UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report of Foreign Private
Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities
Exchange Act of 1934
For the quarter ended December 31, 2023
Commission File Number
001-35754
Infosys Limited
(Exact name of Registrant as
specified in its charter)
Not Applicable.
(Translation of Registrant's name
into English)
Electronics City, Hosur Road,
Bengaluru - 560 100,
Karnataka, India. +91-80-2852-0261
(Address of principal executive
offices)
Indicate by check mark whether the registrant files or
will file annual
reports under cover Form 20-F or Form 40-F:
Form 20-F þ
Form 40-F o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper
as permitted by Regulation S-T Rule 101(b)(7): o
TABLE OF CONTENTS
DISCLOSURE OF
RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Infosys Limited (“we” or “the
Company”) hereby furnishes the United States Securities and Exchange Commission with copies of the following information concerning
our public disclosures regarding our results of operations and financial condition for the quarter and nine months ended December 31, 2023.
The following information
shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or incorporated
by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be
expressly set forth by
specific reference in such a filing.
On January 11, 2024, we announced our results of operations for the quarter and nine months ended December 31, 2023. We issued press releases
announcing our results under International Financial Reporting Standards (“IFRS”) in U.S. dollars and Indian rupees, copies
of which are attached to this Form 6-K as Exhibits 99.1 and 99.2, respectively.
On January 11, 2024, we held a press conference to announce our results, which was followed by a question and answer session. The transcript
of this press conference is attached to this Form 6-K as Exhibit 99.3.
We have also made available to the public on our website,
www.infosys.com, a fact sheet that provides details on our profit and loss account summary for the quarter and nine months ended
December 31, 2023 and 2022 (as per IFRS); revenue by client geography offering, business segment, revenue by offering; information regarding
our client concentration; employee information and metrics; and consolidated IT services information. We have attached this fact sheet
to this Form 6-K as Exhibit 99.4.
On January 11, 2024, we also held a teleconference with investors and analysts to discuss our results. The transcripts of the teleconference
are attached to this Form 6-K as Exhibit 99.5.
We placed form of releases to stock exchanges and advertisements in certain Indian newspapers
concerning our results of operations for the quarter and nine months ended December 31, 2023, under Ind AS. A copy of the release to the stock exchanges
and the advertisement is attached to this Form 6-K as Exhibit 99.6.
We have made available to the public on our website,
www.infosys.com, the following: Audited Interim Condensed Financial Statements in compliance with IFRS in US dollars and the Auditors
Report; Audited Interim Condensed Financial Statements in compliance with IFRS in Indian Rupees and the Auditors Report; Audited Interim
Ind AS Condensed Standalone Financial Statements and the Auditors Report; Audited Interim Ind AS Condensed Consolidated Financial Statements
and the Auditors Report for the quarter and nine months ended December 31, 2023. We have attached these documents to this Form 6-K as Exhibits 99.7, 99.8,
99.9 and 99.10, respectively.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| |
Infosys Limited
/s/ Inderpreet Sawhney
|
| |
|
|
Date: January 17, 2024
|
Inderpreet Sawhney
General Counsel and Chief
Compliance Officer
|
INDEX TO
EXHIBITS
| Exhibit No. |
Description of Document |
| 99.1 |
IFRS USD press release |
| 99.2 |
IFRS INR press release |
| 99.3 |
Transcript
of January 11, 2024 press conference call |
| 99.4 |
Fact Sheet regarding Registrant's Statement of Profit and Loss for the quarter and nine months ended December 31,
2023 and 2022 (as per IFRS); revenue by Business Segment, Client Geography, information regarding Client Concentration; Employee Information
and Metrics and Consolidated IT Services Information and cash flow information. |
| 99.5 |
Transcript
of January 11, 2024 earnings conference call |
| 99.6 |
Form of release to stock exchanges and advertisement placed in Indian newspapers |
| 99.7 |
Audited Interim Condensed Consolidated Financial Statements of Infosys Limited and its Subsidiaries in compliance with International Financial Reporting Standards (IFRS) in US Dollars and the Auditors Report thereon |
| 99.8 |
Audited Interim Consolidated Financial Statements of Infosys Limited and its Subsidiaries in compliance with IFRS in Indian Rupees and the Auditors Report thereon |
| 99.9 |
Audited Interim Condensed Financial Statements of Infosys Limited for the quarter and nine months ended December 31, 2023 in compliance with Indian Accounting Standards (INDAS) and Auditors Report thereon. |
| 99.10 |
Audited Interim Condensed Consolidated Financial Statements of Infosys Limited and its subsidiaries in compliance with INDAS for the quarter and nine months ended December 31, 2023 and Auditors Report thereon |
Exhibit 99.1
IFRS USD Press Release
Resilient performance in a seasonally weak quarter; Large deal momentum continues with 71% net new deals
Infosys Topaz driving strong differentiation and market leadership in generative AI
Bengaluru, India – January 11, 2024: Infosys (NSE, BSE, NYSE: INFY), a global leader in next generation digital services and consulting, delivered $4,663 million in Q3 revenues with year-on-year and sequential decline of 1.0% in constant currency. Large deal TCV for the quarter was $3.2 billion, with 71% being net new. Operating margin for the quarter was 20.5%, a sequential decline of 70 bps. Attrition declined further to 12.9%. FY24 revenue guidance revised to 1.5%-2.0% and operating margin guidance at 20%-22%.
“Our performance in Q3 was resilient.
Large deal wins were strong at $3.2 billion, with 71% of this as net new, reflecting the relevance and strength of our portfolio of offerings
ranging from generative AI, digital and cloud to cost, efficiency and automation” said Salil Parekh, CEO and MD. “Our
clients are leveraging our Topaz generative AI capabilities and our Cobalt cloud capabilities to create long-term value for their businesses”,
he added.
Guidance
for FY24:
| · |
Revenue
growth of 1.5%-2.0% in constant currency |
| · |
Operating
margin of 20%-22% |
For the quarter ended December 31,
2023
·
Revenues in CC terms declined by 1.0% YoY and QoQ
·
Reported revenues at $4,663 million, growth of 0.1% YoY
·
Operating margin at 20.5%, decline of 1.0% YoY and 0.7% QoQ
·
Basic EPS at $0.18, decline of 7.1% YoY
·
FCF at $665 million, growth of 15.5% YoY; FCF conversion at 90.6% of net profit |
For the nine months ended December 31, 2023
·
Revenues in CC terms grew by 1.8% YoY
·
Reported revenues at $13,997 million, growth of 2.5% YoY
·
Operating margin at 20.8%, decline of 0.2% YoY
·
Basic EPS at $0.53, flat YoY
·
FCF at $2,034 million, growth of 11.7% YoY; FCF conversion at 92.1% of net profit |
“Q3
performance is a demonstration of our strong execution capabilities reflected in improved operational efficiencies achieved under ‘Project
Maximus’, despite a challenging environment”, said Nilanjan Roy, Chief Financial Officer. “Cash generation remained
robust with FCF to net profit conversion for Q3 at 90.6%”, he added.
2. Client
wins & Testimonials
| · | Infosys
entered into a collaboration with smart Europe GmbH for five years to bring sustainable electric
mobility to customers. Dirk Adelmann, Chief Executive Officer, smart Europe GmbH,
said, “We are pleased to have Infosys as our partner on this journey. Infosys’
strong leadership commitment backed by its ability to drive end-to-end application development
and maintenance with efficiency and effectiveness, will help us boost our operational performance
and user experience.” |
| · | Infosys
announced a strategic long-term collaboration with TK Elevator (TKE) to help consolidate,
harmonize, and modernize their digital landscape. Susan Poon, Global CIO at TK Elevator,
said, “Technology empowers our employees and business associates to deliver high-quality
services to customers and users across the value chain. We are delighted to significantly
expand our collaboration with Infosys, which brings end-to-end digital transformation capabilities,
helping us accelerate our business transformation and to realize our strategic vision.” |
| · | Infosys
collaborated with LKQ Europe to help integrate and standardize their disparate business processes
and systems, to enable synergies and achieve economies of scale. Varun Laroyia, Chief
Executive Officer, LKQ Europe, said, “At LKQ, we are constantly enhancing our market
leading position. This project is an extension of our original program and focused on building
a more streamlined and impactful organization. With Infosys as our strategic partner, we
are aiming to reduce complexities, increase efficiency and leverage our strengths. This will
allow us to upgrade our focus on customer-centricity, ensure best in class customer experiences
and further excel our top position.” |
| · | Infosys
and Spirit AeroSystems inaugurated their dedicated center for aerospace engineering excellence
in Richardson, Texas. The center will enable Infosys to work more closely with Spirit AeroSystems
to develop cross-functional solutions to pressing business challenges in the aircraft development
lifecycle. Dr. Sean Black, Senior Vice President, Chief Technology Officer and Chief Engineer,
Spirit AeroSystems, said, “The strategic collaboration with Infosys in Richardson,
Texas, will leverage the talent pool in the North Texas region and create a dedicated center
for aerospace engineering excellence to cover the complete aircraft development life cycle
for both new derivatives and in-service aircraft.” |
| · | Infosys
helped enhance Spotlight Retail Group’s customer growth via an omnichannel digital
fulfilment and advanced analytics platform leveraging Infosys Topaz. Tal Lall, Group General
Manager, Digital and Omnichannel, Spotlight Retail Group, said, “At Spotlight Retail
Group, we are committed to continuously optimize customer experiences as one of our key competitive
differentiators. One of the ways that we’ve done this is through greater investment
in personalization, and this is core to the digital commerce platform built with Infosys
Topaz, leveraging its advanced analytics capabilities. This platform now provides us with
deeper customer insights while supporting scalability to meet customer demands and onboarding
new brands. We are delighted to have collaborated with Infosys on this journey.” |
| · | Infosys
collaborated with Proximus to help modernize their IT stack, optimize costs and broaden their
portfolio of offerings. Antonietta Mastroianni, Chief Digital & IT Officer at Proximus,
said, “Our affiliates are an important part of Proximus’ multi-brand strategy.
They have a fantastic reputation in Belgium when it comes to quality service at great prices.
In order to continue to ensure smooth operations and an enhanced portfolio of offerings to
all our customers, it was crucial to achieve deeper integration in the Proximus IT stack.
A complex transition, involving multiple vendors, applications in an evolving landscape meant
that we needed new operating model and sourcing strategy that could anticipate and adapt
to our requirements. Infosys as a managing partner for this venture with the out-tasking
model enabled us to successfully complete the program on time and with great quality of delivery.” |
| · | Bank
of Commerce selected Infosys Finacle for its core banking transformation to help replace
their legacy platform. Michelangelo R. Aguilar, President and CEO, Bank of Commerce,
said, “We are pleased to have chosen Infosys Finacle due to its established presence
in the Philippines, robust solutions suite, and record of reliable delivery in the market.
