
9.0
3.4
5.1
2.6
32.7
4.9
3.1
1.3
0.5
100.0
Fixed Price
Time & Materials
Total
Quarter ended
Jun 30, 2016
45.7
LTM
Sep 30, 2016
Sep 30, 2015
45.7
43.3
52.9
54.3
56.0
54.3
56.7
100.0
100.0
100.0
100.0
100.0
* Excluding products
Page 3 of 7
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
Quarter ended
Jun 30, 2016
LTM
Sep 30, 2015
33.1
32.8
32.8
33.1
33.1
27.4
5.7
22.5
23.5
14.9
1.9
4.5
2.2
27.2
5.6
22.8
24.2
15.5
1.9
4.7
2.1
27.2
5.6
23.8
24.6
14.9
1.9
5.9
1.9
27.4
5.7
22.7
24.1
15.0
1.9
5.1
2.1
27.1
6.0
23.8
24.0
15.0
1.6
5.5
1.9
20.9
20.2
18.8
20.1
19.1
4.8
9.4
6.7
100.0
4.7
9.4
6.1
100.0
4.7
7.9
6.2
100.0
4.9
8.9
6.3
100.0
4.6
8.3
6.2
100.0
Client Data
Quarter ended
Jun 30, 2016
Year ended
Mar 31, 2016
Mar 31, 2015
Number of Clients
Active
1,136
1,126
1,011
1,092
950
78
95
82
325
221
1 Million dollar +
577
574
542
558
529
5 Million dollar +
277
268
258
268
244
10 Million dollar +
186
180
169
177
159
25 Million dollar +
89
87
85
88
83
50 Million dollar +
54
52
50
52
47
75 Million dollar +
30
31
31
31
29
18
17
14
14
15
3.5%
3.6%
3.7%
3.6%
3.3%
Top 5 clients
13.1%
13.7%
14.0%
13.8%
13.5%
Top 10 clients
21.8%
22.2%
22.8%
22.5%
22.7%
Repeat business
97.5%
98.8%
97.6%
97.1%
97.8%
64
66
64
66
65
Page 4 of 7
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
LTM
Sep 30, 2015
Effort
Onsite
29.7
29.9
29.2
29.7
29.0
Offshore
70.3
70.1
70.8
70.3
71.0
Onsite
57.0
57.0
56.1
56.8
55.6
Offshore
43.0
43.0
43.9
43.2
44.4
Including trainees
77.7
76.5
75.4
75.8
74.9
Excluding trainees
82.5
80.5
81.3
81.0
80.7
Quarter ended
Jun 30, 2016
104,721
256,041
245,332
229,737
977,975
872,504
364,008
350,053
324,330
1,390,880
1,228,210
Non Billable
77,162
84,864
74,492
327,190
294,532
Trainee
27,408
22,882
31,280
117,416
116,634
Revenues
Utilization
Billed Onsite
Offshore
TOTAL
LTM
Sep 30, 2016
Sep 30, 2015
412,905
355,706
29,475
28,965
26,015
112,983
97,648
498,053
486,764
456,117
1,948,468
1,737,024
Sequential
growth %
Jun 30,
2016
LTM
Sequential
growth %
Sep 30,
2015
Sequential
growth %
Sep 30,
2016
Year on
Year
growth %
Sep 30,
2015
Year on
Year
growth %
3.1
4.4
4.0
104,721
245,332
350,053
3.3
1.8
2.2
94,593
229,737
324,330
3.5
3.7
3.7
412,905
977,975
1,390,880
16.1
12.1
13.2
355,706
872,504
1,228,210
11.6
13.5
12.9
Revenues ($ million)
Onsite
1,338.48
Offshore
1,007.99
Total
2,346.46
4.3
4.1
4.2
1,283.43
968.51
2,251.94
2.8
0.9
2.0
1,217.56
951.65
2,169.21
6.5
6.2
6.3
5,103.43
3,884.86
8,988.29
12.4
7.0
10.0
4,538.88
3,629.04
8,167.92
7.8
4.3
6.2
Page 5 of 7
Year Ended
51.0
50.9
51.2
50.7
52.3
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
Employee Metrics
Total employees
S/W professionals
Billable
(Nos.)
Year ended
Mar 31, 2016
Mar 31, 2015
1,94,044
1,76,187
Quarter ended
Jun 30, 2016
1,97,050
1,87,595
1,84,644
1,77,110
1,82,329
1,66,046
1,76,334
1,73,154
162,758
1,71,109
1,54,504
4,958
4,910
5,369
5,122
5,357
6,303
6,580
8,983
6,098
6,185
Trainees
12,234
12,406
10,866
11,715
10,141
Gross addition
12,717
13,268
17,595
52,545
53,386
5,752
5,260
7,452
24,719
23,156
Attrition
9,938
10,262
9,142
34,688
37,604
Net addition
2,779
3,006
8,453
17,857
15,782
15.7%
15.8%
14.1%
13.6%
18.9%
20.0%
21.0%
19.9%
18.7%
22.3%
Work in progress
Built-up area
No. of seats
(Sq. Ft.)
Land acquired
during the
Quarter
(acres)
5,643,217
39,739
2,333,606
11,845
3.1
Pune
6,713,222
36,807
980,750
6,000
Chennai
4,276,536
25,270
Hyderabad
5,082,180
25,810
1,378,956
11,120
0.1
Bhubaneshwar
1,205,410
6,168
724,796
2,592
Mangalore
1,945,636
6,891
604,000
4,800
11,582,315
15,566
761,103
4,164
Chandigarh
1,193,052
6,615
Trivandrum
2,031,866
7,593
750,000
6,995
Delhi/ NCR
151,104
1,300
176,163
3,000
Jaipur
778,245
6,948
Nagpur
410,989
5,000
Indore
350,000
3,000
Mohali
25,989
2,000
Hubli
400,169
3,000
2,098,016
21,524
1,079,700
4,500
42,700,799
200,231
9,976,221
68,016
3.2
Global centers
Total
*Infosys Leadership Institute
Page 6 of 7
Quarter ended
Jun 30, 2016
67.53
67.08
Year ended
Mar 31, 2016
Mar 31, 2015
66.26
62.50
65.69
61.18
www.infosys.com
Fact Sheet
Consolidated Financial Data - Second Quarter, Fiscal 2017
Q2 17
Revenues ($ mn)
Q1 17
Q4 16
Q3 16
Q2 16
2,587
2,501
2,446
2,407
2,392
3.5
2.2
1.6
0.6
6.0
8.2
10.9
13.3
8.5
8.7
Constant currency Q o Q
Q2 17
Revenues ($ mn)
Q3 16
Q2 16
2,489
2,452
2,418
2,412
3.9
1.7
1.9
1.1
6.9
Q2 17
Revenues ($ mn)
Q4 16
2,599
Q1 17
Q1 17
Q4 16
Q3 16
Q2 16
2,605
2,529
2,484
2,495
2,513
8.9
12.1
15.0
12.5
14.2
Notes:
Basis of computation
1.
Foreign exchange rates are as per FEDAI.
2.
Average rates for major global currencies:
Average rate of USD
Q2 17
Q1 17
FY 16
Q4 16
Q3 16
Q2 16
AUD
0.76
0.74
0.73
0.73
0.72
0.71
EURO
1.12
1.12
1.10
1.10
1.09
1.11
1.31
1.43
1.51
1.42
1.51
1.54
GBP
3.
Q2 17
Q1 17
FY 16
Q4 16
Q3 16
Q2 16
AUD
7.5
7.3
6.9
6.9
6.6
6.8
EURO
9.6
9.4
9.3
9.6
9.4
9.5
GBP
6.0
6.6
6.6
6.7
6.7
6.6
Q2 2017
Geographical segment growth
North America grew by 2.6% sequentially; and 2.7% in constant currency
Europe grew by 1.1% sequentially; and 3.7% in constant currency
India grew by 29.1% sequentially; and 28.7% in constant currency
Rest of the world grew by 6.5% sequentially; and 5.2% in constant currency
Industry segment growth
FSI grew by 4.6% sequentially; and 5.2% in constant currency
MFG & Hi-Tech grew by 2.1%; both sequentially and in constant currency
RCL grew by 0.4% sequentially; and 1.2% in constant currency
ECS grew by 6.9% sequentially; and 7.3% in constant currency
Page 7 of 7
www.infosys.com
IFRS INR
Press Release
Infosys (NSE, BSE: INFY) Announces Results for the Quarter ended September 30, 2016
Q2 sequential revenue growth at 3.1% in INR terms; 3.9% in constant currency terms
Q2 year on year revenue growth at 10.7% in INR terms; 8.9% in constant currency
terms
H1 year on year revenue growth at 13.7% in reported terms; 10.5% in constant currency
terms
Operating margins expanded 80 bps sequentially to 24.9%
Volume Growth 4.0% during the quarter
Q2 Utilization excluding trainees up by 200 bps sequentially to 82.5%
FY 17 revenue guidance revised to 8.0% - 9.0% in constant currency
Bangalore, India October 14, 2016
Financial Highlights
Consolidated results under International Financial Reporting Standards (IFRS) for the quarter ended September
30, 2016
Quarter ended September 30, 2016
Revenues were ` 17,310 crore for the quarter ended September 30, 2016
QoQ growth of 3.1%
YoY growth of 10.7%
Operating profit was ` 4,309 crore for the quarter ended September 30, 2016
QoQ growth of 6.5%
YoY growth of 7.9%
Net profit was ` 3,606 crore for the quarter ended September 30, 2016
QoQ growth of 4.9%
YoY growth of 6.1%
Earnings per share (EPS) was ` 15.77 for the quarter ended September 30, 2016
QoQ growth of 4.9%
YoY growth of 6.1%
Liquid assets including cash and cash equivalents and investments were ` 35,640 crore as on
September 30, 2016 as compared to ` 33,212 crore as on June 30, 2016 and ` 32,099 crore as on
September 30, 2015.
The Board of Directors declared an interim dividend of ` 11 per share. The record date for interim
dividend is October 24, 2016 and the payment will be made on October 26, 2016
We focused on strong execution in Q2 with our core IT services business showing good progress on the
strength of our innovation and operational initiatives. While we continue to navigate an uncertain external
environment, we remain focused on executing our strategy and increasing momentum of our software plus
services model. Considering our performance in the first half of the year and the near-term uncertain business
outlook, we are revising our revenue guidance. said Dr. Vishal Sikka, CEO. Longer-term, I believe its
increasingly clear that our industrys future lies in evolving from a cost-based, people-only model, to one in
Page 1 of 10
IFRS INR
Press Release
which people are amplified by software and AI, and are freed to innovate in areas that are strategic to our clients
future. And in this all-important transformation, I am glad to see us make continued progress."
We had well-rounded growth during the quarter in our market segments. Our delivery and support teams
executed well on their plans for resource management during the quarter, leading to an uptick in utilization.
said U B Pravin Rao, COO. I am also pleased that the changes we made to employee engagement, policies
and rewarding high performers continue to help retain our high quality workforce.
Our margins expanded during the quarter on the back of further improvement in operational efficiency. said
M.D. Ranganath, CFO. Operating cash flows for the quarter were healthy and we effectively navigated a
volatile currency environment through prudent hedging.
Outlook*
The Companys revenue outlook (consolidated) for the fiscal year ending March 31, 2017, under IFRS is as
follows:
*FY 16 constant currency rates - AUD/USD 0.73; Euro/USD 1.10; GBP/USD 1.51
Currency rates as of March 31, 2016 - 1 US$ = `66.26
Currency rates as of June 30, 2016 - 1 US$ = `67.53
Currency rates as of September 30, 2016 - 1 US$ = `66.62
Board Changes
On the recommendations of the Nomination and Remuneration Committee, the Board of Directors inducted Mr.
D.N. Prahlad as an Independent Director of the Board effective October 14, 2016
D. N. Prahlad is the founder and CEO of Surya Software Systems Private Limited, Bangalore. Surya focuses
on products for financial risk management of financial institutions in general and banks in particular. He is on
the advisory board of Computer Science and Automation Department of Indian Institute of Science, Bangalore.
Prahlad is a B.Sc. with honours in mathematics from Bangalore University and B.E. (Electrical technology and
Electronics) from Indian Institute of Science, Bangalore.
Prior to founding Surya, Prahlad played a key role in the rapid growth of Infosys, being associated with the
company during its formative years.
Welcoming D.N. Prahlad, Mr. Seshasayee, Chairman of the Board said, We are delighted to welcome Prahlad,
a distinguished technologist to the Board. Prahlad brings with him, not only his deep knowledge of the Company,
but also sharp insights into the Industry.
Page 2 of 10
IFRS INR
Press Release
Compensation Plan ( 2015 plan) approved by the shareholders in the postal ballot dated March 31, 2016.
These RSU and stock options would vest over a period of 4 years which shall be exercisable within the period
as approved by the committee. The exercise price of the RSUs will be equal to the par value of the shares
and the exercise price of the stock options would be market price as on the date of grant as approved by the
shareholders. RSU and stock options, in future periods, will be granted on achievement of performance
conditions, as may be decided by the Nomination and Remuneration Committee.
The Board of Directors in their meeting held on October 14, 2016, on recommendation of Nomination and
Remuneration Committee, have approved the revised compensation structure of M.D. Ranganath, Mohit
Joshi, Sandeep Dadlani, Rajesh K Murthy, Ravikumar S., David Kennedy, Krishnamurthy Shankar and
Manikantha AGS with effect from November 1, 2016. The revised aggregate compensation of the above
individuals includes fixed compensation of ` 24 crores and variable compensation of upto ` 20 crores.
Additionally, based on fiscal 2016 performance, restricted stock units (RSU) of 245,750 and stock options of
502,550 will be granted on November 1, 2016 under 2015 Stock Incentive Compensation Plan (2015 plan)
approved by the shareholders in the postal ballot dated March 31, 2016. These RSU and stock options would
vest over a period of 4 years which shall be exercisable within the period as approved by the committee. The
exercise price of RSU will be equal to the par value of the shares and the exercise price of the stock options
would be market price as on the date of grant. The Audit committee in their meeting held on October 13, 2016,
resolved to include Mohit Joshi, Sandeep Dadlani, Rajesh K Murthy, RaviKumar S., Krishnamurthy Shankar
and David Kennedy as key managerial personnel as defined under IndAS 24 Related Party Disclosures
effective from the date of the meeting. Vishal Sikka, Pravin Rao, M.D. Ranganath and Manikantha AGS are
key managerial personnel as defined under Section 2 (51) of the Companies Act, 2013.
The Nomination and Remuneration Committee of the Board of Directors of Infosys Limited at its meeting held
on October 13, 2016, based on fiscal 2016 performance, approved the grant of upto 906,275 RSU and upto
943,810 stock options which shall be made on November 1, 2016, to a total of upto 425 eligible and identified
high-performing executives of the Company and its subsidiaries under 2015 Stock Incentive Compensation
Plan (2015 plan) approved by the shareholders in the postal ballot dated March 31, 2016. The RSUs and
stock options shall vest over a period of 4 years from the date of grant, which shall be exercisable within the
period as approved by the committee. The exercise price of the RSUs will be equal to the par value of the
shares and the exercise price of the stock options would be market price as on the date of grant.
Business Highlights
We continued to execute on our Renew-New strategy through automation and innovation, fueling this through
our culture of learning and education.
RENEW
In Q2, we deepened existing client relationships in core services, won large traditional deals, and focused on
driving automation and grassroots innovation into every aspect of our service offerings through Infosys Mana
and our Zero Distance initiative.
Data volumes continue to grow exponentially, and humankind now converts data into knowledge at
unprecedented rates, making it impossible to codify such expertise and intelligence in software. Our systems
need to learn. Those that do also need to be put to some practical use. It seems that Infosys Mana is doing just
that. - Report title: Infosys Mana uses AI to extract knowledge from processes and control business outcomes,
Authors: Carl Lehmann, Katy Ring, 451 Research, Date: October 4, 2016
"Infosys is a preferred partner for development and support across our portfolio of off-the-shelf and custom
applications, including our most critical business applications. Were keen to create an enterprise for the future
by leveraging AI and machine learning to solve business issues. Weve selected Infosys Mana to help
optimize these business processes and provide a better experience for our users by driving automation,
Page 3 of 10
IFRS INR
Press Release
improving efficiencies, increasing productivity, and reducing business process level disruptions, while at the
same time reducing the total cost of our IT operations. - Andy Bynum, Corporate Vice President IT, AMD
We are very pleased to award Infosys the GPS L2 Application Maintenance & Support Vendor Consolidation
engagement. Infosys impressed us with the overall depth of the solution and commitment to service
transformation through use of its Mana platform which covers automation, analytics and knowledge
management. We believe that this deal will help us achieve our objectives of driving significant productivity
improvements and optimizing and enhancing the services. This is a major step forwards in the strategic
relationship between our organisations and we look forward to a successful journey in delivering the program
together. - Hans-Juergen Rieder, UBS Managing Director - Global Production Services
Beyond the millions of dollars that we're going to be saving here at APS, the benefit is truly with our end
customers in having a system that's going to be flexible and nimble and meet all of their needs. Through our
partnership with Infosys and with this Zero Distance initiative we were able to solve complex problems
that the utilitys been facing for some time. - Christine Gonzales, Program Management Office Lead,
Arizona Public Service
What we're trying to do with world-class customer service is really reinvent, completely transform and turn
inside out the way we deliver customer service here at Cisco. We're looking to use digitization to be able to
simplify, standardize, and automate many of the processes that drive work, so that we can change the
investment we have in people, so that they are then able to have better conversations with a customer. Our
largest savings has been 80% of savings in terms of dollar spend, weve removed 2 million hours of customer
wait time in one particular process alone. Its been a great ride, we really appreciate Infosys flexibility and
ability to change with us - I hope we continue this partnership for the next 20 years. - Steve Power, Senior
Director, Global Service Offerings, CISCO
Gap Inc., a leading global specialty retailer, has chosen Infosys as its primary technology services provider
supporting its entire applications and infrastructure portfolio. This critical milestone strengthens the 18
year relationship between the two organizations even further.
NEW
In Q2, we continued to work with clients and partners on new areas, and new frontiers. And we made Design
Thinking central to every engagement.
GE and Infosys have a shared vision for the merging of our physical and digital worlds. As an early adopter of
our Predix platform, we are partnering with Infosys to foster co-innovation of new applications with advanced
concepts in digital twin, brilliant factory and AI. Our joint innovations will deliver a range of services to
customers, including Industrial Internet solutions and applications to help companies simplify, automate and
transform their businesses. - Bill Ruh, Chief Executive Officer, GE Digital & Chief Digital Officer, GE
I have just returned from our recent visit with the Infosys design team in Palo Alto along with 15 heads of
marketing and customer experience from Australian superannuation funds. Infosys delivered an incredible
session of learning around the theory and practice of design led thinking to develop a leading customer
experience strategy. The group thoroughly enjoyed the time we spent with the team and have a framework
they can take back into their business and start to employ immediately. - Theresa Hoogland, Executive
Manager Strategy and Marketing, Australian Institute of Superannuation Trustees (AIST)
Design Thinking helped bring the teams together for reimagining the collaboration experience at USG
Boral. It also helped them to think big and then bring these thoughts together to achieve actionable insights in
a really short amount of time. Moreover, it was fun and engaging at the same time. - Paul Monzella, Chief
Financial Officer USG Boral
Page 4 of 10
IFRS INR
Press Release
Infosys and Kohls are working together, using Design Thinking, and the Skava digital platform to enhance
experiences from the customers, associates and overall Kohls perspective. - Ratnakar Lavu, Chief Digital
Officer, Kohls
Skava, Panaya & EdgeVerve
This quarter we launched Skava Commerce, a new standard for modern, mobile-first and modular e-commerce
platforms to provide businesses a future-ready architecture that will enable next generation shopping
experiences. Skava, an e-commerce startup acquired by Infosys, developed the platform to help retailers to
quickly launch new offerings, improve conversion rates of digital channels, amongst other benefits, by
leveraging flexible cloud-based microservices and white label applications, along with artificial intelligence (AI)
and machine learning, natural language processing and virtual reality (VR).
Infosys and TOMS Shoes are working together, to implement an omni-channel platform leveraging Skava
Commerce.
In just 8 weeks, Skava and Vantiv worked collaboratively to launch the newly improved Vantiv Advantage
Program App. We extended and simplified the digital engagement experience so Vantivs partners could sell
and grow their businesses faster. Rather than converting an existing partner portal into the mobile app, the
Skava team took a step further and re-authored the entire application in SkavaSTUDIO, which allowed
the Vantiv team to take full ownership and control of the app to publish updates and changes. The Skava team
did a great job to get us to the launch. We are now looking forward to getting this published in the app stores
and seeing the adoption. Stay tuned for mobile transformation at Vantiv. - Balaji Devarasetty, Chief
Technology Officer - Integrated Payments, Vantiv LLC
Panaya
The COOP Group, one of the biggest Swiss retail trade and wholesale companies, selected Panaya for a
seamless migration to SAP HANA with its upgrade from EHP5 to EHP7. With the support of Panayas
solution, we were able to import many references into the system. We havent done anything like that before.
We were able to ensure an overall better quality of the SAP system even beyond the upgrade. After the go
live, there were no more critical errors. Our development department was excited because they were able to
start with the corrections even after the first modification adjustment. For further upgrades we will definitely
cooperate with Panaya again. - Davyd Dppen, Manager IT Processes Product Management ACES at
COOP
EdgeVerve
This quarter the EdgeVerve business delivered a strong performance with 48 wins and 23 go-lives from both
the Finacle and Edge suite of solutions across various markets.
Finacle continues to be the solution of choice for new-generation digital banking businesses. Building upon its
success in the payments bank space, the Finacle solution suite was chosen by Aditya Birla group for their
upcoming payments bank. EdgeVerve continued to gain strong traction for Edge products with several new
clients added this quarter across various solutions such as AssistEdge, BrandEdge and TradeEdge.
This quarter Infosys Finacle also announced the global availability of its industry leading Finacle Universal
Banking Solution Suite on Huaweis FusionCloud based cloud platform.
CULTURE
We continue to invest in education to help our employees maximize their potential. We are enhancing our
capabilities at the Infosys Global Education Center and through partnerships with organizations such as Udacity.
Page 5 of 10
IFRS INR
Press Release
Udacity and Infosys share a similar vision for lifelong learning, that education is no longer about years-long
course work with a singular end goal, but rather, learning is a lifelong endeavor in which we continuously renew
ourselves and expand the knowledge we already have, and learn entirely new kinds of skills. With
Nanodegrees in particular, we can drive rapid acquisition of new skills when needed, for the most indemand skills. As part of this effort, we are excited to launch the Udacity FastTrack program exclusively for
Infosys, making available Udacity's online Nanodegree certifications for all Infosys new-hires. We will
complement Infosys' world class Mysore training programs with Nanodegrees in several high demand and
constantly evolving areas such as user experience, mobile and web development to rapidly scale the skills and
expertise in these areas, and more. We are also excited to leverage the deep expertise of Infosys to bring the
critical hands-on course work to our Nanodegrees through projects based on real-world experiences in the most
sought after skills in the industry. - Sebastian Thrun, Founder & President, Udacity
A Challenger in Gartner Magic Quadrant for IT Services for Communications Service Providers,
Worldwide
BEYOND BUSINESS
We continue to contribute back to the communities in which we are present. In India, through the Infosys
Foundation, we have made several investments in the areas of rehabilitation, healthcare, education and arts &
culture. Some of the initiatives this quarter include handing over a residential enclave of 200 houses to families
that were rendered homeless in the aftermath of cyclone HudHud in 2014, launching an Institute of Robotic
Surgery in partnership with Narayana Health, and funding travel stipends for top researchers at IIT Kharagpur,
as well as sponsoring a study about the antiquity of Indus Valley undertaken by the institute.
Infosys Foundation USA supported quality computer science and Maker professional development for teachers
via CS PD Week, the CS for All Community Giving program, and commitments announced at the White House
Summit on #CSforAll. Additionally, the Foundation announced new grants to support the largest CS teacher
organization (CSTA), recognize excellence in CS teaching through Awards, and assist New York Academy of
Sciences (NYAS).
Page 6 of 10
IFRS INR
Press Release
Contact
Investor Relations
Sandeep Mahindroo
+91 80 3980 1018
Sandeep_Mahindroo@infosys.com
Media Relations
Page 7 of 10
IFRS INR
Press Release
31,732
2,154
11,571
3,892
5,171
89
54,609
32,697
75
11,330
3,029
4,448
116
51,695
11,197
3,771
904
99
1,931
628
5,248
719
24,497
79,106
10,530
3,764
985
103
1,811
536
5,230
735
23,694
75,389
307
2
3,851
11
1,478
1,440
621
6,185
13,895
386
5
3,410
28
1,332
1,341
512
6,225
13,239
235
151
14,281
256
115
13,610
1,144
2,272
60,773
2
634
64,825
64,825
79,106
1,144
2,241
57,655
739
61,779
61,779
75,389
Page 8 of 10
IFRS INR
Press Release
Revenues
Cost of sales
Gross profit
Operating expenses:
Selling and marketing expenses
Administrative expenses
Total operating expenses
Operating profit
Other income, net
Share in associates profit/(loss)
Profit before income taxes
Income tax expense
Net profit
Other comprehensive income
Items that will not be reclassified subsequently to profit or
loss:
Re-measurement of the net defined benefit liability/(asset)
Three months
ended
September 30,
2016
Three months
ended
September 30,
2015
Six months
ended
September 30,
2016
Six months
ended
September 30,
2015
17,310
10,962
6,348
15,635
9,724
5,911
34,091
21,643
12,448
29,989
18,847
11,142
897
1,142
2,039
4,309
760
(3)
5,066
1,460
3,606
843
1,075
1,918
3,993
793
(1)
4,785
1,387
3,398
1,817
2,276
4,093
8,355
1,513
(5)
9,863
2,822
7,041
1,663
2,038
3,701
7,441
1,551
(1)
8,991
2,562
6,429
(40)
(7)
(57)
(14)
(35)
(51)
30
62
(13)
18
206
(89)
3,517
85
3,483
(103)
6,938
210
6,639
3,606
3,606
3,398
3,398
7,041
7,041
6,429
6,429
3,517
3,517
3,483
3,483
6,938
6,938
6,639
6,639
15.77
15.77
14.87
14.87
30.81
30.80
28.13
28.13
Diluted
Page 9 of 10
IFRS INR
Press Release
NOTE:
1. The unaudited Consolidated Interim Balance Sheet and Consolidated Interim Statement of Comprehensive Income
for the three months and six months ended September 30, 2016 have been taken on record at the Board meeting held on
October 14, 2016
2. A Fact Sheet providing the operating metrics of the company can be downloaded from www.infosys.com
Page 10 of 10
IFRS USD
Press Release
Infosys (NYSE: INFY) Announces Results for the Quarter ended September 30, 2016
Q2 sequential revenue growth at 3.5% in USD terms; 3.9% in constant currency terms
Q2 year on year revenue growth at 8.2% in USD terms; 8.9% in constant currency terms
H1 year on year revenue growth at 9.5% in reported terms; 10.5% in constant currency
terms
Operating margins expanded 80 bps sequentially to 24.9%
Volume growth at 4.0% during the quarter
Q2 Utilization excluding trainees up by 200 bps sequentially to 82.5%
FY 17 revenue guidance revised to 8.0% - 9.0% in constant currency
Bangalore, India October 14, 2016
Financial Highlights
Consolidated results under International Financial Reporting Standards (IFRS) for the quarter ended September
30, 2016
Quarter ended September 30, 2016
Revenues were $2,587 million for the quarter ended September 30, 2016
QoQ growth of 3.5% in reported terms; 3.9% in constant currency terms
YoY growth of 8.2% in reported terms; 8.9% in constant currency terms
Operating profit was $644 million for the quarter ended September 30, 2016
QoQ growth of 7.0%
YoY growth of 5.6%
Net profit was $539 million for the quarter ended September 30, 2016
QoQ growth of 5.5%
YoY growth of 3.8%
Earnings per share (EPS) was $0.24 for the quarter ended September 30, 2016
QoQ growth of 5.5%
YoY growth of 3.8%
Liquid assets including cash and cash equivalents and investments were $5,349 million as on
September 30, 2016 as compared to $4,918 million as on June 30, 2016 and $4,894 million as on
September 30, 2015.
The Board of Directors declared an interim dividend of ` 11 per share ($0.17 per ADS based on USDINR rate of 66.62). The record date for interim dividend is October 24, 2016 and the payment will be
made on October 26, 2016
We focused on strong execution in Q2 with our core IT services business showing good progress on the
strength of our innovation and operational initiatives. While we continue to navigate an uncertain external
environment, we remain focused on executing our strategy and increasing momentum of our software plus
services model. Considering our performance in the first half of the year and the near-term uncertain business
outlook, we are revising our revenue guidance. said Dr. Vishal Sikka, CEO. Longer-term, I believe its
increasingly clear that our industrys future lies in evolving from a cost-based, people-only model, to one in
Page 1 of 10
IFRS USD
Press Release
which people are amplified by software and AI, and are freed to innovate in areas that are strategic to our clients
future. And in this all-important transformation, I am glad to see us make continued progress."
We had well-rounded growth during the quarter in our market segments. Our delivery and support teams
executed well on their plans for resource management during the quarter, leading to an uptick in utilization.
said U B Pravin Rao, COO. I am also pleased that the changes we made to employee engagement, policies
and rewarding high performers continue to help retain our high quality workforce.
Our margins expanded during the quarter on the back of further improvement in operational efficiency. said
M.D. Ranganath, CFO. Operating cash flows for the quarter were healthy and we effectively navigated a
volatile currency environment through prudent hedging.
Outlook*
The Companys revenue outlook (consolidated) for the fiscal year ending March 31, 2017, under IFRS is as
follows:
*FY 16 constant Currency rates - AUD/USD 0.73; Euro/USD 1.10; GBP/USD 1.51
Currency rates as of March 31, 2016 - AUD/USD 0.77; Euro/USD 1.14; GBP/USD 1.44
Currency rates as of June 30, 2016 - AUD/USD 0.75; Euro/USD 1.11; GBP/USD 1.35
Currency rates as of September 30, 2016 - AUD/USD 0.76; Euro/USD 1.12; GBP/USD 1.30
Board Changes
On the recommendations of the Nomination and Remuneration Committee, the Board of Directors inducted Mr.
D.N. Prahlad as an Independent Director of the Board effective October 14, 2016
D. N. Prahlad is the founder and CEO of Surya Software Systems Private Limited, Bangalore. Surya focuses
on products for financial risk management of financial institutions in general and banks in particular. He is on
the advisory board of Computer Science and Automation Department of Indian Institute of Science, Bangalore.
Prahlad is a B.Sc. with honours in mathematics from Bangalore University and B.E. (Electrical technology and
Electronics) from Indian Institute of Science, Bangalore.
Prior to founding Surya, Prahlad played a key role in the rapid growth of Infosys, being associated with the
company during its formative years.
Welcoming D.N. Prahlad, Mr. Seshasayee, Chairman of the Board said, We are delighted to welcome Prahlad,
a distinguished technologist to the Board. Prahlad brings with him, not only his deep knowledge of the Company,
but also sharp insights into the Industry.
Page 2 of 10
IFRS USD
Press Release
Compensation Plan ( 2015 plan) approved by the shareholders in the postal ballot dated March 31, 2016.
These RSU and stock options would vest over a period of 4 years which shall be exercisable within the period
as approved by the committee. The exercise price of the RSUs will be equal to the par value of the shares
and the exercise price of the stock options would be market price as on the date of grant as approved by the
shareholders. RSU and stock options, in future periods, will be granted on achievement of performance
conditions, as may be decided by the Nomination and Remuneration Committee.
The Board of Directors in their meeting held on October 14, 2016, on recommendation of Nomination and
Remuneration Committee, have approved the revised compensation structure of M.D. Ranganath, Mohit
Joshi, Sandeep Dadlani, Rajesh K Murthy, Ravikumar S., David Kennedy, Krishnamurthy Shankar and
Manikantha AGS with effect from November 1, 2016. The revised aggregate compensation of the above
individuals includes fixed compensation of ` 24 crores and variable compensation of upto ` 20 crores.
Additionally, based on fiscal 2016 performance, restricted stock units (RSU) of 245,750 and stock options of
502,550 will be granted on November 1, 2016 under 2015 Stock Incentive Compensation Plan (2015 plan)
approved by the shareholders in the postal ballot dated March 31, 2016. These RSU and stock options would
vest over a period of 4 years which shall be exercisable within the period as approved by the committee. The
exercise price of RSU will be equal to the par value of the shares and the exercise price of the stock options
would be market price as on the date of grant. The Audit committee in their meeting held on October 13, 2016,
resolved to include Mohit Joshi, Sandeep Dadlani, Rajesh K Murthy, RaviKumar S., Krishnamurthy Shankar
and David Kennedy as key managerial personnel as defined under IndAS 24 Related Party Disclosures
effective from the date of the meeting. Vishal Sikka, Pravin Rao, M.D. Ranganath and Manikantha AGS are
key managerial personnel as defined under Section 2 (51) of the Companies Act, 2013.
The Nomination and Remuneration Committee of the Board of Directors of Infosys Limited at its meeting held
on October 13, 2016, based on fiscal 2016 performance, approved the grant of upto 906,275 RSU and upto
943,810 stock options which shall be made on November 1, 2016, to a total of upto 425 eligible and identified
high-performing executives of the Company and its subsidiaries under 2015 Stock Incentive Compensation
Plan (2015 plan) approved by the shareholders in the postal ballot dated March 31, 2016. The RSUs and
stock options shall vest over a period of 4 years from the date of grant, which shall be exercisable within the
period as approved by the committee. The exercise price of the RSUs will be equal to the par value of the
shares and the exercise price of the stock options would be market price as on the date of grant.
Business Highlights
We continued to execute on our Renew-New strategy through automation and innovation, fueling this through
our culture of learning and education.
RENEW
In Q2, we deepened existing client relationships in core services, won large traditional deals, and focused on
driving automation and grassroots innovation into every aspect of our service offerings through Infosys Mana
and our Zero Distance initiative.
Data volumes continue to grow exponentially, and humankind now converts data into knowledge at
unprecedented rates, making it impossible to codify such expertise and intelligence in software. Our systems
need to learn. Those that do also need to be put to some practical use. It seems that Infosys Mana is doing just
that. - Report title: Infosys Mana uses AI to extract knowledge from processes and control business outcomes,
Authors: Carl Lehmann, Katy Ring, 451 Research, Date: October 4, 2016
"Infosys is a preferred partner for development and support across our portfolio of off-the-shelf and custom
applications, including our most critical business applications. Were keen to create an enterprise for the future
by leveraging AI and machine learning to solve business issues. Weve selected Infosys Mana to help
optimize these business processes and provide a better experience for our users by driving automation,
Page 3 of 10
IFRS USD
Press Release
improving efficiencies, increasing productivity, and reducing business process level disruptions, while at the
same time reducing the total cost of our IT operations. - Andy Bynum, Corporate Vice President IT, AMD
We are very pleased to award Infosys the GPS L2 Application Maintenance & Support Vendor Consolidation
engagement. Infosys impressed us with the overall depth of the solution and commitment to service
transformation through use of its Mana platform which covers automation, analytics and knowledge
management. We believe that this deal will help us achieve our objectives of driving significant productivity
improvements and optimizing and enhancing the services. This is a major step forwards in the strategic
relationship between our organisations and we look forward to a successful journey in delivering the program
together. - Hans-Juergen Rieder, UBS Managing Director - Global Production Services
Beyond the millions of dollars that we're going to be saving here at APS, the benefit is truly with our end
customers in having a system that's going to be flexible and nimble and meet all of their needs. Through our
partnership with Infosys and with this Zero Distance initiative we were able to solve complex problems
that the utilitys been facing for some time. - Christine Gonzales, Program Management Office Lead,
Arizona Public Service
What we're trying to do with world-class customer service is really reinvent, completely transform and turn
inside out the way we deliver customer service here at Cisco. We're looking to use digitization to be able to
simplify, standardize, and automate many of the processes that drive work, so that we can change the
investment we have in people, so that they are then able to have better conversations with a customer. Our
largest savings has been 80% of savings in terms of dollar spend, weve removed 2 million hours of customer
wait time in one particular process alone. Its been a great ride, we really appreciate Infosys flexibility and
ability to change with us - I hope we continue this partnership for the next 20 years. - Steve Power, Senior
Director, Global Service Offerings, CISCO
Gap Inc., a leading global specialty retailer, has chosen Infosys as its primary technology services provider
supporting its entire applications and infrastructure portfolio. This critical milestone strengthens the 18
year relationship between the two organizations even further.
NEW
In Q2, we continued to work with clients and partners on new areas, and new frontiers. And we made Design
Thinking central to every engagement.
GE and Infosys have a shared vision for the merging of our physical and digital worlds. As an early adopter of
our Predix platform, we are partnering with Infosys to foster co-innovation of new applications with advanced
concepts in digital twin, brilliant factory and AI. Our joint innovations will deliver a range of services to
customers, including Industrial Internet solutions and applications to help companies simplify, automate and
transform their businesses. - Bill Ruh, Chief Executive Officer, GE Digital & Chief Digital Officer, GE
I have just returned from our recent visit with the Infosys design team in Palo Alto along with 15 heads of
marketing and customer experience from Australian superannuation funds. Infosys delivered an incredible
session of learning around the theory and practice of design led thinking to develop a leading customer
experience strategy. The group thoroughly enjoyed the time we spent with the team and have a framework
they can take back into their business and start to employ immediately. - Theresa Hoogland, Executive
Manager Strategy and Marketing, Australian Institute of Superannuation Trustees (AIST)
Design Thinking helped bring the teams together for reimagining the collaboration experience at USG
Boral. It also helped them to think big and then bring these thoughts together to achieve actionable insights in
a really short amount of time. Moreover, it was fun and engaging at the same time. - Paul Monzella, Chief
Financial Officer USG Boral
Page 4 of 10
IFRS USD
Press Release
Infosys and Kohls are working together, using Design Thinking, and the Skava digital platform to enhance
experiences from the customers, associates and overall Kohls perspective. - Ratnakar Lavu, Chief Digital
Officer, Kohls
Skava, Panaya & EdgeVerve
This quarter we launched Skava Commerce, a new standard for modern, mobile-first and modular e-commerce
platforms to provide businesses a future-ready architecture that will enable next generation shopping
experiences. Skava, an e-commerce startup acquired by Infosys, developed the platform to help retailers to
quickly launch new offerings, improve conversion rates of digital channels, amongst other benefits, by
leveraging flexible cloud-based microservices and white label applications, along with artificial intelligence (AI)
and machine learning, natural language processing and virtual reality (VR).
Infosys and TOMS Shoes are working together, to implement an omni-channel platform leveraging Skava
Commerce.
In just 8 weeks, Skava and Vantiv worked collaboratively to launch the newly improved Vantiv Advantage
Program App. We extended and simplified the digital engagement experience so Vantivs partners could sell
and grow their businesses faster. Rather than converting an existing partner portal into the mobile app, the
Skava team took a step further and re-authored the entire application in SkavaSTUDIO, which allowed
the Vantiv team to take full ownership and control of the app to publish updates and changes. The Skava team
did a great job to get us to the launch. We are now looking forward to getting this published in the app stores
and seeing the adoption. Stay tuned for mobile transformation at Vantiv. - Balaji Devarasetty, Chief
Technology Officer - Integrated Payments, Vantiv LLC
Panaya
The COOP Group, one of the biggest Swiss retail trade and wholesale companies, selected Panaya for a
seamless migration to SAP HANA with its upgrade from EHP5 to EHP7. With the support of Panayas
solution, we were able to import many references into the system. We havent done anything like that before.
We were able to ensure an overall better quality of the SAP system even beyond the upgrade. After the go
live, there were no more critical errors. Our development department was excited because they were able to
start with the corrections even after the first modification adjustment. For further upgrades we will definitely
cooperate with Panaya again. - Davyd Dppen, Manager IT Processes Product Management ACES at
COOP
EdgeVerve
This quarter the EdgeVerve business delivered a strong performance with 48 wins and 23 go-lives from both
the Finacle and Edge suite of solutions across various markets.
Finacle continues to be the solution of choice for new-generation digital banking businesses. Building upon its
success in the payments bank space, the Finacle solution suite was chosen by Aditya Birla group for their
upcoming payments bank. EdgeVerve continued to gain strong traction for Edge products with several new
clients added this quarter across various solutions such as AssistEdge, BrandEdge and TradeEdge.
This quarter Infosys Finacle also announced the global availability of its industry leading Finacle Universal
Banking Solution Suite on Huaweis FusionCloud based cloud platform.
CULTURE
We continue to invest in education to help our employees maximize their potential. We are enhancing our
capabilities at the Infosys Global Education Center and through partnerships with organizations such as
Udacity.