The modernization of our core banking system is an integral part of BankCom’s digital
transformation journey as a universal bank in delivering a truly digital banking experience
to our clients. It will enable us to operate better, innovate, and keep pace with industry
best practices, regulatory requirements, and evolving expectations of the markets we serve,
notably the San Miguel Group and SMC ecosystem.” |
3. Recognitions & Awards
AI and Cloud Services
| · | Positioned as a leader in HFS Horizons: Generative Enterprise Services, 2023 |
| · | Recognized as a leader in Constellation ShortList 2023: AI-Driven Cognitive Applications |
| · | Recognized as a leader in Constellation ShortList 2023: Artificial Intelligence and Machine Learning
Best-of-Breed Platforms |
| · | Positioned as a leader in Gartner Magic Quadrant for Cloud ERP Services for Service-Centric
Enterprises |
| · | Rated as a leader in Cloud Services in Insurance PEAK Matrix® Assessment 2023 by Everest
Group |
| · | Recognized as a leader in IDC MarketScape: Worldwide Managed Public Cloud Services 2023 Vendor
Assessment |
| · | Recognized as a leader in IDC MarketScape: IDC Asia/Pacific Cloud Professional Services Vendor
Assessment |
| · | Recognized as a leader in IDC MarketScape: Asia/Pacific Microsoft Business Applications Implementation
Services Vendor Assessment, 2023–2024 |
| · | Rated as a leader in NelsonHall’s Advanced Digital Workplace Services NEAT |
| · | Recognized as a leader in Public Cloud ISG Provider Lens™ report in the US, UK and
Nordics regions |
Key Digital Services
| · | Recognized as a leader in Constellation ShortList 2023: Metaverse Design and Services |
| · | Rated as a leader in Healthcare Payer Digital Services PEAK Matrix® Assessment 2023 by
Everest Group |
| · | Recognized
as a Leader in the Gartner® Magic Quadrant™ for Finance and Accounting Business Process Outsourcing 2023 |
| · | Rated as a leader in Lending IT Services PEAK Matrix® Assessment 2023 by Everest Group |
| · | Rated as a leader in Next-generation Quality Engineering (QE) Services PEAK Matrix® Assessment
2023 by Everest Group |
| · | Recognized as a leader in IDC MarketScape: Worldwide Production Management Service Providers
2023 Vendor Assessment |
| · | Recognized as a leader in IDC MarketScape: Worldwide Quality Management Service Providers
2023 Vendor Assessment |
| · | Positioned as a leader in HFS Horizons: Low-Code Services, 2023 |
| · | Recognized as a leader in IDC MarketScape: Worldwide Supply Chain All Other Ecosystems Services
2023 Vendor Assessment |
| · | Recognized as a leader in IDC MarketScape: Worldwide Software Engineering Services 2023 Vendor
Assessment |
| · | Recognized as a leader in Avasant’s Tech-enabled Sustainability Services 2023–2024
RadarView™ |
| · | Recognized as a leader in Avasant’s Intelligent IT Ops Services 2023-2024 RadarView™ |
| · | Recognized as a leader in Avasant’s Nordics Digital Services 2023-2024 RadarView™ |
Industry & Solutions
| · |
Positioned as a leader in HFS Horizons: Retail and CPG Service Providers, 2023 |
| · |
Infosys BPM won the ‘Best CSR Impact’ award, at the Corporate Social Responsibility Summit and Awards 2023 |
| · | Infosys Finacle recognized as Best SaaS Provider Europe 2023 at the Global Finance Awards |
| · | Infosys Finacle and The National Bank of Greece awarded in the category ‘Best Core Banking Implementation Europe 2023’ at the Global Finance Awards |
| · | Infosys Finacle and Union Bank of India recognized at the 2023 Banking Tech awards in the Best Embedded Finance Initiative category |
| · | Infosys Finacle and Emirates NBD awarded ‘Best Digital Transformation Implementation’ at the MEA Finance Leaders Awards 2023 |
About
Infosys
|
Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. We enable clients in more than 56 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.
Visit
www.infosys.com to
see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next. |
 |
Safe
Harbor
Certain
statements in this release concerning our future growth prospects, or our future financial or operating performance, are forward-looking
statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number
of risks and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking statements.
The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the execution
of our business strategy, our ability to attract and retain personnel, our transition to hybrid work model, economic uncertainties, technological
innovations such as Generative AI, the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision,
our capital allocation policy and expectations concerning our market position, future operations, margins, profitability, liquidity,
capital resources, our corporate actions including acquisitions, the actual or anticipated findings of the ongoing assessment of the
extent and nature of exfiltrated data in relation to the McCamish cybersecurity incident and customer reaction to such findings, and
the amount of any additional costs, including indemnities or damages / claims, resulting from the McCamish cybersecurity incident. Important
factors that may cause actual results or outcomes to differ from those implied by the forward-looking statements are discussed in more
detail in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March
31, 2023. These filings are available at www.sec.gov. Infosys may, from time to time, make
additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and
Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may
be made from time to time by or on behalf of the Company unless it is required by law.
Contact
| Investor
Relations |
Sandeep
Mahindroo
+91
80 3980 1018
Sandeep_Mahindroo@infosys.com |
|
| Media
Relations |
Rishi
Basu
+91
80 4156 3998
Rajarshi.Basu@infosys.com |
Harini
Babu
+1
469 996 3516
Harini_Babu@infosys.com |
Infosys
Limited and subsidiaries
Extracted
from the Condensed Consolidated Balance Sheet under IFRS as at:
(Dollars
in millions)
| |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
| Current assets |
|
|
| Cash and cash equivalents |
1,640 |
1,481 |
| Current investments |
958 |
841 |
| Trade receivables |
3,680 |
3,094 |
| Unbilled revenue |
1,589 |
1,861 |
| Other Current assets |
1,425 |
1,349 |
| Total current assets |
9,292 |
8,626 |
| Non-current assets |
|
|
| Property, plant and equipment and Right-of-use assets |
2,375 |
2,516 |
| Goodwill and other Intangible assets |
1,075 |
1,095 |
| Non-current investments |
1,354 |
1,530 |
| Unbilled revenue |
202 |
176 |
| Other non-current assets |
1,308 |
1,369 |
| Total non-current assets |
6,314 |
6,686 |
| Total assets |
15,606 |
15,312 |
| LIABILITIES AND EQUITY |
|
|
| Current liabilities |
|
|
| Trade payables |
460 |
470 |
| Unearned revenue |
922 |
872 |
| Employee benefit obligations |
326 |
292 |
| Other current liabilities and provisions |
2,970 |
3,135 |
| Total current liabilities |
4,678 |
4,769 |
| Non-current liabilities |
|
|
| Lease liabilities |
802 |
859 |
| Other non-current liabilities |
458 |
460 |
| Total non-current liabilities |
1,260 |
1,319 |
| Total liabilities |
5,938 |
6,088 |
| Total equity attributable to equity holders of the company |
9,617 |
9,172 |
| Non-controlling interests |
51 |
52 |
| Total equity |
9,668 |
9,224 |
| Total liabilities and equity |
15,606 |
15,312 |
Extracted
from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(Dollars
in millions except per equity share data)
| |
3 months ended December 31, 2023 |
3 months ended December 31, 2022 |
9 months ended December 31, 2023 |
9 months ended December 31, 2022 |
| Revenues |
4,663 |
4,659 |
13,997 |
13,657 |
| Cost of sales |
3,274 |
3,230 |
9,755 |
9,544 |
| Gross profit |
1,389 |
1,429 |
4,242 |
4,113 |
| Operating expenses: |
|
|
|
|
| Selling and marketing expenses |
204 |
196 |
633 |
574 |
| Administrative expenses |
229 |
232 |
692 |
671 |
| Total operating expenses |
433 |
428 |
1,325 |
1,245 |
| Operating profit |
956 |
1,001 |
2,917 |
2,868 |
| Other
income, net (3) |
79 |
84 |
196 |
229 |
| Profit before income taxes |
1,035 |
1,085 |
3,113 |
3,097 |
| Income tax expense |
301 |
285 |
904 |
859 |
| Net profit (before minority interest) |
734 |
800 |
2,209 |
2,238 |
| Net profit (after minority interest) |
733 |
800 |
2,208 |
2,237 |
| Basic EPS ($) |
0.18 |
0.19 |
0.53 |
0.53 |
| Diluted EPS ($) |
0.18 |
0.19 |
0.53 |
0.53 |
NOTES:
| 1. | |
The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and nine months ended December 31, 2023, which have been taken on record at the Board meeting held on January 11, 2024. |
| 2. | | A
Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com. |
| 3. | | Other
income is net of Finance Cost |
| 4. | | As the quarter and nine months ended 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 nine months ended figures reported in this statement. |
Exhibit 99.2
IFRS INR Press Release
Resilient performance in a seasonally weak quarter; Large deal momentum continues with 71% net new deals
Infosys Topaz driving strong differentiation and market leadership in generative AI
Bengaluru, India – January 11, 2024: Infosys (NSE, BSE, NYSE: INFY), a global leader in next generation digital services and consulting, delivered $4,663 million in Q3 revenues with year-on-year and sequential decline of 1.0% in constant currency. Large deal TCV for the quarter was $3.2 billion, with 71% being net new. Operating margin for the quarter was 20.5%, a sequential decline of 70 bps. Attrition declined further to 12.9%. FY24 revenue guidance revised to 1.5%-2.0% and operating margin guidance at 20%-22%.
“Our performance in Q3 was resilient.
Large deal wins were strong at $3.2 billion, with 71% of this as net new, reflecting the relevance and strength of our portfolio of offerings
ranging from generative AI, digital and cloud to cost, efficiency and automation” said Salil Parekh, CEO and MD. “Our
clients are leveraging our Topaz generative AI capabilities and our Cobalt cloud capabilities to create long-term value for their businesses”,
he added.
Guidance
for FY24:
| · |
Revenue
growth of 1.5%-2.0% in constant currency |
| · |
Operating
margin of 20%-22% |
For quarter ended December 31, 2023
·
Revenues in CC terms declined by 1.0% YoY and QoQ
·
Reported revenues at  38,821 crore, growth of 1.3% YoY
·
Operating margin at 20.5%, decline of 1.0% YoY and 0.7% QoQ
·
Basic EPS at 14.76, decline of 6.1% YoY
·
FCF at 5,548 crore, growth of 17.0% YoY; FCF conversion at 90.8%
of net profit |
For the nine months ended December 31, 2023
·
Revenues in CC terms grew by 1.8% YoY
·
Reported revenues at 115,748 crore, growth
of 5.9% YoY
·
Operating margin at 20.8%, decline of 0.2% YoY
·
Basic EPS at 44.13, growth of 3.0% YoY
·
FCF at 16,833 crore, growth of 15.3% YoY; FCF conversion at 92.1% of net profit |
“Q3
performance is a demonstration of our strong execution capabilities reflected in improved operational efficiencies achieved under ‘Project
Maximus’, despite a challenging environment”, said Nilanjan Roy, Chief Financial Officer. “Cash generation remained
robust with FCF to net profit conversion for Q3 at 90.6%”, he added.
2. Client
wins & Testimonials
| · | Infosys
entered into a collaboration with smart Europe GmbH for five years to bring sustainable electric
mobility to customers. Dirk Adelmann, Chief Executive Officer, smart Europe GmbH,
said, “We are pleased to have Infosys as our partner on this journey. Infosys’
strong leadership commitment backed by its ability to drive end-to-end application development
and maintenance with efficiency and effectiveness, will help us boost our operational performance
and user experience.” |
| · | Infosys
announced a strategic long-term collaboration with TK Elevator (TKE) to help consolidate,
harmonize, and modernize their digital landscape. Susan Poon, Global CIO at TK Elevator,
said, “Technology empowers our employees and business associates to deliver high-quality
services to customers and users across the value chain. We are delighted to significantly
expand our collaboration with Infosys, which brings end-to-end digital transformation capabilities,
helping us accelerate our business transformation and to realize our strategic vision.” |
| · | Infosys
collaborated with LKQ Europe to help integrate and standardize their disparate business processes
and systems, to enable synergies and achieve economies of scale. Varun Laroyia, Chief
Executive Officer, LKQ Europe, said, “At LKQ, we are constantly enhancing our market
leading position. This project is an extension of our original program and focused on building
a more streamlined and impactful organization. With Infosys as our strategic partner, we
are aiming to reduce complexities, increase efficiency and leverage our strengths. This will
allow us to upgrade our focus on customer-centricity, ensure best in class customer experiences
and further excel our top position.” |
| · | Infosys
and Spirit AeroSystems inaugurated their dedicated center for aerospace engineering excellence
in Richardson, Texas. The center will enable Infosys to work more closely with Spirit AeroSystems
to develop cross-functional solutions to pressing business challenges in the aircraft development
lifecycle. Dr. Sean Black, Senior Vice President, Chief Technology Officer and Chief Engineer,
Spirit AeroSystems, said, “The strategic collaboration with Infosys in Richardson,
Texas, will leverage the talent pool in the North Texas region and create a dedicated center
for aerospace engineering excellence to cover the complete aircraft development life cycle
for both new derivatives and in-service aircraft.” |
| · | Infosys
helped enhance Spotlight Retail Group’s customer growth via an omnichannel digital
fulfilment and advanced analytics platform leveraging Infosys Topaz. Tal Lall, Group General
Manager, Digital and Omnichannel, Spotlight Retail Group, said, “At Spotlight Retail
Group, we are committed to continuously optimize customer experiences as one of our key competitive
differentiators. One of the ways that we’ve done this is through greater investment
in personalization, and this is core to the digital commerce platform built with Infosys
Topaz, leveraging its advanced analytics capabilities. This platform now provides us with
deeper customer insights while supporting scalability to meet customer demands and onboarding
new brands. We are delighted to have collaborated with Infosys on this journey.” |
| · | Infosys
collaborated with Proximus to help modernize their IT stack, optimize costs and broaden their
portfolio of offerings. Antonietta Mastroianni, Chief Digital & IT Officer at Proximus,
said, “Our affiliates are an important part of Proximus’ multi-brand strategy.
They have a fantastic reputation in Belgium when it comes to quality service at great prices.
In order to continue to ensure smooth operations and an enhanced portfolio of offerings to
all our customers, it was crucial to achieve deeper integration in the Proximus IT stack.
A complex transition, involving multiple vendors, applications in an evolving landscape meant
that we needed new operating model and sourcing strategy that could anticipate and adapt
to our requirements. Infosys as a managing partner for this venture with the out-tasking
model enabled us to successfully complete the program on time and with great quality of delivery.” |
| · | Bank
of Commerce selected Infosys Finacle for its core banking transformation to help replace
their legacy platform. Michelangelo R. Aguilar, President and CEO, Bank of Commerce,
said, “We are pleased to have chosen Infosys Finacle due to its established presence
in the Philippines, robust solutions suite, and record of reliable delivery in the market.
The modernization of our core banking system is an integral part of BankCom’s digital
transformation journey as a universal bank in delivering a truly digital banking experience
to our clients. It will enable us to operate better, innovate, and keep pace with industry
best practices, regulatory requirements, and evolving expectations of the markets we serve,
notably the San Miguel Group and SMC ecosystem.” |
3. Recognitions & Awards
AI and Cloud Services
| · | Positioned as a leader in HFS Horizons: Generative Enterprise Services, 2023 |
| · | Recognized as a leader in Constellation ShortList 2023: AI-Driven Cognitive Applications |
| · | Recognized as a leader in Constellation ShortList 2023: Artificial Intelligence and Machine Learning
Best-of-Breed Platforms |
| · | Positioned as a leader in Gartner Magic Quadrant for Cloud ERP Services for Service-Centric
Enterprises |
| · | Rated as a leader in Cloud Services in Insurance PEAK Matrix® Assessment 2023 by Everest
Group |
| · | Recognized as a leader in IDC MarketScape: Worldwide Managed Public Cloud Services 2023 Vendor
Assessment |
| · | Recognized as a leader in IDC MarketScape: IDC Asia/Pacific Cloud Professional Services Vendor
Assessment |
| · | Recognized as a leader in IDC MarketScape: Asia/Pacific Microsoft Business Applications Implementation
Services Vendor Assessment, 2023–2024 |
| · | Rated as a leader in NelsonHall’s Advanced Digital Workplace Services NEAT |
| · | Recognized as a leader in Public Cloud ISG Provider Lens™ report in the US, UK and
Nordics regions |
Key Digital Services
| · | Recognized as a leader in Constellation ShortList 2023: Metaverse Design and Services |
| · | Rated as a leader in Healthcare Payer Digital Services PEAK Matrix® Assessment 2023 by
Everest Group |
| · | Recognized
as a Leader in the Gartner® Magic Quadrant™ for Finance and Accounting Business Process Outsourcing 2023 |
| · | Rated as a leader in Lending IT Services PEAK Matrix® Assessment 2023 by Everest Group |
| · | Rated as a leader in Next-generation Quality Engineering (QE) Services PEAK Matrix® Assessment
2023 by Everest Group |
| · | Recognized as a leader in IDC MarketScape: Worldwide Production Management Service Providers
2023 Vendor Assessment |
| · | Recognized as a leader in IDC MarketScape: Worldwide Quality Management Service Providers
2023 Vendor Assessment |
| · | Positioned as a leader in HFS Horizons: Low-Code Services, 2023 |
| · | Recognized as a leader in IDC MarketScape: Worldwide Supply Chain All Other Ecosystems Services
2023 Vendor Assessment |
| · | Recognized as a leader in IDC MarketScape: Worldwide Software Engineering Services 2023 Vendor
Assessment |
| · | Recognized as a leader in Avasant’s Tech-enabled Sustainability Services 2023–2024
RadarView™ |
| · | Recognized as a leader in Avasant’s Intelligent IT Ops Services 2023-2024 RadarView™ |
| · | Recognized as a leader in Avasant’s Nordics Digital Services 2023-2024 RadarView™ |
Industry & Solutions
| · |
Positioned as a leader in HFS Horizons: Retail and CPG Service Providers, 2023 |
| · |
Infosys BPM won the ‘Best CSR Impact’ award, at the Corporate Social Responsibility Summit and Awards 2023 |
| · | Infosys Finacle recognized as Best SaaS Provider Europe 2023 at the Global Finance Awards |
| · | Infosys Finacle and The National Bank of Greece awarded in the category ‘Best Core Banking Implementation Europe 2023’ at the Global Finance Awards |
| · | Infosys Finacle and Union Bank of India recognized at the 2023 Banking Tech awards in the Best Embedded Finance Initiative category |
| · | Infosys Finacle and Emirates NBD awarded ‘Best Digital Transformation Implementation’ at the MEA Finance Leaders Awards 2023 |
About
Infosys
|
Infosys is a global leader in next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential and create the next opportunity for people, businesses and communities. We enable clients in more than 56 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer clients, as they navigate their digital transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile digital at scale and drive continuous improvement with always-on learning through the transfer of digital skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive workplace.
Visit
www.infosys.com to
see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next. |
|
Safe
Harbor
Certain
statements in this release concerning our future growth prospects, or our future financial or operating performance, are forward-looking
statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number
of risks and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking statements.
The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the execution
of our business strategy, our ability to attract and retain personnel, our transition to hybrid work model, economic uncertainties, technological
innovations such as Generative AI, the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision,
our capital allocation policy and expectations concerning our market position, future operations, margins, profitability, liquidity,
capital resources, our corporate actions including acquisitions, the actual or anticipated findings of the ongoing assessment of the
extent and nature of exfiltrated data in relation to the McCamish cybersecurity incident and customer reaction to such findings, and
the amount of any additional costs, including indemnities or damages / claims, resulting from the McCamish cybersecurity incident. Important
factors that may cause actual results or outcomes to differ from those implied by the forward-looking statements are discussed in more
detail in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March
31, 2023. These filings are available at www.sec.gov. Infosys may, from time to time, make
additional written and oral forward-looking statements, including statements contained in the Company's filings with the Securities and
Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward-looking statements that may
be made from time to time by or on behalf of the Company unless it is required by law.