Page 5 of 10
IFRS USD
Press Release
Udacity and Infosys share a similar vision for lifelong learning, that education is no longer about years-long
course work with a singular end goal, but rather, learning is a lifelong endeavor in which we continuously renew
ourselves and expand the knowledge we already have, and learn entirely new kinds of skills. With
Nanodegrees in particular, we can drive rapid acquisition of new skills when needed, for the most indemand skills. As part of this effort, we are excited to launch the Udacity FastTrack program exclusively for
Infosys, making available Udacity's online Nanodegree certifications for all Infosys new-hires. We will
complement Infosys' world class Mysore training programs with Nanodegrees in several high demand and
constantly evolving areas such as user experience, mobile and web development to rapidly scale the skills and
expertise in these areas, and more. We are also excited to leverage the deep expertise of Infosys to bring the
critical hands-on course work to our Nanodegrees through projects based on real-world experiences in the most
sought after skills in the industry. - Sebastian Thrun, Founder & President, Udacity
AWARDS & RECOGNITION
Winner, Seven 2016 Oracle Excellence Awards
Leader, Infosys Finacle - The Forrester Wave: Customer-Centric Global Banking Platforms, Q3
2016 report
Winner, Infosys Finacle Omnichannel Hub Digital Banking 2016, Best System Solution, Juniper
Research
A Leader, IDC MarketScape: Worldwide Oracle Implementation Services 2016 Vendor Assessment
Winner, 2016 European ISG Paragon award
Leader, Software Testing NelsonHall Vendor Evaluation & Assessment Tool (NEAT)
First Runner-Up, Best Use of CEM Technology for AssistEdge at the Customer Experience Asia
Excellence Awards, 2016 Singapore
A Leader, IDC MarketScape: WW Oil & Gas Professional Services 2016 Vendor Assessment
Winners Circle, HfS Blueprint Report: Energy Operations
Winners Circle, HfS Blueprint Report: ServiceNow Services
Leader, OVUM Decision Matrix (ODM) Selecting a Distributed Agile Delivery Model for ADM Services,
201617
Leader and Star Performer, Everest Group Global Banking AO Service Provider PEAK Matrix
Assessment 2016
Leader, Everest Group IT Outsourcing Global Capital Markets PEAK Matrix Assessment 2016
A Challenger in Gartner Magic Quadrant for IT Services for Communications Service Providers,
Worldwide
BEYOND BUSINESS
We continue to contribute back to the communities in which we are present. In India, through the Infosys
Foundation, we have made several investments in the areas of rehabilitation, healthcare, education and arts &
culture. Some of the initiatives this quarter include handing over a residential enclave of 200 houses to families
that were rendered homeless in the aftermath of cyclone HudHud in 2014, launching an Institute of Robotic
Surgery in partnership with Narayana Health, and funding travel stipends for top researchers at IIT Kharagpur,
as well as sponsoring a study about the antiquity of Indus Valley undertaken by the institute.
Infosys Foundation USA supported quality computer science and Maker professional development for teachers
via CS PD Week, the CS for All Community Giving program, and commitments announced at the White House
Summit on #CSforAll. Additionally, the Foundation announced new grants to support the largest CS teacher
organization (CSTA), recognize excellence in CS teaching through Awards, and assist New York Academy of
Sciences (NYAS).
Page 6 of 10
IFRS USD
Press Release
Contact
Investor Relations
Sandeep Mahindroo
+91 80 3980 1018
Sandeep_Mahindroo@infosys.com
Media Relations
Page 7 of 10
IFRS USD
Press Release
4,763
323
1,737
584
777
13
8,197
4,935
11
1,710
457
672
17
7,802
1,681
566
136
15
289
95
788
108
3,678
11,875
1,589
568
149
16
273
81
789
111
3,576
11,378
46
578
2
222
216
93
929
2,086
58
1
515
4
201
202
77
940
1,998
36
23
2,145
39
17
2,054
199
574
11,553
(2,596)
9,730
9,730
11,875
199
570
11,083
(2,528)
9,324
9,324
11,378
Page 8 of 10
IFRS USD
Press Release
Revenues
Cost of sales
Gross profit
Operating expenses:
Selling and marketing expenses
Administrative expenses
Total operating expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before income taxes
Income tax expense
Net profit
Other comprehensive income
Items that will not be reclassified subsequently to
profit or loss:
Re-measurement of the net defined benefit
liability/(asset)
Cumulative impact on reversal of unrealized gain
on quoted debt securities on adoption of IFRS 9
Equity instruments through other comprehensive
income
Items that will be reclassified subsequently to
profit or loss:
Fair valuation of investments
Exchange differences on translation of foreign
operations
Total other comprehensive income, net of tax
Total comprehensive income
Profit attributable to:
Owners of the company
Non-controlling interests
Total comprehensive income attributable to:
Owners of the company
Non-controlling interests
Earnings per equity share
Basic ($)
Diluted ($)
2,587
1,638
949
2,392
1,488
904
5,088
3,231
1,857
4,647
2,922
1,725
134
171
305
644
114
(1)
757
218
539
129
165
294
610
121
731
212
519
271
340
611
1,246
226
(1)
1,471
421
1,050
258
316
574
1,151
240
1,391
396
995
(6)
(1)
(9)
(2)
(5)
119
5
(242)
(54)
3
(379)
113
652
(238)
281
(68)
982
(378)
617
539
539
519
519
1,050
1050
995
995
652
652
281
281
982
0
982
617
617
0.24
0.24
0.23
0.23
0.46
0.46
0.44
0.44
Page 9 of 10
IFRS USD
Press Release
NOTE:
1. The unaudited Condensed Consolidated Interim Balance sheet and Condensed Consolidated Interim Statement
of Comprehensive Income for the three months and six months ended September 30, 2016 have been taken on record at
the Board meeting held on October 14, 2016
2. A Fact Sheet providing the operating metrics of the company can be downloaded from www.infosys.com
Page 10 of 10
Note
ASSETS
Current assets
Cash and cash equivalents
Current investments
Trade receivables
Unbilled revenue
Prepayments and other current assets
Derivative financial instruments
Total current assets
Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investment in associate
Non-current investments
Deferred income tax assets
Income tax assets
Other non-current assets
Total Non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Trade payables
Derivative financial instruments
Current income tax liabilities
Client deposits
Unearned revenue
Employee benefit obligations
Provisions
Other current liabilities
Total current liabilities
Non-current liabilities
Deferred income tax liabilities
Other non-current liabilities
Total liabilities
Equity
2.1
2.2
2.4
2.3
2.7
2.8
2.2
2.4
4,763
323
1,737
584
777
13
8,197
4,935
11
1,710
457
672
17
7,802
1,681
566
136
15
289
95
788
108
3,678
11,875
1,589
568
149
16
273
81
789
111
3,576
11,378
46
578
2
222
216
93
929
2,086
58
1
515
4
201
202
77
940
1,998
36
23
2,145
39
17
2,054
199
199
\
2.3
2.6
2.5
2.5
Share capital - `5 ($0.16) par value 2,400,000,000 (2,400,000,000) equity shares authorized,
issued and outstanding 2,285,651,730 (2,285,621,088) net of 11,292,934 (11,323,576) treasury
shares, as of September 30, 2016 (March 31, 2016), respectively
Share premium
Retained earnings
Other reserves
Other components of equity
Total equity attributable to equity holders of the company
Non-controlling interests
Total equity
Total liabilities and equity
The accompanying notes form an integral part of the unaudited condensed consolidated interim financial statements.
574
11,553
(2,596)
9,730
9,730
11,875
570
11,083
(2,528)
9,324
9,324
11,378
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
Revenues
Cost of sales
Gross profit
Operating expenses:
Selling and marketing expenses
Administrative expenses
Total operating expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before income taxes
Income tax expense
Net profit
2.15
2.15
2.15
2.11
2015
2016
2015
2,587
1,638
949
2,392
1,488
904
5,088
3,231
1,857
4,647
2,922
1,725
134
171
305
644
129
165
294
610
271
340
611
1,246
258
316
574
1,151
114
(1)
757
218
539
121
731
212
519
226
(1)
1,471
421
1,050
240
1,391
396
995
(6)
(1)
2.2
(9)
(6)
(2)
(5)
(1)
(14)
(2)
2.2
119
119
113
652
(242)
(237)
(238)
281
(54)
(54)
(68)
982
(379)
(376)
(378)
617
539
539
519
519
1,050
1,050
995
995
652
652
281
281
982
982
617
617
0.24
0.23
0.46
0.44
0.24
0.23
0.46
0.44
2,285,641,710
2,285,949,303
2,285,614,029
2,285,713,042
2,285,632,081
2,285,875,988
2,285,612,157
2,285,696,678
2.12
The accompanying notes form an integral part of the unaudited condensed consolidated interim financial statements.
for and on behalf of the Board of Directors of Infosys Limited
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
1,142,805,132
Share
capital
Share
premium
109
659
Retained
earnings
Other
Other Total equity attributable
(3)
components of to equity holders of the
reserves
(4)
company
equity
10,090
(2,096)
8,762
90
(90)
Changes in equity for the six months ended September 30, 2015
9,116
(1)
1,142,805,132
90
(90)
(40)
40
40
(40)
(2)
(2)
(636)
Net profit
995
2,285,619,380
199
569
10,449
2,285,621,088
199
570
11,083
(636)
995
(379)
-
(379)
(2,474)
8,743
(2,528)
9,324
Changes in equity for the six months ended September 30, 2016
Cumulative impact of Reversal of unrealized gain on quoted debt securities on
adoption of IFRS 9 (Refer note 2.2)
Shares issued on exercise of employee stock options (refer to note 2.10)
(5)
(5)
30,642
(82)
82
82
(82)
Net profit
2,285,651,730
199
The accompanying notes form an integral part of the unaudited condensed consolidated interim financial statements.
(1)
574
(580)
4
(9)
(9)
1,050
1,050
11,553
(54)
(2,596)
(54)
9,730
(580)
(2)
excludes treasury shares of 11,292,934 as of September 30, 2016, 11,323,576 as of April 1, 2016, 11,325,284 as of September 30, 2015 and 5,667,200 as of April 1, 2015, held by consolidated
trust.
(3)
Represents the Special Economic Zone Re-investment reserve created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve
should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the provisions of the Sec 10AA(2) of the Income Tax Act, 1961.
(4)
Balance in cash flow hedging reserve as of September 30, 2016 is less than $1 million. Refer note 2.3
for and on behalf of the Board of Directors of Infosys Limited
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
(Dollars in millions)
Six months ended September 30,
2016
2015
Operating activities:
Net Profit
Adjustments to reconcile net profit to net cash provided by operating activities :
Depreciation and amortisation
Income on investments
Income tax expense
Effect of exchange rate changes on assets and liabilities
Deferred purchase price
Impairment loss on financial assets
Other adjustments
Changes in Working Capital
Trade receivables and unbilled revenue
Prepayments and other assets
Trade payables
Client deposits
Unearned revenue
Other liabilities and provisions
Cash generated from operations
Income taxes paid
Net cash provided by operating activities
1,050
2.15
2.11
Investing activities:
Expenditure on property, plant and equipment, net of sale proceeds, including changes in
retention money and capital creditors
Loans to employees
Deposits placed with corporation
Income on investments
Payment for acquisition of business, net of cash acquired
Payment of contingent consideration pertaining to acquisition of business
Investment in preference securities
Investment in other available-for-sale financial assets
Investment in quoted debt securities
Redemption of quoted debt securities
Investment in mutual fund units
Redemption of mutual fund units
Redemption of fixed maturity plan securities
Net cash used in investing activities
2.9
Financing activities:
Payment of dividend (includes corporate dividend tax)
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning
2.1
2.1
Cash and cash equivalents at the end
Supplementary information:
Restricted cash balance
2.1
The accompanying notes form an integral part of the unaudited condensed consolidated interim financial statements
995
123
(14)
421
4
6
31
104
(15)
396
8
19
1
12
(170)
(94)
(12)
(3)
22
14
1,378
(373)
1,005
(190)
(262)
(5)
(1)
9
198
1,269
(443)
826
(219)
(195)
6
(13)
12
(5)
(8)
(1)
(25)
1
(3,015)
2,708
(559)
(1)
(4)
14
(87)
(3)
(2)
(31)
(2,115)
2,156
5
(263)
(579)
(579)
(636)
(636)
(39)
(133)
4,935
4,763
(220)
(73)
4,859
4,566
58
78
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
Infosys consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the company, its controlled trusts
and its subsidiaries. Control exists when the parent has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has
the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those
which significantly affect the entity's returns. Subsidiaries are consolidated from the date control commences until the date control ceases.
The financial statements of the Group companies are consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss
from such transactions are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group. Noncontrolling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly, owned or controlled by the company,
are excluded.
Associates are entities over which the group has significant influence but not control. Investments in associates are accounted for using the equity method of
accounting. The investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investors share of the profit or loss of the
investee after the acquisition date. The groups investment in associates includes goodwill identified on acquisition.
1.4 Use of estimates
The preparation of the financial statements in conformity with IFRS requires management to make estimates, judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the
date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting
estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates
could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management becomes aware of
changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if
material, their effects are disclosed in the notes to the consolidated interim financial statements.
1.5 Critical accounting estimates
a. Revenue recognition
The group uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the group to
estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure
progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are
recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.
b. Income taxes
The company's two major tax jurisdictions are India and the U.S., though the company also files tax returns in other overseas jurisdictions. Significant judgments are
involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions (also refer to note 2.11).
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS 3 (Revised), Business Combinations. IFRS 3 requires the identifiable intangible assets and contingent
consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are
required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts.
d. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after
determining an estimate of an assets expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Group's assets are
determined by management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical
experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology.
e. Impairment of Goodwill
Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit is less than its carrying
amount based on a number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable amount of cash
generating units is determined based on higher of value-in-use and fair value less cost to sell. The goodwill impairment test is performed at the level of the cashgenerating unit or groups of cash-generating units which are benefitting from the synergies of the acquisition and which represents the lowest level at which goodwill is
monitored for internal management purposes
Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of
recoverable amount include estimated long term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections take into
account past experience and represent managements best estimate about future developments.
1.6 Revenue recognition
The company derives revenues primarily from software development and related services and from the licensing of software products. Arrangements with customers
for software related services are either on a fixed-price, fixed-timeframe or on a time-and-material basis.
Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last billing to the balance sheet date is
recognized as unbilled revenues. Revenue from fixed-price, fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of
consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to measurement or ultimate collectability, revenue recognition is
postponed until such uncertainty is resolved. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship
between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable
based on the current contract estimates. Costs and earnings in excess of billings are classified as unbilled revenue while billings in excess of costs and earnings are
classified as unearned revenue. Deferred contract costs are amortized over the term of the contract. Maintenance revenue is recognized ratably over the term of the
underlying maintenance arrangement.
In arrangements for software development and related services and maintenance services, the company has applied the guidance in IAS 18, Revenue, by applying the
revenue recognition criteria for each separately identifiable component of a single transaction. The arrangements generally meet the criteria for considering software
development and related services as separately identifiable components. For allocating the consideration, the company has measured the revenue in respect of each
separable component of a transaction at its fair value, in accordance with principles given in IAS 18. The price that is regularly charged for an item when sold
separately is the best evidence of its fair value. In cases where the company is unable to establish objective and reliable evidence of fair value for the software
development and related services, the company has used a residual method to allocate the arrangement consideration. In these cases the balance of the consideration,
after allocating the fair values of undelivered components of a transaction has been allocated to the delivered components for which specific fair values do not exist.
License fee revenues are recognized when the general revenue recognition criteria given in IAS 18 are met. Arrangements to deliver software products generally have
three elements: license, implementation and Annual Technical Services (ATS). The company has applied the principles given in IAS 18 to account for revenues from
these multiple element arrangements. Objective and reliable evidence of fair value has been established for ATS. Objective and reliable evidence of fair value is the
price charged when the element is sold separately. When other services are provided in conjunction with the licensing arrangement and objective and reliable evidence
of their fair values have been established, the revenue from such contracts are allocated to each component of the contract in a manner, whereby revenue is deferred
for the undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of objective and reliable evidence of fair value
for implementation, the entire arrangement fee for license and implementation is recognized using the percentage-of-completion method as the implementation is
performed. Revenue from client training, support and other services arising due to the sale of software products is recognized as the services are performed. ATS
revenue is recognized ratably over the period in which the services are rendered.
Advances received for services and products are reported as client deposits until all conditions for revenue recognition are met.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discounts/ incentives
amount to each of the underlying revenue transaction that results in progress by the customer towards earning the discount/ incentive. Also, when the level of discount
varies with increases in levels of revenue transactions, the company recognizes the liability based on its estimate of the customer's future purchases. If it is probable
that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and
the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in which the change occurs.
The discounts are passed on to the customer either as direct payments or as a reduction of payments due from the customer.
The company presents revenues net of value-added taxes in its statement of comprehensive income.
1.7 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the
property, plant and equipment are ready for use, as intended by management. The group depreciates property, plant and equipment over their estimated useful lives
using the straight-line method. The estimated useful lives of assets are as follows:
Building
Plant and machinery
Computer equipment
Furniture and fixtures
Vehicles
22-25 years
5 years
3-5 years
5 years
5 years
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of assets not put to use before such date
are disclosed under Capital work-in-progress. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future
economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net
profit in the statement of comprehensive income when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale
or retirement of the asset and the resultant gains or losses are recognized in net profit in the statement of comprehensive income. Assets to be disposed off are reported
at the lower of the carrying value or the fair value less cost to sell.
b. Non-financial assets
(i) Goodwill
Goodwill is tested for impairment on an annual basis and whenever there is an indication that goodwill may be impaired, relying on a number of factors including
operating results, business plans and future cash flows. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the Group's
cash generating units (CGU) or groups of CGUs expected to benefit from the synergies arising from the business combination. A CGU is the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment occurs when the carrying
amount of a CGU including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable amount of a CGU is the higher of its fair value less
cost to sell and its value-in-use. Value-in-use is the present value of future cash flows expected to be derived from the CGU.
Total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on
the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognized in net profit in the statement of comprehensive income and is
not reversed in the subsequent period.
(ii) Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts
may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is
determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in net profit in the statement of comprehensive income is measured by the amount by
which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in net profit in the statement of
comprehensive income if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its
revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization or
depreciation) had no impairment loss been recognized for the asset in prior years.
Cash and cash equivalents as of September 30, 2016 and March 31, 2016 include restricted cash and bank balances of $78 million and $74 million, respectively. The
restrictions are primarily on account of cash and bank balances held by irrevocable trusts controlled by the company, bank balances held as margin money deposits
against guarantees and balances held in unpaid dividend bank accounts.
The deposits maintained by the Group with banks and financial institutions comprise of time deposits, which can be withdrawn by the Group at any point without prior
notice or penalty on the principal.
The table below provides details of cash and cash equivalents :
(Dollars in millions)
As of
September 30, 2016
March 31, 2016
Current accounts
ANZ Bank, Taiwan
130
103
Barclays Bank, UK
10
11
19
11
16
Commerzbank, Germany
15
26
11
Nordbanken, Sweden
10
10
Westpac, Australia
302
12
1
303
Deposit accounts
Andhra Bank
130
143
Axis Bank
275
202
29
Bank of India
11
Canara Bank
341
339
228
232
Citibank
Corporation Bank
14
19
193
194
36
HDFC Bank
298
400
ICICI Bank
564
634
IDBI Bank
285
287
188
189
37
38
Indusind Bank
Jammu & Kashmir Bank
Kotak Mahindra Bank Limited
Oriental Bank of Commerce
63
81
295
297
15
353
357
Syndicate Bank
142
191
11
21
Vijaya Bank
46
46
121
109
Yes Bank
3,640
3,836
817
796
11
821
796
4,763
4,935
2.2 Investments
The carrying value of investments are as follows:
(Dollars in millions)
As of
September 30, 2016
March 31, 2016
(i) Current
Amortised cost
Quoted debt securities:
Cost
322
10
323
11
240
256
(ii) Non-current
Amortised cost
Quoted debt securities:
Cost
Fair value
Fair value
14
Others:
4
Fair value
289
273
Total investments
612
284
241
49
322
257
17
10
The cost and fair value of liquid mutual funds as of September 30, 2016 was $321 million and $322 million, respectively and as of March 31, 2016 was $10 million,
respectively. The fair value is based on quoted prices.
Quoted debt securities carried at amortised cost:
Investment in quoted debt securities represents the investments made in debt securities issued by government and quasi government organisations. The fair value of
quoted debt securities (including interest accrued) as on September 30, 2016 and March 31, 2016 was $278 million and $257 million, respectively. The fair value is
based on the quoted prices and market observable inputs.
Quoted debt securities fair valued through other comprehensive income:
Represents investments in non-convertible debentures issued by government aided institutions. The fair value of non-convertible debentures (including interest
accrued) as of September 30, 2016 is $23 million. The fair value is based on the quoted prices.
12
As per IAS 39
Instrument
Category
Carrying value
(i) Current
Liquid mutual funds
assets (1)
Available for sale financial
assets (1)
Total
(ii) Non current
Quoted debt securities:
10
1
10
1
11
Available for sale financial
assets (1)
11
Amortized cost
241
17
256
Total
273
258
Total investments
284
269
(1)
Details showing the changes in the classification and the corresponding differences on transition, in carrying value as of April 1, 2015:
(Dollars in millions)
As per IFRS 9
As per IAS 39
Instrument
Category
(i) Current
Liquid mutual funds
assets (1)
Available for sale financial
assets (1)
Total
(ii) Non current
Quoted debt securities:
215
(1)
Amortized cost
Fair value through
other comprehensive
income
Carrying value
135
5
140
208
-
Total
215
208
Total investments
355
348
(1)
13
Amortised cost
Designated upon
initial recognition
Assets:
Cash and cash equivalents (Refer to Note 2.1)
Investments (Refer Note 2.2)
Liquid mutual funds
Quoted debt securities
Unquoted equity and preference securities:
Trade receivables
Unbilled revenue
Prepayments and other assets (Refer to Note 2.4)
Derivative financial instruments
Total
Liabilities:
Trade payables
Derivative financial instruments
Client deposits
Other liabilities including contingent consideration
(Refer note 2.5)
Total
(Dollars in millions)
Financial assets/liabilities at fair value through
Total carrying value
Total fair value
OCI
4,763
Equity instruments
Mandatory designated upon initial
recognition
Mandatory
4,763
4,763
241
1,737
584
524
7,849
322
13
335
26
23
23
322
264
26
1,737
584
524
13
8,233
322
301
26
1,737
584
524
13
8,270
46
2
46
2
46
2
26
13
740
788
13
753
801
(1)
753
801
The carrying value and fair value of financial instruments by categories as of March 31, 2016 were as follows:
Amortised cost
Designated upon
initial recognition
Assets:
Cash and cash equivalents (Refer to Note 2.1)
Investments (Refer Note 2.2)
4,935
Equity instruments
Mandatory designated upon initial
recognition
Mandatory
4,935
4,935
10
10
10
257
257
257
1,710
457
393
7,752
17
27
17
17
17
1,710
457
393
17
7,796
17
1,710
457
393
17
7,796
1
-
58
1
4
58
1
4
17
18
(Dollars in millions)
Financial assets/liabilities at fair value through
Total carrying value
Total fair value
OCI
58
4
737
799
754
817
754
817
(Dollars in millions)
Fair value measurement at end of the reporting period / year
using
Level 2
Level 3
Level 1
322
301
22
4
322
66
-
235
-
22
4
13
13
13
13
Liabilities
During the six months ended September 30, 2016, quoted debt securities of `17 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
*Discounted $14 million at 13.4%.
A one percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
14
(1)
(Dollars in millions)
Fair value measurement at end of the reporting period / year
using
Level 2
Level 3
Level 1
10
257
14
3
17
10
57
-
200
17
14
3
-
1
17
1
-
17
2016
193
4
197
2015
207
7
214
Euro
185
1,199
359
51
(15)
(1)
(126)
(91)
(107)
1,454
20
197
70
7
(3)
(30)
(13)
(18)
230
Australian dollars
Other currencies
Total
35
95
20
2
(3)
(6)
(28)
(3)
112
91
105
45
13
(18)
(1)
(31)
(20)
(30)
154
340
1,683
560
77
(42)
(2)
(216)
(158)
(163)
2,079
Australian dollars
Other currencies
Total
26
90
17
2
(1)
(5)
(25)
(6)
98
91
105
38
12
(11)
(1)
(33)
(19)
(32)
150
342
1,638
422
38
(53)
(4)
(198)
(150)
(222)
1,813
The following table analyses foreign currency risk from financial instruments as of March 31, 2016:
(Dollars in millions)
U.S. dollars
Euro
170
1,141
282
14
(19)
(3)
(119)
(87)
(159)
1,220
25
193
56
6
(11)
(23)
(12)
(20)
214
For the three months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and the U.S. dollar has affected the
company's incremental operating margins by approximately 0.51% and 0.51%, respectively.
For the six months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and the U.S. dollar has affected the
company's incremental operating margins by approximately 0.50% and 0.50%, respectively.
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting
period and the current reporting period.
15
551
99
55
35
19
510
100
65
55
25
150
25
25
125
-
The Group recognized a net gain on derivative financial instruments of $26 million for the three months ended September 30, 2016 and a net loss of $3 million for the three months ended September 30, 2015,
which is included under other income.
The Group recognized a net gain on derivative financial instruments of $33 million for the six months ended September 30, 2016 and a net loss of $14 million for the six months ended September 30, 2015, which is
included under other income.
The foreign exchange forward and option contracts mature within 12 months. The table below analyses the derivative financial instruments into relevant maturity groupings based on the remaining period as of the
balance sheet date:
(Dollars in millions)
As of
September 30, 2016
March 31, 2016
177
238
479
516
334
157
990
911
During the three months ended September 30, 2016, the group has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable
forecast cash transactions. Accordingly, the fair value changes of less than $1 million was recorded in the other comprehensive income for the three months and six months ended September 30, 2016. The related
hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to the statement of comprehensive income within 3 months.
The group offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the group intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously.
The following table provides quantitative information about offsetting of derivative financial assets and derivative financial liabilities:
(Dollars in millions)
As of
September 30, 2016
Derivative financial
asset
13
13
Derivative financial
liability
Derivative
financial
asset
Derivative
financial liability
18
(1)
(2)
17
(1)
Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to
$1,737 million and $1,710 million as of September 30, 2016 and March 31, 2016, respectively and unbilled revenue amounting to $584 million and $457 million as of September 30, 2016 and March 31, 2016,
respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk is managed through credit
approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. The group uses a provision matrix to
compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and internal credit risk factors such as credit default swap quotes,
credit ratings from international credit rating agencies and the Group's historical experience for customers.
The following table gives details in respect of percentage of revenues generated from top customer and top five customers:
Three months ended September 30,
2016
2015
3.7
3.5
14.0
13.1
(In %)
Six months ended September 30,
2016
2015
3.7
3.5
14.0
13.4
2016
45
4
49
16
2015
58
(2)
2
58
2015
59
(2)
1
58
Trade receivables
Unbilled revenues
Days Sales Outstanding- DSO (days)
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.
Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations , non convertible debentures issued by government aided institutions
and certificates of deposit which are funds deposited at a bank for a specified time period.
Liquidity risk
The Group's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group has no outstanding bank borrowings. The Group believes that the working
capital is sufficient to meet its current requirements.
As of September 30, 2016, the Group had a working capital of $6,111 million including cash and cash equivalents of $4,763 million and current investments of $323 million. As of March 31, 2016, the Group had a
working capital of $5,804 million including cash and cash equivalents of $4,935 million and current investments of $11 million.
As of September 30, 2016 and March 31, 2016, the outstanding employee benefit obligations were $216 million and $202 million, respectively, which have been substantially funded. Accordingly, no liquidity risk
is perceived.
The table below provides details regarding the contractual maturities of significant financial liabilities as of September 30, 2016:
Particulars
Trade payables
Client deposits
Other liabilities (excluding liability towards contingent consideration - Refer Note 2.5)
Liability towards contingent consideration on an undiscounted basis -Refer Note 2.5
1-2 years
-
2-4 years
-
730
3
-
(Dollars in millions)
4-7 years
Total
46
-
740
14
The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2016:
Particulars
Trade payables
Client deposits
1-2 years
-
2-4 years
-
(Dollars in millions)
4-7 years
Total
58
732
737
13
20
Security deposits
40
46
Loans to employees
Prepaid expenses
(1)
(1)
(1)
38
30
225
106
243
272
11
17
200
187
10
777
672
Non-current
Loans to employees
Security deposits
Deposit with corporations
(1)
12
12
11
13
47
50
Rental Deposits
25
22
108
111
885
783
524
393
Prepaid gratuity
Prepaid expenses
(1)
Withholding taxes and others primarily consist of input tax credits. Other assets primarily represent travel advances and other recoverable. Security deposits relate principally to leased telephone lines and electricity
supplies. Deferred contract costs are upfront costs incurred for the contract and are amortised over the term of the contract.
Deposit with corporation represents amounts deposited to settle certain employee-related obligations as and when they arise during the normal course of business.
17
307
373
192
342
331
12
22
12
25
196
12
16
929
22
940
10
Non-Current
Liability towards contingent consideration (Refer note 2.9)
Accrued compensation to employees
(1)
23
952
17
957
753
754
14
20
(1)
Accrued expenses primarily relate to cost of technical sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office maintenance. Others
include unpaid dividend balances and capital creditors.
2.6 Provisions
Provisions comprise the following:
(Dollars in millions)
As of
September 30, 2016
93
93
Provision for post sales client support and other provisions represents costs associated with providing sales support services which are accrued at the time of recognition of revenues and are expected to be utilized
over a period of 6 months to 1 year. The movement in the provision for post sales client support and other provisions is as follows:
(Dollars in millions)
Three months ended Six months ended
September 30, 2016 September
30, 2016
79
Translation differences
77
-
Provision recognized/(reversed)
17
Provision utilized
(3)
22
(6)
93
93
Provision for post sales client support and other provisions is included in cost of sales in the statement of comprehensive income.
As of September 30, 2016 and March 31, 2016, claims against the company, not acknowledged as debts, net of amounts paid (excluding demands from Indian income tax authorities- Refer to Note 2.11) amounted
to $42 million (`280 crore) and $42 million (`277 crore), respectively.
The company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The companys management does not reasonably expect that these legal actions, when ultimately
concluded and determined, will have a material and adverse effect on the companys results of operations or financial condition.
18
Vehicles
(Dollars in millions)
Total
942
408
628
221
2,445
10
19
41
13
86
(2)
(3)
(1)
(1)
33
Translation difference
Gross carrying value as of September 30, 2016
241
Additions
Deletions
Buildings
13
246
(3)
Depreciation
(6)
965
431
674
237
2,558
(334)
(251)
(410)
(152)
(3)
(1,153)
(9)
(15)
(27)
(7)
(17)
(58)
Translation difference
(1)
(5)
(3)
(5)
(3)
(4)
(348)
(267)
(439)
(161)
(3)
(1,222)
242
617
164
235
76
1,681
238
608
157
218
69
1,624
345
332
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2015:
Land
936
345
573
193
15
29
(1)
(37)
Translation difference
Gross carrying value as of September 30, 2015
248
Additions
Deletions
Buildings
(7)
242
(3)
Depreciation
Translation difference
(27)
(10)
(16)
917
349
549
192
(320)
(214)
(377)
(136)
(9)
(11)
(22)
(6)
15
10
(6)
58
(38)
(66)
5
2,254
(3)
(1,053)
(48)
16
10
(2)
(319)
(219)
(374)
(138)
(3)
(1,055)
30
240
598
130
175
54
1,477
245
616
131
196
57
1,494
278
2,300
(Dollars in millions)
Total
Vehicles
247
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2016:
(Dollars in millions)
Land
Vehicles
955
392
615
218
2,428
15
43
68
21
151
(2)
(5)
(1)
(8)
(2)
(4)
(1)
(13)
(1)
(5)
246
(3)
965
431
674
237
2,558
(332)
(243)
(395)
(149)
(3)
(1,125)
(28)
(51)
(14)
Depreciation
(17)
Translation difference
(1)
(4)
(110)
8
5
(348)
(267)
(439)
(161)
(3)
(1,222)
242
617
164
235
76
1,681
241
623
149
220
69
1,589
345
Total
Translation difference
Gross carrying value as of September 30, 2016
244
Additions
Deletions
Buildings
286
19
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2015:
(Dollars in millions)
Land
Buildings
250
940
337
535
189
20
29
77
12
(1)
(39)
(16)
(24)
Additions
Deletions
Translation difference
(12)
(43)
242
(3)
6
-
2,257
142
(9)
Total
(40)
(1)
(105)
917
349
549
192
2,254
(317)
(207)
(365)
(132)
(3)
(1,027)
(23)
(40)
(12)
(92)
16
17
47
Depreciation
(17)
Translation difference
Vehicles
15
10
15
(2)
(319)
(219)
(374)
(138)
(3)
(1,055)
240
598
130
175
54
1,477
247
623
130
170
57
1,460
278
230
Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 2016:
Land
Buildings
940
337
535
189
2,257
68
76
168
40
362
(1)
(60)
(1)
(2)
(64)
(20)
(28)
(10)
(1)
(127)
Translation difference
(15)
(53)
244
955
392
615
218
2,428
(3)
(317)
(207)
(365)
(132)
(3)
(1,027)
(1)
(33)
(49)
(84)
(24)
(1)
(192)
36
39
18
12
18
(3)
(332)
(243)
(395)
(149)
(3)
(1,125)
55
241
623
149
220
69
1,589
247
623
130
170
57
1,460
286
(Dollars in millions)
Total
Deletions
Translation difference
Vehicles
250
Additions
230
The depreciation expense is included in cost of sales in the statement of comprehensive income.
Carrying value of land includes $95 million and $95 million as of September 30, 2016 and March 31, 2016, respectively, towards amounts paid under certain lease-cum-sale agreements to acquire
land, including agreements where the company has an option to purchase or renew the properties on expiry of the lease period.
The contractual commitments for capital expenditure were $215 million and $224 million as of September 30, 2016 and March 31, 2016, respectively.
2.8 Goodwill
Following is a summary of changes in the carrying amount of goodwill:
(Dollars in millions)
As of
September 30, 2016
Carrying value at the beginning
Goodwill on Kallidus d.b.a Skava acquisition (Refer note 2.9)
Goodwill on Noah acquisition (Refer note 2.9)
568
(2)
Translation differences
Carrying value at the end
566
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the cash generating units (CGU) or groups of CGUs, which benefit from the synergies of the
acquisition. The chief operating decision maker reviews the goodwill for any impairment at the operating segment level, which is represented through groups of CGUs.
During the year ended March 31, 2016, the Company reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase management
oversight. Consequent to these internal reorganizations there were changes effected in the segments based on the management approach as defined in IFRS 8, Operating Segments. (Refer Note
2.14). Accordingly the goodwill has been allocated to the new operating segments as at March 31, 2016.
20
(Dollars in millions)
As of
March 31, 2016
128
64
87
99
119
Segment
Financial services
Manufacturing
Retail, Consumer packaged goods and Logistics
Life Sciences, Healthcare and Insurance
Energy & utilities, Communication and Services
497
Operating segments without significant goodwill
Total
71
568
The entire goodwill relating to Infosys BPOs acquisition of McCamish has been allocated to the group of CGUs which is represented by the Life Sciences, Healthcare and Insurance segment.
The goodwill relating to Infosys Lodestone, Portland, Panaya and Kallidus d.b.a Skava acquisitions has been allocated to the groups of CGUs which are represented by the entitys operating segment.
The entire goodwill relating to Noah acquisition has been allocated to the group of CGU's which is represented by the Energy & utilities, Communication and Services segment.
The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization. The value-in-use is
determined based on specific calculations. These calculations use pre-tax cash flow projections over a period of five years. As of March 31, 2016, the estimated recoverable amount of the CGU
exceeded its carrying amount. The recoverable amount was computed based on the fair value being higher than value-in-use and the carrying amount of the CGU was computed by allocating the net
assets to operating segments for the purpose of impairment testing. The key assumptions used for the calculations are as follows:
In %
As of March 31, 2016
Long term growth rate
8-10
Operating margins
17-20
Discount rate
14.2
The above discount rate is based on the Weighted Average Cost of Capital (WACC) of the Company. These estimates are likely to differ from future actual results of operations and cash flows.
21
On November 16, 2015, Infosys has acquired 100% membership interest in Noah Consulting, LLC (Noah), a leading provider of advanced information management
consulting services for the oil and gas industry. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of $33
million, contingent consideration of upto $5 million and an additional consideration of upto $32 million, referred to as retention bonus payable to the employees of
Noah at each anniversary year following the acquisition date for the next three years, subject to their continuous employment with the group at each anniversary.
This acquisition combines Noahs industry knowledge, information strategy planning, data governance and architecture capabilities with Infosys ability to provide
technology and outsourcing services on a global scale to oil and gas clients. The excess of the purchase consideration paid over the fair value of assets acquired has
been attributed to goodwill.
The purchase price has been allocated based on managements estimates and independent appraisal of fair values as follows:
(Dollars in millions)
Component
Acquiree's carrying
amount
Fair value
adjustments
Purchase price
(*)
18
18
26
32
Net assets
Goodwill
allocated
37
Consideration
Cash paid
33
37
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Noah on achievement of certain financial targets.
At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 32% and the probabilities of achievement
of the financial targets. During year ending March 31, 2016, based on an assessment of Noah achieving the targets for the year ending December 31, 2015 and
December 31, 2016, the entire contingent consideration has been reversed in the statement of comprehensive income
The retention bonus is treated as a post-acquisition employee remuneration expense as per IFRS 3R. For the three months and six months ended September 30, 2016,
a post-acquisition employee remuneration expense of $4 million and $9 million has been recorded in the statement of comprehensive income.
The transaction costs of $2 million related to the acquisition have been included under administrative expenses in the statement of comprehensive income for the year
ended March 31, 2016.
Finacle and Edge Services
On April 24, 2015, the Board of Directors of Infosys authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, a
wholly owned subsidiary, to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders through postal ballot on June 4, 2015, a
Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business with effect from August 1, 2015. The company had
undertaken an enterprise valuation by an independent valuer and accordingly the business were transferred for a consideration of `3,222 crore (approximately $491
million) and `177 crore (approximately $27 million) for Finacle and Edge Services, respectively.
The consideration was settled through issue of 85,00,00,000 equity shares amounting to `850 crore (approximately $129 million) and 25,49,00,000 non-convertible
redeemable debentures amounting to `2,549 crore (approximately $389 million) in EdgeVerve, post the requisite approval from shareholders on December 11, 2015.
During the six months ended September 30, 2016, EdgeVerve has repaid `270 crore (approximately $41 million) by redeeming proportionate number of debentures.
The transfer of assets and liabilities was accounted for at carrying values and did not have any impact on the consolidated financial statements.
22
Component
Acquiree's carrying
amount
Fair value
adjustments
(*)
21
21
27
27
(20)
(20)
30
36
Net assets
Goodwill
allocated
71
107
Consideration
Cash paid
91
16
107
The payment of contingent consideration to sellers of Kallidus is dependent upon the achievement of certain financial targets by Kallidus over a period of 3 years
ending on December 31, 2017.
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Kallidus on achievement of certain financial
targets. At the acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 14% and the probabilities of
achievement of the financial targets.
During the six months ended September 30, 2016 contingent consideration of $6 million was paid to the sellers of Kallidus on the achievement of certain financial
targets. The balance contingent consideration as of September 30, 2016 and March 31, 2016 is $14 million and $20 million on an undiscounted basis.
The transaction costs of $2 million related to the acquisition have been included under administrative expenses in the statement of comprehensive income for the year
ended March 31, 2016.
23
2015 Stock Incentive Compensation Plan (the 2015 Plan): SEBI issued the Securities and Exchange Board of India (Share based Employee Benefits) Regulations, 2014 (SEBI
Regulations) which replaced the SEBI ESOP Guidelines, 1999. The 2011 Plan (as explained below) was required to be amended and restated in accordance with the SEBI Regulations.
Consequently, to effect this change and to further introduce stock options/ADRs and other stock incentives, the Company put forth the 2015 Stock Incentive Compensation Plan (the 2015
Plan) for approval to the shareholders of the Company. Pursuant to the approval by the shareholders through postal ballot which ended on March 31, 2016, the Board of Directors have been
authorised to introduce, offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the 2015 Plan. The maximum number of shares under the
2015 plan shall not exceed 2,40,38,883 equity shares (this includes 1,12,23,576 equity shares which were held by the Trust towards the 2011 Plan as at March 31, 2016). 1,70,38,883 equity
shares will be issued as RSUs at par value and 70,00,000 equity shares will be issued as stock options at market price. These instruments will vest over a period of 4 years and the Company
expects to grant the instruments under the 2015 Plan over the period of 4 to 7 years.