Contact
| Investor
Relations |
Sandeep
Mahindroo
+91
80 3980 1018
Sandeep_Mahindroo@infosys.com |
|
| Media
Relations |
Rishi
Basu
+91
80 4156 3998
Rajarshi.Basu@infosys.com |
Harini
Babu
+1
469 996 3516
Harini_Babu@infosys.com |
Infosys
Limited and subsidiaries
Extracted
from the Condensed Consolidated Balance Sheet under IFRS as at:
(in crore)
| |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
| Current assets |
|
|
| Cash and cash equivalents |
13,645 |
12,173 |
| Current investments |
7,974 |
6,909 |
| Trade receivables |
30,618 |
25,424 |
| Unbilled revenue |
13,227 |
15,289 |
| Other Current assets |
11,857 |
11,086 |
| Total current assets |
77,321 |
70,881 |
| Non-current assets |
|
|
| Property, plant and equipment and Right-of-use assets |
19,762 |
20,675 |
| Goodwill and other Intangible assets |
8,943 |
8,997 |
| Non-current investments |
11,270 |
12,569 |
| Unbilled revenue |
1,677 |
1,449 |
| Other non-current assets |
10,893 |
11,245 |
| Total non-current assets |
52,545 |
54,935 |
| Total assets |
129,866 |
125,816 |
| LIABILITIES AND EQUITY |
|
|
| Current liabilities |
|
|
| Trade payables |
3,825 |
3,865 |
| Unearned revenue |
7,674 |
7,163 |
| Employee benefit obligations |
2,717 |
2,399 |
| Other current liabilities and provisions |
24,713 |
25,759 |
| Total current liabilities |
38,929 |
39,186 |
| Non-current liabilities |
|
|
| Lease liabilities |
6,670 |
7,057 |
| Other non-current liabilities |
3,817 |
3,778 |
| Total non-current liabilities |
10,487 |
10,835 |
| Total liabilities |
49,416 |
50,021 |
| Total equity attributable to equity holders of the company |
80,070 |
75,407 |
| Non-controlling interests |
380 |
388 |
| Total equity |
80,450 |
75,795 |
| Total liabilities and equity |
129,866 |
125,816 |
Extracted
from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(in crore except per equity share data)
| |
3 months ended December 31, 2023 |
3 months ended December 31,
2022 |
9 months ended December 31, 2023 |
9 months ended December 31, 2022 |
| Revenues |
38,821 |
38,318 |
115,748 |
109,326 |
| Cost of sales |
27,253 |
26,561 |
80,666 |
76,342 |
| Gross profit |
11,568 |
11,757 |
35,082 |
32,984 |
| Operating expenses: |
|
|
|
|
| Selling and marketing expenses |
1,700 |
1,611 |
5,238 |
4,591 |
| Administrative expenses |
1,907 |
1,904 |
5,718 |
5,365 |
| Total operating expenses |
3,607 |
3,515 |
10,956 |
9,956 |
| Operating profit |
7,961 |
8,242 |
24,126 |
23,028 |
| Other income, net (3) |
658 |
689 |
1,622 |
1,828 |
| Profit before income taxes |
8,619 |
8,931 |
25,748 |
24,856 |
| Income tax expense |
2,506 |
2,345 |
7,474 |
6,882 |
| Net profit (before minority interest) |
6,113 |
6,586 |
18,274 |
17,974 |
| Net profit (after minority interest) |
6,106 |
6,586 |
18,264 |
17,967 |
| Basic EPS () |
14.76 |
15.72 |
44.13 |
42.85 |
| Diluted EPS () |
14.74 |
15.70 |
44.08 |
42.79 |
NOTES:
| 1. | |
The above information is extracted from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter and nine months ended December 31, 2023, which have been taken on record at the Board meeting held on January 11, 2024. |
| 2. | | A
Fact Sheet providing the operating metrics of the Company can be downloaded from www.infosys.com. |
| 3. | | Other
income is net of Finance Cost |
| 4. | | As the quarter and nine months ended 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 nine months ended figures reported in this statement. |
Exhibit 99.3
Press Conference Call
Infosys Limited
Q3 FY24 Financial Results Press Conference Call
January 11, 2024
CORPORATE PARTICIPANTS:
Salil Parekh
Chief Executive
Officer and Managing Director
Nilanjan Roy
Chief Financial
Officer
Rishi Basu
Corporate Communications
journalists
Ritu Singh
CNBC TV18
Beena Parmar
The Economic Times
Ayushman Baruah
Business Standard
Reshab Shaw
Jas Bardia
Tushar Deep Singh
NDTV Profit
Haripriya Suresh
Haripriya Sureban
The Hindu BusinessLine
Sameer Ranjan Bakshi
Financial Express
Rukmini Rao
Fortune India
Rishi
Basu
A very good
evening, everyone, and wishing you all a very happy new year. Thank you for joining us today at Infosys' Third Quarter Financial Results.
My name is Rishi and on behalf of Infosys, I would like to welcome all of you today. Over the next hour through the course of this press
conference, we request one question from each media house.
And with
that, I would like to invite our Chief Executive Officer, Mr. Salil Parekh, for his opening remarks. Over to you, Salil.
Salil
Parekh
Thanks,
Rishi. Good afternoon, everyone, and wish you a Happy New Year. Our Q3 revenue declined by 1% Q-o-Q and 1% Y-o-Y in constant currency
terms. For the first three quarters, our revenue grew by 1.8% over the same period last year, in constant currency.
Our operating
margin was at 20.5%. Large deals were at $3.2 bn, 71% of these were net new. This includes one mega deal. We are seeing strong traction
for generative AI programs leveraging our Topaz capability. We have integrated our generative AI components into our service line portfolio,
creating impact for our clients. We have 100,000 employees trained in Generative AI areas and we have developed a range of use cases and
benefit scenarios across different industries for our clients. Our margin improvement program continues to gain traction.
Based on
the performance in the first three quarters, and outlook for Q4, we are tightening our revenue growth guidance for FY24 to 1.5% to 2%
growth in constant currency. Our operating margin guidance for FY24 remains unchanged at 20% to 22%.
As you probably
know, Nilanjan is leaving Infosys at the end of this financial year. I want to thank Nilanjan for the excellent work he has done and for
the strong position he has put Infosys in. In addition, I also want to thank Nilanjan for his partnership and his friendship over the
past several years. We wish him all the best in the future.
With that,
let us open up for questions.
Rishi
Basu
Thank you,
Salil. We will now open the floor for questions. Joining Salil is Mr. Nilanjan Roy, Chief Financial Officer, Infosys. The first question
is from Ritu Singh from CNBC TV18.
Ritu
Singh
Hi, Salil.
Hi, Nilanjan. As always, we want to understand why yet again now for the third time during the year, you have revised this guidance. What
is the visibility you have now for the remaining part of the year? Why the tightening? I mean, sure, it is going to be higher than 1%,
perhaps lower than 2.5% on the upper end.
Secondly,
what are you seeing when it comes to client budgets now? Are clients in the U.S. open to spending more? What are the areas of weaknesses
and strength, whether it is geographies or sectors?
And again,
the same question, the headcount continues to come down even in this quarter, even though your attrition rate is lower at 12.9%. Your
hiring plans for the year, if you could outline? And apart from the numbers, if you could clarify on the deal wins and that mega $1.5
bn deal, that MoU that you had signed with a global client in the AI transformation space that you seem to have lost out on. What was
the reason for that? Are you continuing to see deal cancellations?
And while
you wish your colleague all the very best and you always say that Infosys has produced talent for other companies, you are proud of that.
What is the impact on business? Because this is not a one-off event. We have seen multiple exits over the course of the last 18 months
or so.
Salil
Parekh
Okay. So
let me start off. There are several questions in there. The first, I think was on margin. So what we have done is really as we get closer
to the end of the financial year, we have tightened the revenue growth guidance, the margin guidance remains the same. So in effect, really,
the higher end has come a little bit lower and the lower end has gone up a little bit. So, we see the outlook in essence, quite similar,
but the guidance is tightened, that is how we are seeing it.
Based on what we have
seen in the first three quarters, where our growth has been 1.8% in constant currency terms over the previous years’ three quarters.
And that is really all we have done with the guidance.
On the budgets, I think
that was one of the questions on what we are seeing with the budgets. At this stage, we have not seen any different behavior from clients.
Typically, as you know well, Q3 is a quarter with large furloughs and other end-of-year holidays and that we have seen continue. We have
not seen either an increase or either a decrease, so the same view. Digital programs are fewer. Cost and efficiency, automation is much
more. And Generative AI has a lot of interest and traction even if it is small revenue numbers today.
Then there was a question,
I think about the MoU, we have no additional comment. We have shared the comment in the statement we have made some time ago in the quarter.
In terms of leadership,
we are indeed fortunate to have a good team and a very strong set of leaders within the company and over last several quarters and even
in the past, the people who have taken on many of the new positions are people who have been in the company, have developed their skills
there.
And we are delighted Nilanjan
has spent five years in that role. He will obviously share his view and we had a fantastic outcome in those five years. And really, Nilanjan
has contributed immensely to that and all the best wishes as he looks ahead.
Rishi Basu
Thank you.
Ritu Singh
On the headcount question
as well. And for Nilanjan, your Project Maximus, just before you go, I would like to know from you, where do you see the end goal of that
project? How do you evaluate your term here and what is next for you after March?
Nilanjan Roy
Yes, so it is been tremendous
five years here. I think how the company has transformed over the years have been truly remarkable, in terms of the client intimacy, what
we see as hunger for large deals, the focus on people, the entire focus on the shareholder, the capital allocation. So truly, outside
the numbers which you all asked about, has been this whole transformation happening inside and under Salil and the Board's leadership
that has truly been wonderful.
Five years is a long time,
20 quarters answering the question so I think it is time to move and I will do something later on and as the press release says. But more
importantly for me, I may leave Infosys, but Infosys can’t leave me, it’s just a part of me inside.
Rishi Basu
Thanks, Ritu. The next
question is from The Economic Times, Beena.
Beena Parmar
Hi, Salil. Thanks for
the call. Firstly, in terms of your deal pipeline, could you give us a sense, you know, how does the next two quarters look like? Because
your deal pipeline, the order book has reduced that we have seen, in the previous quarter, it was $7.7 bn, but the TCV has reduced this
quarter? Could you give us a reason for that?
And on the
senior level management churn that we have seen, just adding to what Ritu said, what is the reason that you have not really absorbed newer
or recruited newer or made newer appointments? And what is the reason that you are seeing a lot of this churn happening? Do you see this
as a one-off event and what are the reasons?
And another
thing is on the reports that are doing around about Infosys sending in communication to a rival about anti-poaching and unethical practices.
Could you give us your view on that?
Salil
Parekh
Okay, thanks.
Let me try and go through the questions. I think first on the wins, in fact, this quarter has been, I think, very strong at $3.2 bn. If
you look at the nine months, it is the highest ever value of deal wins that we have had. Actually, it is more than what we had in the
year before, where we had a very large deal in that instance. So, we feel extremely good. 71% of this is net new. That again is extremely
strong because it helps to position us for more into the future. The deal win from last quarter was also exceptional, but those are big
numbers. I mean, $3.2 bn is really well above our average deal win in any quarter, if you look back, let us say 8, 10, 12 quarters and
so on. So, we feel extremely strong with what we see going ahead. And these have deals which are related to cost efficiency, automation,
consolidation, new work on SAP, cloud. So, a lot of different areas, which is good. It is across the portfolio.
I think
you had a question on our senior leadership team. Again, my sense is we have an exceptionally strong team at different levels within the
company. We have continued over the last several years and even well into the past, always promote a lot of people internally with larger
responsibilities. We will do that this year and in the years ahead.
And the
type of work that we do, people have exposure to some incredible opportunities, both with clients, with delivery, with projects, and the
type of projects we are working on are quite leading. So we feel good about that. In terms of some of the media reports you alluded to,
we have no real comment on that.
Rishi
Basu
Thank you,
Beena. The next question is from Ayushman Baruah from Business Standard.
Ayushman
Baruah
Hi. So I
think the trend seems to continue that despite the large and mega deals, revenue growth has not been on par, with the deals. So, when
can we expect the revenue growth and the large deals to be in sync? That is one.
And secondly,
any specific pockets of weakness you would like to highlight, both in terms of verticals or geographies?
Salil
Parekh
So there,
I will start off and then Nilanjan may add some things. I think large deals, more represent what is the level of connect we have with
our clients for large transformation programs or consolidations or cost and efficiency programs. The revenue reflects both what deals
contribute and then what programs clients are doing or not doing.
For example,
digital programs have been reduced in what we have seen over the last few quarters with clients. That combination gives us the outcome
for the revenue and we will see how the global economic environment evolves and that will tell us when that comes in. Sorry, what was
the second one?
Ayushman
Baruah
It was about
any pockets of…
Salil
Parekh
Yeah, the
segments. So, there we are seeing, you know, financial services, hitech, telco, where we still see impact in the market. We see growth
in manufacturing, energy utilities, life sciences. So, we do see both of those things. In geography, similarly, we see impact in our North
American business, the growth in the European business. So, it is not one thing for all.
Rishi
Basu
Thank you.
The next question is from Moneycontrol, Reshab Shaw.
Reshab
Shaw
Hi, gentlemen,
Reshab here. So, on your headcount, Y-o-Y we have seen a lot of headcount decrease, so does that indicate a weaker than expected revenue
trajectory from here onwards? Your number of clients has been down month-on-month and Y-o-Y. So, would like to say something on that?
And on furloughs, how much has that impacted revenues this quarter? And discretionary spending, when do you see it coming back?
Nilanjan
Roy
So, I will
take a couple of them. So, I think furlough is a seasonal industry impact and it is reflected in the minus 1% constant currency decline,
so it is part of that as well. In terms of headcount, we had already told you all last quarter that we have a lot of utilization headroom
still. In a way, that led to the 6,000-odd headcount reduction. We are still at 82.7%, and our comfort range is between 84%, 85%. So,
we still have some capacity and we can always crank this up by taking more trainees on short notice as well. So, our model is very flexed
in terms of ability to recruit fast, train them fast and put them on production. So in that sense, I think we are in a good space in terms
of ability to capture any future growth.
Reshab
Shaw
Great. Thank
you.
Rishi
Basu
Thank you.
The next question is from the Mint newspaper, Jas Bardia.
Jas Bardia
Just a couple
of questions. At the start of the year, you had expected to grow at 7% and now this is the third such revision. How much of this revision
do you attribute to company-specific factors? And how much of it do you attribute to macro-economic issues?
The second
question, did the cybersecurity incident at McCamish lead to the termination of the $1.5 bn MoU. Could you give more details on this?
And also, could you cite some measures that Infosys is taking to address this?
Salil
Parekh
So let me
start off with the guidance point first. I think on the guidance, this quarter we see this more as a tightening of the guidance. So, in
that sense, it is not so much a change. It is more that as we get closer to the end of the financial year, the visibility gives us to
a similar outcome.
So, if you
look at last quarter and this quarter, it looks in that sense similar, except the distance to the end of the year is reduced by half.
On the deal specifically, the MoU, we have no additional comment and we have made a specific disclosure at the earlier time.
On the McCamish
question that you asked, I just wanted to maybe share with you a comment from what we had stated in our financial results. As we have
shared earlier, one of our subsidiaries, Infosys McCamish experienced a cybersecurity incident that resulted in the disruption of some
of its services. The systems have been largely restored and are now up and running.
Rishi Basu
Thank you.
The next question is from NDTV Profit, Tushar Singh.
Tushar Deep
Singh
Hi, a couple
of questions. First on the deal signings, we see that the large deal wins are still happening, but they are still not meaningfully converting
into revenue. So, when do you think that is going to come back? And are the large deals ramping up as per expectations so far?
Also, your
margins have declined quarter-on-quarter, I think because of the wage hikes that went out. But you have maintained your operational profitability
guidance for the full year. So, what are the margin levers left in play that is giving you the confidence to maintain those margins? A
final question on your acquisition that you have done of InSemi Tech, can you just talk to us about it?
Salil Parekh
On the first
one, I think, the way we see large deals, they are really helping us to build a foundation into the future. And the win sizes, the overall
win value is very strong at $3.2 bn and at 71%, very good to have the net new. That gives us, let us say one piece of the revenue into
the future. And equally, there are digital programs or other programs which are not something that clients are looking at in this environment.
And that takes away a little bit from the revenue. So that combined gives us the revenue outcome as we see it, and we give out the outlook
as we see it. So that is how we will put that together.
Nilanjan
Roy
On the margin,
as you have seen in our disclosure, one is, we of course, given our wage hike from 1st of November that is about 70 basis points of the
drop. In fact, we have dropped 70 bps. We have had another impact of $30 mn between revenue and cost because of the McCamish incident
as well. So that is actually 1.3% headwind. We have compensated that at about 50 basis points from the Project Maximus, which now is in
full flow. This is across, we have talked about five tracks and many verticals. And there is about 10 basis points which is from currency.
And then, of course, there is a balancing around furloughs, etc. So we actually are seeing a very strong underlying margin movement coming
because of Maximus and of course, the wage hikes, etc., were planned and known for and are leading to this margin gap for this quarter.
Tushar Deep
Singh
The acquisition
of InSemi?
Nilanjan
Roy
Yeah, so as
you know, we have a very large and growing engineering business. We do not probably talk about it as much. It is a business which is working
with leading engineering companies around the world and as you know, semicon is a space which is expected from today, a $500 bn market
to go about a $1 trillion . And this is a very exciting business in terms of semiconductor chip design working with leading fab, non-fab
players across the world. And I think it will give us, firstly, a good entry into a new space and also a new set of clients which we do
not have. So we are very excited about this.
Rishi Basu
Thank you.
The next question is from Haripriya Suresh from Reuters News.
Haripriya
Suresh
Good evening,
gentlemen. First, I wanted to understand, now that client budgets have firmed up, at least for the calendar year, do you see what does
the deal momentum look like? Are there any signs of improvement at all? how do we expect things to look like, so far?
And on the
guidance, I wanted to understand because it was 2.5% at the upper end, right? Like I wanted to understand, if you are not seeing cancellations,
etc., why it was narrowed at the upper end. In terms of geographies, I mean across, this is not obviously an Infy phenomenon, across the
companies - North America has obviously been impacted. How much is that affecting you? And is Europe helping in any way?
And in terms
of hiring, you said that it would be in time. So, is it fair to presume you will not be going to campuses this year and we can expect
headcount to trend the way it has right now? Thank you.
Salil
Parekh
So maybe
combining a few things. On what we are seeing for the budgets as the calendar year starts, most of our comments are on the financial year
that we are looking at. The budget process has started and launched for many of our clients. It is still early in January. So, it will
work its way through.
At this
stage, we do not see any change from what we were seeing last quarter. In that we do not see things becoming worse. We do not see any
change in that dynamic. We will have our own view of the next financial year as we come into the March, April timeframe, when we have
the April results.
The guidance
again, for us, we are seeing similar outlook to what we were seeing in the past quarter. But as we get closer to the end of the year,
just the variability reduces, and that is how we have narrowed the guidance. So it is not a question of reducing the upper end. Because
in that sense, we have increased the lower end. So, I would say it is quite balanced between what we were seeing last quarter and this
quarter.
Haripriya
Suresh
On the campus
hiring?
Nilanjan
Roy
Yes. Like
I just mentioned earlier, we continue to monitor the utilization. And our flexi hiring model, in fact, with COVID, which is both off-campus
and on-campus, I think that is really been a new learning for us. So it is on demand, we can go behind that, in case any fresh demand
comes in. And at this stage, of course, we are not seeing any immediate campus requirement. But for any volume increase, we have a very
strong off-campus program as well now.
Rishi
Basu
Thank you.
The next question is from Haripriya Sureban from The Hindu Business Line.
Haripriya
Sureban
Hi, guys.
Salil, could you give us some more color on the visibility in the market. We keep listening that the macro condition and situation is
bottoming out. Do you think so? And do you see any sort of green shoots or what is your reading like which verticals do you expect to
bounce back earlier?
And on the
margin front, do you see any impact? if there is no tailwind from the currency depreciation given that rupee has been flat for almost
one year now so?
Salil
Parekh
So, on the
outlook in the macro, we do not have a view on where it is in terms of the cycle. What we are focused on is how that is impacting our
client decision-making. And there, we see what we were sharing earlier, financial services, telco, hi-tech, we still see the impact. Equally,
we see growth in manufacturing, energy utilities, life sciences. There is a difference in the geographies as well, as we shared earlier,
between North America and Europe.
So, at this
stage, there is no more view that we have than that. We are obviously very positive with the deal wins we have got. A lot of those deals
win in cost and efficiency. But there are also deal wins which we have seen, for example, in cloud, in SAP and these are areas which we
have tremendous strength in and so we feel good. And then Generative AI is becoming more and more important in all discussions, while
it is not a big revenue component, it is still becoming more and more important in all discussions.
Nilanjan
Roy
On the currency
side, we do not plan for actually any currency movement when we do our margin plans as well. So, whatever comes on top of a currency benefit
is actually always a bonus. But our underlying plans do not reflect that.
Rishi Basu
Thank you.
The next question is from the Financial Express, Sameer Bakshi.
Sameer Ranjan
Bakshi
Hello sir.
Please correct me if I am wrong. You said a lot of Gen AI projects are in pipeline, right? And you have around 1 lakh Gen AI trained employees.
So why is this that we are seeing smaller and active clients, their number have fallen?
Nilanjan
Roy
I think if
you see from a revenue perspective, which is more relevant, it is the large clients who continue to grow well. Of course, there is a longer
tail towards the 1,500 plus clients. But I mean the biggest revenue chunk comes from the top 50, top 100, top 200.
Sameer Ranjan
Bakshi
Okay. Thank
you.
Rishi Basu
Thank you.
The next question is from Rukmini Rao from Fortune India.
Rukmini
Rao
Hi, thank you.
I have two clarification and a question. One, the $30 mn impact of McCamish, it has been accounted for completely this quarter?
Nilanjan
Roy
Yes, between
loss of revenue and in cost, yes.
Rukmini
Rao
Sure, thanks.
And the other one, this is in continuation to what Beena asked. So Salil, I do not fathom how two companies can informally talk to each
other? And if at all, Infosys has actually written to a peer raising certain concerns, it must be legal in nature. I mean I am guessing
so. So, could you actually tell us whether you have had any communication with your other peers when it comes to talent?
Salil Parekh
I think you
are referring to the media report?
Rukmini
Rao
That is right,
that is right.
Salil Parekh
So we have
no additional comments on that.