On August 1, 2016, the company granted 17,83,615 RSUs (includes equity shares and equity shares represented by ADS) at par value, to employees upto mid management (excluding grants
made to Dr. Vishal Sikka). Further, the company granted 73,020 Incentive Units (cash-settled) to eligible employees. These instruments will vest equally over a period of 4 years and are
subject to continued service. As of September 30, 2016, 1,11,92,934 shares are held by the trust towards 2015 Plan. As of September 30, 2016, 72,795 Incentive Units were outstanding (net
of forfeitures) and the carrying value of the cash liability is less than $1 million.
Pursuant to the approval from the shareholders through postal ballot on March 31, 2016, Dr. Vishal Sikka is eligible to receive under the 2015 Plan, an annual grant of RSU's of fair value
$2,000,000 which vest over time, subject to continued service, and an annual grant of performance based equity and stock options of $5,000,000 , subject to achievement of performance
targets set by the Board or its committee, which vest over time. $2,000,000 of fair value in RSUs for financial year 2017 was granted on August 1, 2016 amounting to 120,700 RSUs in
equity shares represented by ADS. The performance based RSU and Options pertaining to financial year 2017 has not yet been granted as of September 30, 2016. Though the performance
based RSU and Options for fiscal 2017 and time based RSUs for the remaining employment term have not been granted as of September 30, 2016, in accordance with IFRS 2 Share-based
Payment, the company has recorded employee stock based compensation expense. The company has recorded employee stock based compensation expense of $1 million and $2 million
during the three months and six months ended September 30, 2016 respectively, towards CEO compensation. The CEO employee stock compensation expense during each of the three
months and six months ended September 30, 2015 was less than $1 million.
2011 RSU Plan (the 2011 Plan) now called 2015 Stock Incentive Compensation Plan ( the 2015 Plan): The Company had a 2011 RSU Plan which provided for the grant of restricted
stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended the establishment of the 2011 Plan to the shareholders on August 30, 2011 and the
shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the
plan was 1,13,34,400 as on date of approval of plan adjusted for bonus shares and the plan was expected to continue in effect for a term of 10 years from the date of initial grant under the
plan. Awards have been granted to the Dr Vishal Sikka under the 2011 RSU plan as detailed below. Further the Company has earmarked 1,00,000 equity shares for welfare activities of the
employees, approved by the shareholders vide postal ballot which ended on March 31, 2016. The equity shares as of March 31, 2016 held under this plan, i.e. 1,12,23,576 equity shares (this
includes the aggregate number of equity shares that may be awarded under the 2011 Plan as reduced by 10,824 equity shares already exercised by Dr. Vishal Sikka and 1,00,000 equity shares
which have been earmarked for welfare activities of the employees) have been subsumed under the 2015 Plan.
During the year ended March 31, 2015, the company made a grant of 108,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Officer and Managing
Director. The Board in its meeting held on June 22, 2015, on recommendation of Nomination and Remuneration Committee, further granted 1,24,061 RSUs to Dr. Vishal Sikka. These RSUs
are vesting over a period of four years from the date of the grant in the proportions specified in the award agreement. The RSUs will vest subject to achievement of certain key performance
indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
The award granted to Dr. Vishal Sikka on June 22, 2015 was modified by the Nomination and remuneration committee on April 14, 2016. There is no modification or change in the total
number of RSUs granted or the vesting period (which is four years). The modifications relate to the criteria of vesting for each of the years. Based on the modification, the first tranche of
the RSUs will vest subject to achievement of certain key performance indicators for the year ended March 31, 2016. Subsequent vesting of RSU's for each of the remaining years would be
subject to continued employment.
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2016 is set out
below:
Three months ended
Six months ended
September 30, 2016
September 30, 2016
Shares arising
Weighted average Shares arising out Weighted average
out of options
exercise price (`)
of options
exercise price (`)
Particulars
209,099
221,505
1,512,895
1,512,895
12,650
12,650
Exercised
18,236
30,642
1,691,108
1,691,108
Granted
Particulars
24
391,420
0.07
391,420
0.07
10,120
0.07
10,120
0.07
381,300
0.07
381,300
0.07
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2015 is set out
below:
Three months ended
September 30, 2015
Particulars
Shares arising
out of options
2015 Plan (Formerly 2011 Plan): Indian equity shares (IES)
Outstanding at the beginning*
Granted
Forfeited and expired
Exercised*
Outstanding at the end
Exercisable at the end
*adjusted for bonus issues (Refer note 2.17)
232,329
9,116
223,213
-
Weighted average
exercise price
108,268
124,061
9,116
223,213
-
5
5
5
5
-
During the three months and six months ended September 30, 2016, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was $15/- and $16/respectively.
During the three months and six months ended September 30, 2015, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was $16/The weighted average remaining contractual life of RSUs outstanding as of September 30, 2016 and March 31, 2016 under the 2015 Plan was 2.27 years and 1.98 years, respectively.
The fair value of each equity settled RSU is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
For options granted in
Particulars
Fiscal 2017Equity Shares
1-Aug-16
1,085
5.00
25-29
1-4
2.37
6- 7
1,019
Grant date
Weighted average share price (`) / ($- ADS)*
Exercise price (`)/ ($- ADS)*
Expected volatility (%)
Expected life of the option (years)
Expected dividends (%)
Risk-free interest rate (%)
Weighted average fair value as on grant date (`) / ($- ADS)*
Fiscal 2017ADS
1-Aug-16
16.57
0.07
26-30
1-4
2.29
0.5 - 1
15.59
The expected term of the RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the RSU.
Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares during a period
equivalent to the expected term of the RSU.
During the three months and six months ended September 30, 2016 and September 30, 2015, the company recorded an employee stock compensation expense of $3 million and less than $1
million and $4 million and less than $1 million, respectively in the statement of profit and loss. The cash settled stock compensation expense during each of the three months and six months
ended September 30, 2016 was less than $1 million.
25
(Dollars in millions)
Six months ended September 30,
2016
2015
2016
2015
165
172
328
314
54
48
110
84
219
220
438
398
Current taxes
Domestic taxes
Foreign taxes
Deferred taxes
Domestic taxes
Foreign taxes
(1)
(1)
218
(1)
(5)
(7)
(12)
(8)
(8)
212
(17)
421
(2)
396
Income tax expense for the three months ended September 30, 2016 and September 30, 2015 includes reversal (net of provisions) of $2 million and $5 million, respectively, pertaining to
earlier periods.
Income tax expense for the six months ended September 30, 2016 and September 30, 2015 includes reversal (net of provisions) of $1 million and $18 million, respectively, pertaining to
earlier periods.
Entire deferred income tax for the three months and six months ended September 30, 2016 and September 30, 2015 relates to origination and reversal of temporary differences.
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized below:
Three months ended September 30,
2016
2015
757
731
34.61%
34.61%
262
253
(78)
34
(2)
2
(3)
8
(1)
(2)
(2)
218
(74)
28
(5)
2
(2)
11
(2)
1
212
(Dollars in millions)
Six months ended September 30,
2016
2015
1,471
1,391
34.61%
34.61%
509
482
(150)
62
(1)
2
(7)
8
4
(4)
(2)
421
(136)
51
(18)
1
(5)
2
22
(4)
1
396
During the six months ended September 30, 2016 and September 30, 2015, the Group has claimed weighted tax deduction on eligible research and development expenditure based on the
approval received from Department of Scientific and Industrial Research (DSIR) which is valid upto 31st March 2017. The weighted tax deduction is equal to 200% of such expenditure
incurred.
The foreign expense is due to income taxes payable overseas principally in the United States. In India, the company has benefited from certain tax incentives that the Government of India had
provided for export of software from the units registered under the Special Economic Zones Act, 2005 (SEZ). SEZ units which began the provision of services on or after April 1, 2005 are
eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from the financial year in which the unit commenced the provision of
services and 50 percent of such profits or gains for further five years. Up to 50% of such profits or gains is also available for a further five years subject to creation of a Special Economic
Zone re-Investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business as
per the provisions of the Income Tax Act, 1961.
As of September 30, 2016, claims against the group not acknowledged as debts from the Indian Income tax authorities net of amount paid to statutory authorities of $658 million (`4,383
crore) amounted to $1 million (`7 crore).
As of March 31, 2016, claims against the group not acknowledged as debts from the Indian Income tax authorities net of amount paid to statutory authorities of $662 million (`4,383 crore)
amounted to $1 million (`7 crore).
Payment of $658 million (`4,383 crore) includes demands from the Indian Income tax authorities of $621 million ( `4,135 crore), including interest of $184 million (`1,224 crore) upon
completion of their tax assessment for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011. These demands were paid to statutory tax authorities. The company has filed an appeal
with the income tax appellate authorities.
Demand for fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the income Tax Act as determined by
the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total
turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011 also includes disallowance of portion of profit earned outside India from the STP units under section
10A of the Income Tax Act and disallowance of profits earned from SEZ units under section 10AA of the Income Tax Act. The matters for fiscal 2007, fiscal 2008 and fiscal 2009 are
pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscal 2010 and fiscal 2011 is pending before Honble Income Tax Appellate Tribunal (ITAT)
Bangalore.
The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. The management believes that the
ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.
2.12 Reconciliation of basic and diluted shares used in computing earnings per share
The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:
Three months ended September 30,
Basic earnings per equity share - weighted average number of equity shares outstanding (1)(2)
Effect of dilutive common equivalent shares
(1)
(2)
2015
2016
2015
2,285,641,710
2,285,614,029
2,285,632,081
2,285,612,157
307,593
Diluted earnings per equity share - weighted average number of equity shares and common equivalent
shares outstanding
2016
2,285,949,303
99,013
2,285,713,042
243,907
2,285,875,988
For the three and six months ended September 30, 2016 and September 30, 2015 there were no outstanding options to purchase equity shares which had an anti-dilutive effect.
26
84,521
2,285,696,678
Salaries and other employee benefits to whole-time directors and executive officers (1)
(Dollars in millions)
Six months ended September 30,
2016
2015
5
5
Total
(1)
Includes employee stock compensation expense of $4 million and less than $1 million for the six months ended September 30, 2016 and September 30, 2015, respectively towards CEO compensation.
Refer to note 2.10
2.14
Segment Reporting
IFRS 8 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas,
and major customers. The group's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. During the quarter ended
March 31, 2016, the Group reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase management oversight
consequent to which, erstwhile manufacturing segment is now being reviewed as Hi-Tech, Manufacturing and others included in ECS. Additionally, Infosys Public services (IPS) is being
reviewed separately by the Chief Operating Decision Maker (CODM). Consequent to the internal reorganizations, there were changes effected in the reportable business segments based on
the "management approach" as defined in IFRS 8, Operating Segments. The CODM evaluates the Company's performance and allocates resources based on an analysis of various
performance indicators by business segments and geographic segments. Accordingly, information has been presented both along business segments and geographic segments. The accounting
principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting
policies.
Business segments of the Group are primarily enterprises in Financial Services (FS), enterprises in Manufacturing (MFG), enterprises in Retail, Consumer packaged goods and Logistics
(RCL), enterprises in the Energy & utilities, Communication and Services (ECS), enterprises in Hi-Tech (Hi-Tech), enterprises in Life Sciences, Healthcare and Insurance (HILIFE) and all
other segments. The FS reportable segments has been aggregated to include the Financial Services operating segment and the Finacle operating segment. All other segments represents the
operating segments of businesses in India, Japan and China and IPS. Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and
off-shore locations. North America comprises the United States of America, Canada and Mexico, Europe includes continental Europe (both the east and the west), Ireland and the United
Kingdom, and the Rest of the World comprising all other places except those mentioned above and India. Consequent to the above changes in the composition of reportable business
segments, the prior period comparatives have been restated.
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Revenue for all other segments
represents revenue generated by IPS and revenue generated from customers located in India, Japan and China. Allocated expenses of segments include expenses incurred for rendering
services from the Company's offshore software development centres and on-site expenses, which are categorized in relation to the associated turnover of the segment. Certain expenses such
as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying assets are used interchangeably. Management
believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted
against the total income of the Group.
Assets and liabilities used in the Group's business are not identified to any of the reportable segments, as these are used interchangeably between segments. Management believes that it is
currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
Geographical information on revenue and business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise
recognized.
27
MFG
ECS
RCL
HILIFE
Hi-Tech
700
649
355
301
152
155
193
193
277
275
144
153
63
68
70
54
578
510
278
233
132
126
168
151
423
395
203
186
97
98
123
111
312
311
158
146
71
77
83
88
200
191
103
87
46
47
51
57
FS
MFG
ECS
RCL
HILIFE
Hi-Tech
1,378
1,259
688
602
308
295
382
362
552
527
285
288
130
130
137
109
1,132
1,008
540
460
266
247
326
301
850
763
408
363
199
187
243
213
611
605
307
293
143
148
161
164
397
373
205
185
93
91
99
97
Revenues
Identifiable operating expenses
Allocated expenses
Segment profit
All other
segments
97
61
56
35
22
15
19
11
Unallocable expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before Income taxes
Income tax expense
Net profit
Depreciation and amortisation
Non-cash expenses other than depreciation and amortisation
Total
2,587
2,392
1,297
1,141
583
586
707
665
63
55
644
610
114
121
(1)
757
731
218
212
539
519
63
55
-
Six months ended September 30, 2016 and September 30, 2015
Revenues
Identifiable operating expenses
Allocated expenses
Segment profit
Unallocable expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before Income taxes
Income tax expense
Net profit
Depreciation and amortisation
Non-cash expenses other than depreciation and amortisation
28
All other
segments
168
112
108
75
39
27
21
10
Total
5,088
4,647
2,541
2,266
1,178
1,125
1,369
1,256
123
105
1,246
1,151
226
240
(1)
1,471
1,391
421
396
1,050
995
123
104
1
1,590
1,513
814
735
362
374
414
404
Europe
India
582
548
292
267
132
135
158
146
88
55
37
13
19
12
32
30
Rest of the
World
327
276
154
126
70
65
103
85
Unallocable expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before Income taxes
Income Tax expense
Net profit
Depreciation and amortisation
Non-cash expenses other than depreciation and amortisation
(Dollars in millions)
Total
2,587
2,392
1,297
1,141
583
586
707
665
63
55
644
610
114
121
(1)
757
731
218
212
539
519
63
55
-
Six months ended September 30, 2016 and September 30, 2015
North America
Revenues
3,140
2,939
1,609
1,457
735
719
796
763
Europe
India
1,159
1,053
568
519
271
257
320
277
156
105
74
51
33
22
49
32
Unallocable expenses
Operating profit
Other income, net
Share in associate's profit / (loss)
Profit before Income taxes
Income Tax expense
Net profit
Depreciation and amortisation
Non-cash expenses other than depreciation and amortisation
29
Rest of the
World
633
550
290
239
139
127
204
184
(Dollars in millions)
Total
5,088
4,647
2,541
2,266
1,178
1,125
1,369
1,256
123
105
1,246
1,151
226
240
(1)
1,471
1,391
421
396
1,050
995
123
104
1
63
58
140
28
29
12
1
9
13
4
1
1,638
2015
1,155
10
55
66
131
27
26
9
1
7
5
(5)
1
1,488
(Dollars in millions)
Six months ended September 30,
2016
2,515
123
142
277
55
43
23
2
17
24
8
2
3,231
2015
2,277
19
104
130
249
57
44
18
2
14
14
(7)
1
2,922
2016
103
12
12
3
2
1
1
134
2015
103
13
9
2
2
1
(1)
129
(Dollars in millions)
Six months ended September 30,
2016
202
27
30
5
4
1
2
271
2015
201
26
21
3
4
1
2
258
Administrative expenses
Three months ended September 30,
2016
59
23
33
9
10
8
6
4
2
4
1
8
4
171
30
2015
53
25
31
9
10
9
5
3
2
2
9
7
165
(Dollars in millions)
Six months ended September 30,
2016
109
48
70
18
20
18
12
7
4
7
1
15
11
340
2015
97
48
59
17
19
21
10
5
4
1
1
16
18
316
2.16 Dividends
The Company declares and pays dividends in Indian rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable
distribution taxes.
The amount of per share dividend recognized as distributions to equity shareholders for the six months ended September 30, 2016 and September 30, 2015 was `14.25/- per equity
share ($0.22 per equity share) and `29.50/- per equity share ($0.47 per equity share) (not adjusted for June 17, 2015 bonus issue).
The Board of Directors, in their meeting on October 14, 2016, declared an interim dividend of approximately $0.17 per equity share (`11/- per equity share), which would result in a
net cash outflow of approximately $455 million, (excluding dividend paid on treasury shares) inclusive of corporate dividend tax.
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
31
Note
2.1
2.2
2.4
2.3
31,732
2,154
11,571
3,892
5,171
89
32,697
75
11,330
3,029
4,448
116
51,695
54,609
2.7
2.8
2.2
2.4
2.3
2.6
2.5
2.5
Share premium
Retained earnings
Cash flow hedge reserve
Other reserves
Other components of equity
Total equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Total liabilities and equity
11,197
3,771
904
99
1,931
628
5,248
719
24,497
79,106
10,530
3,764
985
103
1,811
536
5,230
735
23,694
75,389
307
2
3,851
11
1,478
1,440
621
6,185
13,895
386
5
3,410
28
1,332
1,341
512
6,225
13,239
235
151
14,281
256
115
13,610
1,144
1,144
2,272
60,773
2
634
64,825
64,825
79,106
2,241
57,655
739
61,779
61,779
75,389
The accompanying notes form an integral part of the condensed consolidated interim financial statements
As per our report of even date attached
for and on behalf of the Board of Directors of Infosys Limited
for B S R & Co. LLP
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
R. Seshasayee
U. B. Pravin Rao
Partner
Chairman
Managing Director
Whole-time Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Bangalore
October 14, 2016
Roopa Kudva
Director
Company Secretary
2016
17,310
10,962
6,348
2015
15,635
9,724
5,911
2016
34,091
21,643
12,448
2015
29,989
18,847
11,142
897
1,142
2,039
4,309
760
(3)
5,066
1,460
3,606
843
1,075
1,918
3,993
793
(1)
4,785
1,387
3,398
1,817
2,276
4,093
8,355
1,513
(5)
9,863
2,822
7,041
1,663
2,038
3,701
7,441
1,551
(1)
8,991
2,562
6,429
(40)
(7)
(57)
(14)
(35)
(40)
(7)
(92)
(14)
2
(51)
(49)
(89)
62
30
92
85
2
(13)
(11)
(103)
206
18
224
210
3,517
3,483
6,938
6,639
3,606
3,606
3,398
3,398
7,041
7,041
6,429
6,429
3,517
3,517
3,483
3,483
6,938
6,938
6,639
6,639
15.77
15.77
14.87
14.87
30.81
30.80
28.13
28.13
228,56,41,710
228,59,49,303
228,56,14,029
228,57,13,042
228,56,32,081
228,58,75,988
228,56,12,157
228,56,96,678
2.15
2.15
2.15
2.11
2.2
2.3
2.2
2.12
The accompanying notes form an integral part of the condensed consolidated interim financial statements.
As per our report of even date attached
for B S R & Co. LLP
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
Partner
Membership No. 205385
Bangalore
October 14, 2016
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer and
Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
Share capital
114,28,05,132
572
Share
premium
Retained
earnings
Other
2,806
50,978
(3)
reserves
54,763
114,28,05,132
572
572
(572)
(572)
9,116
(265)
265
265
(265)
18
18
(14)
(14)
(4,061)
6,429
-
206
(4,061)
6,429
206
228,56,19,380
228,56,21,088
1,144
1,144
2,238
2,241
53,346
57,655
617
739
(35)
(35)
30,642
57,345
61,779
30
30
-
(551)
551
551
(551)
(57)
(57)
Dividends
(3,923)
(3,923)
Net profit
7,041
7,041
(13)
634
2,285,651,730
1,144
2,272
60,773
(13)
64,825
The accompanying notes form an integral part of the condensed consolidated interim financial statements.
(1)
(2)
excludes treasury shares of 1,12,92,934 as of September 30, 2016, 1,13,23,576 as of April 1, 2016, 1,13,25,284 as of September 30, 2015 and 56,67,200 as of April 1, 2015, held by consolidated trust.
(3)
Represents the Special Economic Zone Re-investment reserve created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Company
for acquiring new plant and machinery for the purpose of its business in terms of the provisions of the Sec 10AA(2) of the Income Tax Act, 1961.
As per our report of even date attached
for B S R & Co. LLP
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
R. Seshasayee
U. B. Pravin Rao
Partner
Chairman
Managing Director
M. D. Ranganath
M. D. Ranganath
Chief Financial
Chief Financial
Officer Officer
A.G.S Manikantha
Bangalore
October 14, 2016
Roopa Kudva
Director
Company Secretary
2015
7,041
6,429
824
2,822
(90)
27
40
205
671
2,562
(96)
50
124
7
79
(1,145)
(633)
(78)
(17)
146
94
9,236
(2,499)
6,737
(1,231)
(1,693)
(33)
(5)
55
1,275
8,194
(2,862)
5,332
(1,469)
38
(85)
79
(36)
(54)
(8)
(159)
4
(20,217)
18,159
(3,748)
(1,268)
(6)
(24)
86
(549)
(22)
(15)
(201)
(13,664)
13,932
33
(1,698)
2.1
2.1
(3,910)
(3,910)
(44)
(921)
32,697
31,732
(4,061)
(4,061)
6
(427)
30,367
29,946
2.1
522
382
2.15
2.11
Loans to employees
Deposits placed with corporation
Income on investments
Payment for acquisition of business, net of cash acquired
Payment of contingent consideration pertaining to acquisition of business
Investment in preference securities
Investment in others
Investment in quoted debt securities
Redemption of quoted debt securities
Investment in liquid mutual fund units
Redemption of liquid mutual fund units
Redemption of fixed maturity plan securities
Net cash used in investing activities
Financing activities:
Payment of dividends (includes corporate dividend tax)
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning
Cash and cash equivalents at the end
Supplementary information:
Restricted cash balance
The accompanying notes form an integral part of the condensed consolidated interim financial statements.
2.9
2.9
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer and
Whole-time Director
Bangalore
Roopa Kudva
M. D. Ranganath
A.G.S Manikantha
Director
Company Secretary
The financial statements of the Group companies are consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions
are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group. Non-controlling interests which represent part of
the net profit or loss and net assets of subsidiaries that are not, directly or indirectly, owned or controlled by the company, are excluded.
Associates are entities over which the group has significant influence but not control. Investments in associates are accounted for using the equity method of accounting. The investment
is initially recognized at cost, and the carrying amount is increased or decreased to recognize the investors share of the profit or loss of the investee after the acquisition date. The groups
investment in associates includes goodwill identified on acquisition.
e. Impairment of Goodwill
Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit is less than its carrying amount based on a
number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable amount of cash generating units is determined based on higher
of value-in-use and fair value less cost to sell. The goodwill impairment test is performed at the level of the cash-generating unit or groups of cash-generating units which are benefitting
from the synergies of the acquisition and which represents the lowest level at which goodwill is monitored for internal management purposes.
Market related information and estimates are used to determine the recoverable amount. Key assumptions on which management has based its determination of recoverable amount
include estimated long term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections take into account past experience and represent
managements best estimate about future developments.
In arrangements for software development and related services and maintenance services, the company has applied the guidance in IAS 18, Revenue, by applying the revenue recognition
criteria for each separately identifiable component of a single transaction. The arrangements generally meet the criteria for considering software development and related services as
separately identifiable components. For allocating the consideration, the company has measured the revenue in respect of each separable component of a transaction at its fair value, in
accordance with principles given in IAS 18. The price that is regularly charged for an item when sold separately is the best evidence of its fair value. In cases where the company is
unable to establish objective and reliable evidence of fair value for the software development and related services, the company has used a residual method to allocate the arrangement
consideration. In these cases the balance of the consideration, after allocating the fair values of undelivered components of a transaction has been allocated to the delivered components
for which specific fair values do not exist.
License fee revenues are recognized when the general revenue recognition criteria given in IAS 18 are met. Arrangements to deliver software products generally have three elements:
license, implementation and Annual Technical Services (ATS). The company has applied the principles given in IAS 18 to account for revenues from these multiple element
arrangements. Objective and reliable evidence of fair value has been established for ATS. Objective and reliable evidence of fair value is the price charged when the element is sold
separately. When other services are provided in conjunction with the licensing arrangement and objective and reliable evidence of their fair values have been established, the revenue
from such contracts are allocated to each component of the contract in a manner, whereby revenue is deferred for the undelivered services and the residual amounts are recognized as
revenue for delivered elements. In the absence of objective and reliable evidence of fair value for implementation, the entire arrangement fee for license and implementation is recognized
using the percentage-of-completion method as the implementation is performed. Revenue from client training, support and other services arising due to the sale of software products is
recognized as the services are performed. ATS revenue is recognized ratably over the period in which the services are rendered.
Advances received for services and products are reported as client deposits until all conditions for revenue recognition are met.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discounts/ incentives amount to each of
the underlying revenue transaction that results in progress by the customer towards earning the discount/ incentive. Also, when the level of discount varies with increases in levels of
revenue transactions, the company recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if
the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes
in the estimated amount of obligations for discounts in the period in which the change occurs. The discounts are passed on to the customer either as direct payments or as a reduction of
payments due from the customer.
The company presents revenues net of value-added taxes in its statement of comprehensive income.
1.7 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant
and equipment are ready for use, as intended by management. The group depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The
estimated useful lives of assets are as follows:
Building
Plant and machinery
Computer equipment
Furniture and fixtures
Vehicles
22-25 years
5 years
3-5 years
5 years
5 years
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end. (Refer note 2.7)
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of assets not put to use before such date are disclosed under
Capital work-in-progress. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these
will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the statement of comprehensive income when
incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized
in net profit in the statement of comprehensive income. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
b. Non-financial assets
(i) Goodwill
Goodwill is tested for impairment on an annual basis and whenever there is an indication that goodwill may be impaired, relying on a number of factors including operating results,
business plans and future cash flows. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the Group's cash generating units (CGU) or
groups of CGUs expected to benefit from the synergies arising from the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are
largely independent of the cash inflows from other assets or group of assets. Impairment occurs when the carrying amount of a CGU including the goodwill, exceeds the estimated
recoverable amount of the CGU. The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of future cash
flows expected to be derived from the CGU.
Total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the
carrying amount of each asset in the CGU. An impairment loss on goodwill is recognized in net profit in the statement of comprehensive income and is not reversed in the subsequent
period.
(ii) Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be
recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset
basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the
asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in net profit in the statement of comprehensive income is measured by the amount by which the carrying
value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in net profit in the statement of comprehensive income if there has been a
change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not
exceed the carrying amount that would have been determined (net of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
1.12 Employee benefits
1.12.1 Gratuity
The Group provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees of Infosys and its Indian subsidiaries. The Gratuity Plan provides a
lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of
employment with the Group.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method.
The company fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPO and EdgeVerve, contributions are made
to the Infosys BPO's Employees' Gratuity Fund Trust and EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts
and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by law of India.
The Group recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit
liability/(asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to
measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments are recognized in net profits in the statement of comprehensive
income.
1.12.2 Superannuation
Certain employees of Infosys, Infosys BPO and EdgeVerve are participants in a defined contribution plan. The Group has no further obligations to the Plan beyond its monthly
contributions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
1.12.3 Provident fund
Eligible employees of Infosys receive benefits from a provident fund, which is a defined benefit plan. Both the eligible employee and the company make monthly contributions to the
provident fund plan equal to a specified percentage of the covered employee's salary. The company contributes a portion to the Infosys Limited Employees' Provident Fund Trust. The
trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the
annual interest is payable to the beneficiaries by the trust is being administered by the government. The company has an obligation to make good the shortfall, if any, between the return
from the investments of the Trust and the notified interest rate.
In respect of Indian subsidiaries, eligible employees receive benefits from a provident fund, which is a defined contribution plan. Both the eligible employee and the respective companies
make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected under the provident fund plan are deposited
in a government administered provident fund. The companies have no further obligation to the plan beyond its monthly contributions.
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding
during the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity
shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential
equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are
determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes
effected prior to the approval of the financial statements by the Board of Directors.
1.15 Recent accounting pronouncements
1.15.1 Standards issued but not yet effective
IFRS 15 Revenue from Contract with Customers: In May 2014, the International Accounting Standards Board (IASB) issued IFRS 15, Revenue from Contract with Customers. The
core principle of the new standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration
to which the entity expects to be entitled in exchange for those goods or services. Further the new standard requires enhanced disclosures about the nature, amount, timing and
uncertainty of revenue and cash flows arising from the entitys contracts with customers. The standard permits the use of either the retrospective or cumulative effect transition method.
The effective date for adoption of IFRS 15 is annual periods beginning on or after January 1, 2017, though early adoption is permitted. In September 2015, the IASB issued an
amendment to IFRS 15, deferring the adoption of the standard to periods beginning on or after January 1, 2018 instead of January 1, 2017.
The Group is evaluating the effect of IFRS 15 on the consolidated financial statements including the transition method to be adopted and the related disclosures. The group continues to
evaluate the effect of the standard on ongoing financial reporting.
IFRS 16 Leases : On January, 2016, the International Accounting Standards Board issued the final version of IFRS 16, Leases. IFRS 16 will replace the existing leases Standard, IAS 17
Leases, and related Interpretations. The Standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the
lessee and the lessor. IFRS 16 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months,
unless the underlying asset is of low value. Currently, operating lease expenses are charged to the statement of comprehensive income. The Standard also contains enhanced disclosure
requirements for lessees. IFRS 16 substantially carries forward the lessor accounting requirements in IAS 17.
The effective date for adoption of IFRS 16 is annual periods beginning on or after January 1, 2019, though early adoption is permitted for companies applying IFRS 15 Revenue from
Contracts with Customers. The Group is yet to evaluate the requirements of IFRS 16 and the impact on the consolidated financial statements.
Cash and cash equivalents as of September 30, 2016 and March 31, 2016 include restricted cash and bank balances of `522 crore and `492 crore, respectively. The restrictions
are primarily on account of cash and bank balances held by irrevocable trusts controlled by the Company, bank balances held as margin money deposits against guarantees and
balances held in unpaid dividend bank accounts.
The deposits maintained by the Group with banks and financial institution comprise of time deposits, which can be withdrawn by the Group at any point without prior notice or
penalty on the principal.
The table below provides details of cash and cash equivalents:
(In ` crore)
As of
September 30, 2016
Current Accounts
ANZ Bank, Taiwan
Axis Bank, India
Axis Bank - Unpaid dividend account
Banamex Bank, Mexico
Banamex Bank, Mexico (U.S. Dollar account)
Bank of America, Mexico
Bank of America, USA
Bank Zachodni WBK S.A, Poland
Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan
Barclays Bank, UK
Bank Leumi, Israel (US Dollar account)
Bank Leumi, Israel
BNP Paribas Bank, Norway
China Merchants Bank, China
Citibank N.A, China
Citibank N.A., China (U.S. Dollar account)
Citibank N.A., Costa Rica
Citibank N.A., Australia
Citibank N.A., Brazil
Citibank N.A., Dubai
Citibank N.A., India
Citibank N.A., Japan
Citibank N.A., New Zealand
Citibank N.A., Portugal
Citibank N.A., Singapore
Citibank N.A., South Africa
CitiBank N.A., South Africa (Euro account)
Citibank N.A., Philippines, (U.S. Dollar account)
CitiBank N.A., USA
CitiBank N.A., EEFC (U.S. Dollar account)
Commerzbank, Germany
Crdit Industriel et Commercial Bank, France
Deutsche Bank, India
Deutsche Bank, Philippines
Deutsche Bank, Philippines (U.S. Dollar account)
Deutsche Bank, Poland
Deutsche Bank, Poland (Euro account)
Deutsche Bank, EEFC (Australian Dollar account)
Deutsche Bank, EEFC (Euro account)
Deutsche Bank, EEFC (Swiss Franc account)
Deutsche Bank, EEFC (U.S. Dollar account)
Deutsche Bank, EEFC (United Kingdom Pound Sterling account)
Deutsche Bank, Belgium
Deutsche Bank, Malaysia
Deutsche Bank, Czech Republic
Deutsche Bank, Czech Republic (Euro account)
18
1
2
3
23
857
10
1
12
10
8
2
9
63
47
4
126
24
1
1
18
9
1
6
1
1
109
1
10
9
10
3
12
4
51
28
1
43
7
51
22
-
27
16
19
8
2
4
1
6
37
6
3
3
5
46
4
15
2
13
3
20
3
4
3
38
6
7
4
33
9
5
9
28
1
2,009
Deposit Accounts
Andhra Bank
Axis Bank
Bank BGZ BNP Paribas S.A
Bank of India
Canara Bank
Central Bank of India
Citibank
Corporation Bank
Deutsche Bank, Poland
HDFC Bank
ICICI Bank
IDBI Bank
Indian Overseas Bank
Indusind Bank
Jammu & Kashmir Bank
Kotak Mahindra Bank Limited
National Australia Bank Limited
Oriental Bank of Commerce
Punjab National Bank
South Indian Bank
State Bank of India
Syndicate Bank
Union Bank of India
Vijaya Bank
Yes Bank
868
1,830
193
2,274
1,518
93
1,285
54
1,985
3,758
1,900
1,250
250
25
420
1,967
100
2,350
949
72
304
807
24,252
5,446
25
Total
5,471
31,732
28
10
17
6
2
1
4
1
1
170
1
5
1
72
10
2
3
15
4
5
4
78
8
5
65
19
15
12
2
28
4
23
6
1,999
948
1,340
77
2,247
1,538
128
1,285
237
2,650
4,199
1,900
1,250
250
25
537
1
1,967
18
23
2,367
1,266
140
304
724
25,421
5,277
5,277
32,697
2.2 Investments
The carrying value of the investments are as follows:
(In ` crore)
As of
September 30, 2016
(i) Current
Amortised Cost
Quoted debt securities:
Cost
2,147
68
2,154
75
1,599
1,696
155
147
93
Non-current
Amortised Cost
Quoted debt securities:
Cost
Others:
Fair value
Total investments
Investments carried at amortised cost
Investments carried at fair value thorough other comprehensive income
Investments carried at fair value through profit and loss
30
22
1,931
1,811
4,085
1,886
1,606
1,703
332
115
2,147
68
Details showing the changes in the classification and the corresponding differences in carrying amounts as of the transition date April 1, 2016
(In ` crore)
As per IFRS 9
As per IAS 39
Instrument
Category
(i) Current
Liquid mutual funds
Total
(ii) Non current
Quoted debt securities:
68
7
75
Available for sale
financial assets (1)
68
Carrying value
(1)
1,696
75
Amortized cost
1,599
115
Total
1,811
1,714
Total investments
1,886
1,789
(1)
Details showing the changes in the classification and the corresponding differences in carrying amounts as of the transition date April 1, 2015
(In ` crore)
As per IFRS 9
As per IAS 39
Instrument
Category
(i) Current
Liquid mutual funds
Total
(ii) Non current
Quoted debt securities:
1,344
Amortized cost
Carrying value
842
32
874
1,304
1
Total
1,345
1,305
Total investments
2,219
2,179
(1)
(In ` crore)
Total fair value
Assets:
Cash and cash equivalents (Refer Note 2.1)
31,732
31,732
31,732
1,606
11,571
3,892
3,494
52,295
2,147
87
2,234
177
177
155
2
157
2,147
1,761
177
11,571
3,892
3,494
89
54,863
2,147
2,003 *
177
11,571
3,892
3,494
89
55,105
307
11
2
-
307
2
11
307
2
11
4,926
Total
5,244
83
5,009
5,009
85
5,329
5,329
The carrying value and fair value of financial instruments by categories as of March 31, 2016 were as follows:
Amortised
cost
(In ` crore)
Total fair value
Assets:
Cash and cash equivalents (Refer Note 2.1)
32,697
32,697
32,697
1,703
11,330
3,029
2,601
51,360
68
116
184
115
115
68
1,703
115
11,330
3,029
2,601
116
51,659
68
1,703
115
11,330
3,029
2,601
116
51,659
386
28
4,880
5
117
386
5
28
4,997
386
5
28
4,997
5,294
122
5,416
5,416
Assets
Investments in liquid mutual fund units (Refer Note 2.2)
Investments in quoted debt securities (Refer Note 2.2)
Investments in equity and preference securities (Refer Note 2.2)
Others (Refer Note 2.2)
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts
(In ` crore)
Fair value measurement at end of the reporting period/year using
2,147
2,003
147
Level 1
Level 2
Level 3
2,147
438
-
1,565
-
147
30
30
89
89
83
83
Liabilities
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts
Liability towards contingent consideration (Refer note 2.5)*
During the six months ended September 30, 2016, quoted debt securities of `115 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
*Discounted $14 million (approximately ` 93 crore) at 13.4%
A one percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
Fair value hierarchy of assets and liabilities measured as of March 31, 2016:
(In ` crore)
As of March 31, 2016 Fair value measurement at end of the reporting period/year using
Assets
Investments in liquid mutual fund units (Refer Note 2.2)
Investments in quoted debt securities (Refer Note 2.2)
Investments in equity securities and preference securities(Refer Note 2.2)
Others (Refer Note 2.2)
Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts
Level 1
Level 2
Level 3
68
1,703
93
22
116
68
376
-
1,327
116
93
22
-
117
117
Liabilities
Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts
Liability towards contingent consideration (Refer note 2.5)*
*Discounted $20 million (approximately ` 132 crore) at 13.7%
A one percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
The movement in contingent consideration as of September 30, 2016 from March 31, 2016 is on account of settlement of contingent consideration of `40 crore and change in discount rates and passage of time.
Income from financial assets or liabilities is as follows:
(In ` crore)
Six months ended September 30,
2016
2015
645
651
8
653
20
671
2016
1,296
27
1,323
2015
1,333
44
1,377
Market risk
The Group operates internationally and a major portion of the business is transacted in several currencies and consequently the Group is exposed to foreign exchange risk through its sales and services in the United States
and elsewhere, and purchases from overseas suppliers in various foreign currencies. The Group holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate the risk of changes
in exchange rates on foreign currency exposures. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently,
the results of the Groups operations are adversely affected as the rupee appreciates/ depreciates against these currencies.
The following table analyzes foreign currency risk from financial instruments as of September 30, 2016:
United Kingdom
Pound Sterling
Australian dollars
Other currencies
(In ` crore)
Total
136
1,310
467
49
(21)
(3)
(201)
(89)
(118)
1,530
57
581
440
29
(22)
(153)
(36)
(33)
863
231
630
134
12
(23)
(38)
(185)
(17)
744
609
699
298
87
(118)
(3)
(209)
(131)
(203)
1,029
2,265
11,205
3,730
516
(282)
(11)
(1,440)
(1,045)
(1,086)
13,852
U.S. dollars
Euro
United Kingdom
Pound Sterling
Australian dollars
Other currencies
(In ` crore)
Total
1,124
7,558
1,871
96
(126)
(20)
(788)
(573)
(1,049)
8,093
167
1,280
368
37
(75)
(2)
(152)
(80)
(135)
1,408
202
721
190
26
(73)
(116)
(49)
(32)
869
171
598
114
10
(4)
(35)
(166)
(42)
646
601
696
253
84
(76)
(6)
(219)
(125)
(208)
1,000
2,265
10,853
2,796
253
(354)
(28)
(1,310)
(993)
(1,466)
12,016
U.S. dollars
1,232
7,985
2,391
339
(98)
(5)
(839)
(604)
(715)
9,686
Euro
The following table analyzes foreign currency risk from financial instruments as of March 31, 2016:
For each of the three months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S. dollar, has affected the
Company's incremental operating margins by approximately 0.51%.
For each of the six months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S. dollar, has affected the Company's
incremental operating margins by approximately 0.50%.
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period
and the current reporting period.
As of
March 31, 2016
In million
In ` crore
551
99
55
35
19
3,671
733
478
177
133
510
100
65
55
25
3,379
750
623
281
173
150
25
25
1,000
216
186
6,594
125
-
828
6,034
The Group recognized a net gain on derivative financial instruments of `177 crore and `224 crore during the three months and six months ended September 30, 2016 as against a net loss on derivative financial instruments of
`18 crore and `92 crore during the three months and six months ended September 30, 2015, which are included in other income.
The foreign exchange forward and option contracts mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the
balance sheet date:
(In ` crore)
As of
September 30, 2016
1,178
3,191
2,225
6,594
1,577
3,420
1,037
6,034
During the three months ended September 30, 2016, the group has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash
transactions. Accordingly, the fair value changes of `2 crore was recorded in the other comprehensive income for the three months and six months ended September 30, 2016. The related hedge transactions for balance in cash
flow hedging reserve are expected to occur and reclassified to the statement of comprehensive income within 3 months.