Rukmini
Rao
Going back
to the deal that did not fructify, right? I just want to understand from you, was it a client concern about Infosys' ability to be able
to execute this deal or was it a client-specific problem that you faced? The way large deals are getting structured or the check boxes
the very last minute that are getting countered, what really led to this deal not fructifying? And also some sense on the large deals,
is there any fundamental change that is happening how vendors are being looked at by clients when it comes to closing large deals? Thanks.
Salil Parekh
So, on the
way large deals are working, in fact, in this quarter, in Q3, we have seen quite a few deals which are consolidation deals where we have
been the beneficiary, where clients are looking to consolidate to select partners or strategic partners. So, that is one of the things
that we are visibly seeing.
On the specific
MoU which was not completed, there is no additional comment. We made the statement, as we had shared earlier. The deal flow in the market
is good because the way we look at it, at $3.2 bn, it is well above the average that we see for large deals in any quarter. With 71% net
new, that is also very strong because that gives us a good confidence that, that is building out for the future. I think that then you
get coupled with, the digital programs which are not happening or slowing down. And that takes away a little bit from the possible benefits
of these large deals. And that is really the balance that we are working on.
Rukmini
Rao
Salil, like
you mentioned earlier saying that digital deals are not still a big component of your revenue, right? But when you have another peer of
yours already calling out Gen-AI revenues that they are doing, when do you see actually Infosys being able to call out this number or
reach a size in revenue, where are you there in the curve when it comes to being able to grab a Gen-AI deal and make it, let us say substantial
or be able to have a statable set of revenues coming out of Gen-AI?
Salil
Parekh
So, in Generative
AI, we have an extremely strong capability set, a lot of activity with our clients. For example, we are working with a large retail company
on their AI-first transformation. This is a very strategic work with the client. We are working with a large global bank on their risk
area to use large language models to make that risk area better for them.
So we have
a large number of such deals. We are not at this stage of publicly sharing what the Gen-AI revenue is, but we have tremendous capability,
a good leading market position. And we feel in Generative AI, we are very strong in the capabilities we build.
For example,
there are a lot of large language models out there. There are several different use cases, different benefits scenarios. We have many
of them, for example, in customer service, in analytics, in data, in software engineering. So a host of areas which we are working with
clients on. We have also developed what we think is an appropriate approach for large enterprises, what we call the narrow transformer
approach.
Here, when
you are looking at large companies, the interest is not just on consumer Generative AI. It is much more on what is going to make an impact
to them with their data set. And so which is the appropriate large language model you can use for their data set, depending on what the
area is.
So I believe
we have an incredible capability in Topaz. And clients are also resonating with that capability. We are not today calling out the Generative
AI value today, but that is a different subject. But the work we are doing, I think, is quite impactful.
Rukmini
Rao
Salil, just
to understand the Gen-AI needs that you are actually getting are from existing clients, or you have been able to get newer clients, maybe
of smaller ticket sizes. Just to understand…
Salil
Parekh
It is a
mix of both. A large number of them are existing clients. We have good relationships. They have seen our capability set, and they are,
as I said, it is resonating. We have also done what we call a Generative AI roadshow. It is a tour where we are taking all of our capabilities
in the different locations around the world. And there are some new clients as well, where we are sort of first time doing Generative
AI.
Rishi
Basu
Thank you.
With that, we come to the end of this Q&A session. We thank our friends from media for being part of this press conference. Thank
you, Salil. Thank you, Nilanjan.
Before we
conclude, please note that the archived webcast of this press conference will be available on the Infosys website and on our YouTube channel
later today. Thank you, and we request you to join us for some high tea outside.
Salil
Parekh
Exhibit 99.4
Fact
Sheet
Revenue Growth- Q3 24
| |
Reported |
CC |
| QoQ growth (%) |
-1.2% |
-1.0% |
| YoY growth (%) |
0.1% |
-1.0% |
Revenues by Business Segments
(in %)
| |
Quarter ended |
YoY Growth |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
Reported |
CC |
| Financial services |
27.8 |
27.5 |
29.3 |
(5.2) |
(5.9) |
| Retail |
14.6 |
15.2 |
14.3 |
2.0 |
0.4 |
| Communication |
11.4 |
11.4 |
12.3 |
(7.3) |
(8.0) |
| Energy, Utilities, Resources & Services |
13.2 |
12.7 |
13.0 |
1.8 |
0.3 |
| Manufacturing |
14.9 |
14.3 |
13.3 |
12.5 |
10.6 |
| Hi-Tech |
7.7 |
7.8 |
8.1 |
(5.0) |
(5.1) |
| Life Sciences |
7.6 |
7.8 |
7.0 |
8.2 |
6.3 |
| Others |
2.9 |
3.3 |
2.7 |
5.8 |
7.0 |
| Total |
100.0 |
100.0 |
100.0 |
0.1 |
(1.0) |
Revenues by Client Geography
(in %)
| |
Quarter ended |
YoY Growth |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
Reported |
CC |
| North America |
59.0 |
61.1 |
62.0 |
(4.7) |
(4.9) |
| Europe |
28.2 |
26.5 |
25.8 |
9.2 |
5.0 |
| Rest of the world |
10.4 |
9.6 |
9.8 |
7.1 |
7.8 |
| India |
2.4 |
2.8 |
2.4 |
(1.9) |
(1.0) |
| Total |
100.0 |
100.0 |
100.0 |
0.1 |
(1.0) |
Client Data
| |
Quarter ended |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
| Number of Clients |
|
|
|
| Active |
1,872 |
1,884 |
1,850 |
| Added during the period (gross) |
88 |
100 |
134 |
| Number of Million dollar clients* |
|
|
|
| 1 Million dollar + |
944 |
951 |
912 |
| 10 Million dollar + |
308 |
312 |
294 |
| 50 Million dollar + |
82 |
80 |
79 |
| 100 Million dollar + |
40 |
39 |
38 |
| Client contribution to revenues |
|
|
|
| Top 5 clients |
13.4% |
13.3% |
13.1% |
| Top 10 clients |
20.0% |
19.9% |
20.5% |
| Top 25 clients |
33.7% |
34.1% |
35.3% |
| Days Sales Outstanding* |
72 |
67 |
68 |
| * | | LTM (Last twelve months) Revenues |
Effort & Utilization – Consolidated
IT Services
(in %)
| |
Quarter ended |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
| Effort |
|
|
|
| Onsite |
24.4 |
24.6 |
24.5 |
| Offshore |
75.6 |
75.4 |
75.5 |
| Utilization |
|
|
|
| Including trainees |
81.7 |
80.4 |
77.1 |
| Excluding trainees |
82.7 |
81.8 |
81.7 |
Employee Metrics
(Nos.)
| |
Quarter ended |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
| Total employees |
322,663 |
328,764 |
346,845 |
| S/W professionals |
304,590 |
310,375 |
329,296 |
| Sales & Support |
18,073 |
18,389 |
17,549 |
| Voluntary Attrition % (LTM - IT Services) |
12.9% |
14.6% |
24.3% |
| % of Women Employees |
39.3% |
39.4% |
39.4% |
Cash Flow
In US $ million
| |
Quarter ended |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
| Free cash flow (1) |
665 |
670 |
576 |
| Consolidated cash and investments (2) |
3,903 |
4,170 |
3,908 |
In crore
| |
Quarter ended |
| |
Dec 31, 2023 |
Sep 30, 2023 |
Dec 31, 2022 |
| Free cash flow (1) |
5,548 |
5,536 |
4,741 |
| Consolidated cash and investments (2) |
32,476 |
34,635 |
32,330 |
| (1) | | Free cash flow is defined as net cash provided by operating activities less capital expenditure
as per the consolidated statement of cash flows prepared under IFRS (Non-IFRS measure) |
| (2) | | Consolidated cash and investments comprise of cash and cash equivalents, current and non-current
investments excluding investments in equity and preference shares, unquoted compulsorily convertible debentures and others (Non-IFRS
measure) |
Consolidated statement of Comprehensive Income
for three months ended,
(Extracted from IFRS Financial Statement)
In US $ million, except per equity share data
| Particulars |
Dec 31, 2023 |
Dec 31, 2022 |
Growth %
YoY |
Sep 30, 2023 |
Growth %
QoQ |
| Revenues |
4,663 |
4,659 |
0.1% |
4,718 |
-1.2% |
| Cost of sales |
3,274 |
3,230 |
1.4% |
3,271 |
0.1% |
| Gross Profit |
1,389 |
1,429 |
-2.8% |
1,447 |
-4.0% |
| Operating Expenses: |
|
|
|
|
|
| Selling and marketing expenses |
204 |
196 |
4.1% |
213 |
-4.2% |
| Administrative expenses |
229 |
232 |
-1.3% |
234 |
-2.1% |
| Total Operating Expenses |
433 |
428 |
1.2% |
447 |
-3.1% |
| Operating Profit |
956 |
1,001 |
-4.5% |
1,000 |
-4.4% |
| Operating Margin % |
20.5 |
21.5 |
-1.0% |
21.2 |
-0.7% |
| Other Income, net(1) |
79 |
84 |
-6.0% |
60 |
31.7% |
| Profit before income taxes |
1,035 |
1,085 |
-4.6% |
1,060 |
-2.4% |
| Income tax expense |
301 |
285 |
5.6% |
309 |
-2.6% |
| Net Profit (before minority interest) |
734 |
800 |
-8.2% |
751 |
-2.2% |
| Net Profit (after minority interest) |
733 |
800 |
-8.3% |
751 |
-2.3% |
| Basic EPS ($) |
0.18 |
0.19 |
-7.1% |
0.18 |
-2.3% |
| Diluted EPS ($) |
0.18 |
0.19 |
-7.1% |
0.18 |
-2.3% |
| Dividend Per Share ($)(2) |
– |
– |
– |
0.22 |
– |
Consolidated statement of Comprehensive Income
for nine months ended,
(Extracted from IFRS Financial Statement)
In US $ million, except per equity share data
| Particulars |
Dec 31, 2023 |
Dec 31, 2022 |
Growth % |
| Revenues |
13,997 |
13,657 |
2.5% |
| Cost of sales |
9,755 |
9,544 |
2.2% |
| Gross Profit |
4,242 |
4,113 |
3.1% |
| Operating Expenses: |
|
|
|
| Selling and marketing expenses |
633 |
574 |
10.3% |
| Administrative expenses |
692 |
671 |
3.1% |
| Total Operating Expenses |
1,325 |
1,245 |
6.4% |
| Operating Profit |
2,917 |
2,868 |
1.7% |
| Operating Margin % |
20.8 |
21.0 |
-0.2% |
| Other Income, net(1) |
196 |
229 |
-14.4% |
| Profit before income taxes |
3,113 |
3,097 |
0.5% |
| Income tax expense |
904 |
859 |
5.2% |
| Net Profit (before minority interest) |
2,209 |
2,238 |
-1.3% |
| Net Profit (after minority interest) |
2,208 |
2,237 |
-1.3% |
| Basic EPS ($) |
0.53 |
0.53 |
0.0% |
| Diluted EPS ($) |
0.53 |
0.53 |
0.1% |
| Dividend Per Share ($)(2) |
0.22 |
0.20 |
9.1% |
| (1) | | Other income is net of Finance Cost |