The group offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the group intends either to settle on a net basis, or to realise the asset and
settle the liability simultaneously.
The following table provides quantitative information about offsetting of derivative financial assets and derivative financial liabilities:
As of
September 30, 2016
Derivative financial Derivative financial
asset
liability
Gross amount of recognized financial asset/liability
Amount set off
Net amount presented in balance sheet
90
(1)
89
(3)
1
(2)
(In ` crore)
As of
March 31, 2016
Derivative Derivative financial
financial
liability
asset
124
(8)
116
(13)
8
(5)
Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to
`11,571 crore and `11,330 crore as of September 30, 2016 and March 31, 2016, respectively and unbilled revenue amounting to `3,892 crore and `3,029 crore as of September 30, 2016 and March 31, 2016, respectively.
Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk has always been managed by the group through
credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. On account of adoption of IFRS 9, the
group uses expected credit loss model to assess the impairment loss or gain. The group uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision
matrix takes into account available external and internal credit risk factors such as credit default swap quotes, credit ratings from international credit rating agencies and the Group's historical experience for customers.
The following table gives details in respect of percentage of revenues generated from top customer and top five customers:
(In %)
Three months ended September 30,
2016
Revenue from top customer
Revenue from top five customers
3.5
13.1
3.7
14.0
2016
2015
3.5
13.4
3.7
14.0
Write-offs
Balance at the end
The Companys credit period generally ranges from 30-60 days.
2016
2015
2016
2015
305
(3)
25
(1)
326
367
2
11
380
289
(2)
40
(1)
326
366
7
7
380
Trade receivables
11,571
11,330
Unbilled revenues
3,892
3,029
64
66
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments
primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations, non convertible debentures issued by government aided institutions and certificates of
deposit which are funds deposited at a bank for a specified time period.
Liquidity risk
The Group's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The group has no outstanding bank borrowings. The group believes that the working capital is
sufficient to meet its current requirements.
As of September 30, 2016, the Group had a working capital of `40,714 crore including cash and cash equivalents of `31,732 crore and current investments of `2,154 crore. As of March 31, 2016, the Group had a working
capital of `38,456 crore including cash and cash equivalents of `32,697 crore and current investments of `75 crore.
As of September 30, 2016 and March 31, 2016, the outstanding employee benefit obligations were `1,440 crore and `1,341 crore, respectively, which have been substantially funded. Accordingly, no liquidity risk is
perceived.
The table below provides details regarding the contractual maturities of significant financial liabilities as of September 30, 2016:
Particulars
Trade payables
Client deposits
Other liabilities (excluding liability towards acquisition) (Refer Note 2.5)
Liability towards acquisitions on an undiscounted basis (including contingent
consideration) -Refer Note 2.5
1-2 years
2-4 years
4-7 years
(In ` crore)
Total
307
307
11
11
4,859
48
21
4,928
46
47
93
The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2016:
Less than 1 year
1-2 years
2-4 years
4-7 years
(In ` crore)
Total
Trade payables
386
386
Client deposits
28
28
4,847
25
4,881
86
46
132
Particulars
Current
Rental deposits
19
Security deposits
Loans to employees
Prepaid expenses(1)
13
10
264
303
253
201
1,501
704
1,621
1,799
68
110
1,333
1,238
63
48
Other assets
39
5,171
25
4,448
Non-current
Loans to employees
26
(1)
25
52
62
168
146
81
78
310
333
Prepaid expenses(1)
73
87
Prepaid gratuity(1)
Other assets
719
735
5,890
5,183
3,494
2,601
Withholding taxes and others primarily consist of input tax credits. Other assets primarily represent travel advances and other recoverables. Security deposits relate
principally to leased telephone lines and electricity supplies. Deferred contract costs are upfront cost incurred for the contract and are amortised over the term of the
contract.
Deposit with corporations represents amounts deposited to settle certain employee-related obligations as and when they arise during the normal course of business.
Current
Accrued compensation to employees
2,047
2,265
Accrued expenses
2,487
2,189
1,280
1,296
Retainage
81
80
148
167
Accrued gratuity(1)
44
81
96
6,185
146
6,225
Non-current
Liability towards contingent consideration (Refer note 2.9)
39
36
67
33
45
46
151
115
6,336
6,340
(1)
5,009
4,997
93
132
Accrued expenses primarily relates to cost of technical sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office
maintenance. Others include unpaid dividend balances and capital creditors.
2.6 Provisions
Provisions comprise the following:
(In ` crore)
As of
September 30, 2016
621
621
Provision for post sales client support and other provisions represents cost associated with providing post sales support services which are accrued at the time of recognition of revenues and are expected to
be utilized over a period of 6 months to 1 year. The movement in the provision for post sales client support and other provisions is as follows:
(In ` crore)
Six months ended
September 30,
2016
536
512
110
146
Provision utilized
(18)
(39)
Translation difference
Balance at the end
(7)
621
621
Provision for post sales client support and other provisions is included in cost of sales in the statement of comprehensive income.
As of September 30, 2016 and March 31, 2016, claims against the company, not acknowledged as debts, net of amounts paid (excluding demands from Indian Income tax authorities- Refer note 2.11)
amounted to `280 crore and `277 crore, respectively.
The company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The companys management does not reasonably expect that these legal actions, when
ultimately concluded and determined, will have a material and adverse effect on the companys results of operations or financial condition.
Buildings
Plant and
machinery
Computer equipment
Furniture and
fixtures
Vehicles
Total
1,629
6,361
2,757
4,241
1,494
31
16,513
Additions
63
123
273
91
561
Deletions
(9)
(20)
(3)
(1)
(33)
Translation difference
(2)
(4)
(4)
(10)
1,638
6,424
2,869
4,490
1,578
32
17,031
(23)
(2,258)
(1,695)
(2,766)
(1,029)
(18)
(7,789)
(1)
(58)
(95)
(179)
(48)
(2)
(383)
20
33
(24)
(2,316)
(1,780)
(2,922)
(1,070)
(18)
(8,130)
2,296
1,614
4,108
1,089
1,568
508
14
11,197
2,241
1,606
4,103
1,062
1,475
465
13
10,965
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2015:
(In ` crore)
Land
Buildings
Plant and
machinery
Computer equipment
Furniture and
fixtures
Vehicles
Total
1,580
5,955
2,196
3,647
1,232
35
14,645
Additions
56
94
191
32
384
Deletions
(2)
(241)
(2)
(1)
(246)
Translation difference
(1)
(1)
1,589
6,011
2,287
3,600
1,261
36
14,784
(17)
(2,035)
(1,365)
(2,402)
(868)
(20)
(6,707)
(2)
(54)
(76)
(142)
(37)
(2)
(313)
93
94
Translation difference
(2)
(19)
(2,089)
(1,439)
(2,453)
(902)
(21)
(6,923)
1,825
1,570
3,922
848
1,147
359
15
9,686
1,573
1,563
3,920
831
1,245
364
15
9,511
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2016:
Land
Buildings
Plant and
machinery
Computer equipment
Furniture and
fixtures
Vehicles
Total
1,620
18
6,325
99
2,598
285
4,072
457
1,444
143
29
5
16,088
1,007
Deletions
(12)
(35)
(4)
(2)
(53)
Translation difference
(2)
(4)
(5)
(11)
1,638
6,424
2,869
4,490
1,578
32
17,031
(22)
(2)
(2,201)
(115)
(1,608)
(185)
(2,617)
(343)
(986)
(93)
(17)
(3)
(7,451)
(741)
12
35
53
Translation difference
(24)
(2,316)
(1,780)
(2,922)
(1,070)
(18)
(8,130)
2,296
1,614
4,108
1,089
1,568
508
14
11,197
1,893
1,598
4,124
990
1,455
458
12
10,530
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2015:
Land
Buildings
Total
3,347
Furniture and
fixtures
1,179
Vehicles
5,881
Plant and
machinery
2,104
Computer equipment
1,562
34
14,107
27
130
186
494
79
919
(5)
(254)
(3)
(2)
(264)
11
18
1,589
6,011
2,287
3,600
1,261
36
14,784
(16)
(1,982)
(1,293)
(2,287)
(825)
(19)
(6,422)
(1)
(1)
(2)
(3)
(107)
(148)
(256)
(77)
(3)
(594)
100
106
(19)
(2,089)
(1)
(1,439)
(9)
(2,453)
(1)
(902)
(21)
(11)
(6,923)
1,825
1,570
3,922
848
1,147
359
15
9,686
1,440
1,546
3,899
811
1,060
354
15
9,125
Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 2016:
(In ` crore)
Land
Buildings
Plant and
machinery
Computer equipment
Furniture and
fixtures
Vehicles
Total
1,562
5,881
2,104
3,347
1,179
34
14,107
58
444
499
1,103
265
2,375
Deletions
(8)
(396)
(7)
(12)
(423)
Translation difference
16
25
1,620
6,325
2,598
4,072
1,444
29
16,088
(16)
(1,982)
(1,293)
(2,287)
(825)
(19)
(6,422)
(1)
(1)
(2)
(1,264)
(6)
(219)
(320)
(553)
(161)
(5)
237
255
Translation difference
(1)
(13)
(4)
(18)
(22)
(2,201)
(1,608)
(2,617)
(986)
(17)
(7,451)
1,893
1,598
4,124
990
1,455
458
12
10,530
1,440
1,546
3,899
811
1,060
354
15
9,125
The depreciation expense is included in cost of sales in the consolidated statement of comprehensive income.
Carrying value of land includes `631 crore and `628 crore as of September 30, 2016 and March 31, 2016, respectively, towards amounts paid under certain lease-cum-sale agreements to acquire land including agreements
where the Company has an option to purchase or renew the properties on expiry of the lease period. The contractual commitments for capital expenditure were `1,433 crore and `1,486 crore, as of September 30, 2016 and
March 31, 2016, respectively.
2.8 Goodwill
Following is a summary of changes in the carrying amount of goodwill:
(In ` crore)
As of
September 30, 2016
3,764
7
3,771
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the cash generate units (CGU) or groups of CGUs, which benefit from the synergies of the acquisition. The chief operating
decision maker reviews the goodwill for any impairment at the operating segment level, which is represented through groups of CGUs.
During the year ended March 31, 2016, the Company reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase management oversight. Consequent to
these internal reorganizations there were changes effected in the segments based on the management approach as defined in IFRS 8, Operating Segments. (Refer Note 2.14). Accordingly the goodwill has been allocated to
the new operating segments as at March 31, 2016:
Segment
Financial services
Manufacturing
Retail, Consumer packaged goods and Logistics
Life Sciences, Healthcare and Insurance
Energy & Utilities, Communication and Services
Operating segments without significant goodwill
Total
(In ` crore)
As of
March 31, 2016
851
423
573
656
789
3,292
472
3,764
The entire goodwill relating to Infosys BPOs acquisition of McCamish has been allocated to the groups of CGUs which are represented by the Life Sciences, Healthcare and Insurance segment.
The goodwill relating to Infosys Lodestone, Portland, Panaya and Kallidus d.b.a Skava acquisitions has been allocated to the groups of CGUs which are represented by the entitys operating segment.
The entire goodwill relating to Noah acquisition has been allocated to the group of CGU's which is represented by the Energy & Utilities, Communication and Services segment.
The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization. The value-in-use is determined based on specific
calculations. These calculations use pre-tax cash flow projections over a period of five years. An average of the range of each assumption used is mentioned below. As of March 31, 2016, the estimated recoverable amount of
the CGU exceeded its carrying amount. The recoverable amount was computed based on the fair value being higher than value-in-use and the carrying amount of the CGU was computed by allocating the net assets to
operating segments for the purpose of impairment testing. The key assumptions used for the calculations are as follows:
(in %)
March 31, 2016
Long term growth rate
Operating margins
Discount rate
The above discount rate is based on the Weighted Average Cost of Capital (WACC) of the Company. These estimates are likely to differ from future actual results of operations and cash flows.
8-10
17-20
14.2
On November 16, 2015, Infosys has acquired 100% membership interest in Noah Consulting, LLC (Noah), a leading provider of advanced information management
consulting services for the oil and gas industry. The business acquisition was conducted by entering into a share purchase agreement for cash consideration of $33
million (approximately `216 crore), contingent consideration of upto $5 million (approximately `33 crore on acquisition date) and an additional consideration of upto
$32 million (approximately `212 crore on acquisition date), referred to as retention bonus, payable to the employees of Noah at each anniversary year following the
acquisition date over the next three years, subject to their continuous employment with the group at each anniversary.
This acquisition combines Noahs industry knowledge, information strategy planning, data governance and architecture capabilities with Infosys ability to provide
technology and outsourcing services on a global scale to oil and gas clients. The excess of the purchase consideration paid over the fair value of assets acquired has
been attributed to goodwill.
The purchase price has been allocated based on managements estimates and independent appraisal of fair values as follows:
Component
Net assets(*)
Intangible assets technical know-how
Intangible assets trade name
Intangible assets - customer contracts and relationships
Acquiree's carrying
Fair value adjustments
amount
39
27
27
(in ` crore)
Purchase price
allocated
39
27
27
119
119
39
173
212
30
242
Goodwill
Total purchase price
*Includes cash and cash equivalents acquired of ` 18 crore
Goodwill of `4 crore is tax deductible.
The gross amount of trade receivables acquired and its fair value is `29 crore and the amounts have been largely collected.
The acquisition date fair value of each major class of consideration as of the acquisition date is as follows:
Component
Cash paid
Fair value of contingent consideration
Total purchase price
(in ` crore)
Consideration
216
26
242
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Noah on achievement of certain financial
targets. At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 32% and the probabilities of
achievement of the financial targets. During the year end March 31, 2016, based on an assessment of Noah achieving the targets for the year ending December 31,
2015 and December 31, 2016, the entire contingent consideration has been reversed in the statement of comprehensive income.
The retention bonus is treated as a post-acquisition employee remuneration expense as per IFRS 3R. For the three months and six months ended September 30, 2016,
a post-acquisition employee remuneration expense of `30 crore and `61 crore respectively, has been recorded in the statement of comprehensive income.
The transaction costs of `11 crore related to the acquisition have been included under administrative expenses in the statement of comprehensive income for the year
ended March 31, 2016.
Finacle and Edge Services
On April 24, 2015, the Board of Directors of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, a
wholly owned subsidiary, to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders through postal ballot on June 4, 2015, a
Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business with effect from August 1, 2015. The company has
undertaken an enterprise valuation by an independent valuer and accordingly the business were transferred for a consideration of `3,222 crore and `177 crore for
Finacle and Edge Services, respectively.
The consideration was settled through issue of 85,00,00,000 equity shares amounting to `850 crore and 25,49,00,000 non-convertible redeemable debentures
amounting to `2,549 crore in EdgeVerve, post the requisite approval from shareholders on December 11, 2015. During the six months ended September 30, 2016
EdgeVerve had repaid `270 crore by redeeming proportionate number of debentures
The transfer of assets and liabilities was accounted for at carrying values and did not have any impact on the consolidated financial statements.
Infosys expects to help its clients bring new digital experiences to their customers through IP-led technology offerings, new automation tools and skill and expertise in
these new emerging areas. The excess of the purchase consideration paid over the fair value of assets acquired has been attributed to goodwill.
The purchase price has been allocated based on managements estimates and independent appraisal of fair values as follows:
Component
Acquiree's carrying
Fair value adjustments
amount
(in ` crore)
Purchase price
allocated
35
35
130
130
14
14
175
175
(128)
(128)
35
191
226
Net assets(*)
Goodwill
452
678
(in ` crore)
Consideration
Cash paid
578
100
678
The payment of contingent consideration to sellers of Kallidus is dependent upon the achievement of certain financial targets by Kallidus over a period of 3 years
ending on December 31, 2017.
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Kallidus on achievement of certain financial
targets. At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 14% and the probabilities of
achievement of the financial targets.
During the six months ended September 30, 2016 contingent consideration of `40 crore was paid to the sellers of Kallidus on the achievement of the certain financial
targets. The balance contingent consideration as of September 30, 2016 and March 31, 2016 is `93 crore and `132 crore respectively, on an undiscounted basis.
The transaction costs of `12 crore related to the acquisition have been included under administrative expenses in the statement of comprehensive income for the year
ended March 31, 2016.
2011 RSU Plan (the 2011 Plan) now called 2015 Stock Incentive Compensation Plan ( the 2015 Plan): The Company had a 2011 RSU Plan which provided for the grant of restricted
stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended the establishment of the 2011 Plan to the shareholders on August 30, 2011 and the
shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the
plan was 1,13,34,400 as on date of approval of plan adjusted for bonus shares and the plan was expected to continue in effect for a term of 10 years from the date of initial grant under the
plan. Awards have been granted to the Dr Vishal Sikka under the 2011 RSU plan as detailed below. Further the Company has earmarked 1,00,000 equity shares for welfare activities of the
employees, approved by the shareholders vide postal ballot which ended on March 31, 2016. The equity shares as of March 31, 2016 held under this plan, i.e. 1,12,23,576 equity shares (this
includes the aggregate number of equity shares that may be awarded under the 2011 Plan as reduced by 10,824 equity shares already exercised by Dr. Vishal Sikka and 1,00,000 equity
shares which have been earmarked for welfare activities of the employees) have been subsumed under the 2015 Plan.
During the year ended March 31, 2015, the company made a grant of 108,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Officer and Managing
Director. The Board in its meeting held on June 22, 2015, on recommendation of Nomination and Remuneration Committee, further granted 1,24,061 RSUs to Dr. Vishal Sikka. These
RSUs are vesting over a period of four years from the date of the grant in the proportions specified in the award agreement. The RSUs will vest subject to achievement of certain key
performance indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
The award granted to Dr. Vishal Sikka on June 22, 2015 was modified by the Nomination and remuneration committee on April 14, 2016. There is no modification or change in the total
number of RSUs granted or the vesting period (which is four years). The modifications relate to the criteria of vesting for each of the years. Based on the modification, the first tranche of
the RSUs will vest subject to achievement of certain key performance indicators for the year ended March 31, 2016. Subsequent vesting of RSU's for each of the remaining years would be
subject to continued employment.
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2016 is set out
below:
Particulars
Shares arising out of Weighted average Shares arising out of Weighted average
options exercise price (`)
options exercise price (`)
209,099
1,512,895
12,650
18,236
1,691,108
-
5
5
5
5
5
-
221,505
1,512,895
12,650
30,642
1,691,108
-
5
5
5
5
5
-
Particulars
Shares arising out of Weighted average Shares arising out of Weighted average
options exercise price ($)
options exercise price ($)
391,420
10,120
381,300
-
0.07
0.07
0.07
-
391,420
10,120
381,300
-
0.07
0.07
0.07
-
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2015 is set out
below:
Particulars
Shares arising out of Weighted average Shares arising out of Weighted average
options
exercise price
options
exercise price
5
5
5
5
-
During the three months and six months ended September 30, 2015, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was `1,092/-
The weighted average remaining contractual life of RSUs outstanding as of September 30, 2016 and March 31, 2016 under the 2015 Plan was 2.27 years and 1.98 years respectively.
The fair value of each equity settled RSU is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
Particulars
Fiscal 2017Equity Shares
Grant date
Weighted average share price (`) / ($- ADS)*
Exercise price (`)/ ($- ADS)*
Expected volatility (%)
Expected life of the option (years)
Expected dividends (%)
Risk-free interest rate (%)
Weighted average fair value as on grant date (`) / ($- ADS)*
1-Aug-16
1,085
5.00
25-29
1-4
2.37
6- 7
1,019
22-Jun-15
1,024
5.00
28-36
1-4
2.43
7- 8
948
The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the RSU.
Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares during a period
equivalent to the expected term of the RSU.
During the three months and six months ended September 30, 2016 and September 30, 2015, the company recorded an employee stock compensation expense of `21 crore and `2 crore and
`30 crore and `4 crore, respectively in the statement of profit and loss. The cash settled stock compensation expense during each of the three months and six months ended September 30,
2016 was less than `1 crore.
Current taxes
Domestic taxes
Foreign taxes
Deferred taxes
Domestic taxes
Foreign taxes
Income tax expense
2016
2015
2016
2015
1,106
363
1,469
1,124
317
1,441
2,201
735
2,936
2,025
549
2,574
(2)
(7)
(9)
1,460
(4)
(50)
(54)
1,387
(31)
(83)
(114)
2,822
41
(53)
(12)
2,562
Income tax expense for the three months ended September 30, 2016 and September 30, 2015 includes reversals (net of provisions) of `17 crore and `30 crore, respectively, pertaining to
earlier periods. Income tax expense for the six months ended September 30, 2016 and September 30, 2015 includes reversal (net of provisions) of `9 crore and `113 crore, respectively,
pertaining to earlier periods.
Entire deferred income tax for the three months and six months ended September 30, 2016 and September 30, 2015 relates to origination and reversal of temporary differences.
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized below:
(In ` crore)
Six months ended September 30,
2016
5,066
2015
4,785
2016
9,863
2015
8,991
34.61%
34.61%
34.61%
34.61%
1,753
1,656
3,414
3,111
(523)
(483)
(1,007)
(877)
Overseas taxes
225
183
415
332
(17)
(30)
(9)
(113)
(17)
(16)
(45)
(34)
56
53
13
14
14
16
(8)
65
24
140
(16)
(12)
(30)
(26)
(7)
(9)
1,460
1,387
2,822
2,562
During the six months ended September 30, 2016 and September 30, 2015, the Group has claimed weighted tax deduction on eligible research and development expenditure based on the
approval received from Department of Scientific and Industrial Research (DSIR) which is valid upto 31st March 2017. The weighted tax deduction is equal to 200% of such expenditure
incurred.
The foreign tax expense is due to income taxes payable overseas, principally in the United States. In India, the company has benefited from certain tax incentives that the Government of
India has provided to the export of software for the units registered under the Special Economic Zones Act, 2005 (SEZ). SEZ units which began the provision of services on or after April
1, 2005 are eligible for a deduction of 100 percent of profits or gains derived from the export of services for the first five years from the financial year in which the unit commenced the
provision of services and 50 percent of such profits or gains for further five years. Up to 50% of such profits or gains is also available for a further five years subject to creation of a Special
Economic Zone Reinvestment Reserve out of the profit for the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of
its business as per the provisions of the Income Tax Act, 1961.
As of September 30, 2016 and March 31, 2016, claims against the group not acknowledged as debts from the Indian Income tax authorities (net of amount paid to statutory authorities of
`4,383 crore and `4,383 crore) amounted to `7 crore and `7 crore, respectively.
Payment of `4,383 crore (`4,383 crore) includes demands from the Indian Income tax authorities of `4,135 crore (`4,135 crore), including interest of `1,224 crore (`1,224 crore) upon
completion of their tax assessment for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011. These demands were paid to statutory tax authorities. The company has filed an
appeal with the income tax appellate authorities.
Demand for fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the income Tax Act as determined by
the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total
turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011 also includes disallowance of portion of profit earned outside India from the STP units under section
10A of the Income Tax Act and disallowance of profits earned from SEZ units under section 10AA of the Income Tax Act. The matters for fiscal 2007, fiscal 2008 and fiscal 2009 are
pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscal 2010 and fiscal 2011 is pending before Honble Income Tax Appellate Tribunal (ITAT)
Bangalore.
The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. The management believes that
the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.
2.12 Reconciliation of basic and diluted shares used in computing earnings per share
The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:
Three months ended September 30,
Basic earnings per equity share - weighted average number of equity shares
outstanding
(2)
2016
228,56,41,710
2015
228,56,14,029
2016
228,56,32,081
2015
228,56,12,157
307,593
228,59,49,303
99,013
228,57,13,042
243,907
228,58,75,988
84,521
228,56,96,678
For the three months and six months ended September 30, 2016 and September 30, 2015, respectively, there were no outstanding options to purchase equity shares which had an antidilutive effect.
2.13 Related party transactions
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Transactions with key management personnel
The table below describes the compensation to key management personnel which comprise directors and executive officers:
Three months ended September 30,
Salaries and other employee benefits to whole-time directors and executive officers(1)
Commission and other benefits to non-executive/independent directors
Total
2016
14
3
17
2015
6
3
9
(In ` crore)
Six months ended September 30,
2016
35
6
41
2015
28
5
33
Includes stock compensation expense of ` 5 crore and ` 2 crore, and ` 14 crore and ` 4 crore for the three months and six months ended September 30, 2016 and September 30, 2015,
respectively
(1)
IFRS 8 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas,
and major customers. The Group's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. During the quarter ended
March 31, 2016, the Group reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase management oversight
consequent to which, erstwhile manufacturing segment is now being reviewed as Hi-Tech, Manufacturing and others included in ECS. Additionally, Infosys Public services (IPS) is being
reviewed separately by the Chief Operating Decision Maker (CODM). Consequent to the internal reorganizations, there were changes effected in the reportable business segments based on
the "management approach" as defined in IFRS 8, Operating Segments. The CODM evaluates the Group's performance and allocates resources based on an analysis of various performance
indicators by business segments and geographic segments. Accordingly, information has been presented both along business segments and geographic segments. The accounting principles
used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual segments, and are as set out in the significant accounting policies.
Business segments of the Group are primarily enterprises in Financial Services (FS), enterprises in Manufacturing (MFG), enterprises in Retail, Consumer packaged goods and Logistics
(RCL), enterprises in the Energy & utilities, Communication and Services (ECS), enterprises in Hi-tech (Hi-TECH), enterprises in Life Sciences, Healthcare and Insurance (HILIFE) and all
other segments. The FS reportable segments has been aggregated to include the Financial Services operating segment and the Finacle operating segment. All other segments represents the
operating segments of businesses in India, Japan and China and IPS. Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and
off-shore locations. North America comprises the United States of America, Canada and Mexico, Europe includes continental Europe (both the east and the west), Ireland and the United
Kingdom, and the Rest of the World comprising all other places except those mentioned above and India. Consequent to the above changes in the composition of reportable business
segments, the prior period comparatives have been restated.
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Revenue for all other segments
represents revenue generated by IPS and revenue generated from customers located in India, Japan and China. Allocated expenses of segments include expenses incurred for rendering
services from the Company's offshore software development centres and on-site expenses, which are categorized in relation to the associated turnover of the segment. Certain expenses such
as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying assets are used interchangeably. Management
believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted
against the total income of the Group.
Assets and liabilities used in the Group's business are not identified to any of the reportable segments, as these are used interchangeably between segments. Management believes that it is
currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
Geographical information on revenue and business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise
recognized.
Allocated expenses
Segment profit
FS
MFG
ECS
RCL
HILIFE
Hi-TECH
(In ` crore)
Total
4,686
1,853
3,864
2,833
2,089
1,339
646
17,310
4,243
1,827
3,336
2,582
2,036
1,214
397
15,635
2,373
961
1,861
1,361
1,055
692
375
8,678
1,965
1,012
1,514
1,218
953
561
232
7,455
1,018
423
881
646
476
305
148
3,897
1,011
451
824
638
503
300
99
3,826
1,295
469
1,122
826
558
342
123
4,735
1,267
364
998
726
580
353
66
4,354
426
Unallocable expenses
361
4,309
Operating profit
3,993
760
793
(3)
(1)
5,066
4,785
1,460
1,387
3,606
Net profit
3,398
424
358
2
Six months ended September 30, 2016 and September 30, 2015
(In ` crore)
Particulars
Revenues
Allocated expenses
Segment profit
Unallocable expenses
FS
MFG
ECS
RCL
HILIFE
Hi-TECH
Total
9,237
3,696
7,583
5,694
4,093
2,661
1,127
34,091
8,125
3,444
6,502
4,923
3,906
2,365
724
29,989
4,611
1,910
3,618
2,731
2,054
1,375
720
17,019
3,878
1,891
2,958
2,342
1,891
1,163
487
14,610
2,065
866
1,776
1,335
959
624
263
7,888
1,907
844
1,593
1,206
957
579
177
7,263
2,561
920
2,189
1,628
1,080
662
144
9,184
2,340
709
1,951
1,375
1,058
623
60
8,116
829
675
Operating profit
8,355
7,441
1,513
1,551
(5)
(1)
9,863
8,991
2,822
2,562
Net profit
7,041
6,429
824
671
5
4
Allocated expenses
Segment profit
North America
Europe
India
(In ` crore)
Total
10,641
3,896
587
2,186
17,310
9,891
3,580
360
1,804
15,635
5,444
1,956
250
1,028
8,678
4,803
1,742
87
823
7,455
2,423
885
123
466
3,897
2,442
881
79
424
3,826
2,774
1,055
214
692
4,735
2,646
957
194
557
4,354
426
Unallocable expenses
361
4,309
Operating profit
3,993
760
793
(3)
(1)
5,066
4,785
1,460
1,387
3,606
Net profit
3,398
424
358
2
Six months ended September 30, 2016 and September 30, 2015
Particulars
Revenues
Allocated expenses
Segment profit
North America
(In ` crore)
Total
Europe
India
21,041
7,764
1,045
4,241
34,091
18,965
6,800
678
3,546
29,989
10,780
3,801
498
1,940
17,019
9,392
3,351
323
1,544
14,610
4,926
1,813
217
932
7,888
4,643
1,659
142
819
7,263
5,335
2,150
330
1,369
9,184
4,930
1,790
213
1,183
8,116
Unallocable expenses
829
675
Operating profit
8,355
7,441
1,513
1,551
(5)
(1)
9,863
8,991
2,822
2,562
Net profit
7,041
6,429
824
671
5
4
2016
8,564
424
386
187
7
194
940
78
61
85
30
6
10,962
2015
7,544
64
358
434
179
8
174
858
59
42
33
(34)
5
9,724
(In ` crore)
Six months ended September 30,
2016
16,850
824
952
370
14
287
1,857
151
115
162
51
10
21,643
2015
14,689
124
671
835
367
12
287
1,607
113
90
86
(43)
9
18,847
2016
692
82
81
17
5
12
8
897
2015
670
86
61
11
5
13
(3)
843
(In ` crore)
Six months ended September 30,
2016
1,353
184
197
31
9
24
19
1,817
2015
1,295
169
135
21
9
27
7
1,663
Administrative expenses
(In ` crore)
Six months ended September 30,
2016
2015
727
628
320
314
471
380
124
112
132
124
124
133
44
7
80
62
24
28
49
34
6
5
102
104
73
107
2,276
2,038
2.16 Dividends
The Company declares and pays dividends in Indian rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to
applicable distribution taxes.
The amount of per share dividend recognized as distributions to equity shareholders for the six months ended September 30, 2016 and September 30, 2015 was `14.25/and `29.50/-(not adjusted for June 17, 2015 bonus issue) respectively.
The Board of Directors in their meeting on October 14, 2016 declared an interim dividend of `11/- per equity share which would result in a net cash outflow of
approximately `3,029 crore, (excluding dividend paid on treasury shares) inclusive of corporate dividend tax.
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
Partner
R. Seshasayee
U. B. Pravin Rao
Chairman
Managing Director
Whole-time Director
Bangalore
Roopa Kudva
M. D. Ranganath
A.G.S Manikantha
Director
Company Secretary
In ` crore
April 1, 2015
8,901
1,067
3,771
904
99
8,637
960
3,764
985
103
7,685
776
3,091
638
93
2.6
2.7
2.8
2.17
2.17
2.11
1,931
26
302
628
5,248
1,620
24,497
1,714
25
286
536
5,230
1,357
23,597
1,305
31
173
536
4,089
698
19,115
2.6
2.9
2.10
2.7
2.8
2.11
2,154
11,571
31,732
264
6,883
2,005
54,609
79,106
75
11,330
32,697
303
5,190
2,158
51,753
75,350
874
9,713
30,367
222
4,527
1,541
47,244
66,359
2.13
1,144
63,681
64,825
64,825
1,144
60,600
61,744
61,744
572
54,198
54,770
54,770
2.14
2.17
2.15
106
235
45
386
69
252
46
367
159
47
206
307
6,356
2,760
621
3,851
13,895
79,106
386
6,302
2,629
512
3,410
13,239
75,350
140
5,983
1,964
478
2,818
11,383
66,359
Note
2.4
2.5
2.5
2.25
Current assets
Financial Assets:
Investments
Trade receivables
Cash and cash equivalents
Loans
Other financial assets
Other Current Assets
Total current assets
Total assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity attributable to equity holders of the Company
Non-controlling interests
Total equity
Liabilities
Non-current liabilities
Financial Liabilities
Other financial liabilities
Deferred tax liabilities (net)
Other non-current liabilities
Total non-current liabilities
Current liabilities
Financial Liabilities
Trade payables
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
Total current liabilities
Total equity and liabilities
2.14
2.15
2.16
2.17
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
for and on behalf of the Board of Directors of Infosys Limited
for B S R & Co. LLP
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
Partner
Membership No. 205385
Bangalore
October 14, 2016
R. Seshasayee
Chairman
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
U. B. Pravin Rao
Chief Operating Officer and
Whole-time Director
A.G.S Manikantha
Company Secretary
2.18
2.19
Total income
17,310
760
15,635
793
34,091
1,513
29,989
1,549
18,070
16,428
35,604
31,538
9,648
8,558
18,930
16,612
Expenses
Employee benefit expenses
2.20
64
940
858
1,857
1,608
520
582
1,260
1,137
381
354
657
666
Communication expenses
136
111
256
223
165
184
340
353
424
358
824
671
2.20
787
573
1,612
1,154
13,001
11,642
25,736
22,548
5,069
4,786
9,868
8,990
(3)
5,066
(1)
4,785
(5)
9,863
(1)
8,989
2.17
1,469
1,441
2,936
2,574
2.17
(9)
3,606
(54)
3,398
(114)
7,041
(12)
6,427
(40)
(7)
(57)
(14)
(40)
(7)
(57)
(14)
(51)
62
(13)
206
(49)
62
(11)
206
(89)
55
(68)
192
Travel expenses
Cost of software packages and others
2.20
124
2.12
3,517
3,453
6,973
6,619
3,606
-
3,398
-
7,041
-
6,427
-
3,606
3,398
7,041
6,427
3,517
3,453
6,973
6,619
Non-controlling interests
3,517
3,453
6,973
6,619
Basic (`)
15.77
14.87
30.81
28.12
Diluted (`)
15.77
14.87
30.80
28.12
Weighted average equity shares used in computing earnings per equity share
2.23
Basic
228,56,41,710
228,56,14,029 228,56,32,081
228,56,12,157
Diluted
228,59,49,303
228,57,13,042 228,58,75,988
228,56,96,678
The accompanying notes form an integral part of the consolidated interim financial statements
As per our report of even date attached
for B S R & Co. LLP
Chartered Accountants
Firm's Registration Number:101248W/W-100022
Supreet Sachdev
R.Seshasayee
U. B. Pravin Rao
Partner
Chairman
Managing Director
Whole-time Director
Bangalore
Roopa Kudva
M. D. Ranganath
A.G.S Manikantha
Director
Company Secretary
OTHER EQUITY
RESERVES & SURPLUS
Securities
premium
reserve
Retained
earnings
572
2,784
41,606
572
(572)
(1,217)
Equity
Share
capital #
54
General
reserve
9,336
Share
Options
Outstandin
g Account
Special
Economic
Zone Reinvestment
reserve (1)
Other
Equity
Exchange
Cash flow Other items of
other
reserves(2) instruments differences on hedge reserve
comprehensive
through translating the
income
Other
financial
comprehens statements of
ive income
a foreign
operation
4
411
Total equity
attributable to
equity holders of
the Company
54,770
572
(572)
1,217
(265)
265
265
(265)
(14)
(14)
(4,061)
(4,061)
6,427
6,427
207
618
1,144
Capital
reserve
2,212
42,755
54
10,553
207
(13)
57,333
Particulars
RESERVES & SURPLUS
Capital General
Share
reserve
reserve
Options
Outstandin
g Account
Securities
premium
reserve
Retained
earnings
2,213
47,063
(3,923)
(1,579)
(551)
551
Equity
Share
capital #
1,144
54
10,553
Total equity
attributable to
equity holders of
the Company
61,744
30
30
(3)
(3,923)
1,579
551
(551)
(57)
(57)
54
Special
Economic
Zone Reinvestment
reserve (1)
12,132
35
(13)
702
2
7,041
(68)
(13)
64,825
The Special Economic Zone Re-investment Reserve has been created out of the profit of eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Company for
acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961.
(2)
Under the Swiss Code of Obligation, few subsidiaries of Infosys Lodestone are required to appropriate a certain percentage of the annual profit to legal reserve which 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.
The accompanying notes form an integral part of the consolidated interim financial statements.
As per our report of even date attached
for and on behalf of the Board of Directors of Infosys Limited
for B S R & Co. LLP
Chartered Accountants
Firms Registration No : 101248W/W-100022
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer and
Whole-time Director
Bangalore
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
In ` crore
Six months ended September 30,
2016
2015
7,041
6,427
2,822
824
(1,324)
40
27
205
2,562
671
(1,375)
7
50
124
79
(1,145)
95
(78)
223
8,730
(2,499)
6,231
(1,231)
(717)
(33)
1,325
7,889
(2,862)
5,027
(1,469)
(1,268)
Loans to employees
Deposits placed with corporation
38
(6)
(85)
585
(24)
391
(36)
(549)
-
(54)
(5)
(20,217)
(154)
(8)
(22)
(201)
(13,664)
(15)
4
18,159
(3,242)
13,932
33
(1,393)
(3,910)
(3,910)
(921)
32,697
(44)
31,732
(4,061)
(4,061)
(427)
30,367
6
29,946
522
382
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
Bangalore
October 14, 2016
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
A.G.S Manikantha
Company Secretary
The company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The company has its primary listings on the BSE
Limited and National Stock Exchange in India. The companys American Depositary Shares representing equity shares are also listed on the New York Stock Exchange (NYSE), Euronext
London and Euronext Paris.
The Group's consolidated financial statements are approved for issue by the company's Board of Directors on October 14, 2016
1.2 Basis of preparation of financial statements
These consolidated financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain
financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 ('Act') (to the extent notified) and guidelines issued by the Securities and Exchange Board
of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting
Standards) Amendment Rules, 2016.
The Group has adopted all the Ind AS standards and the adoptions was carried out in accordance with Ind AS 101 - First time adoption of Indian Accounting Standards. The transition was
carried out from Indian Accounting Principles generally accepted in India as prescribed under Sec 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP),
which was the previous GAAP. Reconciliations and descriptions of the effect of the transition has been summarized in Note 2.1 and 2.2
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in
the accounting policy hitherto in use.
These consolidated financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain
financial instruments which are measured at fair values, the provisio
As the quarter and year-to-date figures are taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported for the previous
quarters might not always add up to the year-to-date figures reported in this statement
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the company, its controlled trusts and its subsidiaries as
disclosed in Note 2.25. Control exists when the parent has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect
those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity's
returns. Subsidiaries are consolidated from the date control commences until the date control ceases.
The financial statements of the Group companies are consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions are
eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group. Non-controlling interests which represent part of the net
profit or loss and net assets of subsidiaries that are not, directly or indirectly, owned or controlled by the company, are excluded.
Associates are entities over which the group has significant influence but not control. Investments in associates are accounted for using the equity method of accounting. The investment is
initially recognized at cost, and the carrying amount is increased or decreased to recognize the investors share of the profit or loss of the investee after the acquisition date. The groups
investment in associates includes goodwill identified on acquisition.
1.4 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions
affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and
the use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates could change from period to period. Actual results could differ from those
estimates. Appropriate changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the
financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the consolidated financial statements.
1.5 Critical accounting estimates
a. Revenue recognition
The group uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the group to estimate the efforts or
costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct
relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the
expected contract estimates at the reporting date.
b. Income taxes
The company's two major tax jurisdictions are India and the U.S., though the company also files tax returns in other overseas jurisdictions. Significant judgments are involved in determining
the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. Also refer to Note 2.17.
22-25 years
5 years
5 years
3-5 years
5 years
5 years
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of
assets not put to use before such date are disclosed under Capital work-in-progress. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is
probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net
profit in the statement of profit and loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the
resultant gains or losses are recognized in the statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
The group recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair
value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial
assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted
for at trade date.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds
the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable
amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior years.
1.14 Provisions
A provision is recognized if, as a result of a past event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time
value of money and the risks specific to the liability.
a. Post sales client support
The group provides its clients with a fixed-period post sales support for corrections of errors and support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support
services are accrued at the time related revenues are recorded and included in cost of sales. The group estimates such costs based on historical experience and estimates are reviewed on a
periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations
under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract.
Before a provision is established the Group recognizes any impairment loss on the assets associated with that contract.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate in effect at the
balance sheet date.