| (2) | | USD/INR exchange rate of 83.00 considered for Q3’24 |
Consolidated statement of Comprehensive Income
for three months ended,
(Extracted from IFRS Financial Statement)
In crore, except per equity share data
| Particulars |
Dec 31, 2023 |
Dec 31, 2022 |
Growth %
YoY |
Sep 30, 2023 |
Growth %
QoQ |
| Revenues |
38,821 |
38,318 |
1.3% |
38,994 |
-0.4% |
| Cost of sales |
27,253 |
26,561 |
2.6% |
27,031 |
0.8% |
| Gross Profit |
11,568 |
11,757 |
-1.6% |
11,963 |
-3.3% |
| Operating Expenses: |
|
|
|
|
|
| Selling and marketing expenses |
1,700 |
1,611 |
5.5% |
1,754 |
-3.1% |
| Administrative expenses |
1,907 |
1,904 |
0.2% |
1,935 |
-1.4% |
| Total Operating Expenses |
3,607 |
3,515 |
2.6% |
3,689 |
-2.2% |
| Operating Profit |
7,961 |
8,242 |
-3.4% |
8,274 |
-3.8% |
| Operating Margin % |
20.5 |
21.5 |
-1.0% |
21.2 |
-0.7% |
| Other Income, net(1) |
658 |
689 |
-4.5% |
494 |
33.2% |
| Profit before income taxes |
8,619 |
8,931 |
-3.5% |
8,768 |
-1.7% |
| Income tax expense |
2,506 |
2,345 |
6.9% |
2,553 |
-1.8% |
| Net Profit (before minority interest) |
6,113 |
6,586 |
-7.2% |
6,215 |
-1.6% |
| Net Profit (after minority interest) |
6,106 |
6,586 |
-7.3% |
6,212 |
-1.7% |
| Basic EPS () |
14.76 |
15.72 |
-6.1% |
15.01 |
-1.7% |
| Diluted EPS () |
14.74 |
15.70 |
-6.1% |
14.99 |
-1.7% |
| Dividend Per Share () |
– |
– |
– |
18.00 |
– |
Consolidated statement of Comprehensive Income
for nine months ended,
(Extracted from IFRS Financial Statement)
In crore, except per equity share data
| Particulars |
Dec 31, 2023 |
Dec 31, 2022 |
Growth % |
| Revenues |
115,748 |
109,326 |
5.9% |
| Cost of sales |
80,666 |
76,342 |
5.7% |
| Gross Profit |
35,082 |
32,984 |
6.4% |
| Operating Expenses: |
|
|
|
| Selling and marketing expenses |
5,238 |
4,591 |
14.1% |
| Administrative expenses |
5,718 |
5,365 |
6.6% |
| Total Operating Expenses |
10,956 |
9,956 |
10.0% |
| Operating Profit |
24,126 |
23,028 |
4.8% |
| Operating Margin % |
20.8 |
21.1 |
-0.3% |
| Other Income, net(1) |
1,622 |
1,828 |
-11.3% |
| Profit before income taxes |
25,748 |
24,856 |
3.6% |
| Income tax expense |
7,474 |
6,882 |
8.6% |
| Net Profit (before minority interest) |
18,274 |
17,974 |
1.7% |
| Net Profit (after minority interest) |
18,264 |
17,967 |
1.7% |
| Basic EPS () |
44.13 |
42.85 |
3.0% |
| Diluted EPS () |
44.08 |
42.79 |
3.0% |
| Dividend Per Share () |
18.00 |
16.50 |
9.1% |
| (1) | | Other income is net of Finance Cost |
As the quarter and nine months ended 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 quarter might not always add up to the nine months ended figures reported in this statement.
Exhibit 99.5
Earnings Conference Call
Infosys
Limited
Earnings Conference Call
January
11, 2024
CORPORATE
PARTICIPANTS
Salil Parekh
Chief Executive Officer & Managing Director
Nilanjan Roy
Chief Financial Officer
Sandeep Mahindroo
Senior Vice President, Financial Controller & Head Investor
Relations
analystS
Kumar
Rakesh
BNP
Paribas
Nitin
Padmanabhan
Investec
Moshe
Katri
Wedbush
Securities
Ankur
Rudra
JPMorgan
Chase
Bryan
Bergin
TD
Cowen
Keith
Bachman
BMO
Jamie
Friedman
Susquehanna
International Group
Sumeet
Jain
CLSA
Yogesh
Agarwal
HSBC
Vibhor
Singhal
Nuvama
Equities
Gaurav
Rateria
Morgan
Stanley
Sandeep
Shah
Equirus
Securities
Kawaljeet
Saluja
Kotak
Manik
Taneja
Axis
Capital
Moderator
Ladies and gentlemen,
good day and welcome to the Infosys Earnings Conference Call. As a reminder, all participant lines will be in
listen-only mode, and there
will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance
during the conference call,
please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference
is being recorded.
I now hand the
conference over to Mr. Sandeep Mahindroo. Thank you and over to you, sir.
Sandeep Mahindroo
Hello, everyone,
and welcome to Infosys Earnings Call for Q3 FY '24. Let me start by wishing everyone a very Happy New Year.
Joining us on this call is
CEO and MD, Mr. Salil Parekh; CFO, Mr. Nilanjan Roy; and other members of the leadership team. We will start
the call with some remarks
on the performance of the company for Q3, subsequent to which we will open up the call for questions.
Please note that
anything we say that refers to our outlook for the future is a forward-looking statement that must be read in
conjunction with the risk
that the company faces. A full statement explanation of these risks is available in our filings with the SEC,
which can be found on www.sec.gov.
I would now like
to pass on the call to Salil.
Salil Parekh
Thanks, Sandeep.
Good evening and good morning to everyone on the call. Wish you a Happy New Year.
Our Q3 revenue
declined by 1% quarter-on-quarter and 1% year-on-year in constant currency terms. For the first three
quarters, our revenue grew by 1.8%
over the same period last year in constant currency. We see lower traction for digital transformation programs
and more activity for cost
and efficiency programs and increasing interest in Generative AI programs.
Our operating
margin was at 20.5%. We delivered this outcome while managing through one-off business disruptions. Nilanjan
will provide more detail
for this. Large deals were at $3.2 bn. 71% of this was net new. This included one mega deal. With this, our
large deal value for the first
three quarters stands at $13.2 bn, of which 55% is net new. This is the highest ever large deal value for the
first three quarters in
the fiscal year for us.
We see that with
our large deal wins, we continue to win market share and strengthen our position through our leading
capabilities in helping clients with
cost, efficiency, automation programs and by leveraging Generative AI, digital and cloud.
We have seen impact
in financial services, telco and hi-tech segments. We see strength in manufacturing, energy utilities and life
sciences segments. We are
seeing strong traction for Generative AI programs, leveraging our Topaz capability. We have integrated our
Generative AI components into
our service line portfolio, creating impact for our clients.
We have 100,000
employees trained in Generative AI areas. We have developed a range of use cases and benefit scenarios across
different industries for
our clients. Some of these areas are related to client analytics, process optimization, sales, marketing,
knowledge analysis, software
development, self-service and personalization.
Some
examples of the work we are doing in these areas. We are working with a large global bank to support them
in their risk analysis program
by using a large language model for them. We are working with a global food supplier to
personalized food experience for their
customers and to make their operations efficient using artificial intelligence. We are working with a global
retail company in defining
their AI first business transformation strategy.
Our clients are
leveraging all these Generative AI capabilities in Topaz, combined with the cloud capabilities in Cobalt to
help them navigate through
this current business environment and setting up for the future.
Our margin improvement
program continues to gain traction. The five pillars, the large organization mobilization and steady execution
are creating impact. Based
on the performance in the first three quarters and our outlook for Q4, we are tightening our revenue growth
guidance for financial year
'24 to 1.5% to 2% in constant currency.
Our operating
margin guidance for financial year '24 remains unchanged at 20% to 22%.
As you probably
know, Nilanjan is leaving Infosys at the end of this financial year. I want to thank Nilanjan for the
excellent work he has done and the
strong position he has put Infosys in. In addition, I also want to thank him for his partnership and his
friendship over the past several
years. We wish him all the best in his future plans.
With that, let
me hand it over to Nilanjan.
Nilanjan Roy
Thanks, Salil.
Good evening, everyone and thank you for joining the call.
Coming to our
Q3 results, revenues declined by 1% year-on-year in constant currency. Sequentially, revenues similarly
declined by 1% in constant currency
and 1.2% in dollar terms. This includes the impact of furloughs and one-offs. Volumes remain soft, coupled
with seasonality and normalization
of one-time revenues we had in Q2. While the overall environment remains subdued, our large-deal TCV is
highest ever on a YTD basis. I
will talk about the large deals in more detail.
Revenue for nine
months increased by 1.8% in constant currency and 2.5% in USD terms. We are making steady progress on Project
Maximus, the margin improvement
plan across five pillars and over 20 tracks. This strengthens our confidence that the program will give us the
impetus for margin expansion
overtime.
Operating margins for Q3 were
20.5%, a decline
of 70 basis points sequentially, bringing the nine-month margins to 20.8%, which is within the guidance band
for the year. The
major components of QoQ margin walk for Q3 margin are as follows:
Headwinds of
130 bps
comprising
of
- 70
bps from salary increases
effective Nov 1st
- 60
bps from McCamish cyber
incident which had an impact on both revenues and costs
Partially
offset by tailwinds
of 60 bps comprising of
- 50
bps benefit from cost optimization
including higher utilization and lower SG&A
- 10
bps from currency movement
Balance includes
impact of furloughs, offset by higher leave utilization and one-off benefits including lower provision for
post sales client support and
lower ECL model losses etc
Headcount at
the
end of the quarter stood at 322,000 employees, a decline of 1.9% from the previous quarter, which is reflected
in improvement in utilization
to 82.7% excluding trainees. On-site mix also improved by 20 basis points sequentially to 24.4. As mentioned
earlier, we continue to improve
our operating efficiencies.
LTM attrition
for Q3 reduced further by 1.7% to 12.9%. Free cash flow for the quarter was robust at $665 mn and the
conversion to net profit for Q3
was strong at 90.6%. Our unbilled revenues dropped for the third consecutive quarter. And consequently,
this has partly led to an increase in DSO by 5 days sequentially to 72 days. Consolidated cash and
equivalents stood at $3.9 bn at the
end of the quarter after a dividend payout of $895 mn.
EPS declined by
6.1% in INR on a year-on-year basis and grew by 3% in INR for the 9 months period ended.