1.16 Earnings per equity share
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during
the period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares
considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity
shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding
equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined
independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes
effected prior to the approval of the financial statements by the Board of Directors.
1.17 Income taxes
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid
to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets and liabilities
are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements except when the deferred income tax
arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of
the transaction. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to
taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is
recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that
future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed earnings
of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The group offsets current tax assets and current
tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability
simultaneously. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are credited to share premium.
1.18 Employee benefits
1.18.1 Gratuity
The Group provides for gratuity, a defined benefit retirement plan ('the Gratuity Plan') covering eligible employees of Infosys and its Indian subsidiaries. The Gratuity Plan provides a lumpsum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary and the tenure of employment
with the Group.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The
company fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). In case of Infosys BPO and EdgeVerve, contributions are made to the
Infosys BPO's Employees' Gratuity Fund Trust and EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts and
contributions are invested in a scheme with Life Insurance Corporation of India as permitted by law of India.
The Group recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit
liability/(asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to
measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments are recognized in net profits in the statement of profit and loss.
1.18.2 Superannuation
Certain employees of Infosys, Infosys BPO and EdgeVerve are participants in a defined contribution plan. The Group has no further obligations to the Plan beyond its monthly contributions
which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
Notes to the consolidated financial statements for the three months and six months ended September 30, 2016
2.1
2.1.1
Note
(a)
(a)
(b)
(c)
(b)
(g)
(d)
(c)
(e)
(d)
(e)
(f)
7,685
776
3,595
66
93
(504)
572
-
1,305
31
173
536
4,089
698
19,047
7,685
776
3,091
638
93
7,861
1,008
4,265
67
96
68
1,305
31
173
536
4,089
698
19,115
1,538
42
222
513
4,693
1,200
21,505
872
9,713
30,367
222
4,527
1,541
47,242
66,289
2
2
70
874
9,713
30,367
222
4,527
1,541
47,244
66,359
572
50,164
50,736
50,736
4,034
4,034
4,034
50
50
140
6,021
1,968
4,556
2,818
15,503
66,289
(597)
850
-
In ` crore
Balance Sheet as at March 31, 2016
Effects of
Ind AS
transition to IndIGAAP
AS
253
7,861
1,008
3,668
917
96
1,538
42
222
513
4,693
1,200
21,758
8,637
960
4,476
67
103
(712)
918
-
8,637
960
3,764
985
103
1,714
25
286
533
5,230
1,357
23,388
3
209
1,714
25
286
536
5,230
1,357
23,597
582
10,397
29,946
217
6,219
1,774
49,135
70,640
253
582
10,397
29,946
217
6,219
1,774
49,135
70,893
75
11,330
32,697
303
5,190
2,158
51,753
75,141
209
75
11,330
32,697
303
5,190
2,158
51,753
75,350
572
54,198
54,770
54,770
1,144
53,411
54,555
54,555
2,778
2,778
2,778
1,144
56,189
57,333
57,333
1,144
56,682
57,826
57,826
3,918
3,918
3,918
1,144
60,600
61,744
61,744
159
(3)
156
159
47
206
102
49
151
(22)
277
(2)
253
80
277
47
404
80
46
126
(11)
252
241
69
252
46
367
(38)
(4)
(4,078)
(4,120)
70
140
5,983
1,964
478
2,818
11,383
66,359
110
7,171
5,100
435
3,118
15,934
70,640
(9)
(2,769)
(2,778)
253
110
7,162
2,331
435
3,118
13,156
70,893
386
6,309
2,633
4,451
3,410
17,189
75,141
(7)
(4)
(3,939)
(3,950)
209
386
6,302
2,629
512
3,410
13,239
75,350
Explanations for Reconciliation of Balance Sheet as previously reported under IGAAP to IND AS
(a) Goodwill and Intangible assets
Intangible assets and deferred tax asset/liabilities in relation to business combinations which were included within Goodwill under IGAAP, have been recognized separately under Ind-AS with corresponding adjustments to retained earnings and
other comprehensive income for giving effect of amortisation expenses and exchange gains and losses.
(b) Investments
Tax free bonds are carried at amortised cost both under Ind AS and IGAAP. Investment in equity instruments are carried at fair value through OCI in Ind AS compared to being carried at cost under IGAAP.
(c) Deferred taxes
Deferred taxes in relation to business combinations have been recognised under Ind-AS
(d) Other financial Liabilities
Adjustments includes impact of discounting the deferred and contingent consideration payable for acquisitions under Ind AS
(e) Other liabilities
Adjustments that reflect unamortised negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 - Employee Benefits requires such gains and losses to be adjusted to retained earnings. Also reflects
adjustments for interim dividend (including corporate dividend tax), declared and approved by the board, post reporting period.
(f) Provisions
Adjustments reflect final dividend (including corporate dividend tax), declared and approved post reporting period.
(g) Other Equity
1. Adjustments to retained earnings and other comprehensive income has been made in accordance with Ind AS, for the above mentioned line items.
2. In addition, as per Ind-AS 19, actuarial gain and losses are recognized in other comprehensive income as compared to being recognized in the Statement of Profit and Loss under IGAAP.
Particulars
Note
in ` crore
Year ended March 31, 2016
Effects of
Ind AS
transition to IndIGAAP
AS
62,441
62,441
3,128
(5)
3,123
16,428
31,537
31,538
65,569
(5)
65,564
(9)
8,558
16,629
(17)
16,612
34,418
(12)
34,406
64
91
124
110
Expenses
Employee benefit expenses
(h)
8,567
(i)
46
18
33
39
149
858
858
1,608
1,608
3,531
3,531
Travel expenses
582
582
1,137
1,137
2,263
2,263
354
354
666
666
1,274
1,274
Communication expenses
111
111
223
223
449
449
184
184
353
353
779
358
595
671
1,266
(j)
Other expenses
(i)
Total expenses
PROFIT BEFORE MINORITY INTEREST / SHARE IN NET
PROFIT / (LOSS) OF ASSOCIATE
Share in net profit/(loss) of associate
PROFIT BEFORE TAX
313
45
76
779
193
1,459
569
573
1,150
1,154
2,497
14
2,511
11,584
58
11,642
22,452
96
22,548
46,587
234
46,821
4,843
(57)
4,786
9,085
(95)
8,990
18,982
(239)
18,743
(1)
4,842
(57)
(1)
4,785
(1)
9,084
(95)
(1)
8,989
(3)
18,979
(239)
(3)
18,740
1,441
2,570
2,574
5,315
Tax expense:
Current tax
(k)
Deferred tax
(l)
1,439
(41)
3,444
(h)
(m)
18
18
18
(13)
(46)
(54)
3,398
(7)
(7)
-
(21)
(12)
6,505
(78)
(14)
(14)
(14)
(14)
6,427
(14)
3
(53)
5,318
(67)
13,678
(189)
13,489
(12)
(12)
(12)
(12)
(7)
(7)
44
44
37
62
62
55
57
57
57
149
149
135
206
206
192
81
81
81
222
222
210
303
303
291
3,462
(9)
3,453
6,562
57
6,619
13,759
21
13,780
3,444
3,444
(46)
(46)
3,398
(78)
(78)
6,427
6,427
13,678
13,678
(189)
(189)
13,489
3,398
6,505
6,505
(9)
3,453
6,562
57
6,619
13,759
21
13,780
(9)
3,453
6,562
57
6,619
13,759
21
13,780
13,489
3,462
Non-controlling interests
3,462
Explanations for Reconciliation of Profit and loss as previously reported under IGAAP to IND AS
(h) 1. As per Ind-AS 19, actuarial gain and losses are recognized in other comprehensive income and not reclassified to profit and loss in a subsequent period.
2. Adjustments reflect unamortised negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained earnings.
(i) Adjustments reflect impact of discounting pertaining to deferred and contingent consideration payable for business combinations
(j) Adjustment reflects impact of amortisation of intangible assets included within goodwill under the IGAAP, separately recognized under Ind-AS
(k) Tax component on actuarial gains and losses which was transferred to other comprehensive income under Ind AS
(l) The reduction in deferred tax expense is on account of reversal of deferred tax liabilities recorded on intangible assets acquired in business combination.
(m) Under Ind-AS, exchange differences on translation of foreign operations are recorded in other comprehensive income.
2.2.3 Cash flow statement
There were no significant reconciliation items between cash flows prepared under IGAAP and those prepared under Ind AS.
Component
(*)
Net assets
Intangible assets technical know-how
Intangible assets trade name
Intangible assets - customer contracts and relationships
Acquiree's
carrying
39
39
Fair value
adjustments
-
(in ` crore)
Purchase price
allocated
39
27
27
119
173
27
27
119
212
30
242
Goodwill
Total purchase price
*Includes cash and cash equivalents acquired of ` 18 crore
Goodwill of `4 crore is tax deductible.
The gross amount of trade receivables acquired and its fair value is `29 crore and the amounts have been largely collected.
The acquisition date fair value of each major class of consideration as of the acquisition date is as follows:
Component
Cash paid
(in ` crore)
Consideration
216
26
242
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Noah on achievement of
certain financial targets. At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate
of 32% and the probabilities of achievement of the financial targets. During the year ended March 31, 2016, based on an assessment of Noah
achieving the targets for the year ended December 31, 2015 and year ending December 31, 2016, the entire contingent consideration was
reversed in the statement of profit and loss.
The retention bonus is treated as a post-acquisition employee remuneration expense as per Ind AS 103. Post-acquisition employee remuneration
expense of `30 crore and `61 crore has been recorded in the statement of profit and loss for the three months and six months ended September
30, 2016.
The transaction costs of `11 crore related to the acquisition was recognised under consultancy and professional charges and employee benefit
costs in the statement of profit and loss for the year ended March 31, 2016.
Finacle and Edge Services
On April 24, 2015, the Board of Directors of Infosys authorized the Company to execute a Business Transfer Agreement and related documents
with EdgeVerve, a wholly owned subsidiary, to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders
through postal ballot on June 4, 2015, a Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the
business with effect from August 1, 2015. The company had undertaken an enterprise valuation by an independent valuer and accordingly the
business were transferred for a consideration of `3,222 crore and `177 crore for Finacle and Edge Services, respectively.
The consideration was settled through issue of 85,00,00,000 equity shares amounting to `850 crore and 25,49,00,000 non-convertible redeemable
debentures amounting to `2,549 crore in EdgeVerve, post the requisite approval from shareholders on December 11, 2015. During the six months
ended September 30, 2016, EdgeVerve had repaid `270 crore by redeeming proportionate number of debentures.
The transfer of assets and liabilities was accounted for at carrying values and did not have any impact on the consolidated financial statements.
Fair value
adjustments
(in ` crore)
Purchase price
allocated
35
130
130
14
14
175
175
(128)
(128)
35
191
226
Component
Net assets
(*)
Goodwill
452
678
(in ` crore)
Consideration
578
100
678
The payment of contingent consideration to sellers of Kallidus is dependent upon the achievement of certain financial targets by Kallidus over a
period of 3 years ending on December 31, 2017.
The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Kallidus on achievement of
certain financial targets. At acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate
of 14% and the probabilities of achievement of the financial targets.
During the six months ended September 30, 2016 contingent consideration of `40 crore was paid to the sellers of Kallidus on the achievement of
certain financial targets. The balance contingent consideration as of September 30, 2016 and March 31, 2016 is `93 crore and `132 crore,
respectively, on an undiscounted basis.
The transaction costs of `12 crore related to the acquisition have been included under consultancy and professional charges and employee benefit
costs in the statement of profit and loss for the year ended March 31, 2016.
Panaya
On March 5, 2015, Infosys acquired 100% of the voting interests in Panaya Inc. (Panaya), a Delaware Corporation in the United States. Panaya is
a leading provider of automation technology for large scale enterprise and software management. The business acquisition was conducted by
entering into a share purchase agreement for cash consideration of `1,398 crore.
Panayas CloudQuality suite positions Infosys to bring automation to several of its service lines via an agile SaaS model, and helps mitigate
risk, reduce costs and shorten time to market for clients. The excess of the purchase consideration paid over the fair value of net assets acquired
has been attributed to goodwill.
The purchase price has been allocated based on Managements estimates and independent appraisal of fair values as follows:
(In ` crore)
Component
Acquiree's
carrying
amount
9
Fair value
adjustments
38
38
243
243
21
21
82
82
26
26
(99)
(99)
47
273
Goodwill
320
1,078
1,398
Plant and
machinery
Office Computer
Equipment equipment
976
9
655
-
6,361
63
1,872
74
885
49
4,240
273
1,494
91
31
2
16,514
561
(9)
(20)
(3)
(1)
(33)
(1)
(2)
(4)
(4)
(11)
985
655
6,424
1,945
923
4,489
1,578
32
17,031
(23)
(1)
(2,258)
(58)
(1,161)
(64)
(535)
(31)
(2,767)
(179)
(1,029)
(48)
(17)
(2)
(7,790)
(383)
9
1
20
4
3
4
1
-
33
10
Translation difference
Gross carrying value as of September 30, 2016
(24)
(2,316)
(1,224)
(556)
(2,922)
(1,070)
(18)
(8,130)
985
631
4,108
721
367
1,567
508
14
8,901
976
632
4,103
711
350
1,473
465
14
8,724
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2015:
LandLand- Buildings
(1)
Freehold Leasehold
Gross carrying value as of July 1, 2015
Additions
Deletions
Translation difference
Gross carrying value as of September 30, 2015
Accumulated depreciation as of July 1, 2015
Depreciation
Accumulated depreciation on deletions
Translation difference
Accumulated depreciation as of September 30,
2015
Carrying value as of September 30, 2015
Carrying value as of July 1, 2015
949
9
-
633
Plant and
machinery
Office Computer
Equipment equipment
5,955
56
-
1,492
53
(1)
703
41
(2)
-
3,647
191
(241)
3
1,229
32
(2)
2
35
2
(1)
-
14,643
384
(246)
4
958
633
6,011
1,544
742
3,600
1,261
36
14,785
(17)
(2)
(19)
(2,035)
(54)
(2,089)
(932)
(51)
1
(982)
(432)
(25)
1
(1)
(457)
(2,402)
(142)
93
(2)
(2,453)
(867)
(37)
1
(903)
(20)
(2)
1
(21)
(6,705)
(313)
94
(6,924)
958
949
614
616
3,922
3,920
562
560
285
271
1,147
1,245
358
362
15
15
7,861
7,938
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2016:
LandLand- Buildings
(1)
Freehold Leasehold
Gross carrying value as of April 1, 2016
Additions
Deletions
Plant and
machinery
Office Computer
Equipment equipment
972
13
650
5
6,325
99
1,759
188
839
97
4,072
457
1,444
143
29
5
16,090
1,007
(1)
(11)
(35)
(4)
(2)
(53)
(1)
(2)
(5)
(5)
(13)
985
655
6,424
1,945
923
4,489
1,578
32
17,031
(22)
(2)
(2,201)
(115)
(1,100)
(126)
(509)
(59)
(2,618)
(343)
(986)
(93)
(17)
(3)
(7,453)
(741)
1
1
11
1
35
4
4
5
2
-
53
11
Translation difference
Gross carrying value as of September 30, 2016
(24)
(2,316)
(1,224)
(556)
(2,922)
(1,070)
(18)
(8,130)
985
631
4,108
721
367
1,567
508
14
8,901
972
628
4,124
659
330
1,454
458
12
8,637
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2015:
LandLand- Buildings
(1)
Freehold Leasehold
Plant and
machinery
Office Computer
Equipment equipment
931
-
633
-
5,881
-
1,427
-
Additions
27
130
117
69
494
79
919
Deletions
(5)
(254)
(3)
(2)
(264)
676
1
3,347
2
34
-
14,108
4
11
18
958
633
6,011
1,544
742
3,600
1,261
36
14,785
(16)
-
(1,982)
-
(881)
-
(412)
(1)
(2,287)
(1)
(826)
-
(19)
-
(6,423)
(2)
Depreciation
Accumulated depreciation on deletions
Translation difference
Accumulated depreciation as of September 30,
2015
Carrying value as of September 30, 2015
(3)
(19)
(107)
(2,089)
(101)
(982)
(47)
4
(1)
(457)
(256)
100
(9)
(2,453)
(77)
1
(1)
(903)
(3)
1
(21)
(594)
106
(11)
(6,924)
958
614
3,922
562
285
1,147
358
15
7,861
931
617
3,899
546
264
1,060
353
15
7,685
Translation difference
Gross carrying value as of September 30, 2015
Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 2016:
LandLand- Buildings
(1)
Freehold Leasehold
Plant and
machinery
Office Computer
Equipment equipment
931
41
-
633
17
-
5,881
444
-
1,427
333
(1)
-
676
1
166
(6)
2
3,347
2
1,103
(396)
16
1,179
1
265
(8)
7
34
6
(12)
1
972
650
6,325
1,759
839
4,072
1,444
29
14,108
4
2,375
(423)
26
16,090
(16)
(6)
(22)
(1,982)
(219)
(2,201)
(881)
(220)
1
(1,100)
(412)
(1)
(100)
5
(1)
(509)
(2,287)
(1)
(553)
237
(14)
(2,618)
(826)
(161)
4
(3)
(986)
(19)
(5)
7
(17)
(6,423)
(2)
(1,264)
254
(18)
(7,453)
972
628
4,124
659
330
1,454
458
12
8,637
931
617
3,899
546
264
1,060
353
15
7,685
Notes:
(1)
Buildings include ` 250/- being the value of 5 shares of ` 50/- each in Mittal Towers Premises Co-operative Society Limited.
Gross carrying value of lease hold land represents amounts paid under certain lease-cum-sale agreements to acquire land including agreements where the Company has an option to purchase or
renew the properties on expiry of the lease period.
The aggregate depreciation has been included under depreciation and amortisation expense in the consolidated statement of profit and loss.
September 30,
2016
March 31,
2016
3,764
7
3,771
3,091
452
30
191
3,764
For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the cash generate units (CGU) or groups of CGUs, which benefit from the synergies of the
acquisition. The chief operating decision maker reviews the goodwill for any impairment at the operating segment level, which is represented through groups of CGUs.
The following table gives the break up of allocation of goodwill to operating segments as at April 1, 2015
In ` crore
As at
April 1, 2015
663
367
656
318
141
473
193
280
3,091
Segment
Financial services
Insurance
Manufacturing
Energy, Communication and Services
Resources and utilities
Retail, Consumer packaged goods and Logistics
Life Sciences and Healthcare
Growth Markets
Total
During the year ended March 31, 2016, the Company reorganized some of its segments to enhance executive customer relationships, improve focus of sales investments and increase
management oversight. Consequent to these internal reorganizations there were changes effected in the segments based on the management approach as defined in Ind AS 108, Operating
Segments. Accordingly the goodwill has been allocated to the new operating segments as at March 31, 2016.
(In ` crore)
Segment
As of
March 31, 2016
Financial services
Manufacturing
Retail, Consumer packaged goods and Logistics
Life Sciences, Healthcare and Insurance
Energy & Utilities, Communication and Services
851
423
573
656
789
3,292
472
3,764
The entire goodwill relating to Infosys BPOs acquisition of McCamish has been allocated to the groups of CGUs which are represented by the Life Sciences, Healthcare and Insurance
segment.
The goodwill relating to Infosys Lodestone, Portland, Panaya and Kallidus d.b.a Skava has been allocated to the groups of CGUs which are represented by the entitys operating segment.
The entire goodwill relating to Noah acquisition has been allocated to the group of CGU's which is represented by the Energy & Utilities, Communication and Services segment.
The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization. The value-in-use is
determined based on specific calculations. These calculations use pre-tax cash flow projections for a CGU / groups of CGU's over a period of five years. An average of the range of each
assumption used is mentioned below. As of March 31, 2016 and April 1, 2015 the estimated recoverable amount of the CGU exceeded its carrying amount. The recoverable amount was
computed based on the fair value less cost to sell being higher than value-in-use. The carrying amount of the CGU was computed by allocating the net assets to operating segments for the
purpose of impairment testing. The key assumptions used for the calculations are as follows:
(in %)
As of
March 31, 2016 April 1, 2015
Long term growth rate
Operating margins
Discount rate
8-10
17-20
14.2
8-10
17-20
13.9
The above discount rate is based on the Weighted Average Cost of Capital (WACC) of the Company. These estimates are likely to differ from future actual results of operations and cash flows.
Following are the changes in the carrying value of acquired intangible assets for the three months ended September 30, 2016:
Customer
related
Software
Sub- Intellectual
related contracting
property
rights rights related
related
Others
In ` crore
Total
1,458
-
784
-
422
-
21
-
1
-
72
-
94
-
64
-
(9)
(6)
(1)
(1)
(1) -
775
(329)
(22)
416
(74)
(11)
21
(21)
-
1
(1)
-
71
(6)
(1)
93
(42)
(3)
63
(27)
(4)
18
1,440
(500)
(41)
(348)
(83)
(21)
(1)
(7)
(45)
(31)
(536)
455
348
66
52
37
958
427
333
64
48
32
904
3-10
1-7
8-10
7-9
50
45
3-10
2-9
3-5
2-5
Others
In ` crore
Total
35
1
1,241
(10)
17
Following are the changes in the carrying value of acquired intangible assets for the three months ended September 30, 2015:
Customer
related
640
4
644
Software
Sub- Intellectual
related contracting
property
rights rights related
related
396
12
408
21
-
11
(10)
-
72
1
73
66
(1)
21
65
36
1,248
(187)
(30)
-
(29)
(10)
(1)
(21)
-
(11)
10
-
(5)
(1)
-
(32)
(1)
2
(12)
(3)
-
(297)
(45)
10
1
(217)
(40)
(21)
(1)
(6)
(31)
(15)
(331)
453
367
67
34
23
944
427
368
67
34
21
917
Others
In ` crore
Total
Following are the changes in the carrying value of acquired intangible assets for the six months ended September 30, 2016:
Customer
related
Software
Sub- Intellectual
related contracting
property
rights rights related
related
775
-
414
-
21
-
1
-
72
-
93
-
63
-
1,439
-
(1)
775
(303)
(45)
416
(62)
(22)
21
(21)
-
1
(1)
-
71
(6)
(1)
93
(38)
(7)
63
(23)
(8)
1,440
(454)
(83)
(348)
(83)
(21)
(1)
(7)
(45)
(31)
(536)
472
352
66
55
40
985
427
333
64
48
32
904
3-10
1-7
8-10
7-9
50
45
3-10
2-9
3-5
2-5
Following are the changes in the carrying value of acquired intangible assets for the six months ended September 30, 2015:
Customer
related
Software
Sub- Intellectual
related contracting
property
rights rights related
related
Others
In ` crore
Total
448
175
261
130
21
-
11
-
71
-
49
14
34
-
895
319
21
17
(10)
-
(10)
44
21
36
1,248
(162)
(50)
(5)
644
408
(21)
(18)
(1)
(21)
-
(11)
10
-
73
(5)
(1)
-
(28)
(2)
(1)
65
(9)
(6)
-
(257)
(77)
10
(7)
(217)
(40)
(21)
(1)
(6)
(31)
(15)
(331)
286
240
66
21
25
638
427
368
67
34
21
917
Others
In ` crore
Total
Following are the changes in the carrying value of acquired intangible assets for the year ended March 31, 2016:
Customer
related
Software
Sub- Intellectual
related contracting
property
rights rights related
related
448
294
261
130
21
-
11
-
71
-
49
41
34
27
895
492
Additions
Deletions
Translation difference
Gross carrying value as of March 31, 2016
Accumulated amortization as of April 1, 2015
Amortization expense
Deletions during the period
Translation differences
Accumulated amortization as of March 31, 2016
Carrying value as of April 1, 2015
Carrying value as of March 31, 2016
33
2
21
(10)
-
2
(10)
60
775
(162)
(132)
(9)
414
(21)
(40)
(1)
21
(21)
-
1
(11)
10
-
72
(5)
(1)
-
93
(28)
(9)
(1)
63
(9)
(13)
(1)
1,439
(257)
(195)
10
(12)
(303)
286
472
(62)
240
352
(21)
-
(1)
-
(6)
66
66
(38)
21
55
(23)
25
40
(454)
638
985
3-10
1-7
8-10
7-9
50
45
3-10
2-9
3-5
2-5
The amortization expense has been included under depreciation and amortisation expense in the consolidated statement of profit and loss.
Research and development expense recognized in net profit in the consolidated statement of profit and loss account for the three months and six months ended September 30, 2016 and
September 30, 2015 is `198 crore and `173 crore and `382 crore and `333 crore, respectively
2.6 INVESTMENTS
in ` crore
Particulars
September 30, 2016
Non-current
Unquoted
Investments carried at fair value through other comprehensive income (refer note 2.6.1 )
Preference securities
Equity instruments
Others
Quoted
Investment carried at amortized cost (refer note 2.6.2)
Tax free bonds
Government Bonds
Investments carried at fair value through other comprehensive income (refer note 2.6.4 )
Non convertible debentures
As at
March 31, 2016
146
1
30
177
92
1
22
115
1,599
1,599
1,599
1,599
155
155
April 1, 2015
1
1
1,300
4
1,304
1,931
1,714
1,305
2,147
2,147
68
68
842
842
7
7
7
7
\
-
32
32
2,154
75
874
Total investments
4,085
1,789
2,179
1,761
2,003
2,423
6
1,606
1,703
286
6
1,336
1,376
936
6
1,606
332
2,147
1,606
115
68
1,304
1
874
Particulars
Preference securities
Airviz Inc.
2,82,279 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each
ANSR Consulting
52,631 (52,631) Series A Preferred Stock, fully paid up, par value USD 0.001 each
Whoop Inc
16,48,352 (16,48,352) Series B Preferred Stock, fully paid up, par value USD 0.0001 each
CloudEndure Ltd.
12,79,645 (12,79,645) Preferred Series B Shares, fully paid up, par value ILS 0.01 each
Nivetti Systems Private Limited
2,28,501 (2,28,501) Preferred Stock, fully paid up, par value `1 each
Waterline Data Science, Inc
39,33,910 (39,33,910) Preferred Series B Shares, fully paid up, par value USD 0.00001 each
Trifacta Inc.
11,80,358 (Nil) Preferred Stock
Cloudyn Software Ltd
27,022 (Nil) Preferred Series B-3 shares, fully paid up, par value ILS 0.01 each
Equity Instrument
OnMobile Systems Inc., USA
21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid up, par value USD 0.001 each
Merasport Technologies Private Limited
2,420 (2,420) equity shares at ` 8,052/- each, fully paid up, par value `10/- each
Global Innovation and Technology Alliance
15,000 (15,000) equity shares at `1,000/- each, fully paid up, par value `1,000/- each
Others
Vertex Ventures US Fund L.L.P
13
13
20
20
27
13
10
10
27
27
26
14
30
177
22
115
The balances held in government bonds as at September 30, 2016 and March 31, 2016 is as follows:
Particulars
Face Value
PHP
Fixed Rate Treasury Notes 1.62 PCT MAT DATE 7 SEPT 2016
100
Fixed Rate Treasury Notes 2.20 PCT MAT DATE 25 APR 2016
100
Fixed Rate Treasury Notes 1.00 PCT MAT DATE 25 APR 2016
100
Treasury Notes PHY6972FWG18 MAT Date 22 Feb 2017
100
Treasury Notes PHY6972FWQ99 MAT Date 07 June 2017
100
Treasury Notes PHY6972FWG18 MAT Date 22 Feb 2017
100
5
2
7
2
7
2.7
50
53
52
155
LOANS
in ` crore
Particulars
September 30, 2016
Non Current
Unsecured, considered good
Other loans
Loans to employees
Unsecured, considered doubtful
Loans to employees
Less: Allowance for doubtful loans to employees
Current
Unsecured, considered good
Other loans
Loans to employees
Total Loans
As at
March 31, 2016
April 1, 2015
26
26
25
25
31
31
22
48
22
26
19
44
19
25
12
43
12
31
264
264
303
303
222
222
290
328
253
2.8
Particulars
September 30, 2016
Non Current
Security deposits (1)
Rental deposits (1)
Restricted deposits(1)
Others (1)
As at
March 31, 2016
April 1, 2015
81
168
52
1
302
78
146
62
286
68
47
58
173
10
19
1,333
3,892
1,501
89
39
6,883
7
13
1,238
3,029
762
116
25
5,190
4
24
1,100
2,845
444
101
9
4,527
7,185
5,476
4,700
(1)
7,096
2
87
5,360
116
4,599
101
Current
Security deposits (1)
Rental deposits (1)
Restricted deposits (1)
Unbilled revenues (1)
Interest accrued but not due (1)
Foreign currency forward and options contracts (2) (3)
Others (1)
Restricted deposits represents deposits with financial institutions to settle employee-related obligations as and when they arise during the normal course of business.
Other assets primarily represent travel advances and other recoverables.
2.9
TRADE RECEIVABLES
in ` crore
As at
Particulars
Current
Unsecured
Considered good
Considered doubtful
Less: Allowances for credit loss
11,571
203
11,774
203
11,571
April 1, 2015
11,330
289
11,619
289
11,330
9,713
366
10,079
366
9,713
2.10
Particulars
September 30, 2016
Balances with banks
In current and deposit accounts
Cash on hand
Others
Deposits with financial institutions
Balances with banks in unpaid dividend accounts
Deposit with more than 12 months maturity
Balances with banks held as margin money deposits against
guarantees
As at
March 31, 2016
April 1, 2015
26,261
-
27,420
-
26,195
-
5,471
31,732
18
436
5,277
32,697
5
404
4,172
30,367
3
311
359
342
185
Cash and cash equivalents as of September 30, 2016, March 31, 2016 and April 1, 2015 include restricted cash and bank balances
of `522 crore, `492 crore and `364 crore, respectively. The restrictions are primarily on account of cash and bank balances held
by irrevocable trusts controlled by the Company, bank balances held as margin money deposits against guarantees and balances
held in unpaid dividend accounts.
The deposits maintained by the Group with banks and financial institutions comprise of time deposits, which can be withdrawn by
the Group at any point without prior notice or penalty on the principal.
The details of balances as on Balance Sheet dates with banks are as follows:
Particulars
Current accounts
ANZ Bank, Taiwan
Axis Bank, India
Banamex Bank, Mexico
Banamex Bank, Mexico (U.S. Dollar account)
Bank of America, Mexico
Bank of America, USA
Bank Zachodni WBK S.A, Poland
Bank of Tokyo-Mitsubishi UFJ, Ltd., Japan
Barclays Bank, UK
Bank Leumi, Israel (US Dollar account)
Bank Leumi, Israel
BNP Paribas Bank, Norway
China Merchants Bank, China
Citibank N.A, China
Citibank N.A., China (U.S. Dollar account)
Citibank N.A., Costa Rica
Citibank N.A., Australia
Citibank N.A., Brazil
Citibank N.A., Dubai
Citibank N.A., India
Citibank N.A., Japan
Citibank N.A., New Zealand
Citibank N.A., Portugal
Citibank N.A., Singapore
Citibank N.A., South Africa
Citibank N.A., South Africa (Euro account)
Citibank N.A., Philippines, (U.S. Dollar account)
Citibank N.A., USA
Citibank N.A., EEFC (U.S. Dollar account)
Commerzbank, Germany
Crdit Industriel et Commercial Bank, France
Deutsche Bank, India
Deutsche Bank, Philippines
Deutsche Bank, Philippines (U.S. Dollar account)
Deutsche Bank, Poland
Deutsche Bank, Poland (Euro account)
Deutsche Bank, EEFC (Australian Dollar account)
Deutsche Bank, EEFC (Euro account)
Deutsche Bank, EEFC (Swiss Franc account)
Deutsche Bank, EEFC (U.S. Dollar account)
Deutsche Bank, EEFC (United Kingdom Pound Sterling account)
Deutsche Bank, Belgium
Deutsche Bank, Malaysia
in ` crore
As at
September 30, 2016
18
1
3
23
857
10
1
12
10
8
2
9
63
47
4
126
24
1
1
18
9
1
6
1
1
109
1
10
9
10
3
12
4
51
28
1
43
7
51
-
13
1
5
3
21
681
3
1
19
17
10
8
65
72
2
72
5
1
1
15
6
2
3
5
1
1
60
19
4
8
13
1
5
2
32
5
96
9
59
9
Particulars
Deposit accounts
Andhra Bank
Axis Bank
Bank BGZ BNP Paribas S.A
Bank of India
Canara Bank
Central Bank of India
Citibank
Corporation Bank
Deutsche Bank, Poland
HDFC Bank
ICICI Bank
IDBI Bank
Indian Overseas Bank
Indusind Bank
Jammu & Kashmir Bank
Kotak Mahindra Bank Limited
National Australia Bank Limited
Oriental Bank of Commerce
Punjab National Bank
South Indian Bank
State Bank of India
Syndicate Bank
Union Bank of India
Vijaya Bank
Yes Bank
Unpaid dividend accounts
Axis Bank - Unpaid dividend account
HDFC Bank - Unpaid dividend account
ICICI Bank - Unpaid dividend account
Margin money deposits against guarantees
Canara Bank
Citibank
ICICI Bank
State Bank of India
Deposits with financial institutions
HDFC Limited
Bajaj Finance Limited
22
27
16
19
8
2
4
1
6
37
6
3
5
46
4
15
2
3
20
3
4
3
38
6
7
4
33
9
5
9
28
1
1,991
14
1
28
10
17
6
2
1
4
1
1
170
5
1
72
10
3
15
4
5
4
78
8
5
65
19
15
12
2
28
4
23
6
1,994
in ` crore
As at
September 30, 2016
March 31, 2016
868
1,830
193
2,115
1,518
90
1,285
54
1,985
3,600
1,900
1,250
250
25
420
1,967
100
2,311
949
72
304
807
23,893
948
1,340
77
2,115
1,538
125
1,285
237
2,650
4,049
1,900
1,250
250
25
537
1
1,967
18
23
2,310
1,266
140
304
724
25,079
2
3
13
18
2
1
2
5
159
3
158
39
359
132
3
150
57
342
5,446
25
5,471
5,277
5,277
31,732
32,697
2.11
OTHER ASSETS
in ` crore
Particulars
September 30, 2016
Non Current
Capital advances
Advances other than capital advances
Prepaid gratuity (refer note 2.22.1 )
Deferred Contract Cost
Prepaid expenses
Current
Advances other than capital advances
Payment to vendors for supply of goods
Others
Withholding taxes and others
Prepaid expenses
Deferred Contract Cost
Total Other Assets
As at
March 31, 2016
April 1, 2015
1,229
933
664
8
310
73
1,620
4
333
87
1,357
27
7
698
68
110
79
1,621
253
63
2,005
1,799
201
48
2,158
1,364
98
1,541
3,625
3,515
2,239
Deferred contract costs are upfront costs incurred for the contract and are amortized over the term of the contract. Withholding
taxes and others primarily consist of input tax credits.
Assets:
Cash and cash equivalents (Refer Note 2.10)
Investments (Refer Note 2.6)
Equity , preference and other securities
Tax free bonds and government bonds
Liquid mutual fund units
Non convertible debentures
Trade receivables (Refer Note 2.9)
Loans (Refer Note 2.7)
Other financials assets (Refer Note 2.8)
Total
Liabilities:
Trade payables
Other financial liabilities (Refer Note 2.14)
Total
(In ` crore)
Financial assets/ liabilities at fair
Financial assets/liabilities at fair value Total carrying value Total fair value
value through profit or loss
through OCI
Designated upon
Mandatory Equity instruments
Mandatory
initial recognition
designated upon
initial recognition
31,732
31,732
31,732
1,606
11,571
290
7,096
52,295
2,147
87
2,234
177
177
155
2
157
177
1,606
2,147
155
11,571
290
7,185
54,863
177
1,848 *
2,147
155
11,571
290
7,185
55,105
307
4,937
5,244
85
85
307
5,022
5,329
307
5,022
5,329
The carrying value and fair value of financial instruments by categories as of March 31, 2016 were as follows:
Amortised cost
Assets:
Cash and cash equivalents (Refer Note 2.10)
Investments (Refer Note 2.6)
Equity , preference and other securities
Tax free bonds and government bonds
Liquid mutual fund units
Trade receivables (Refer Note 2.9)
Loans (Refer Note 2.7)
Other financials assets (Refer Note 2.8)
Total
Liabilities:
Trade payables
Other financial liabilities (Refer Note 2.14)
Total
(In ` crore)
Financial assets/ liabilities at fair
Financial assets/liabilities at fair value Total carrying value Total fair value
value through profit or loss
through OCI
Designated upon
Mandatory Equity instruments
Mandatory
initial recognition
designated upon
initial recognition
32,697
32,697
32,697
1,606
11,330
328
5,360
51,321
68
116
184
115
115
115
1,606
68
11,330
328
5,476
51,620
115
1,703 *
68
11,330
328
5,476
51,717
386
4,908
122
386
5,030
386
5,030
5,294
122
5,416
5,416
The carrying value and fair value of financial instruments by categories as of April 1, 2015 were as follows:
Amortised cost
Assets:
Cash and cash equivalents (Refer Note 2.10)
Investments (Refer Note 2.6)
Equity , preference and other securities
Tax free bonds and government bonds
Liquid mutual fund units
Fixed maturity plans
Trade receivables (Refer Note 2.9)
Loans (Refer Note 2.7)
Other financials assets (Refer Note 2.8)
Total
Liabilities:
Trade payables
Other financial liabilities (Refer Note 2.14)
Total
* Changes in fair values including interest accrued
(In ` crore)
Total carrying value Total fair value
Mandatory
30,367
30,367
30,367
1,304
9,713
253
4,599
46,236
842
32
101
975
1
1
1
1,304
842
32
9,713
253
4,700
47,212
1
1,344 *
842
32
9,713
253
4,700
47,252
140
4,911
5,051
3
3
140
4,914
5,054
140
4,914
5,054
As of September
30, 2016
Assets
Investments in liquid mutual fund units (Refer Note 2.6)
2,147
2,147
1,841
276
1,565
1
146
146
155
155
30
30
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8)
89
89
83
83
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14)
Liability towards contingent consideration (Refer note 2.14)*
*Discounted $14 million (approximately ` 93 crore) at 13.4%
During the six months ended September 30, 2016, tax free bonds of `115 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market
observable inputs
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:
(In ` crore)
As of March 31,
2016
Assets
Investments in liquid mutual fund units (Refer Note 2.6)
Investments in bonds (Refer Note 2.6)
Investments in government bonds (Refer Note 2.6)
Investments in equity instruments (Refer Note 2.6)
Investments in preference securities (Refer Note 2.6)
Others (Refer Note 2.6)
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8)
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14)
Liability towards contingent consideration (Refer note 2.14)*
*Discounted $20 million (approximately ` 132 crore) at 13.7%
Level 2
Level 3
68
1,696
7
1
92
22
116
68
369
7
-
1,327
116
1
92
22
-
5
117
5
-
117
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of April 1, 2015:
(In ` crore)
As of April 1, 2015 Fair value measurement at end of the reporting period/year
using
Level 1
Level 2
Level 3
Assets
Investments in liquid mutual fund units (Refer Note 2.6)
Investments in fixed maturity plan securities (Refer Note 2.6)
Investments in bonds (Refer Note 2.6)
Investments in government bonds (Refer Note 2.6)
Investments in equity instruments (Refer Note 2.6)
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.8)
842
842
32
32
1,340
604
736
101
101
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.14)
A one percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
The movement in contingent consideration as of September 30, 2016 from March 31, 2016 is on account of settlement of contingent consideration of `40 crores and change in discount rate
and passage of time.
The fair value of liquid mutual funds is based on quoted price. The fair value of tax free bonds and government bonds is based on quoted prices and market observable inputs. The fair value is
of non-convertible debentures is based on quoted prices. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are
directly or indirectly observable in the marketplace.
Australian dollars
Other currencies
(In ` crore)
Total
136
1,310
516
(21)
(411)
1,530
57
581
469
(22)
(222)
863
231
630
146
(23)
(240)
744
609
699
385
(118)
(546)
1,029
2,265
11,205
4,246
(282)
(3,582)
13,852
U.S. dollars
Euro
United Kingdom
Pound Sterling
Australian dollars
Other currencies
(In ` crore)
Total
1,124
7,558
1,967
(126)
(2430)
8,093
167
1,280
405
(75)
(369)
1,408
202
721
216
(73)
(197)
869
171
598
124
(4)
(243)
646
601
696
337
(76)
(558)
1,000
2,265
10,853
3,049
(354)
(3,797)
12,016
U.S. dollars
Euro
1,232
7,985
2,730
(98)
(2163)
9,686
The following table analyzes foreign exchange risk from financial instruments as of March 31, 2016:
For each of the three months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S.
dollar, has affected the Company's incremental operating margins by approximately 0.51%.
For each of the six months ended September 30, 2016 and September 30, 2015, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and U.S.
dollar, has affected the Company's incremental operating margins by approximately 0.50%.
Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the
previous reporting period and the current reporting period.
Derivative financial instruments
The Group holds derivative financial instruments such as foreign currency forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are
directly or indirectly observable in the marketplace.
The following table gives details in respect of outstanding foreign currency forward and option contracts:
As of
September 30, 2016
In million
In ` crore
Forward contracts
In U.S. dollars
In Euro
In United Kingdom Pound Sterling
In Australian dollars
In Swiss Franc
Option Contracts
In U.S. dollars
In GBP
In EUR
Total forwards and options
As of
#
#
In million
In ` crore
551
99
55
35
19
3,671
733
478
177
133
510
100
65
55
25
3,379
750
623
281
173
150
25
25
1000
216
186
6,594
125
-
828
6,034
The foreign exchange forward and option contracts mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the
remaining period as of the balance sheet date:
(In ` crore)
As of
September 30, 2016 March 31, 2016
Not later than one month
Later than one month and not later than three
months
Later
than three months and not later than one
year
1,178
3,191
2,225
6,594
1,577
3,420
1,037
6,034
During the three months ended September 30, 2016, the group has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on
highly probable forecast cash transactions. Accordingly, the fair value changes of `2 crore was recorded in the other comprehensive income for the three months and six months ended September
30, 2016. The related hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to the statement of profit or loss within 3 months.
The group offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the group intends either to settle on a net basis,
or to realise the asset and settle the liability simultaneously.
The following table provides quantitative information about offsetting of derivative financial assets and derivative financial liabilities:
(In ` crore)
As of
As of
Derivative
financial asset
Derivative financial
liability
Derivative
financial
asset
Derivative
financial
liability
90
(1)
(3)
1
124
(8)
(13)
8
89
(2)
116
(5)
Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade
receivables amounting to `11,571 crore and `11,330 crore as of September 30, 2016 and March 31, 2016, respectively and unbilled revenue amounting to `3,892 crore and `3,029 crore as of
September 30, 2016 and March 31, 2016, respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in
the United States. Credit risk has always been managed by the group through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to
which the Group grants credit terms in the normal course of business. On account of adoption of Ind AS 109, the group uses expected credit loss model to assess the impairment loss or gain.
The group uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and
internal credit risk factors such as credit default swap quotes, credit ratings from international credit rating agencies and the Group's historical experience for customers.
The following table gives details in respect of percentage of revenues generated from top customer and top five customers:
(In %)
Six months ended September 30,
2016
2015
2016
2015
3.5
13.1
3.7
14.0
3.5
13.4
3.7
14.0
2016
2015
2016
2015
305
25
367
11
289
40
366
7
(1)
(3)
326
2
380
(1)
(2)
326
7
380
11,571
3,892
64
11,330
3,029
66
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit
rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations, non convertible debentures
issued by government aided institutions and certificates of deposit which are funds deposited at a bank for a specified time period.
Liquidity risk
The Group's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group has no outstanding bank borrowings. The Group
believes that the working capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of September 30, 2016, the Group had a working capital of `40,714 crore including cash and cash equivalents of `31,732 crore and current investments of `2,154 crore. As of March 31,
2016, the Group had a working capital of `38,514 crore including cash and cash equivalents of `32,697 crore and current investments of `75 crore.
As of September 30, 2016 and March 31, 2016, the outstanding employee benefit obligations were `1,440 crore and `1,341 crore, respectively, which have been substantially funded.
Accordingly no liquidity risk is perceived.
The table below provides details regarding the contractual maturities of significant financial liabilities as of September 30, 2016:
Particulars
Trade payables
Other financial liabilities (excluding liability towards acquisition) (Refer Note 2.14)
Liability towards acquisitions on an undiscounted basis (including contingent
consideration) -Refer Note 2.14
1-2 years
2-4 years
4-7 years
(In ` crore)
Total
307
307
4,870
48
21
4,939
46
47
93
1-2 years
2-4 years
4-7 years
(In ` crore)
Total
The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2016:
Particulars
Trade payables
Other financial liabilities (excluding liability towards acquisition) (Refer Note 2.14)
Liability towards acquisitions on an undiscounted basis (including contingent
consideration) -Refer Note 2.14
386
4,875
25
4,909
86
46
132
2.13
EQUITY
SHARE CAPITAL
Particulars
Authorized
Equity shares, `5/- par value
(3)
240,00,00,000 (240,00,00,000 ) equity shares
1,200
1,200
600
1,144
1,144
572
1,144
1,144
572
(1)
(2)
(3)
The Company has only one class of shares referred to as equity shares having a par value of `5/-. Each holder of equity shares is entitled to one vote per share. The equity
shares represented by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying equity
share.
The Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing
Annual General Meeting. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution taxes.
In the period of five years immediately preceding September 30, 2016:
The Company has allotted 114,84,72,332 and 57,42,36,166 fully paid-up shares of face value `5/- each during the quarter ended June 30, 2015 and December 31, 2014,
pursuant to bonus issue approved by the shareholders through postal ballot. For both the bonus issues, 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. Options granted under the restricted stock unit plan have been adjusted for bonus shares.
The Board has increased dividend pay-out ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
The Board of Directors, in its meeting on April 15, 2016, proposed a final dividend of `14.25/- per equity share and the same was approved by the shareholders at the Annual
General Meeting held on June 18, 2016. The amount was recognized as distributions to equity shareholders during the six months ended September 30, 2016 and the total
appropriation was `3,923 crore (excluding dividend on treasury shares), including corporate dividend tax. (Refer note 2.2.1 for impact on transition to Ind AS)
The amount of per share dividend recognized as distributions to equity shareholders during the six months ended September 30, 2015 was `29.50/- per equity share (not
adjusted for June 17, 2015 bonus issue).
The board of directors in their meeting on October 14, 2016 declared an interim dividend of `11/- per equity share which would result in a net cash outflow of approximately
`3,029 crore, (excluding dividend paid on treasury shares) inclusive of corporate dividend tax
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of
equity shares held by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts exist currently, other than the amounts held by
irrevocable controlled trusts. For irrevocable controlled trusts, the corpus would be settled in favour of the beneficiaries.
The details of shareholder holding more than 5% shares as at September 30, 2016 and March 31, 2016 are set out below :
Name of the shareholder
Number of shares
% held
Number of shares
% held
38,53,17,937
16.78
38,53,17,937
16.78
14,83,67,646
6.46
13,22,74,300
5.76
The reconciliation of the number of shares outstanding and the amount of share capital as at September 30, 2016 and March 31, 2016 is set out below:
Particulars
Amount
Number of shares
Amount
2,285,621,088
1,144
1,142,805,132
572
30,642
2,285,651,730
1,144
1,148,472,332
10,824
5,667,200
2,285,621,088
574
2
1,144
Particulars
0.07
0.07
0.07
-
0.07
0.07
0.07
-
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2015
is set out below:
Three months ended
Six months ended
Particulars
September 30, 2015
September 30, 2015
Shares arising out of Weighted average
Shares arising out of
Weighted average
options
exercise price
options
exercise price
2015 Plan (Formerly 2011 Plan): Indian equity shares (IES)
Outstanding at the beginning*
232,329
5
108,268
5
Granted
124,061
9,116
9,116
223,213
-
5
-
223,213
-
5
-
Exercised*
Outstanding at the end
Exercisable at the end
The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the
RSU. Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares
during a period equivalent to the expected term of the RSU.
During the three months and six months ended September 30, 2016 and September 30, 2015, the company recorded an employee stock compensation expense of `21 crore and
`2 crore and `30 crore and `4 crore, respectively in the statement of profit and loss. The cash settled stock compensation expense during each of the three months and six
months ended September 30, 2016 was less than `1 crore.
in ` crore
Particulars
September 30, 2016
Non-current
Others
(1)
Accrued compensation to employees
(2)
Payable for acquisition of business (refer note 2.3)
Contingent consideration
As at
March 31, 2016
April 1, 2015
67
33
39
106
36
69
18
2,047
2,487
81
2,265
2,189
80
2,106
1,984
53
44
11
148
1,440
2
40
38
6,356
81
28
167
1,341
5
81
60
6,302
487
27
177
1,069
3
43
31
5,983
6,462
6,371
5,983
(1)
4,937
85
93
4,908
122
132
4,911
3
-
Current
Unpaid dividends (1)
Others
Accrued compensation to employees (1)
(1)
Accrued expenses
Retention monies (1)
Payable for acquisition of business
Deferred consideration (refer note 2.3) (1)
Contingent consideration (refer note 2.3) (2)
Client deposits (1)
Payable by controlled trusts (1)
Compensated absences
Foreign currency forward and options contracts (2)
Capital creditors (1)
Other payables (1)
in ` crore
Particulars
September 30, 2016
Non-current
Others
Deferred income - government grant on land use rights
Current
Unearned revenue
Other
Withholding taxes and others
Accrued gratuity (refer note 2.22.1)
Tax on dividend
Deferred rent
Deferred income - government grant on land use rights
As at
March 31, 2016
April 1, 2015
45
45
46
46
47
47
1,478
1,332
1,052
1,280
1
1
1,296
1
904
7
1
2,760
2,629
1,964
2.16 PROVISIONS
in ` crore
As at
Particulars
September 30, 2016
April 1, 2015
Current
Others
Post-sales client support and warranties and others
621
512
478
Total
621
512
478
in ` crore
Six months ended
September 30, 2016
512
146
(39)
2
621
Current taxes
Deferred taxes
Income tax expense
1,387
In ` crore
Six months ended September 30,
2016
2015
2,936
2,574
(114)
(12)
2,822
2,562
Income tax expense for the three months ended September 30, 2016 and September 30, 2015 includes reversals (net of provisions) of `17 crore and `30 crore,
respectively, pertaining to prior periods.
Income tax expense for the six months ended September 30, 2016 and September 30, 2015 includes reversals (net of provisions) of `9 crore `113 crore,
respectively, pertaining to prior periods.
Entire deferred income tax for the three months and six months ended September 30, 2016 and September 30, 2015 relates to origination and reversal of
temporary differences.
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is
summarized below:
In ` crore
Three months ended September 30, Six months ended September 30,
2016
2015
2016
2015
5,066
4,785
9,863
8,989
Profit before income taxes
34.61%
34.61%
34.61%
34.61%
Enacted tax rates in India
1,753
1,656
3,414
3,111
Computed expected tax expense
(523)
(483)
(1,007)
(877)
Tax effect due to non-taxable income for Indian tax purposes
225
183
415
332
Overseas taxes
(17)
(30)
(9)
(113)
Tax provision (reversals), overseas and domestic
(17)
(16)
(45)
(34)
Effect of exempt non-operating income
56
3
53
13
Effect of unrecognized deferred tax assets
14
14
16
8
Effect of differential overseas tax rates
(8)
65
24
140
Effect of non-deductible expenses
(16)
(12)
(30)
(26)
Additional deduction on research and development expense
(7)
7
(9)
8
Others
Income tax expense
1,460
1,387
2,822
2,562
The applicable Indian statutory tax rates for fiscal 2017 and fiscal 2016 is 34.61%.
During the six months ended September 30, 2016 and September 30, 2015, the Group has claimed weighted tax deduction on eligible research and
development expenditure based on the approval received from Department of Scientific and Industrial Research (DSIR) which is valid upto March 31, 2017.
The weighted tax deduction is equal to 200% of such expenditure incurred.
The foreign expense is due to income taxes payable overseas principally in the United States. In India, the company has benefited from certain tax incentives
that the Government of India had provided for export of software from the units registered under the Special Economic Zones Act, 2005 (SEZ). SEZ units
which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100 percent of profits or gains derived from the export of services
for the first five years from the financial year in which the unit commenced the provision of services and 50 percent of such profits or gains for further five
years. Up to 50% of such profits or gains is also available for a further five years subject to creation of a Special Economic Zone re-Investment Reserve out of
the profit of the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business as per
the provisions of the Income Tax Act, 1961.
Infosys is subject to a 15% Branch Profit Tax (BPT) in the U.S. to the extent its U.S. branch's net profit during the year is greater than the increase in the net
assets of the U.S. branch during the year, computed in accordance with the Internal Revenue Code. As of March 31, 2016, Infosys' U.S. branch net assets
amounted to approximately `5,109 crore. As of September 30, 2016, the Company has provided for branch profit tax of `336 crore for its U.S branch, as the
Company estimates that these branch profits are expected to be distributed in the foreseeable future. The change in provision for branch profit tax includes `2
crore movement on account of exchange rate during the six months ended September 30, 2016.
Deferred income tax liabilities have not been recognized on temporary differences amounting to `4,701 crore and `4,195 crore as of September 30, 2016 and
March 31, 2016, respectively, associated with investments in subsidiaries and branches as it is probable that the temporary differences will not reverse in the
foreseeable future.
The following table provides the details of income tax assets and income tax liabilities as of September 30, 2016, March 31, 2016 and April 1, 2015:
In ` crore
As at
March 31, 2016
5,230
3,410
1,820
April 1, 2015
4,089
2,818
1,271
The gross movement in the current income tax asset/ (liability) for the three months and six months ended September 30, 2016 and September 30, 2015 is as
follows:
In ` crore
Three months ended September 30, Six months ended September 30,
2016
2015
2016
2015
1,102
1,450
1,820
1,271
Net current income tax asset/ (liability) at the beginning
6
11
Translation differences
1,755
1,557
2,499
2,862
Income tax paid
(1,469)
(1,441)
(2,936)
(2,574)
Current income tax expense (Refer Note 2.17)
1
1
Income tax benefit arising on exercise of stock options
8
3
13
5
Income tax on other comprehensive income
Net current income tax asset/ (liability) at the end
1,397
1,575
1,397
1,575
The tax effects of significant temporary differences that resulted in deferred income tax assets and liabilities are as follows:
In ` crore
As at
March 31, 2016
April 1, 2015
133
52
74
108
426
97
7
128
1,025
178
50
68
89
389
77
4
55
910
241
51
48
111
299
74
31
855
(235)
(336)
(61)
(632)
628
(235)
(252)
(334)
(40)
(626)
536
(252)
(159)
(316)
(3)
(478)
536
(159)
Deferred tax assets and deferred tax liabilities have been offset wherever the Group has a legally enforceable right to set off current tax assets against current
tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.
The deferred income tax assets and deferred income tax liabilities recoverable within and after 12 months are as follows:
In ` crore
As of
September 30, March 31, 2016
2016
361
409
664
501
1,025
910
(446)
(402)
(180)
(230)
(632)
(626)
In assessing the reliability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be
realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the
temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income,
and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods
in which the deferred income tax assets are deductible, management believes that the Group will realize the benefits of those deductible differences. The
amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the
carry forward period are reduced.
The gross movement in the deferred income tax account for the three months and six months ended September 30, 2016 and September 30, 2015, is as follows:
In ` crore
Six months ended September 30,
2016
2015
284
377
(128)
(5)
(25)
114
12
(2)
393
234
The credits relating to temporary differences during the six months ended September 30, 2016 are primarily on account of trade receivables, accrued
compensation to employees, compensated absences and post sales client support partially offset by property, plant and equipments. The credits relating to
temporary differences during the six months ended September 30, 2015 are primarily on account of trade receivables, compensated absences, accrued
compensation to employees, partially offset by property, plant and equipment, computer software amortization and post sales customer support.
2.18
Particulars
Income from software services
Income from software products
2.19
in ` crore
Six months ended September 30,
2016
2015
29,039
33,062
950
1,029
34,091
29,989
in ` crore
Six months ended September 30,
2016
2015
OTHER INCOME
Particulars
Interest received on financial assets:
Bonds and government bonds
Deposit with Bank and others
Non convertible debentures
31
614
-
27
624
-
62
1,234
-
52
1,281
-
2.20
20
27
44
(18)
224
(92)
(109)
39
760
70
70
793
(100)
66
1,513
119
145
1,549
EXPENSES
Particulars
Employee benefit expenses
Salaries including bonus
Contribution to provident and other funds
Share based payments to employees (Refer note 2.13)
Staff welfare
Other expenses
Repairs and maintenance
Power and fuel
Brand and marketing
Operating lease payments
Rates and taxes
Consumables
Insurance
Provision for post-sales client support and warranties
Commission to non-whole time directors
Impairment loss recognized / (reversed) on financial assets
Auditor's remuneration
Statutory audit fees
Taxation matters
Other services
Reimbursement of expenses
Contributions towards Corporate Social responsibility
Others
2.21
8
177
in ` crore
Six months ended September 30,
2016
2015
9,385
193
21
49
9,648
8,345
160
2
51
8,558
18,415
379
30
106
18,930
16,201
320
4
87
16,612
187
194
381
180
174
354
370
287
657
379
287
666
292
61
81
121
40
13
11
30
3
27
226
59
61
87
30
11
13
(34)
2
11
614
124
198
231
80
22
25
51
6
44
448
112
137
168
62
20
28
(43)
5
7
2
53
53
787
2
59
46
573
4
102
111
1,612
3
104
103
1,154
LEASES
in ` crore
Six months ended September 30,
2016
2015
231
168
The obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows:
In ` crore
As at
Future minimum lease payable
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
April 1, 2015
168
395
168
The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of
inception and relates to rented premises. Some of these lease agreements have price escalation clauses.
Particulars
(Gain)/loss from change in demographic assumptions
(Gain)/loss from change in financial assumptions
(In ` crore)
Six months ended September 30,
2016
2015
54
(10)
54
(10)
The weighted-average assumptions used to determine benefit obligations as of September 30, 2016 and March 31, 2016 are set out below:
Particulars
Discount rate
Weighted average rate of increase in compensation levels
As of
March 31, 2016
7.8%
8.0%
April 1, 2015
7.8%
8.0%
The weighted-average assumptions used to determine net periodic benefit cost for the three months and six months ended September 30, 2016 and September 30, 2015
are set out below:
Particulars
Discount rate
Weighted average rate of increase in compensation levels
Weighted average duration of defined benefit obligation
Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India.
The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The discount rate is based on the government
securities yield.
As of September 30, 2016, every percentage point increase / decrease in discount rate will affect our gratuity benefit obligation by approximately `55 crore.
As of September 30, 2016, every percentage point increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit
obligation by approximately `46 crore.
Sensitivity for significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by one
percentage, keeping all other actuarial assumptions constant.
Gratuity is applicable only to employees drawing a salary in Indian rupees and there are no other foreign defined benefit gratuity plans.
The Company contributes all ascertained liabilities towards gratuity to the Infosys Limited Employees' Gratuity Fund Trust. In case of Infosys BPO and EdgeVerve,
contributions are made to the Infosys BPO Employees' Gratuity Fund Trust and EdgeVerve Systems Limited Employees Gratuity Fund Trust, respectively. Trustees
administer contributions made to the trust. As of September 30, 2016 and March 31, 2016, the plan assets have been primarily invested in insurer managed funds.
Actual return on assets for the three months and six months ended September 30, 2016 and September 30, 2015 were `20 crore and `19 crore and `41 crore and `37
crore, respectively.
The Group expects to contribute `66 crore to the gratuity trusts during the remainder of fiscal 2017.
Maturity profile of defined benefit obligation:
(in ` crore)
152
157
164
177
191
940
Within 1 year
1-2 year
2-3 year
3-4 year
4-5 year
5-10 years
2.22.2 Superannuation
The group contributed `42 crore and `56 crore and `83 crore and `114 crore to the superannuation plan during the three months and six months ended September 30,
2016 and September 30, 2015, respectively and the same has been recognized in the Statement of profit and loss account under the head employee benefit expense.
2.22.3 Provident fund
Infosys has an obligation to fund any shortfall on the yield of the trusts investments over the administered interest rates on an annual basis. These administered rates
are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by the Company has been higher
in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the
below provided assumptions there is no shortfall as at September 30, 2016, March 31, 2016 and April 1, 2015, respectively.
The details of fund and plan asset position are given below:
(in ` crore)
Particulars
Plan assets at period end, at fair value
Present value of benefit obligation at period end
Asset recognized in balance sheet
The plan assets have been primarily invested in government securities.
As of
March 31, 2016
3,808
3,808
-
April 1, 2015
2,912
2,912
-
Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach:
Particulars
Government of India (GOI) bond yield
Remaining term to maturity of portfolio
Expected guaranteed interest rate - First year:
- Thereafter:
As of
March 31, 2016
7.80%
7 years
8.75%
8.60%
April 1, 2015
7.80%
7 years
8.75%
8.60%
The Group contributed `116 crore and `102 crore and `230 crore and `203 crore to the provident fund during the three months and six months ended September 30,
2016 and September 30, 2015, respectively and the same has been recognized in the statement of profit and loss under the head employee benefit expense.
The provident plans are applicable only to employees drawing a salary in Indian rupees and there are no other significant foreign defined benefit plans.
2.22.4 Employee benefit costs include:
Particulars
Salaries and bonus*
Defined contribution plans
Defined benefit plans
(in ` crore)
Six months ended September 30,
2016
2015
18,557
16,237
125
147
248
228
18,930
16,612
* Includes stock compensation expense of ` 21 crore and ` 2 crore and ` 30 crore and ` 4 crore for the three months and six months ended September 30, 2016 and
September 30, 2015, respectively. Refer note 2.13
2.23
RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNINGS PER SHARE
Particulars
Basic earnings per equity share - weighted average number of equity
shares outstanding
Effect of dilutive common equivalent shares - share options
outstanding
Diluted earnings per equity share - weighted average number of
equity shares and common equivalent shares outstanding
2.24
2016
2015
2016
2015
228,56,41,710
228,56,14,029
228,56,32,081
228,56,12,157
307,593
99,013
228,59,49,303
228,57,13,042
243,907
228,58,75,988
CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
Particulars
Contingent liabilities :
Claims against the Company, not acknowledged as debts(1)
287
84,521
228,56,96,678
in ` crore
As at
March 31, 2016
April 1, 2015
284
264
1,486
1,574
Commitments :
Estimated amount of contracts remaining to be executed on capital contracts and not
provided for
(net of advances and deposits)
Other Commitment*
1,433
84
79
*Uncalled capital pertaining to investments in Vertex Ventures US Fund L.L.P and Cloudyn Software Ltd
Claims against the company not acknowledged as debts as on September 30, 2016 include demand from the Indian Income tax authorities for payment of tax of `4,135
crore (`4,135 crore), including interest of `1,224 crore (`1,224 crore) upon completion of their tax assessment for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal
2011. These demands were paid to statutory tax authorities . The company has filed an appeal with the income tax appellate authorities.
(1)
Demand for fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the income Tax Act as
determined by the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover
but not reduced from total turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011 also includes disallowance of portion of profit earned
outside India from the STP units under section 10A of the Income Tax Act and disallowance of profits earned from SEZ units under section 10AA of the Income Tax Act. The
matters for fiscal 2007, fiscal 2008 and fiscal 2009 are pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscal 2010 and fiscal 2011 is
pending before Honble Income Tax Appellate Tribunal (ITAT) Bangalore.
The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. The
management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company's financial position and results of operations.
The company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The companys management does not reasonably expect that
these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the companys results of operations or financial condition.
2.25
Name of subsidiaries
Country
India
99.98%
99.98%
China
100%
100%
Mexico
100%
100%
Sweden
100%
100%
China
100%
100%
Brazil
100%
100%
U.S.
100%
100%
U.S.
100%
100%
Czech Republic
99.98%
99.98%
Poland
99.98%
99.98%
Mexico
U.S.
99.98%
99.98%
Australia
99.98%
99.98%
U.S.
99.98%
Australia
100%
100%
India
100%
100%
Switzerland
100%
100%
U.S.
100%
100%
Australia
100%
100%
Switzerland
100%
100%
Switzerland
100%
100%
Switzerland
100%
100%
Belgium
99.90%
99.90%
Germany
100%
100%
Singapore
100%
100%
Infosys Management Consulting Pty Limited (formerly Lodestone Management Consultants Pty Limited)
(3)
(2)(3)
(3)
Infosys Consulting Pte Ltd. (formerly Lodestone Management Consultants Pte Ltd)
(3)
(3)
France
100%
100%
(3)
Czech Republic
100%
100%
Austria
100%
100%
China
100%
100%
U.K.
100%
100%
Netherlands
100%
100%
99.99%
99.99%
Poland
100%
100%
Portugal
100%
100%
Romania
100%
100%
Argentina
100%
100%
(3)
(3)
(3)
(3)
(4)
Brazil
Infosys Consulting Sp. z.o.o (formerly Lodestone Management Consultants Sp. z o.o.)
Lodestone Management Consultants Portugal, Unipessoal, Lda.
(3)
(3)
(3)
(3)
Canada
U.S.
100%
100%
U.S.
100%
100%
Israel
100%
100%
Germany
100%
100%
Australia
Japan
100%
100%
India
100%
100%
U.S.
100%
100%
U.S.
100%
100%
Canada
100%
100%
(8)
(9)
(10)
(11)
(3)
Wholly owned subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)
(4)
Majority owned and controlled subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)
(5)
Wholly owned subsidiary of Infosys Consulting AG (formerly Lodestone Management Consultants AG)
(6)
(7)
(8)
On June 2, 2015, Infosys acquired 100% of the voting interest in Skava Systems
(9)
On June 2, 2015, Infosys acquired 100% of the voting interest in Kallidus Inc.
(10)
On November 16, 2015, Infosys acquired 100% of the membership interests in Noah
(11)
(12)
(13)
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Name of Associates
DWA Nova LLC
(1)
Holdings as at
September 30, 2016
March 31, 2016
Country
(1)
U.S.
16%
16%
Country
Nature of relationship
India
India
India
India
India
India
India
India
Controlled trust
India
Controlled trust
India
Controlled trust
Refer Notes 2.22 for information on transactions with post-employment benefit plans mentioned above.
List of key management personnel
Whole time directors
U B Pravin Rao
Dr. Vishal Sikka
Non-whole-time directors
K.V.Kamath ( resigned effective June 5, 2015)
Prof. Jeffrey S. Lehman
R. Seshasayee
Ravi Venkatesan
Kiran Mazumdar Shaw
Carol M. Browner (resigned effective November 23, 2015)
Prof. John W. Etchemendy
Roopa Kudva
Dr. Punita Kumar-Sinha (appointed effective January 14, 2016)
Executive Officers
M. D. Ranganath, Chief Financial Officer (effective October 12, 2015)
David D. Kennedy, Executive Vice President, General Counsel and Chief Compliance Officer
Rajiv Bansal, Chief Financial Officer (till October 12, 2015)
Company Secretary
A.G.S. Manikantha (appointed effective June 22, 2015)
Related party transactions:
Transaction with key management personnel:
The table below describes the compensation to key managerial personnel which comprise directors and members of executive officers:
Particulars
Salaries and other employee benefits to whole-time directors and members
of executive officers (1)
Commission and other benefits to non-executive/independent directors
Total
in ` crore
Six months ended September 30,
2016
2015
14
35
28
17
41
33
Includes stock compensation expense of ` 5 crore and ` 2 crore and ` 14 crore and ` 4 crore for the three months and six months ended September 30, 2016 and
September 30, 2015, towards CEO compensation. Refer note 2.13
(1)
2.26
SEGMENT REPORTING
Ind AS 108 establishes standards for the way that public business enterprises report information about operating segments and related disclosures about products and services, geographic areas, and major customers. The
group's operations predominantly relate to providing end-to-end business solutions to enable clients to enhance business performance. Based on the "management approach" as defined in INDAS 108, the Chief Operating
Decision Marker (CODM) evaluates the group's performance and allocates resources based on an analysis of various performance indicators by business segments and geographic segments. Accordingly, information has
been presented both along business segments and geographic segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and expenditure in individual
segments, and are as set out in the significant accounting policies.
Business segments of the group are primarily enterprises in Financial Services (FS), enterprises in Manufacturing (MFG), enterprises in Retail, Consumer packaged goods and Logistics (RCL), enterprises in the Energy &
utilities, Communication and Services (ECS), enterprises in Hi-tech (Hi-tech), enterprises in Life Sciences, Healthcare and Insurance (HILIFE) and all other segments. The FS reportable segments has been aggregated to
include the Financial Services operating segment and the Finacle operating segment because of the similarity of the economic characteristics. All other segments represents the operating segments of businesses in India,
Japan and China and IPS. Geographic segmentation is based on business sourced from that geographic region and delivered from both on-site and off-shore locations. North America comprises the United States of
America, Canada and Mexico, Europe includes continental Europe (both the east and the west), Ireland and the United Kingdom, and the Rest of the World comprising all other places except those mentioned above and
India.
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment. Revenue for all other segments represents revenue generated by IPS
and revenue generated from customers located in India, Japan and China. Allocated expenses of segments include expenses incurred for rendering services from the group's offshore software development centres and onsite expenses, which are categorized in relation to the associated turnover of the segment. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to
specific segments as the underlying assets are used interchangeably. Management believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are
separately disclosed as "unallocated" and adjusted against the total income of the group.
Assets and liabilities used in the group's business are not identified to any of the reportable segments, as these are used interchangeably between segments. Management believes that it is currently not practicable to provide
segment disclosures relating to total assets and liabilities since a meaningful segregation of the available data is onerous.
Geographical information on revenue and business segment revenue information is collated based on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Business Segments
Three months ended September 30, 2016 and September 30, 2015 :
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segmental profit
FS
4,686
4,243
2,373
1,965
1,018
1,011
1,295
1,267
MFG
1,853
1,827
961
1,012
423
451
469
364
ECS
3,864
3,336
1,861
1,514
881
824
1,122
998
RCL
2,833
2,582
1,361
1,218
646
638
826
726
HILIFE
Hi-Tech
2,089
2,036
1,055
953
476
503
558
580
1,339
1,214
692
561
305
300
342
353
HILIFE
Hi-Tech
4,093
3,906
2,054
1,891
959
957
1,080
1,058
2,661
2,365
1,375
1,163
624
579
662
623
All other
segments
646
397
375
232
148
99
123
66
Unallocable expenses
Other income
Share in net profit/(loss) of associate
Profit before tax
Tax expense
Profit for the period
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
in ` crore
Total
17,310
15,635
8,678
7,455
3,897
3,826
4,735
4,354
426
361
760
793
(3)
(1)
5,066
4,785
1,460
1,387
3,606
3,398
424
358
2
3
Six months ended September 30, 2016 and September 30, 2015 :
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segmental profit
Unallocable expenses
Other income
Share in net profit/(loss) of associate
Profit before tax
Tax expense
Profit for the period
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
FS
9,237
8,125
4,611
3,878
2,065
1,907
2,561
2,340
MFG
3,696
3,444
1,910
1,891
866
844
920
709
ECS
7,583
6,502
3,618
2,958
1,776
1,593
2,189
1,951
RCL
5,694
4,923
2,731
2,342
1,335
1,206
1,628
1,375
All other
segments
1,127
724
720
487
263
177
144
60
in ` crore
Total
34,091
29,989
17,019
14,610
7,888
7,263
9,184
8,116
829
675
1,513
1,549
(5)
(1)
9,863
8,989
2,822
2,562
7,041
6,427
824
671
5
4
Geographic Segments
Three months ended September 30, 2016 and September 30, 2015 :
in ` crore
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segmental operating income
North America
10,641
9,891
5,444
4,803
2,423
2,442
2,774
2,646
Europe
India
3,896
3,580
1,956
1,742
885
881
1,055
957
587
360
250
87
123
79
214
194
Rest of the
World
2,186
1,804
1,028
823
466
424
692
557
Unallocable expenses
Other income, net
Share in net profit/(loss) of associate
Profit before tax
Tax expense
Profit for the period
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
Total
17,310
15,635
8,678
7,455
3,897
3,826
4,735
4,354
426
361
760
793
(3)
(1)
5,066
4,785
1,460
1,387
3,606
3,398
424
358
2
3
Six months ended September 30, 2016 and September 30, 2015 :
in ` crore
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segmental operating income
North America
21,041
18,965
10,780
9,392
4,926
4,643
5,335
4,930
Europe
7,764
6,800
3,801
3,351
1,813
1,659
2,150
1,790
Unallocable expenses
Other income, net
Share in net profit/(loss) of associate
Profit before tax
Tax expense
Profit for the period
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
Significant clients
No client individually accounted for more than 10% of the revenues for the three months and six months ended September 30, 2016 and September 30, 2015.
India
1,045
678
498
323
217
142
330
213
Rest of the
World
4,241
3,546
1,940
1,544
932
819
1,369
1,183
Total
34,091
29,989
17,019
14,610
7,888
7,263
9,184
8,116
829
675
1,513
1,549
(5)
(1)
9,863
8,989
2,822
2,562
7,041
6,427
824
671
5
4
Particulars
Revenue from operations
2016
17,310
2015
15,635
2016
34,091
2015
29,989
Cost of Sales
10,962
9,724
21,643
18,847
6,348
5,911
12,448
11,142
GROSS PROFIT
Operating expenses
Selling and marketing expenses
897
843
1,817
1,663
1,142
1,075
2,276
2,038
2,039
1,918
4,093
3,701
OPERATING PROFIT
Other income
4,309
760
3,993
793
8,355
1,513
7,441
1,549
5,069
4,786
9,868
8,990
(3)
(1)
(5)
(1)
5,066
4,785
9,863
8,989
1,469
1,441
2,936
2,574
(9)
3,606
(54)
3,398
(114)
7,041
(12)
6,427
(7)
(57)
(14)
(7)
(57)
(14)
(51)
62
(13)
206
(49)
62
(11)
206
(89)
55
(68)
192
(40)
(40)
Items that will be reclassified subsequently to profit or loss
Fair value changes on cash flow hedges
Exchange differences on translation of foreign operations
3,517
3,453
6,973
6,619
3,606
3,606
3,398
3,398
7,041
7,041
6,427
6,427
3,517
3,453
6,973
6,619
3,517
3,453
6,973
6,619
Supreet Sachdev
R.Seshasayee
U. B. Pravin Rao
Partner
Chairman
Managing Director
Whole-time Director
Bangalore
Roopa Kudva
M. D. Ranganath
A.G.S Manikantha
Director
Company Secretary
INFOSYS LIMITED
Balance Sheet as at
ASSETS
Non-current assets
Property, plant and equipment
Capital work-in-progress
Intangible assets
Financial assets
Investments
Loans
Other financial assets
Deferred tax assets (net)
Other non-current assets
Income tax assets (net)
Total non - current Assets
Note
8,470
1,053
-
8,248
934
-
7,347
769
-
2.5
2.6
2.7
2.17
2.10
2.17
11,253
5
206
428
834
4,981
27,230
11,076
5
192
405
755
5,020
26,635
6,108
4
110
433
349
3,941
19,061
2.5
2.8
2.9
2.6
2.7
2.10
1,905
10,168
27,967
321
6,286
1,800
48,447
2
9,798
29,176
355
4,801
1,965
46,097
749
8,627
27,722
225
4,045
1,384
42,752
75,677
72,732
61,813
2.12
1,148
62,632
63,780
1,148
59,934
61,082
574
51,617
52,191
2.13
39
39
62
62
27
27
272
5,128
2,178
556
3,724
11,858
623
5,132
2,093
436
3,304
11,588
124
4,847
1,564
382
2,678
9,595
75,677
72,732
61,813
2.3
2.4
Current assets
Financial assets
Investments
Trade receivables
Cash and cash equivalents
Loans
Other financial assets
Other current assets
Total current assets
Total Assets
EQUITY AND LIABILITIES
Equity
Equity share capital
Other equity
Total equity
LIABILITIES
Non-current liabilities
Financial liabilities
Other financial liabilities
Deferred tax liabilities (net)
Total non - current liabilities
2.17
Current liabilities
Financial liabilities
Trade payables
Other financial liabilities
Other current liabilities
Provisions
Income tax liabilities (net)
Total current liabilities
(In ` crore)
April 1, 2015
2.14
2.13
2.15
2.16
2.17
Supreet Sachdev
Partner
R. Seshasayee
Chairman
Bangalore
October 14, 2016
Roopa Kudva
Director
U. B. Pravin Rao
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
INFOSYS LIMITED
Note
2.18
2.19
Expenses
Employee benefit expenses
2.20
15,544
64
1,183
1,035
13,794
124
2,319
2,000
364
425
940
857
335
536
626
90
80
172
160
119
123
238
255
338
272
657
524
2.20
606
426
1,268
876
10,951
9,747
21,674
19,216
4,812
4,553
9,271
8,543
2.17
1,327
1,333
2,640
2,385
2.17
9
3,476
(28)
3,248
(25)
6,656
19
6,139
6,987
312
2.20
Communication expenses
Depreciation and amortisation expense
7,939
-
Total expenses
Profit before tax
Tax expense:
Current tax
Deferred tax
Profit for the period
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Remeasurement of the net defined benefit liability/asset
Equity instruments through other comprehensive income
Fair value changes on cash flow hedges
(35)
2
1
-
(52)
2
(7)
-
(33)
(50)
(7)
3,443
3,249
6,606
6,132
15.13
15.13
14.14
14.14
28.98
28.98
26.73
26.73
2,296,944,664
2,297,025,587
2,296,944,664
2,296,944,664
2,296,944,664
2,296,990,357
2,296,944,664
2,296,944,664
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Bangalore
October 14, 2016
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
INFOSYS LIMITED
Statement of changes in Equity
Particulars
Securities
premium
reserve
In ` crore
Total equity
attributable to
equity holders of
the Company
Other Equity
Equity
Share
Capital
Retained
earnings
Capital
reserve
Special
Economic
Zone Reinvestment
reserve (1)
Share Options
Outstanding
Account
General
reserve
54
8,291
Equity
Other items of
Instruments
Cash flow hedge
other
through other
reserve
comprehensive
comprehensive
income
income
Business
transfer
adjustment
reserve(2)
574
2,778
40,065
412
574
15
52,191
574
(1,217)
1,217
(574)
(574)
(265)
265
265
(265)
(1)
(7)
(7)
(4,078)
(4,078)
3,036
3,036
2,205
6,139
40,909
9,508
3,448
6,139
57,285
1,148
54
INFOSYS LIMITED
Statement of changes in Equity
Particulars
Other Equity
Equity
Share
Capital
Securities
premium
reserve
1,148
Retained
earnings
Capital
reserve
2,204
44,698
54
9,508
Special
Economic
Zone Reinvestment
reserve (1)
Business
transfer
adjustment
reserve(2)
3,448
In ` crore
Total equity
attributable to
equity holders of
the Company
13
61,082
(1,579)
1,579
(551)
551
551
(551)
(3)
30
30
Share based payment to employees of the group (refer to note 2.12 and note
(52)
(52)
(3,939)
2,208
6,656
45,836
54
36
2.25)
Remeasurement of the net defined benefit liability/asset, net of tax effect
(refer note 2.22 and 2.17)
Equity instruments through other comprehensive income
1,148
11,087
3,448
2
-
(3,939)
6,656
63,780
(39)
(1)
The Special Economic Zone Re-investment Reserve has been created out of the profit of eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Company for acquiring new plant and machinery for the purpose of
its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961.
(2)
Profit on transfer of business between entities under common control taken to reserve on account of transition to Indian Accounting Standards (Ind AS)
The accompanying notes form an integral part of the standalone interim financial statements.
As per our report of even date attached
for B S R & Co. LLP
Chartered Accountants
Firms Registration Number : 101248W/W-100022
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Bangalore
October 14, 2016
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
INFOSYS LIMITED
(In ` crore)
Six months ended
September 30,
2016
2015
6,656
6,139
657
2,615
44
524
2,404
124
(13)
(1,318)
129
25
(1,286)
81
24
(1,215)
227
(351)
111
7,580
(2,168)
(1,149)
(767)
151
1,380
7,612
(2,665)
5,412
4,947
(1,142)
(1,057)
(86)
36
270
(13)
12
(252)
(36)
-
(191)
(578)
(250)
(40)
(18,524)
(154)
(22)
(13,320)
(200)
-
16,640
614
13,532
365
(2,674)
(1,722)
(3,926)
(116)
115
(4,078)
(3,926)
(4,079)
Effect of exchange differences on translation of foreign currency cash and cash equivalents
(21)
(1,188)
29,176
(5)
(859)
27,722
27,967
26,863
370
201
Supplementary information:
Restricted cash balance
The accompanying notes form an integral part of the standalone interim financial statements.
Supreet Sachdev
Partner
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary
Bangalore
October 14, 2016
INFOSYS LIMITED
Notes to the Financial Statements
1. Company Overview and Significant Accounting Policies
1.1 Company overview
Infosys ('the Company') is a leading provider in consulting, technology, outsourcing and next-generation services. Along with its subsidiaries, Infosys provides Business IT services (comprising
application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and life cycle solutions and business process
management); Consulting and systems integration services (comprising consulting, enterprise solutions, systems integration and advanced technologies); Products, business platforms and solutions to
accelerate intellectual property-led innovation including Finacle, our banking solution; and offerings in the areas of Analytics, Cloud, and Digital Transformation.
The Company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The company has its primary listings on the BSE Limited and
National Stock Exchange in India. The Companys American Depositary Shares representing equity shares are also listed on the New York Stock Exchange (NYSE), Euronext London and Euronext
Paris.
The interim financial statements are approved for issue by the Company's Board of Directors on October 14, 2016.
1.2 Basis of preparation of financial statements
These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which
are measured at fair values, the provisions of the Companies Act , 2013 (`Act') (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are
prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies ( Indian Accounting Standards) Amendment Rules, 2016.
The company has adopted all the Ind AS standards and the adoptions was carried out in accordance with Ind AS 101 First time adoption of Indian Accounting Standards . The transition was carried out
from Indian Accounting Principles generally accepted in India as prescribed under Sec 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous
GAAP. Reconciliations and descriptions of the effect of the transition has been summarized in Note 2.1.
Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the
accounting policy hitherto in use.
As the quarter and year-to-date figures are taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported for the previous quarters might
not always add up to the year-to-date figures reported in this statement.
1.3 Use of estimates
The preparation of the financial statements in conformity with Ind AS requires management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the
application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of
revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these
financial statements have been disclosed in Note 1.4. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are
made as management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements in the period in which changes are made and,
if material, their effects are disclosed in the notes to the financial statements.
1.4 Critical accounting estimates
a. Revenue recognition
The company uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the company to estimate the efforts or costs
expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between
input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the
reporting date.
b. Income taxes
The company's two major tax jurisdictions are India and the U.S., though the company also files tax returns in other overseas jurisdictions. Significant judgements are involved in determining the
provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions. Also refer to Note 2.17 and Note 2.24.
c. Property, plant and equipment
Property, plant and equipment represent a significant proportion of the asset base of the company. The charge in respect of periodic depreciation is derived after determining an estimate of an assets
expected useful life and the expected residual value at the end of its life. The useful lives and residual values of company's assets are determined by management at the time the asset is acquired and
reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as
changes in technology.
Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last billing to the balance sheet date is recognized as unbilled revenues.
Revenue from fixed-price, fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When
there is uncertainty as to measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Efforts or costs expended have been used to measure progress
towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses
become probable based on the current contract estimates. Costs and earnings in excess of billings are classified as unbilled revenue while billings in excess of costs and earnings are classified as
unearned revenue. Deferred contract costs are amortized over the term of the contract. Maintenance revenue is recognized ratably over the term of the underlying maintenance arrangement.
In arrangements for software development and related services and maintenance services, the company has applied the guidance in Ind AS 18, Revenue, by applying the revenue recognition criteria for
each separately identifiable component of a single transaction. The arrangements generally meet the criteria for considering software development and related services as separately identifiable
components. For allocating the consideration, the company has measured the revenue in respect of each separable component of a transaction at its fair value, in accordance with principles given in Ind
AS 18. The price that is regularly charged for an item when sold separately is the best evidence of its fair value. In cases where the company is unable to establish objective and reliable evidence of fair
value for the software development and related services, the company has used a residual method to allocate the arrangement consideration. In these cases the balance of the consideration, after
allocating the fair values of undelivered components of a transaction has been allocated to the delivered components for which specific fair values do not exist.
License fee revenues are recognized when the general revenue recognition criteria given in Ind AS 18 are met. Arrangements to deliver software products generally have three elements: license,
implementation and Annual Technical Services (ATS). The company has applied the principles given in Ind AS 18 to account for revenues from these multiple element arrangements. Objective and
reliable evidence of fair value has been established for ATS. Objective and reliable evidence of fair value is the price charged when the element is sold separately. When other services are provided in
conjunction with the licensing arrangement and objective and reliable evidence of their fair values have been established, the revenue from such contracts are allocated to each component of the contract
in a manner, whereby revenue is deferred for the undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of objective and reliable evidence of fair
value for implementation, the entire arrangement fee for license and implementation is recognized using the percentage-of-completion method as the implementation is performed. Revenue from client
training, support and other services arising due to the sale of software products is recognized as the services are performed. ATS revenue is recognized ratably over the period in which the services are
rendered.
Advances received for services and products are reported as client deposits until all conditions for revenue recognition are met.
The company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discounts/ incentives amount to each of the underlying
revenue transaction that results in progress by the customer towards earning the discount/ incentive. Also, when the level of discount varies with increases in levels of revenue transactions, the company
recognizes the liability based on its estimate of the customer's future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then
discount is not recognized until the payment is probable and the amount can be estimated reliably. The company recognizes changes in the estimated amount of obligations for discounts in the period in
which the change occurs. The discounts are passed on to the customer either as direct payments or as a reduction of payments due from the customer.
The company presents revenues net of value-added taxes in its statement of profit and loss.
1.6 Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are
ready for use, as intended by management. The company depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets
are as follows:
Building
Plant and machinery
Office equipment
Computer equipment
Furniture and fixtures
Vehicles
22-25 years
5 years
5 years
3-5 years
5 years
5 years
Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.
Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date is classified as capital advances under other non-current assets and the cost of assets not
put to use before such date are disclosed under Capital work-in-progress. Subsequent expenditures relating to property, plant and equipment is capitalized only when it is probable that future economic
benefits associated with these will flow to the company and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in net profit in the statement of profit and loss
when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the
statement of profit and loss. Assets to be disposed off are reported at the lower of the carrying value or the fair value less cost to sell.
Although the company believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any
derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss. when incurred. Subsequent to
initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets/ liabilities in this category are
presented as current assets/current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
The company designates certain foreign exchange forward and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in
the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the net profit in the statement of profit and loss. If the hedging
instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative
gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The
cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the statement of profit and loss upon the occurrence of the related forecasted transaction.
If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the statement of profit and loss.
c. Share capital
Ordinary Shares
Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options are recognized as a deduction from equity, net of any tax effects.
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss. Loss allowance for trade receivables with no
significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there
has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss
allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in profit or loss.
b. Non-financial assets
(i) Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the
purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate
cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated
recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount. The carrying
amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization
or depreciation) had no impairment loss been recognized for the asset in prior years.
1.11 Provisions
A provision is recognized if, as a result of a past event, the company has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will
be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the
risks specific to the liability.
a. Post sales client support
The company provides its clients with a fixed-period post sales support for corrections of errors and support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support services
are accrued at the time related revenues are recorded in the statement of profit and loss. The company estimates such costs based on historical experience and estimates are reviewed on a periodic basis
for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when the expected benefits to be derived by the company from a contract are lower than the unavoidable costs of meeting the future obligations under the
contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is
established the company recognizes any impairment loss on the assets associated with that contract.
1.12 Foreign currency
Functional currency
The functional currency of the company is the Indian rupee. These financial statements are presented in Indian rupees (rounded off to crore; one crore equals ten million).
Transactions and translations
Foreign-currency denominated monetary assets and liabilities are translated into the relevant functional currency at exchange rates in effect at the balance sheet date. The gains or losses resulting from
such translations are included in net profit in the statement of profit and loss. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are
translated at the exchange rate prevalent at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical
cost are translated at the exchange rate prevalent at the date of the transaction.
Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense and cashflow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction.
Basic earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares outstanding during the period.
Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the company by the weighted average number of equity shares considered for deriving basic
earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares
are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity shares). Dilutive potential equity shares are deemed
converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to
the approval of the financial statements by the Board of Directors.
1.14 Income taxes
Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the statement of profit and loss except to the extent that it relates to items recognized
directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from
the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. Deferred income tax assets and liabilities are recognized for all temporary
differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the
extent that it is no longer probable that the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date and are expected to apply to taxable income
in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or
expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected
that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to
set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Tax benefits of deductions earned on exercise of employee
share options in excess of compensation charged to income are credited to share premium.
Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each balance sheet date using the projected unit credit method. The company
fully contributes all ascertained liabilities to the Infosys Limited Employees' Gratuity Fund Trust (the Trust). Trustees administer contributions made to the Trusts and contributions are invested in a
scheme with Life Insurance Corporation of India as permitted by laws of India.
The company recognizes the net obligation of a defined benefit plan in its balance sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset) are
recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation
is recognized in other comprehensive income. The effect of any plan amendments are recognized in net profits in the statement of profit and loss.
1.15.2 Superannuation
Certain employees of Infosys are participants in a defined contribution plan. The company has no further obligations to the Plan beyond its monthly contributions which are periodically contributed to a
trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
1.15.3 Provident fund
Eligible employees of Infosys receive benefits from a provident fund, which is a defined benefit plan. Both the eligible employee and the company make monthly contributions to the provident fund plan
equal to a specified percentage of the covered employee's salary. The company contributes a portion to the Infosys Limited Employees' Provident Fund Trust. The trust invests in specific designated
instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the
trust is being administered by the government. The company has an obligation to make good the shortfall, if any, between the return from the investments of the Trust and the notified interest rate.
The company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial
valuation performed by an independent actuary at each balance sheet date using projected unit credit method on the additional amount expected to be paid/availed as a result of the unused entitlement
that has accumulated at the balance sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.
1.18 Dividends
Final dividends on shares are recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the company's Board of
Directors.
1.19 Other income
Other income is comprised primarily of interest income, dividend income and exchange gain/loss on forward and options contracts and on translation of other assets and liabilities. Interest income is
recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.
1.20 Leases
Leases under which the company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value or present value of
the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognized as an expense on a straight line basis in net profit in the statement of
profit and loss over the lease term.
2 Notes to the standalone financial statements for the three months and six months ended September 30, 2016
2.1 First-time adoption of Ind-AS
These standalone interim financial statements of Infosys Limited for the three months and six months ended September 30, 2016 have been
prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101 First Time adoption of Indian Accounting Standard , with April 1, 2015 as the transition date and IGAAP as the previous GAAP.
The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting
policies and principles. The accounting policies set out in note 1 have been applied in preparing the standalone financial statements for the three
months and six months ended September 30, 2016 and the comparative information. An explanation of how the transition from previous GAAP to
Ind AS has affected the Companys balance sheet , statement of profit and loss, is set out in note 2.2 and 2.2.2. Exemptions on first time adoption
of Ind AS availed in accordance with Ind AS 101 have been set out in note 2.1.1.
2.2 Reconciliations
The following reconciliations provides the effect of transition to Ind AS from IGAAP in accordance with Ind AS 101
1. Equity as at April 1, 2015, September 30, 2015 and March 31, 2016
2. Net profit for the three months and six months ended September 30, 2015 and year ended March 31, 2016
(In ` crore)
Note
7,347
769
A
B
C
B
C
D
6,108
4
110
433
349
3,941
19,061
749
8,627
27,722
225
4,045
1,384
42,752
61,813
574
47,494
48,068
7,347
769
-
6,108
4
110
433
349
3,941
19,061
7,504
998
7,227
4
146
399
692
4,428
21,398
749
8,627
27,722
225
4,045
1,384
42,752
61,813
537
9,256
26,863
212
9,034
1,630
47,532
68,930
4,123
4,123
574
51,617
52,191
7,504
998
-
8,248
934
-
8,248
934
-
(28)
(28)
7,199
4
146
399
692
4,428
21,370
11,111
5
192
405
755
5,020
26,670
(35)
(35)
11,076
5
192
405
755
5,020
26,635
(28)
537
9,256
26,863
212
9,034
1,630
47,532
68,902
2
9,798
29,176
355
4,801
1,965
46,097
72,767
(35)
2
9,798
29,176
355
4,801
1,965
46,097
72,732
1,148
53,363
54,511
2,774
2,774
1,148
56,137
57,285
1,148
56,009
57,157
3,925
3,925
1,148
59,934
61,082
27
3
30
(3)
(3)
27
27
119
2
121
(22)
(2)
(24)
97
97
73
73
(11)
(11)
62
62
124
4,885
1,568
4,460
2,678
13,715
61,813
(38)
(4)
(4,078)
(4,120)
-
124
4,847
1,564
382
2,678
9,595
61,813
275
6,096
4,694
351
2,882
14,298
68,930
(9)
(2,769)
(2,778)
(28)
275
6,087
1,925
351
2,882
11,520
68,902
623
5,138
2,097
4,375
3,304
15,537
72,767
(6)
(4)
(3,939)
(3,949)
(35)
623
5,132
2,093
436
3,304
11,588
72,732
Explanations for Reconciliation of Balance Sheet as previously reported under IGAAP to INDAS
A. Investment
a) Tax free bonds are carried at amortized cost under Ind AS and IGAAP. Investment in equity instruments are carried at fair value through OCI in Ind AS compared to being carried at cost under IGAAP.
b) Investments include discounted value of contingent consideration payable on acquisition of business under IndAS as compared to undiscounted value of contingent consideration under IGAAP
B. Other financial liabilities
Adjustments includes impact of discounting the deferred and contingent consideration payable for acquisitions under Ind AS
C. Other liabilities Adjustments that reflect unamortised negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained earnings.
D. Provisions
Adjustments reflect dividend (including corporate dividend tax), declared and approved post reporting period.
E. Other equity
a) Adjustments to retained earnings and other comprehensive income has been made in accordance with Ind AS, for the above mentioned line items.
b) In addition, as per Ind-AS 19, actuarial gain and losses are recognized in other comprehensive income as compared to being recognized in the statement of profit and loss under IGAAP.
c) Profit on transfer of business between entities under common control which were earlier recognized in statement of profit and loss under IGAAP are adjusted to reserves on transition to Ind AS.
2.2.2
Reconciliation Statement of Profit and loss as previously reported under IGAAP to Ind AS
Particulars
Revenue from operations
Other income, net
Total Income
Expenses
Employee benefit expenses
Deferred consideration pertaining to acquisition
Cost of technical sub-contractors
Travel expenses
Cost of software packages and others
Communication expenses
Consultancy and professional charges
Depreciation and amortisation expenses
Other expenses
Total expenses
Profit before exceptional items and tax
Profit on transfer of business
Profit before tax
Tax expense:
Current tax
Deferred tax
Profit for the period
Other comprehensive income
Items that will not be reclassified subsequently to profit or loss
Remeasurement of the net defined benefit liability/asset
Note
F
G
6,985
46
1,035
425
335
80
123
272
423
9,724
4,575
2
18
-
3,036
7,611
3
23
(22)
(3,036)
(3,058)
1,333
(28)
6,306
(3,058)
6,987
64
1,035
425
335
80
123
272
426
9,747
4,553
4,553
13,802
91
2,000
857
626
160
255
524
872
19,187
8,569
1,333
(28)
3,248
1
1
(8)
33
(In ` crore)
Year ended March 31 2016
Effects of
IGAAP
transition to IndInd AS
AS
53,983
53,983
3,009
(3)
3,006
56,992
(3)
56,989
28,206
110
4,417
1,655
1,049
311
563
1,115
1,909
39,335
17,657
3,036
11,605
4
29
(26)
(3,036)
(3,062)
13,794
124
2,000
857
626
160
255
524
876
19,216
8,543
8,543
2,382
19
9,204
3
(3,065)
2,385
19
6,139
1
1
(7)
(7)
9,204
(3,072)
3,036
20,693
1
39
14
54
(57)
(3,036)
(3,093)
28,207
149
4,417
1,655
1,049
311
563
1,115
1,923
39,389
17,600
17,600
4,898
9
15,786
(3,093)
4,898
9
12,693
(7)
(7)
(2)
(2)
(7)
15,786
(3,095)
(2)
(2)
6,306
(3,057)
3,249
Explanations for reconciliation of Statement of Profit and loss as previously reported under IGAAP to Ind AS
F. Employee Benefit expenses
a) As per Ind-AS 19, actuarial gain and losses are recognized in other comprehensive income and not reclassified to profit and loss in a subsequent period.
b) Adjustments reflect unamortised negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained earnings.
G.. Deferred and contingent consideration pertaining to acquisition
Adjustments reflect impact of discounting pertaining to deferred consideration and contingent consideration payable for business combinations
H. Reversal of exceptional item
Profit on transfer of business between entities under common control has been reversed and taken to business transfer reserve on account of transition to Ind AS
I. Current tax
Tax component on actuarial gains and losses which is transferred to other comprehensive income under Ind AS
2.2.3
(7)
6,132
(2)
(2)
12,691
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2016:
Particulars
Land- Freehold
LandLeasehold
Buildings
(1)(2)
Plant and
machinery(2)
Office
Computer
Equipment equipment (2)
Furniture and
fixtures (2)
Vehicles
Total
15,099
482
(2)
974
9
643
-
62
727
3,617
1,118
21
73
38
234
64
(2)
(15)
(1)
(18)
6,270
1,864
763
3,836
1,182
22
15,563
(22)
(2,206)
(1,102)
(395)
(2,330)
(706)
(12)
(6,773)
(56)
(61)
(29)
(151)
(39)
(1)
(338)
15
Depreciation
(1)
1,791
643
983
6,208
(23)
(2,262)
(1,163)
(422)
(2,466)
(745)
(12)
(7,093)
983
620
4,008
701
341
1,370
437
10
8,470
(In ` crore)
Following are the changes in the carrying value of property, plant and equipment for the three months ended September 30, 2015:
Particulars
Land- Freehold
LandLeasehold
947
621
10
957
Buildings
(1)(2)
5,807
56
Plant and
machinery(2)
Office
Computer
Equipment equipment (2)
Furniture and
fixtures (2)
Vehicles
Total
3,089
876
15
127
30
13,331
316
(2)
(3)
1,425
551
52
39
(231)
(230)
(1)
621
5,863
1,477
590
2,986
905
17
13,416
(17)
(1,988)
(885)
(300)
(1,950)
(579)
(9)
(5,728)
(53)
(47)
(23)
(122)
(26)
88
Depreciation
(1)
(272)
88
(18)
(2,041)
(932)
(323)
(1,984)
(605)
(9)
(5,912)
957
603
3,822
545
267
1,002
300
7,504
(In ` crore)
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2016:
Particulars
18
Land- Freehold
LandLeasehold
Buildings
(1)(2)
Plant and
machinery(2)
Office
Computer
Equipment equipment (2)
Furniture and
fixtures (2)
Vehicles
Total
14,709
879
(2)
970
638
6,173
13
97
(1)
(2)
643
6,270
1,864
763
(21)
(2,150)
(1,044)
(369)
(112)
(120)
(55)
983
Depreciation
(2)
1,679
679
3,481
1,070
19
186
86
375
113
(20)
(1)
(1)
(25)
3,836
1,182
22
15,563
(2,195)
(671)
(11)
(6,461)
(291)
(75)
(2)
(657)
20
25
(23)
(2,262)
(1,163)
(422)
(2,466)
(745)
(12)
(7,093)
983
620
4,008
701
341
1,370
437
10
8,470
(In ` crore)
Following are the changes in the carrying value of property, plant and equipment for the six months ended September 30, 2015:
Particulars
Land- Freehold
LandLeasehold
929
621
28
Buildings
(1)(2)
Plant and
machinery(2)
Office
Computer
Equipment equipment (2)
(2)
(3)
Furniture and
fixtures (2)
Vehicles
Total
12,827
825
5,733
1,361
525
2,812
832
14
130
116
65
408
75
(236)
(234)
(2)
957
621
5,863
1,477
590
2,986
905
17
13,416
(16)
(1,937)
(838)
(280)
(1,852)
(549)
(8)
(5,480)
(2)
(104)
(94)
(43)
(223)
(57)
(1)
(524)
91
92
(18)
(2,041)
(932)
(323)
(1,984)
(605)
(9)
(5,912)
957
603
3,822
545
267
1,002
300
7,504
Office
Computer
Equipment equipment (2)
Furniture and
fixtures (2)
Vehicles
(In ` crore)
Total
Following are the changes in the carrying value of property, plant and equipment for the year ended March 31, 2016:
Particulars
LandLeasehold
Buildings
(1)(2)
Plant and
machinery(2)
(2)
(3)
929
621
5,733
1,361
525
2,812
832
14
12,827
Additions
41
17
440
319
155
945
241
2,163
Deletions
(1)
(1)
(276)
(3)
(281)
970
638
6,173
1,679
679
3,481
1,070
19
14,709
(16)
(1,937)
(838)
(280)
(1,852)
(549)
(8)
(5,480)
(5)
(213)
(207)
(90)
(472)
(125)
(3)
(1,115)
129
134
(21)
(2,150)
(1,044)
(369)
(2,195)
(671)
(11)
(6,461)
970
617
4,023
635
310
1,286
399
8,248
929
605
3,796
523
245
960
283
7,347
Land- Freehold
(1)
Buildings include ` 250/- being the value of 5 shares of ` 50/- each in Mittal Towers Premises Co-operative Society Limited.
(2)
(3)
During the year ended March 31, 2016, computer equipment having net book value of ` 20 crore was transferred to EdgeVerve (Refer note 2.5.3)
Gross carrying of leasehold land represents amounts paid under certain lease-cum-sale agreements to acquire land including agreements where the Company has an option to purchase or renew the properties on expiry of
the lease period.
The aggregate depreciation has been included under depreciation and amortisation expense in the statement of profit and loss.
Tangible assets provided on operating lease to subsidiaries as at September 30, 2016 and March 31, 2016 are as follows:
(In ` crore)
Accumulated
Net book value
depreciation
197
79
Buildings
118
197
75
122
Plant and machinery
32
16
16
33
14
19
Furniture and fixtures
25
14
11
25
12
13
Computer Equipment
3
2
1
3
2
1
Office equipment
18
8
10
18
7
11
The aggregate depreciation charged on the above assets during the three months and six months ended September 30, 2016 amounted to `5 crore and `11 crore ( `3 crore and `5 crore for three months and six months
ended September 30, 2015 respectively).
Particulars
Cost
The rental income from subsidiaries for the three months and six months ended September 30, 2016 amounted to `16 crore and `32 crore respectively (`12 crore and ` 20 crore for the three months and six months ended
September 30, 2015 respectively).
Sub-contracting
rights related
21
-
21
(21)
-
(9)
-
Others
(In ` crore)
Total
30
30
(30)
-
(21)
-
(9)
-
(30)
-
Intellectual Sub-contracting
property
rights related
rights related
Others
(In ` crore)
Total
9
-
42
(12)
Following are the changes in the carrying value of acquired intangible assets for the three months ended September 30, 2015:
Particulars
12
(12)
21
(12)
-
(21)
-
(9)
-
Deletion
Accumulated amortization as of September 30, 2015
Carrying value as of September 30, 2015
21
-
30
(42)
-
12
12
(21)
-
(9)
-
(30)
-
Sub-contracting
rights related
Others
(In ` crore)
Total
Following are the changes in the carrying value of acquired intangible assets for the six months ended September 30, 2016:
Particulars
21
-
30
-
21
30
(21)
-
(9)
-
Deletion
(30)
-
(21)
-
(9)
-
(30)
-
Intellectual Sub-contracting
property
rights related
rights related
Others
(In ` crore)
Total
9
-
42
(12)
Following are the changes in the carrying value of acquired intangible assets for the six months ended September 30, 2015:
Particulars
12
(12)
21
21
(12)
12
-
(21)
(21)
(9)
(9)
(42)
12
(30)
Intellectual Sub-contracting
property
rights related
rights related
Others
(In ` crore)
Total
9
-
42
-
30
Following are the changes in the carrying value of acquired intangible assets for the year ended March 31, 2016:
Particulars
12
-
21
-
(12)
-
(12)
21
30
(12)
-
(21)
-
(9)
-
(42)
-
Deletion/Retirement
Accumulated amortization as of March 31, 2016
12
-
(21)
(9)
12
(30)
Research and development expense recognized in net profit in the statement of profit and loss for the three months and six months ended September 30, 2016 is `89 crore and `168 crore (`89 crore and `223 crore for the
three months and six months ended September 30, 2015)
2.5 INVESTMENTS
(In ` crore)
Particulars
September 30, 2016
Non-current investments
Equity instruments of subsidiaries
Debentures of subsidiary
Preference securities and equity investments
Tax free bonds
Non convertible debentures
Current investments
Liquid mutual fund units
Government bonds
Total carrying value
Particulars
As at
March 31, 2016
April 1, 2015
7,153
2,279
133
1,533
155
11,253
6,901
2,549
93
1,533
11,076
4,873
1
1,234
6,108
1,903
2
1,905
13,158
2
2
11,078
749
749
6,857
Non-current investments
Unquoted
Investment carried at cost
Investments in equity instruments of subsidiaries
Infosys BPO Limited
3,38,22,319 (3,38,22,319) equity shares of `10/- each, fully paid
Infosys Technologies (China) Co. Limited
Infosys Technologies (Australia) Pty Limited
1,01,08,869 (1,01,08,869) equity shares of AUD 0.11 par value, fully paid
Infosys Technologies, S. de R.L. de C.V., Mexico
17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up
Infosys Technologies (Sweden) AB
1,000 (1,000) equity shares of SEK 100 par value, fully paid
Infosys Technologia do Brasil Ltda
5,91,24,348 (5,91,24,348) shares of BRL 1.00 par value, fully paid
Infosys Technologies (Shanghai) Company Limited
Infosys Public Services, Inc.
3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid
Infosys Consulting Holding AG (formerly Lodestone Holding AG)
23,350 (23,350) - Class A shares of CHF 1,000 each and 29,400
(29,400) - Class B Shares of CHF 100 each, fully paid up
Infosys Americas Inc.
10,000 (10,000) shares of USD 10 per share, fully paid up
EdgeVerve Systems Limited (refer note 2.5.3)
131,18,40,000 (131,18,40,000) equity shares of `10/- each, fully paid
Panaya Inc.
2 (2) shares of USD 0.01 per share, fully paid up
Infosys Nova Holdings LLC
Kallidus Inc. (refer note 2.5.2)
10,21,35,416 (10,21,35,416) shares
Skava Systems Private Limited (refer note 2.5.2)
25,000 (25,000) shares of `10 per share, fully paid up
Noah Consulting LLC ( refer note 2.5.1)
Investment carried at amortised cost
Investment in debentures of subsidiary
EdgeVerve Systems Limited (refer note 2.5.3)
22,79,00,000 (25,49,00,000) Unsecured redeemable, non-convertible debentures of ` 100 each fully paid up
Investment carried at fair value through other comprehensive income (FVOCI) (refer note 2.5.5)
Preference securities
Equity instruments
Quoted
Investments carried at amortized cost
Tax free bonds (refer note 2.5.6)
Investments carried at fair value through other comprehensive income (refer note 2.5.8 )
Non convertible debentures
Total non-current investments
659
659
236
66
169
66
65
65
51
149
149
780
99
646
99
1,323
1,323
1,312
1,312
1,398
1,398
94
619
94
619
59
59
242
7,153
242
6,901
2,279
2,279
9,432
2,549
2,549
9,450
132
1
133
92
1
93
1,533
1,533
1,533
1,533
155
11,253
11,076
Current investments
Unquoted
Investments carried at fair value through profit or loss
Liquid mutual fund units (refer note 2.5.7)
1,903
1,903
2
2
1,905
2
2
2
13,158
11,078
1,690
1,535
1,922
1,627
11,468
9,543
7,153
6,901
3,814
4,084
Quoted
Investments carried at amortized cost
Government bonds (refer note 2.5.6)
Total current investments
Total investments
Aggregate amount of quoted investments
Market value of quoted investments (including interest accrued)
Aggregate amount of unquoted investments
Aggregate amount of impairment in value of investments
288
1,903
93
-
On April 24, 2015, the Board of Directors of Infosys authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, to transfer the business of Finacle and Edge
Services. Post the requisite approval from shareholders through postal ballot on June 4, 2015, a Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business
with effect from August 1, 2015. The Company has undertaken an enterprise valuation by an independent valuer and accordingly the business were transferred for a consideration of `3,222 crore and `177 crore
for Finacle and Edge Services, respectively. Net assets amounting to `363 crore, (including working capital amounting to `337 crore) were transferred and accordingly a gain of `3,036 crore had been recorded as
an exceptional item under previous GAAP. On adoption of Ind AS, the same has been reversed from retained earnings and transferred to 'Business Transfer Adjustment Reserve' under retained earnings, in
accordance with Ind AS 103 which requires common control transactions to be recorded at book values.
The consideration was settled through issue of 85,00,00,000 equity shares amounting to `850 crore and 25,49,00,000 non-convertible redeemable debentures amounting to `2,549 crore in EdgeVerve, post the
requisite approval from shareholders on December 11, 2015. During the six months ended September 30, 2016 EdgeVerve had repaid `270 crore by redeeming proportionate number of debentures.
Particulars
Preference Securities
Airviz Inc.
2,82,279 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each
13
13
20
20
27
13
2,28,501 (2,28,501) Preferred Stock, fully paid up, par value `1 each
Waterline Data Science, Inc
10
10
39,33,910 (39,33,910) Preferred Series B Shares, fully paid up, par value USD 0.00001 each
27
27
ANSR Consulting
52,631 (52,631) Series A Preferred Stock, fully paid up, par value USD 0.001 each
Whoop Inc
16,48,352 (16,48,352) Series B Preferred Stock, fully paid up, par value USD 0.0001 each
CloudEndure Ltd.
25,59,290 (12,79,645) Preferred Series B Shares, fully paid up, par value ILS 0.01 each
Nivetti Systems Private Limited
Trifacta Inc.
11,80,358 (Nil) Preferred Stock
26
Equity Instrument
OnMobile Systems Inc., USA
21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid up, par value USD 0.001 each
Merasport Technologies Private Limited
2,420 (2,420) equity shares at ` 8,052/- each, fully paid up, par value `10/- each
Global Innovation and Technology Alliance
15,000 (15,000) equity shares at `1,000/- each, fully paid up, par value `1,000/- each
133
93
The balances held in tax free bonds as at September 30, 2016 and March 31, 2016 is as follows:
Particulars
Amount
Face Value `
1,000/-
20,00,000
201
20,00,000
201
1,000/-
21,00,000
211
21,00,000
211
1,000/-
2,00,000
21
2,00,000
21
10,00,000/-
1,000
100
1,000
100
1,000/-
5,00,000
53
5,00,000
53
10,00,000/-
1,500
150
1,500
150
10,00,000/-
2,000
200
2,000
200
10,00,000/-
1,500
150
1,500
150
10,00,000/-
450
45
450
45
1,000/-
5,00,000
50
5,00,000
50
10,00,000/-
2,000
200
2,000
200
1,000/-
5,00,000
53
5,00,000
53
1,000/-
4,22,800
42
4,22,800
42
1,000/-
5,71,396
57
5,71,396
57
68,02,646
1,533
68,02,646
1,533
The balances held in government bonds as at September 30, 2016 and March 31, 2016 is as follows:
Face Value
Particulars
PHP
100
(In ` crore)
As at March 31, 2016
Units
Amount
150,000
1,50,000
in ` crore
As at September 30, 2016
Units
Amount
409
1,318,178
443
19,005,913
451
1,176,385
600
3,139,444
2,46,39,919
1,903
The balances held in non convertible debenture as at September 30, 2016 is as follows:
Particulars
5,000,000
5,000,000
5,000,000
50
53
52
15,000,000
155
2.6 LOANS
(In ` crore)
Particulars
September 30, 2016
As at
March 31, 2016
April 1, 2015
Non- Current
Unsecured, considered good
Other Loans
Loans to employees
5
5
5
5
4
4
15
20
13
18
10
14
15
13
10
93
91
24
228
264
201
321
326
355
360
225
229
As at
March 31, 2016
April 1, 2015
65
77
73
(1)(4)
129
119
Rental deposits
45
206
192
110
1,240
1,154
1,039
3,474
2,673
2,423
1,398
696
433
82
109
94
89
166
49
6,286
4,801
4,045
6,492
4,993
4,155
6,410
4,884
4,061
Current
(1)
(1)(6)
Total
(1)
(2)
(3)
2
80
-
109
94
21
21
(4)
(5)
27
20
(6)
16
24
43
Restricted deposits represent deposit with financial institutions to settle employee related obligations as and when they arise during the normal course of business.
2.8 TRADE RECEIVABLES (1)
(In ` crore)
Particulars
September 30, 2016
As at
March 31, 2016
April 1, 2015
Current
Unsecured
Considered good(2)
Considered doubtful
Less: Allowances for credit losses
(1)
(2)
10,168
175
10,343
9,798
249
10,047
8,627
322
8,949
175
249
322
10,168
291
9,798
1
244
8,627
6
309
23,067
-
As at
March 31, 2016
April 1, 2015
24,276
-
23,722
-
4,900
4,900
4,000
27,967
29,176
27,722
18
267
352
237
336
182
185
Cash and cash equivalents as of September 30, 2016, March 31, 2016 and April 1, 2015 include restricted cash and bank balances of `370 crore, `341 crore, `188 crore, respectively.
The restrictions are primarily on account of bank balances held as margin money deposits against guarantees and balances held in unpaid dividends bank accounts.
The deposits maintained by the Company with banks and financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or
penalty on the principal.
The details of balances as on balance sheet dates with banks are as follows:
(In ` crore)
As at
Particulars
In current accounts
ANZ Bank, Taiwan
Bank of America, USA
Citibank N.A., Australia
Citibank N.A., India
Citibank N.A., Dubai
Citibank N.A., EEFC (U.S. Dollar account)
Citibank N.A., Japan
Citibank N.A., New Zealand
Citibank N.A., South Africa
Deutsche Bank, Philippines
Deutsche Bank, India
Deutsche Bank, EEFC (Euro account)
Deutsche Bank, EEFC (United Kingdom Pound Sterling account)
Deutsche Bank, EEFC (Australian Dollar account)
Deutsche Bank, EEFC (U.S. Dollar account)
Deutsche Bank, EEFC (Swiss Franc account)
Deutsche Bank, Belgium
Deutsche Bank, France
Deutsche Bank, Germany
Deutsche Bank, Netherlands
Deutsche Bank, Russia (U.S. Dollar account)
Deutsche Bank, Russia (Russian Ruble account)
Deutsche Bank, Singapore
Deutsche Bank, Switzerland
Deutsche Bank, United Kingdom
Deutsche Bank, Malaysia
HSBC Bank, Hong Kong
ICICI Bank, India
ICICI Bank, EEFC (U.S. Dollar account)
Nordbanken, Sweden
Punjab National Bank, India
Royal Bank of Canada, Canada
State Bank of India
18
585
51
1
1
1
18
6
6
9
8
13
6
50
38
1
50
7
19
5
4
2
1
6
34
5
35
7
3
3
14
6
1,013
13
563
24
1
1
15
2
4
11
4
17
8
2
95
2
59
10
17
4
1
2
4
1
170
9
1
57
10
5
4
24
7
1,147
(In ` crore)
Particulars
As at
In deposit accounts
Andhra Bank
Axis Bank
Canara Bank
Central Bank of India
Corporation Bank
HDFC Bank
ICICI Bank
IDBI Bank
Indusind Bank
Indian Overseas Bank
Jammu & Kashmir Bank
Kotak Mahindra Bank Limited
Oriental Bank of Commerce
State Bank of India
Syndicate Bank
Union Bank of India
Vijaya Bank
Yes Bank
In unpaid dividend accounts
Axis Bank - Unpaid dividend account
HDFC Bank - Unpaid dividend account
ICICI Bank - Unpaid dividend account
848
1,500
1,861
1,518
1,185
1,877
3,361
1,750
250
1,000
25
375
1,967
2,311
949
7
200
700
21,684
848
1,170
1,861
1,518
1,185
2,500
3,755
1,750
250
1,000
25
492
1,967
2,310
1,250
7
200
700
22,788
2
3
13
18
2
1
2
5
159
154
39
352
132
147
57
336
4,900
4,900
4,900
4,900
27,967
29,176
As at
March 31, 2016
April 1, 2015
445
333
316
26
73
310
834
87
333
755
7
349
49
58
60
257
59
1,435
1,800
209
48
1,650
1,965
71
1,253
1,384
2,634
2,720
1,733
55
43
Deferred contract costs are upfront costs incurred for the contract and are amortized over the term of the contract. Withholding taxes and others primarily consist of input tax credits.
Amortised cost
Assets:
Cash and cash equivalents (Refer Note 2.9)
Investments (Refer note 2.5)
Equity and preference securities
Tax free bonds and government bonds
Liquid mutual fund units
Redeemable, non-convertible debentures (1)
Non convertible debentures
(In ` crore)
Total fair value
Designated upon
initial recognition
Mandatory
Equity instruments
designated upon
initial recognition
Mandatory
27,967
27,967
133
133
1,535
2,279
1,903
-
1,535
1,903
2,279
27,967
133
1,767 *
1,903
2,279
155
155
155
10,168
326
10,168
326
10,168
326
6,410
48,685
80
1,983
133
2
157
6,492
50,958
6,492
51,190
272
3,859
4,131
85
85
272
3,944
4,216
272
3,944
4,216
Liabilities:
Trade payables (Refer Note 2.14)
Other financial liabilities (Refer Note 2.13)
Total
The carrying value and fair value of financial instruments by categories as of March 31, 2016 were as follows:
Particulars
Amortised cost
Assets:
Cash and cash equivalents (Refer Note 2.9)
Investments (Refer Note 2.5)
Equity and preference securities
Tax free bonds and government bonds
Redeemable, non-convertible debentures (1)
Trade receivables (Refer Note 2.8)
Loans (Refer note 2.6)
Other financial assets (Refer Note 2.7)
Total
Liabilities:
Trade payables (Refer note 2.14)
Other financial liabilities (Refer Note 2.13)
Total
(1)
(In ` crore)
Total fair value
Designated upon
initial recognition
Mandatory
Equity instruments
designated upon
initial recognition
Mandatory
29,176
29,176
29,176
1,535
2,549
9,798
360
4,884
48,302
109
109
93
93
93
1,535
2,549
9,798
360
4,993
48,504
93
1,627 *
2,549
9,798
360
4,993
48,596
623
623
623
3,947
4,570
117
117
4,064
4,687
4,064
4,687
The carrying value of debentures approximates fair value as the instruments are at prevailing market rates
The carrying value and fair value of financial instruments by categories as of April 1, 2015 were as follows:
Particulars
Amortised cost
Assets:
Cash and cash equivalents (Refer Note 2.9)
Investments (Refer Note 2.5)
Equity, preference and other securities
Bonds and government bonds
Liquid mutual fund units
Trade receivables (Refer Note 2.8)
Loans (Refer note 2.6)
Other financial assets (Refer Note 2.7)
Total
Liabilities:
Trade payables (Refer note 2.14)
Other financial liabilities (Refer Note 2.13)
Total
* On account of fair value changes including interest accrued
27,722
27,722
1,234
8,627
229
4,061
41,873
749
94
843
1
1
1
1,234
749
8,627
229
4,155
42,717
124
3,967
4,091
124
3,967
4,091
(In ` crore)
Total fair value
27,722
1
1,269 *
749
8,627
229
4,155
42,752
124
3,967
4,091
As of September 30,
2016
Assets
Investments in liquid mutual fund units (Refer Note 2.5)
1,903
1,903
1,765
200
Level 2
Level 3
1,565
132
132
155
155
82
82
83
83
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.7)
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer Note 2.13)
Liability towards contingent consideration (Refer note 2.13)*
*Discounted $14 million (approximately ` 93 crore) at 13.4%
During the six months ended September 30, 2016, tax free bonds of `115 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs
The following table presents fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2016:
Particulars
(In ` crore)
As of March 31, Fair value measurement at end of the reporting period/year using
2016
Level 1
Level 2
Level 3
Assets
Investments in tax free bonds (Refer Note 2.5)
1,625
298
1,327
92
92
109
109
115
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer note 2.13)
Liability towards contingent consideration (Refer note 2.13)*
115
(In ` crore)
As of April 1, 2015 Fair value measurement at end of the reporting period/year using
Level 1
Level 2
Level 3
749
749
1,269
1
533
-
736
-
94
94
Liabilities
Derivative financial instruments - foreign currency forward and option contracts (Refer note 2.13)
A one percentage point change in the unobservable inputs used in fair valuation of the contingent consideration does not have a significant impact in its value.
The movement in contingent consideration as of September 30, 2016 from March 31, 2016 is on account of settlement of contingent consideration of `40 crore and change in discount rates and passage of time.
The fair value of liquid mutual funds is based on quoted price. The fair value of tax free bonds and government bonds is based on quoted prices and market observable inputs. The fair value is of non-convertible
debentures is based on quoted prices. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the
marketplace.
Market risk
The Company operates internationally and a major portion of the business is transacted in several currencies and consequently the Company is exposed to foreign exchange risk through its sales and services in the
United States and elsewhere, and purchases from overseas suppliers in various foreign currencies. The Company holds derivative financial instruments such as foreign exchange forward and option contracts to mitigate
the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future.
Consequently, the results of the Companys operations are adversely affected as the rupee appreciates/ depreciates against these currencies.
The following table analyzes foreign currency risk from financial instruments as of September 30, 2016:
Particulars
Cash and cash equivalents
Trade receivables
Other financials assets ( including loans)
Trade payables
Other financial liabilities
Net assets / (liabilities)
U.S. dollars
Euro
636
7,212
2,482
(116)
(1,881)
8,333
95
1,100
427
(19)
(247)
1,356
United Kingdom
Pound Sterling
40
575
455
(72)
(172)
826
Australian dollars
Other currencies
(In ` crore)
Total
101
590
142
(29)
(210)
594
89
339
145
(17)
(149)
407
961
9,816
3,651
(253)
(2,659)
11,516
United Kingdom
Pound Sterling
178
664
210
(133)
Australian dollars
Other currencies
(In ` crore)
Total
26
539
108
(32)
93
296
125
(39)
1,074
9,347
2,818
(445)
The following table analyzes foreign currency risk from financial instruments as of March 31, 2016:
Particulars
Cash and cash equivalents
Trade Receivables
Other financials assets ( including loans)
Trade payables
U.S. dollars
Euro
670
6,875
2,005
(199)
107
973
370
(42)
Forward contracts
In U.S. dollars
In Euro
In United Kingdom Pound Sterling
In Australian dollars
In Swiss Franc
Option Contracts
In U.S. dollars
In GBP
In Euro
Total forwards and options
(In ` crore)
As of
September 30, 2016
In million
In ` crore
As of
March 31, 2016
In million
In ` crore
505
91
50
30
19
3,365
677
432
152
133
467
84
60
50
25
3,094
633
573
255
173
150
25
25
1,000
216
186
6,161
125
-
828
5,556
The foreign exchange forward and option contracts mature within twelve months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the
balance sheet date:
(In ` crore)
Particulars
Not later than one month
Later than one month and not later than three months
Later than three months and not later than one year
As of
September 30, 2016
1,092
2,984
2,085
6,161
During the three months ended September 30, 2016, the company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast
cash transactions. Accordingly, the fair value changes of `2 crore was recorded in the other comprehensive income for the three months and six months ended September 30, 2016. The related hedge transactions for balance
in cash flow hedging reserve are expected to occur and reclassified to the statement of profit and loss within 3 months.
The company offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the company intends either to settle on a net basis, or to realise the
asset and settle the liability simultaneously.
The following table provides quantitative information about offsetting of derivative financial assets and derivative financial liabilities:
Particulars
As of
September 30, 2016
Derivative financial
Derivative financial
asset
liability
83
(1)
82
(3)
1
(2)
(In ` crore)
As of
March 31, 2016
Derivative
Derivative
financial financial liability
asset
117
(10)
(8)
8
109
(2)
Credit risk
Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to
`10,168 crore and `9,798 crore as of September 30, 2016 and March 31, 2016, respectively and unbilled revenue amounting to `3,474 crore and `2,673 crore as of September 30, 2016 and March 31, 2016,
respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk has always been managed by the
group through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. On account of adoption
of Ind AS 109, the group uses expected credit loss model to assess the impairment loss or gain. The group uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled
revenues. The provision matrix takes into account available external and internal credit risk factors such as credit default swap quotes, credit ratings from international credit rating agencies and the Group's historical
experience for customers.
The following table gives details in respect of percentage of revenues generated from top customer and top five customers:
Particulars
(In %)
Six months ended September 30,
2016
2015
4.1
4.2
15.1
15.7
Particulars
Balance at the beginning
Impairment loss recognised/ reversed (Refer note 2.20)
Amounts written off
Translation differences
Balance at the end
(In ` crore)
Six months ended September 30,
2016
2015
249
322
44
(14)
(1)
4
1
293
312
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies.
Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi government organizations, non convertible debentures issued by government aided institutions and
certificates of deposit which are funds deposited at a bank for a specified time period.
Liquidity risk
The company's principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The company has no outstanding bank borrowings. The company believes that the working
capital is sufficient to meet its current requirements. Accordingly, no liquidity risk is perceived.
As of September 30, 2016, the Company had a working capital of `36,589 crore including cash and cash equivalents of `27,967 crore and current investments of `1,905 crore. As of March 31, 2016, the Company had a
working capital of `34,509 crore including cash and cash equivalents of `29,176 crore and current investments of `2 crore.
As of September 30, 2016 and March 31, 2016, the outstanding employee benefit obligations were `1,223 crore and `1,130 crore, respectively, which have been substantially funded. Accordingly, no liquidity risk is
perceived.
The table below provides details regarding the contractual maturities of significant financial liabilities as of September 30, 2016:
Particulars
Trade payables
Other financial liabilities (excluding liability towards
acquisition) (Refer Note 2.13)
Liability towards acquisitions on an undiscounted basis
(including contingent consideration)
1-2 years
47
2-4 years
-
4-7 years
-
(In ` crore)
Total
272
3,861
93
The table below provides details regarding the contractual maturities of significant financial liabilities as of March 31, 2016:
Particulars
Trade payables
Other liabilities (excluding liability towards acquisition)
(Refer Note 2.13)
Liability towards acquisitions on an undiscounted basis
(including contingent consideration)
1-2 years
-
2-4 years
-
4-7 years
-
(In ` crore)
Total
623
3,922
27
3,949
86
46
132
2.12 EQUITY
EQUITY SHARE CAPITAL
in ` crore, except as otherwise stated
Particulars
September 30, 2016
As at
March 31, 2016
April 1, 2015
Authorized
Equity shares, `5/- par value
240,00,00,000 (240,00,00,000 (2) ) equity shares
1,200
1,200
600
1,148
1,148
574
1,148
1,148
574
(2)
The authorised equity shares were 120,00,00,000 and the issued, subscribed and paid-up shares were 114,84,72,332 as of April 1, 2015.
Forfeited shares amounted to `1,500/- (`1,500/-)
The Company has only one class of shares referred to as equity shares having a par value of `5/-. Each holder of equity shares is entitled to one vote per share.The equity shares represented
by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying equity share.
In the period of five years immediately preceding September 30, 2016:
The Company has allotted 114,84,72,332 and 57,42,36,166 fully paid-up shares of face value `5/- each during the quarter ended June 30, 2015 and December 31, 2014, pursuant to bonus
issue approved by the shareholders through postal ballot. For both the bonus issues, 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. Options granted under the restricted stock unit plan have been adjusted for bonus shares.
The Board has increased dividend pay-out ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.
The Board of Directors, in its meeting on April 15, 2016, proposed a final dividend of `14.25/- per equity share and the same was approved by the shareholders at the Annual General
Meeting held on June 18, 2016. The amount was recognized as distributions to equity shareholders during the six months ended September 30, 2016 and the total appropriation was `3,939
crore including corporate dividend tax. (Refer note 2.2.1 for impact on transition to Ind AS)
The amount of per share dividend recognized as distributions to equity shareholders during the six month ended September 30, 2015 was `29.50/- per equity share (not adjusted for June 17,
2015 bonus issue).
The Board of Directors, in their meeting on October 14, 2016, declared an interim dividend of `11/- per equity share, which would result in a cash outflow of approximately `3,041 crore,
inclusive of corporate dividend tax.
In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares
held by the shareholders, after distribution of all preferential amounts.
The details of shareholder holding more than 5% shares as at September 30, 2016 and March 31, 2016 are set out below :
Number of shares
38,53,17,937
% held
16.78
Number of shares
38,53,17,937
14,83,67,646
6.46
13,22,74,300
% held
16.78
5.76
The reconciliation of the number of shares outstanding and the amount of share capital as at September 30, 2016 and March 31, 2016 is set out below:
Amount
Number of shares
Amount
2,296,944,664
1,148
1,148,472,332
574
2,296,944,664
1,148
1,148,472,332
2,296,944,664
574
1,148
2011 RSU Plan (the 2011 Plan) now called 2015 Stock Incentive Compensation Plan ( the 2015 Plan): The Company had a 2011 RSU Plan which provided for the grant of restricted
stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended the establishment of the 2011 Plan to the shareholders on August 30, 2011 and the
shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the
plan was 1,13,34,400 as on date of approval of plan adjusted for bonus shares and the plan was expected to continue in effect for a term of 10 years from the date of initial grant under the
plan. Awards have been granted to the Dr Vishal Sikka under the 2011 RSU plan as detailed below. Further the Company has earmarked 1,00,000 equity shares for welfare activities of the
employees, approved by the shareholders vide postal ballot which ended on March 31, 2016. The equity shares as of March 31, 2016 held under this plan, i.e. 1,12,23,576 equity shares (this
includes the aggregate number of equity shares that may be awarded under the 2011 Plan as reduced by 10,824 equity shares already exercised by Dr. Vishal Sikka and 1,00,000 equity
shares which have been earmarked for welfare activities of the employees) have been subsumed under the 2015 Plan.
During the year ended March 31, 2015, the company made a grant of 108,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Officer and Managing
Director. The Board in its meeting held on June 22, 2015, on recommendation of Nomination and Remuneration Committee, further granted 1,24,061 RSUs to Dr. Vishal Sikka. These
RSUs are vesting over a period of four years from the date of the grant in the proportions specified in the award agreement. The RSUs will vest subject to achievement of certain key
performance indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date.
The award granted to Dr. Vishal Sikka on June 22, 2015 was modified by the Nomination and remuneration committee on April 14, 2016. There is no modification or change in the total
number of RSUs granted or the vesting period (which is four years). The modifications relate to the criteria of vesting for each of the years. Based on the modification, the first tranche of
the RSUs will vest subject to achievement of certain key performance indicators for the year ended March 31, 2016. Subsequent vesting of RSU's for each of the remaining years would be
subject to continued employment.
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2016 is set out
below:
Particulars
Particulars
209,099
1,512,895
12,650
18,236
1,691,108
-
5
5
5
5
5
-
391,420
10,120
381,300
-
Weighted average
exercise price (`)
221,505
1,512,895
12,650
30,642
1,691,108
-
5
5
5
5
5
-
391,420
10,120
381,300
-
Weighted average
exercise price ($)
0.07
0.07
0.07
-
The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share based payment transactions during the three months and six months ended September 30, 2015 is set out
below:
Particulars
Weighted average
exercise price
5
5
5
5
-
During the three months and six months ended September 30, 2015, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was `1,092/The weighted average remaining contractual life of RSUs outstanding as of September 30, 2016 and March 31, 2016 under the 2015 Plan was 2.27 years and 1.98 years respectively.
The fair value of each equity settled RSU is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:
Particulars
Grant date
Weighted average share price (`) / ($- ADS)*
Exercise price (`)/ ($- ADS)*
Expected volatility (%)
Expected life of the option (years)
Expected dividends (%)
Risk-free interest rate (%)
Weighted average fair value as on grant date (`) / ($- ADS)*
* Data for Fiscal 2015 is not adjusted for bonus issues
The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behaviour of the employee who receives the RSU.
Expected volatility during the expected term of the RSU is based on historical volatility of the observed market prices of the company's publicly traded equity shares during a period
equivalent to the expected term of the RSU.
During the three months and six months ended September 30, 2016 and September 30, 2015, the company recorded an employee stock compensation expense of `20 crore and `2 crore and
`29 crore and `4 crore, respectively in the statement of profit and loss. The cash settled stock compensation expense during each of the three months and six months ended September 30,
2016 was less than `1 crore.
As at
March 31, 2016
April 1, 2015
39
39
27
35
62
27
27
18
1,558
1,953
56
1,764
1,707
58
1,719
1,582
50
44
4
35
1,223
235
80
16
66
1,130
304
487
20
37
907
42
5,128
5,132
5,167
5,194
4,874
3,859
3,947
3,967
85
117
93
4,847
(1)
132
27
(2)
13
29
27
36
26
38
33
(3)
As at
September 30, 2016
March 31, 2016
Trade payables *
272
272
143
623
623
145
April 1, 2015
124
124
102
As at
March 31, 2016
April 1, 2015
1,088
1,025
831
1,089
1
2,178
1,068
2,093
733
0
1,564
2.16 PROVISIONS
(In ` crore)
As at
Particulars
September 30, 2016
Current
Others
Post-sales client support and warranties and others
April 1, 2015
556
436
556
436
382
382
The movement in the provision for post-sales client support and warranties and others is as follows :
Particulars
462
436
Provision recognized/(reversed)
109
145
Provision utilized
(8)
Exchange difference
(7)
556
556
(26)
Current taxes
Deferred taxes
Income tax expense
2015
1,333
(28)
1,305
(In ` crore)
Six months ended
September 30,
2016
2015
2,640
2,385
(25)
2,615
19
2,404
Current tax expense for the three months period ended September 30, 2016 and September 30, 2015 includes reversals (net of provisions) amounting to `19 crore and `29 crore respectively pertaining to prior periods
Current tax expense for the six months period ended September 30, 2016 and September 30, 2015 includes reversals (net of provisions) amounting to `19 crore and `117 crore respectively pertaining to prior periods
Entire deferred income tax for the three months and six months ended September 30, 2016 and September 30, 2015 relates to origination and reversal of temporary differences.
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized below:
Particulars
(In ` crore)
Six months ended
September 30,
2015
4,553
34.61%
1,576
(464)
181
(29)
(16)
1
61
(5)
1,305
2016
9,271
34.61%
3,209
(974)
410
(19)
(29)
(9)
27
2,615
2015
8,543
34.61%
2,957
(843)
327
(117)
(31)
130
(19)
2,404
The applicable Indian statutory tax rate for fiscal 2017 and fiscal 2016 is 34.61%.
The foreign tax expense is due to income taxes payable overseas, principally in the United States. In India, the company has benefited from certain tax incentives that the Government of India has provided to the export of
software for the units registered under the Special Economic Zones Act, 2005 (SEZ). SEZ units which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100 percent of profits or gains
derived from the export of services for the first five years from the financial year in which the unit commenced the provision of services and 50 percent of such profits or gains for further five years. Up to 50% of such
profits or gains is also available for a further five years subject to creation of a Special Economic Zone re-Investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve by the Company for
acquiring new plant and machinery for the purpose of its business as per the provisions of the Income Tax Act, 1961.
Infosys is subject to a 15% Branch Profit Tax (BPT) in the U.S. to the extent its U.S. branch's net profit during the year is greater than the increase in the net assets of the U.S. branch during the year, computed in
accordance with the Internal Revenue Code. As of March 31, 2016, Infosys' U.S. branch net assets amounted to approximately `5,109 crore. As of September 30, 2016, the Company has provided for branch profit tax of
`336 crore for its U.S branch, as the Company estimates that these branch profits are expected to be distributed in the foreseeable future. The change in provision for branch profit tax includes `2 crore movement on
account of exchange rate during the six months ended September 30, 2016.
Deferred income tax liabilities have not been recognized on temporary differences amounting to `4,701 crore and `4,195 crore as of September 30, 2016 and March 31, 2016, respectively, associated with investments in
subsidiaries and branches as it is probable that the temporary differences will not reverse in the foreseeable future.
(In ` crore)
The following table provides the details of income tax assets and income tax liabilities as of September 30, 2016, March 31, 2016 and April 1, 2015
As at
March 31, 2016
5,020
3,304
1,716
April 1, 2015
3,941
2,678
1,263
The gross movement in the current income tax asset/ (liability) for the three months and six months ended September 30, 2016 and September 30, 2015 is as follows:
2015
1,455
1,424
(1,333)
1,546
(In ` crore)
Six months ended
September 30,
2016
2015
1,716
1,263
2,168
2,665
(2,640)
(2,385)
12
3
1
1,257
1,546
(In ` crore)
The tax effects of significant temporary differences that resulted in deferred income tax assets and liabilities are as follows:
Particulars
September 30, 2016
As at
March 31, 2016
April 1, 2015
102
53
45
96
382
92
24
794
146
50
46
79
359
76
21
777
210
51
29
100
280
72
7
749
336
30
366
428
334
38
372
405
316
316
433
Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred
tax liabilities relate to income taxes levied by the same taxation authority.
In assessing the realizability of deferred income tax assets, management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is
dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected
future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax
assets are deductible, management believes that the Group will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near
term if estimates of future taxable income during the carry forward period are reduced.
(In ` crore)
Six months ended
September 30,
The gross movement in the deferred income tax account for the three months and six months ended September 30, 2016 and September 30, 2015, is as follows:
Particulars
Three months ended
September 30,
Net deferred income tax asset at the beginning
Translation differences
Credits / (charge) relating to temporary differences (Refer Note 2.17)
Temporary differences on other comprehensive income
Net deferred income tax asset at the end
2016
432
5
(9)
428
2015
405
(34)
28
399
2016
405
(2)
25
428
2015
433
(15)
(19)
399
The credits relating to temporary differences during the six months ended September 30, 2016 are primarily on account of trade receivable, accrued compensation to employees and compensated absences partially offset by
reversal of credits pertaining to property plant and equipment. The charge relating to temporary differences during the six months ended September 30, 2015 are primarily on account of property plant and equipment, trade
receivables, accrued compensation to employees partially offset by compensated absences.
(In ` crore)
14,996
2015
13,366
25,626
159
637
15,000
13,525
29,420
26,263
(In ` crore)
2015
29,412
2015
2015
81
25
165
560
580
1,130
49
1,196
161
19
(14)
23
207
41
(85)
(93)
85
(89)
134
48
763
80
775
89
1,496
(In ` crore)
2.20 EXPENSES
Particulars
161
1,525
2015
2015
7,741
6,825
15,158
13,473
163
134
319
273
4
20
29
Staff welfare
15
26
38
44
7,939
6,987
15,544
13,794
168
163
339
347
144
172
197
279
312
335
536
626
(In ` crore)
Particulars
2016
2015
2016
2015
48
49
100
95
64
49
161
114
67
43
124
84
34
24
65
51
248
194
532
382
10
17
15
19
26
11
(37)
22
(32)
22
47
(13)
Other expenses
55
Other services
Reimbursement of expenses
53
59
1
-
98
101
22
19
44
52
606
426
1,268
876
2.21 LEASES
Obligations on long-term, non-cancellable operating leases
The lease rentals charged during the period is as under:
Particulars
Lease rentals
recognized
(In ` crore)
Six months ended
September 30,
2015
2016
124
84
The obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows:
(In ` crore)
Future minimum lease payable
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
As at
March 31, 2016
170
417
315
April 1, 2015
101
284
158
The operating lease arrangements, are renewable on a periodic basis and for most of the leases extend upto a maximum of ten years from their respective dates of
inception and relates to rented premises. Some of these lease agreements have price escalation clauses.
As at
September 30,
2016
826
755
Service cost
56
106
Interest expense
31
Curtailment gain
(3)
55
(34)
Transfer of obligation
67
Benefits paid
(39)
938
(66)
828
781
10
826
33
59
(43)
Contributions
118
90
Benefits paid
(39)
944
(66)
828
Amount for the three months and six months ended September 30, 2016 and September 30, 2015 recognized in the statement of profit and loss under employee benefit
expenses.
Particulars
2016
2015
Service cost
28
27
56
54
(2)
(1)
(2)
(2)
Curtailment gain
(3)
26
51
52
26
2015
(In ` crore)
Six months ended
September 30,
Amount for the three months and six months ended September 30, 2016 and September 30, 2015 recognized in statement of other comprehensive income:
Particulars
2015
(In ` crore)
Six months ended
September 30,
2016
2015
42
(1)
67
12
(Return) / loss on plan assets excluding amounts included in the net interest on the
net defined benefit liability/(asset)
(1)
(3)
(3)
(2)
64
42
Particulars
(In ` crore)
Six months ended
September 30,
2016
2015
2015
37
(4)
47
(9)
37
(4)
47
(9)
The weighted-average assumptions used to determine benefit obligations as at September 30, 2016, March 31, 2016 and April 1, 2015 are set out below:
Particulars
As of
Discount rate
Weighted average rate of increase in compensation levels
April 1, 2015
6.9%
8.0%
7.8%
7.8%
8.0%
8.0%
The weighted-average assumptions used to determine net periodic benefit cost for the three months and six months ended September 30, 2016 and September 30, 2015
are set out below:
Particulars
Discount rate
Weighted average rate of increase in compensation levels
Weighted average duration of defined benefit obligation
2016
2015
2016
2015
7.8%
7.8%
7.8%
7.8%
8.0%
8.0%
8.0%
8.0%
6.4 years
6.5 years
6.4 years
6.5 years
Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India.
The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The discount rate is based on the government
securities yield.
As of September 30, 2016, every percentage point increase / decrease in discount rate will affect our gratuity benefit obligation by approximately `55 crore.
As of September 30, 2016, every percentage point increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit
obligation by approximately `46 crore.
Sensitivity for significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by one
percentage, keeping all other actuarial assumptions constant.
Gratuity is applicable only to employees drawing a salary in Indian rupees and there are no other foreign defined benefit gratuity plans.
The Company contributes all ascertained liabilities towards gratuity to the Infosys Limited Employees' Gratuity Fund Trust. Trustees administer contributions made to
the trust. As of September 30, 2016 and March 31, 2016, the plan assets have been primarily invested in insurer managed funds.
Actual return on assets for the three months and six months ended September 30, 2016 and September 30, 2015 were `17 crore and `15 crore and `36 crore and `32
crore respectively.
The Company expects to contribute `50 crore to the gratuity trusts during the remainder of fiscal 2017.
Maturity profile of defined benefit obligation:
(In ` crore)
Within 1 year
128
1-2 year
135
2-3 year
143
3-4 year
155
4-5 year
168
5-10 years
845
b. Superannuation
The Company contributed `39 crore and `75 crore to the Superannuation trust during the three months and six months ended September 30, 2016 (`55 crore and `112
crore during the three months and six months ended September 30, 2015).
c. Provident fund
Infosys has an obligation to fund any shortfall on the yield of the trusts investments over the administered interest rates on an annual basis. These administered rates
are determined annually predominantly considering the social rather than economic factors and in most cases the actual return earned by the Company has been higher
in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by Actuarial Society of India and based on the below
provided assumptions there is no shortfall as at September 30, 2016 and March 31, 2016 and April 1, 2015, respectively.
The details of fund and plan asset position are given below:
(In ` crore)
Particulars
As of
September 30, 2016
3,939
3,808
2,912
3,939
-
3,808
2,912
April 1, 2015
As at
September 30, 2016
6.90%
7.80%
April 1, 2015
7.80%
7 years
7 years
7 years
8.75%
8.75%
8.75%
- Thereafter:
8.60%
8.60%
8.60%
The Company contributed `95 crore and `188 crore during the three months and six months ended September 30, 2016 (`84 crore and `170 crore during the three
months and six months ended September 30, 2015 ).
The provident plans are applicable only to employees drawing a salary in Indian rupees and there are no other significant foreign defined benefit plans.
7,779
2015
6,822
39
55
121
7,939
110
6,987
(In ` crore)
Six months ended September 30,
2016
2016
2015
15,230
13,460
75
112
239
15,544
222
13,794
* Includes stock compensation expense of ` 20 crore and ` 2 crore and ` 29 crore and ` 4 crore for the three months and six months ended September 30, 2016 and
September 30, 2015, respectively. (Refer note 2.12).
2.23 RECONCILIATION OF BASIC AND DILUTED SHARES USED IN COMPUTING EARNING PER SHARE
The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share:
Basic earnings per equity share - weighted average number of equity shares outstanding
Effect of dilutive common equivalent shares - share options outstanding
Diluted earnings per equity share - weighted average number of equity shares and common equivalent shares
outstanding
80,923
229,70,25,587
229,69,44,664
45,693
229,69,90,357
As at
March 31, 2016
229,69,44,664
2.24 CONTINGENT LIABILITIES AND COMMITMENTS (TO THE EXTENT NOT PROVIDED FOR)
(In ` crore)
Particulars
Contingent liabilities :
Claims against the Company, not acknowledged as debts(1)
[Net of amount paid to statutory authorities `4,388 crore (` 4,386 crore )]
Commitments :
Estimated amount of contracts remaining to be executed on capital contracts and not provided for
(net of advances and deposits)
April 1, 2015
191
188
167
1,164
1,295
1,272
(1)
Claims against the company not acknowledged as debts as on September 30, 2016 include demand from the Indian Income tax authorities for payment of tax of `4,135 crores (`4,135 crores), including interest of
`1,224 crore (`1,224 crore) upon completion of their tax assessment for fiscal 2007, fiscal 2008, fiscal 2009, fiscal 2010 and fiscal 2011. These demands were paid to statutory tax authorities. The company has filed an
appeal with the income tax appellate authorities.
Demand for fiscal 2007, fiscal 2008 and fiscal 2009 includes disallowance of a portion of the deduction claimed by the company under Section 10A of the income Tax Act as determined by the ratio of export turnover to
total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. Demand for fiscal 2007, fiscal 2008, fiscal 2009, fiscal
2010 and fiscal 2011 also includes disallowance of portion of profit earned outside India from the STP units under section 10A of the Income Tax Act and disallowance of profits earned from SEZ units under section
10AA of the Income Tax Act. The matters for fiscal 2007, fiscal 2008 and fiscal 2009 are pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscal 2010 and fiscal 2011 is pending
before Honble Income Tax Appellate Tribunal (ITAT) Bangalore.
The company is contesting the demand and the management including its tax advisors believes that its position will likely be upheld in the appellate process. The management believes that the ultimate outcome of these
proceedings will not have a material adverse effect on the Company's financial position and results of operations.
The company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The companys management does not reasonably expect that these legal actions, when ultimately concluded
and determined, will have a material and adverse effect on the companys results of operations or financial condition.
2.25 RELATED PARTY TRANSACTIONS
List of related parties:
Name of subsidiaries
Infosys BPO Limited (Infosys BPO)
Infosys Technologies (China) Co. Limited (Infosys China)
Infosys Technologies S. de R. L. de C. V. (Infosys Mexico)
Infosys Technologies (Sweden) AB. (Infosys Sweden)
Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai)
Infosys Tecnologia DO Brasil LTDA. (Infosys Brasil)
Infosys Public Services, Inc. USA (Infosys Public Services)
Infosys Americas Inc., (Infosys Americas)
Infosys (Czech Republic) Limited s.r.o. (formerly Infosys BPO s. r. o) (1)
Infosys Poland Sp Z.o.o (formerly Infosys BPO (Poland) Sp Z.o.o) (1)
Infosys BPO S.DE R.L. DE.C.V (1)(17)
Infosys McCamish Systems LLC (1)
Portland Group Pty Ltd(1)
Portland Procurement Services Pty Ltd(5)
Infosys BPO Americas LLC.(1)(16)
Infosys Technologies (Australia) Pty. Limited (Infosys Australia) (2)
EdgeVerve Systems Limited (EdgeVerve) (7)
Infosys Consulting Holding AG (Infosys Lodestone) (formerly Lodestone Holding AG)
Lodestone Management Consultants Inc. (3)
Infosys Management Consulting Pty Limited ( formerly Lodestone Management Consultants Pty Limited) (3)
Infosys Consulting AG (formerly Lodestone Management Consultants AG) (3)
Lodestone Augmentis AG (2) (6)
Lodestone GmbH (formerly Hafner Bauer & dman GmbH) (2)(3)
Lodestone Management Consultants (Belgium) S.A. (4)
Infosys Consulting GmbH (formerly Lodestone Management Consultants GmbH) (3)
Infosys Consulting Pte Ltd. (formerly Lodestone Management Consultants Pte Ltd) (3)
Infosys Consulting SAS (formerly Lodestone Management Consultants SAS) (3)
Infosys Consulting s.r.o.(formerly Lodestone Management Consultants s.r.o.) (3)
Lodestone Management Consultants GmbH (3)
Lodestone Management Consultants Co., Ltd. (3)
Infy Consulting Company Limited (formerly Lodestone Management Consultants Ltd.) (3)
Infy Consulting B.V. (Lodestone Management Consultants B.V.) (3)
Infosys Consulting Ltda. (formerly Lodestone Management Consultants Ltda.) (4)
Infosys Consulting Sp. Z.o.o. (formerly Lodestone Management Consultants Sp. z o.o.) (3)
Lodestone Management Consultants Portugal, Unipessoal, Lda. (3)
Country
India
China
Mexico
Sweden
China
Brazil
U.S.
U.S.
Czech Republic
Poland
Mexico
U.S.
Australia
Australia
U.S.
Australia
India
Switzerland
U.S.
Australia
Switzerland
Switzerland
Switzerland
Belgium
Germany
Singapore
France
Czech Republic
Austria
China
U.K.
Netherlands
Brazil
Poland
Portugal
Holding as at
March 31, 2016
99.98%
100%
100%
100%
100%
100%
100%
100%
99.98%
99.98%
99.98%
99.98%
-
April 1, 2015
99.98%
100%
100%
100%
100%
100%
100%
100%
99.98%
99.98%
99.98%
99.98%
-
100%
100%
100%
100%
100%
100%
100%
100%
99.90%
100%
100%
100%
100%
100%
100%
100%
100%
99.99%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
99.90%
100%
100%
100%
100%
100%
100%
100%
100%
99.99%
100%
100%
S.C. Infosys Consulting S.R.L.(formerly S.C. Lodestone Management Consultants S.R.L.) (3)
Infosys Consulting S.R.L. (formerly Lodestone Management Consultants S.R.L.) (3)
Infosys Canada Public Services Ltd.(8)
Infosys Nova Holdings LLC. (Infosys Nova)(9)
Panaya Inc. (Panaya) (10)
Panaya Ltd.(11)
Panaya GmbH(11)
Panaya Pty Ltd(2)(11)
Panaya Japan Co. Ltd.(11)
Skava Systems Pvt. Ltd. (Skava Systems)(12)
Kallidus Inc. (Kallidus)(13)
Noah Consulting LLC (Noah) (14)
Noah Information Management Consulting Inc. (Noah Canada) (15)
(1)
Wholly owned subsidiary of Infosys BPO.
(2)
Under liquidation
(3)
Wholly owned subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)
(4)
Majority owned and controlled subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)
(5)
Wholly owned subsidiary of Portland Group Pty Ltd. Liquidated effective May 14, 2014.
(6)
Wholly owned subsidiary of Infosys Consulting AG (formerly Lodestone Management Consultants AG)
(7)
Incorporated effective February 14, 2014 (Refer note 2.5.3)
(8)
Wholly owned subsidiary of Infosys Public Services, Inc. Incorporated effective December 19, 2014
(9)
Incorporated effective January 23, 2015
(10)
On March 5, 2015, Infosys acquired 100% of the voting interest in Panaya Inc.
(11)
Wholly owned subsidiary of Panaya Inc .
(12)
On June 2, 2015, Infosys acquired 100% of the voting interest in Skava Systems (Refer note 2.5.2)
(13)
On June 2, 2015, Infosys acquired 100% of the voting interest in Kallidus Inc. (Refer note 2.5.2)
(14)
On November 16, 2015, Infosys acquired 100% of the membership interests in Noah (Refer Note 2.5.1)
(15)
Wholly owned subsidiary of Noah
(16)
Incorporated effective November 20, 2015
(17)
Liquidated effective March 15, 2016
Romania
Argentina
Canada
U.S.
U.S.
Israel
Germany
Australia
Japan
India
U.S.
U.S.
Canada
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
-
Holding as at
March 31, 2016
16%
April 1, 2015
20%
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Name of Associates
DWA Nova LLC(1)
(1)
Associate of Infosys Nova Holdings LLC.
Country
U.S.
Nature of relationship
Post-employment benefit plan of Infosys
Post-employment benefit plan of Infosys
Post-employment benefit plan of Infosys
Controlled trust
Controlled trust
Controlled trust
The details of amounts due to or due from related parties as at September 30, 2016, March 31, 2016 and April 1, 2015 are as follows:
(In ` crore)
Particulars
September 30, 2016
Investment in debentures
EdgeVerve(2)
Trade receivables
Infosys China
Infosys Mexico
Infosys Brasil
Infosys BPO
Infy Consulting Company Ltd.
EdgeVerve
Infosys Public Services
Infosys Sweden
Panaya Ltd
As at
March 31, 2016
April 1, 2015
2,279
2,549
35
5
1
3
46
8
159
7
27
291
29
6
1
5
8
153
28
14
244
16
1
5
1
26
14
246
309
24
69
93
24
67
91
6
18
24
6
55
7
1
2
71
5
8
3
43
6
1
1
67
1
4
14
3
1
20
43
26
1
27
20
20
1
5
6
10
7
3
1
4
9
7
4
62
2
12
17
4
1
143
10
6
2
2
8
16
7
83
9
2
145
10
1
1
5
10
8
65
2
102
24
1
1
26
27
1
1
1
7
1
38
16
2
1
1
9
4
33
11
2
13
1
18
10
29
(1)
37
36
Loans(1)
Infy Consulting Company Ltd.
Infosys Sweden
Infosys Technologies China
EdgeVerve
Prepaid and other financial assets (3)
Infosys BPO
Infosys Public Services
EdgeVerve
Panaya
Infosys Consulting SAS
Infosys Consulting GmbH
Infy Consulting Company Ltd.
Lodestone Management Consultants Inc.
Unbilled revenues
Infosys Consulting SAS
EdgeVerve
Kallidus
Infosys McCamish Systems LLC
Trade payables
Infosys China
Infosys BPO
Infosys (Czech Republic) Limited s.r.o.
Portland Group Pty Ltd
Infosys Mexico
Infosys Sweden
Infosys Management Consulting Pty Limited
Infosys Consulting Pte Ltd.
Infy Consulting Company Ltd.
Infosys Brasil
Noah Consulting LLC
Panaya Ltd.
Infosys Public Services
Kallidus
Other financial liabilities
Infosys BPO
Infosys McCamish Systems LLC
Infosys Consulting AG
Infy Consulting Company Ltd.
EdgeVerve
Panaya Ltd.
Infosys Public Services
Infosys Sweden
Infosys Mexico
Accrued expenses
Infosys BPO
Kallidus Inc
Noah Consulting, LLC
Noah Information Management Consulting Inc.
EdgeVerve
The details of the related parties transactions entered into by the Company, in addition to the lease commitments described in note 2.21, for the three months and six months ended September 30, 2016 and September 30,
2015 are as follows:
Particulars
Capital transactions:
Financing transactions
Equity
Infosys China
Infosys Sweden
Infosys Shanghai
2015
67
(In ` crore)
Six months ended
September 30,
2016
2015
67
51
134
191
191
67
252
(270)
(270)
(270)
(270)
Debenture
EdgeVerve
1
44
(1)
3
-
(6)
10
13
(18)
45
(1)
250
250
250
250
30
31
190
9
1
8
91
15
6
5
12
2
1
10
35
1
447
32
25
190
28
1
3
85
18
3
2
4
3
394
59
63
377
17
1
15
183
39
11
9
21
3
2
11
64
2
877
63
54
364
59
2
6
158
37
6
5
5
4
763
1
8
9
3
3
2
11
13
5
5
Infosys China
EdgeVerve
1
51
52
1
1
2
105
107
2
2
Infosys China
Infosys Mexico
Infy Consulting Company Limited
Infosys Brasil
Infosys BPO
McCamish Systems LLC
Infosys Sweden
EdgeVerve
Infosys Public Services
3
7
30
2
14
(1)
1
-
Interest income
-
Sale of services
4
77
236
373
10
8
13
31
2
10
7
1
17
1
7
7
15
47
4
28
-
5
17
11
3
35
2
14
219
264
8
135
471
715
433
520
12
2
5
19
20
14
24
58
15
2
10
27
The table below describes the compensation to key managerial personnel which comprise directors and executive officers:
Particulars
Salaries and other employee benefits to whole-time directors and executive officers (1)
Commission and other benefits to non-executive/independent directors
Total
2015
6
3
9
(In ` crore)
Six months ended
September 30,
2016
2015
35
28
5
5
40
33
Includes stock compensation expense of ` 5 crore and ` 14 crore for the three months and six months ended September 30, 2016 ( ` 2 crore and ` 4 crore for the three months and six months ended September 30,
2015) towards CEO compensation.
(1)
Revenue and identifiable operating expenses in relation to segments are categorized based on items that are individually identifiable to that segment.
Revenue for all other segments represents revenue generated from customers located in India, Japan and China. Allocated expenses of segments include
expenses incurred for rendering services from the Company's offshore software development centres and on-site expenses, which are categorized in relation
to the associated turnover of the segment. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically
allocable to specific segments as the underlying assets are used interchangeably. Management believes that it is not practical to provide segment disclosures
relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted against the total income of the
Company.
Assets and liabilities used in the Company's business are not identified to any of the reportable segments, as these are used interchangeably between
segments. Management believes that it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful
segregation of the available data is onerous.
Geographical information on revenue and business segment revenue information is collated based on individual customers invoiced or in relation to which
the revenue is otherwise recognized.
Business segments
Three months ended September 30, 2016 and September 30, 2015
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segment operating income
FS
MFG
ECS
RCL
HILIFE
Hi-tech
3,998
3,692
2,180
1,829
754
770
1,064
1,093
1,506
1,445
772
791
285
305
449
349
3,510
2,981
1,732
1,393
664
629
1,114
959
2,598
2,377
1,291
1,149
491
501
816
727
1,736
1,611
908
791
328
340
500
480
1,275
1,184
669
557
241
250
365
377
Unallocable expenses
Operating profit
Other income, net
Profit before income taxes
Income tax expense
Net profit
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
All other
segments
377
235
225
118
71
49
81
68
(In ` crore)
Total
15,000
13,525
7,777
6,628
2,834
2,844
4,389
4,053
340
275
4,049
3,778
763
775
4,812
4,553
1,336
1,305
3,476
3,248
338
272
2
3
Six months ended September 30, 2016 and September 30, 2015
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segment operating income
FS
MFG
ECS
RCL
HILIFE
Hi-tech
7,871
7,343
4,236
3,673
1,545
1,525
2,090
2,145
2,978
2,693
1,533
1,445
586
575
859
673
6,851
5,824
3,368
2,766
1,347
1,243
2,136
1,815
5,181
4,556
2,575
2,217
1,020
972
1,586
1,367
3,364
3,119
1,752
1,577
661
666
951
876
2,545
2,302
1,338
1,156
501
491
706
655
North
America
9,668
9,012
5,105
4,495
1,828
1,900
2,735
2,617
Europe
India
3,297
2,931
1,711
1,440
623
618
963
873
518
278
217
80
98
56
203
142
All other
segments
630
426
427
291
123
91
80
44
Unallocable expenses
Operating profit
Other income, net
Profit before income taxes
Income tax expense
Net profit
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
(In ` crore)
Total
29,420
26,263
15,229
13,125
5,783
5,563
8,408
7,575
662
528
7,746
7,047
1,525
1,496
9,271
8,543
2,615
2,404
6,656
6,139
657
524
5
4
Geographic segments
Three months ended September 30, 2016 and September 30, 2015
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segment profit
Unallocable expenses
Operating profit
Other income, net
Profit before income taxes
Income tax expense
Net profit
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
Rest of the
World
1,517
1,304
744
613
285
270
488
421
(In ` crore)
Total
15,000
13,525
7,777
6,628
2,834
2,844
4,389
4,053
340
275
4,049
3,778
763
775
4,812
4,553
1,336
1,305
3,476
3,248
338
272
2
3
Six months ended September 30, 2016 and September 30, 2015
Particulars
Revenue from operations
Identifiable operating expenses
Allocated expenses
Segment profit
Unallocable expenses
Operating profit
Other income, net
Profit before income taxes
Income tax expense
Net profit
Depreciation and amortization
Non-cash expenses other than depreciation and amortization
North
America
19,077
17,367
10,107
8,817
3,753
3,705
5,217
4,845
Europe
India
6,541
5,544
3,303
2,771
1,287
1,179
1,951
1,594
854
607
404
314
166
117
284
176
Rest of the
World
2,948
2,745
1,415
1,223
577
562
956
960
(In ` crore)
Total
29,420
26,263
15,229
13,125
5,783
5,563
8,408
7,575
662
528
7,746
7,047
1,525
1,496
9,271
8,543
2,615
2,404
6,656
6,139
657
524
5
4
Significant clients
No client individually accounted for more than 10% of the revenues in the three months and six months ended September 30, 2016 and September 30,
2015.
(In ` crore)
Six months ended September 30,
2016
2015
29,420
26,263
18,561
15,770
10,859
10,493
680
878
1,558
4,049
763
4,812
657
1,094
1,751
3,778
775
4,553
1,379
1,734
3,113
7,746
1,525
9,271
1,346
2,100
3,446
7,047
1,496
8,543
1,327
9
3,476
1,333
(28)
3,248
2,640
(25)
6,656
2,385
19
6,139
(35)
2
1
-
(52)
2
(7)
-
(33)
(50)
(7)
3,443
3,249
6,606
6,132
Supreet Sachdev
Partner
Membership No. 205385
R. Seshasayee
Chairman
U. B. Pravin Rao
Chief Operating Officer
and Whole-time Director
Bangalore
October 14, 2016
Roopa Kudva
Director
M. D. Ranganath
Chief Financial Officer
A.G.S Manikantha
Company Secretary