Yield on cash
balances was 6.9% in Q3. ROE improved to 31.8%.
Large deal momentum
continued and deal TCV of Q3 was $3.2 bn, with 71% net new. Consequently, our YTD large deal TCV is over $13
bn, which is the highest
ever for any comparative period. This clearly reinforces our position and strengthens the relevance and
strength of our service offerings.
We signed 23 large
deals in Q3, including one mega deal. We signed 8 deals in manufacturing, 6 in FS, 4 in EURS, 2 each in retail
and communication and 1
in others. Region-wise, we signed 10 large deals in America, 9 in Europe, 3 in ROW and 1 in India.
Coming to industry
verticals,
Inflation, uncertain
macro and delay in decision-making continues to impact the financial services sector. With increasing cost
pressures, clients remain cautious
on spending and are reprioritizing their programs to deliver maximum business value. Topaz is central to our
Generative AI discussions,
which is gaining momentum and use cases around improving customer experience. We also started implementing use
cases in some of our clients
focusing on improving client experience, detecting fraud, etc. Overall, while the near-term outlook remains
volatile, we will benefit
from the recent deal wins and the new account openings.
Clients in communication
sector continues to face growth challenges, which is putting pressure on opex spend. Uncertainty about
medium-term spend remains with
clients, prioritizing cost optimization and vendor consolidation. Clients are looking at conserving cash,
which is visible in delayed
decision-making and project deferrals. Our focus on large and mega deals resulted in healthy pipeline and deal
wins.
Energy, utilities,
resources and services clients remain cautiously optimistic about the demand environment with cap on
short-term spend. In Energy segment,
we are seeing market share gains due to consolidation. Our investment on industry cloud solutions and the
energy transition, combined
with extreme focus on human experience, have helped us differentiate, win multiple deals and build a strong
pipeline.
Manufacturing
segment continues to deliver strong performance on the back of new deal wins and ramp-up of earlier large
deals signed. Growth was broad-based
across Europe and the U.S. as well as across industrial, automotive and aerospace industries. While the budget
remains largely stable,
clients continue to find ways to channel run savings into newer areas like digital, cloud, data and IoT.
Pipeline remains healthy with
emerging opportunities on various fronts in the ER&D space resulting from increased spending.
In the Retail
segment, cost takeouts and consolidation remain the primary focus for the clients. While discretionary spend
remain under pressure, there
are pockets of opportunities, leveraging Generative AI, in predictive analysis, real-term insights and
decision support areas. Deal pipeline
is strong, though decision cycles remain long.
A resilient performance
in a seasonally weak quarter and the continued momentum in deal wins, coupled with a very large efficient
execution engine, gives us confidence
for growth in the medium term. Driven by our YTD growth of 1.8% in CC terms and Q4 outlook, we have revised
our revenue growth guidance
for FY '24 from 1% to 2.5% previously to 1.5% to 2% in constant currency terms. We retain our margin guidance
band for the year at 20%
to 22%.
Finally, I would
personally like to thank all the stakeholders of Infosys, especially the fabulous finance team here for their
support over the past five
years. As I step down, I look forward to working closely with the entire leadership team over the next few
months to ensure a smooth transition.
Finally, I wish Jayesh the very best as he assumes the role of CFO from 1st of April '24.
With that, we
can open up the call for questions.
Moderator
Thank you, very
much. We will now begin the question-and-answer session. The first question is from the line of Kumar Rakesh
from BNP Paribas. Please
go ahead.
Kumar Rakesh
Hi, good evening
and thank you for taking my question. My first question was...
Moderator
Kumar sir, can
I request you to speak up a bit?
Kumar Rakesh
Sure. Is this
better?
Moderator
Yes. Go ahead,
please.
Kumar Rakesh
Thank you. So,
my first question was around the new deal wins, which has been pretty strong at $2.3 bn, it is some of the
highest we have seen in the
recent quarters. However, that also implies the renewals have been weaker. In recent quarters, we have seen
renewals to be in the range
of $1.5 bn to $2 bn. In this quarter, it was less than $1 bn. And that could also be the reason for the
slowdown in the second half, which
you are expecting.
We can understand
that the new deal wins would be lumpy and difficult to predict, but you would have a timeline on the renewals,
when they would be happening
and what is the probability that you could see winning them back? So how do you see the next quarter or so
panning out from the renewal
perspective, any visibility on that side?
Salil Parekh
Thanks for that
question. I think my reading of the large deals win is more along the lines that we are continuing to do well
with renewals and then we
have got really excellent net new wins in the $3.2 bn. As we have discussed at other times, the large deals
numbers by themselves vary
quarter-on-quarter. As you know, last quarter was also extremely large number.
Having said that,
we have on the renewals, a clear sight of what is coming up. We are also benefiting in many of these areas
from consolidations which Nilanjan
referenced. And also where our clients are seeing, opportunities for cost and efficiency. So all of that gets
combined with the renewals
coming along at regular cycles.
Kumar Rakesh
Got it. Thanks
for that. And my second question was around Gen AI. So you have talked about 100,000 employees being trained
on Gen AI. But can you just
quantify or share some insights on the client engagement side? Anything that you can quantify, number of
projects that we are working
or the amount of deals that we are winning, anything that we can start tracking on that side?
Salil Parekh
So there, we are
not, at this stage sharing externally any views on revenues or projects and so on. To give you color what is
happening today is, almost
every discussion with clients involves some element of Generative AI. And what we have now developed through
Topaz is a set of areas where
there is benefit cases, use cases scenarios where there is impact, where we are working across a large number
of clients on those in different
scales, where there are some which are more pilot, some which are programs. And that is the three examples
that I shared.
We have also developed
strength across a number of large language model, where we have trained our teams. And then on how to leverage
datasets. Our focus is
very much on large enterprises who are our clients and the datasets within those enterprises, depending on the
usage of where that large
language model is to be applied.
We have a very
strong business in data and analytics, which becomes the foundation for this Generative AI work. We are
working to make sure that the
benefits are felt across all of our service offerings, so we can start to see in new discussions with clients,
productivity benefits,
which are downstream coming from this Generative AI. So at this stage, while we are not externally quantifying
all of the elements I referenced,
that is the sort of color we are seeing across a large number of discussions.
Kumar Rakesh
Thanks for that,
Salil.
Moderator
Thank you. The
next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.
Nitin Padmanabhan
Hi, good evening,
thanks for the opportunity. Congrats on the strong deal wins. So I think, first off, Salil, anything that you
have seen versus the previous
quarter in terms of client behavior that suggests green shoots on the discretionary side? Or do you think that
will continue to be under
pressure for some time?
The second question
is for Nilanjan. It appears that we will exit the year with margins lower than last year. Do you still believe
that margin could be better
next year versus the current one? We have sort of highlighted that as an aspiration at the beginning of the
year, so just wanted your
thoughts on how one should think of that at this point in time? Thank you.
Salil Parekh
Thanks. In terms
of the client discussions, we have not seen some significant change in one or the other direction from what we
were seeing last quarter.
So some of the digital transformation work or some of that type of programs are where clients are not putting
focus or attention, whereas
the cost and the efficiency and now even consolidation, we are seeing more and more of that, which is what we
were seeing last quarter
as well.
So in that sense, we do not have
any change that we have sensed at this stage.
Nilanjan Roy
So Nitin, on the
margin question, I think you have seen this quarter as well, the underlying margins, excluding the one-offs
are quite resilient and we
have talked about now Project Maximus, this is nearly the third quarter and a lot of work has been going on.
We are seeing the benefits
of that, and you can see that in our commentary as well. We are very confident about the overall margin
outlook.
Of course, we
would not give a number about next year. But really, the multiple tracks around value-based selling, around
efficient pyramid, around
automation and Gen AI, are all working well. So, I think that gives us good optimism over the medium term in
terms of our margin structure.
Nitin Padmanabhan
Okay. Thank you
so much and all the best.
Moderator
Thank you. Next
question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.
Moshe Katri
Thanks
for taking my questions and congrats on strong bookings for the quarter. First question, any color
of the ongoing budget cycle
for calendar '24? Do you think budgets will be on time? Do you think budgets will be delayed? Any color there
on that one?
Salil Parekh
Thanks, Moshe.
On the budgets, in Q3 end of the year quarter the furloughs were in play. We are seeing that coming into play
in the Q1 calendar year
which is our Q4. The budget decisions are ongoing and as you know well, these will go through the early part
of this month. So, nothing
from that. We do not see any change in what we were seeing in terms of behavior from the last quarter where
budgets would suddenly have
a different direction.
So, at this stage,
it looks like it is similar to what we were seeing, but everything is not yet closed out from our discussions
on the budgets.
Moshe Katri
Understood. And
then looking at the deal flow, the large deal flow that went through calendar '23, there were some concerns
that they are not converting,
some of deals are not converting on a timely basis. Has that changed in any way in terms of conversion on some
of these deals, and when
we could start seeing that inflection point in revenue growth because of those deals converting? Thanks a lot.
Salil Parekh
On that, as you
are aware, the large deals are obviously giving us the foundation, especially the net new and renewal for
future revenue. And at the same
time, we are also seeing impact of the digital programs not moving or digital programs sometimes being
stopped. So that combination is
what gives that revenue outcome.
At this stage,
we have no specific external view on what will happen in the quarter, but our overall revenue guidance for
this financial year, which
is only one more quarter, gives you a sense of how we are feeling about that. We will see, because a lot of
the large deals, as they start
to build up, and when the digital capabilities start to have more interest with clients, we will start to see
that change, I am sure.
Moshe Katri
Thanks, Salil.
Moderator
Thank you. The
next question is from the line of Ankur Rudra from JPMorgan Chase. Please go ahead.
Ankur Rudra
Hi, thank you.
Salil, could you elaborate on what you have seen the client spending sentiment has been, on projects that have
already been signed, let
us say in the last nine months or so on the cost takeout side; and on incremental signing of smaller projects?
Because we can see on large
projects, but we do not have a visibility on how your small projects are doing?
Salil Parekh
Sure. So, on the
client spending, where clients have signed recently in the last three, six, nine months, that spending is
going well, both on cost and
other projects, incremental projects, as you were describing. On things that were more in the past, that
behavior on the cost has continued
and the incremental projects we have seen even in the past quarter some impact. But what has been signed
recently, we see
those proceeding as per what they have signed.
Ankur
Rudra
Understood.
And you have
mentioned
several times on the call that there seems to be delays in revenue recognition because of project
reprioritization. Is there a way of
maybe estimating this for investors benefit? Like, for example, how much of fiscal '23 or the last 2 years,
total contract value or signings
may have been impacted because of change in client priorities? Or alternatively, how much of the signings have
been shrinking every quarter,
there is one back with new project signings for you to stay at the same place?
Salil
Parekh
We are not in
a position to
share that externally. We have a view on what we look at, in terms of wins, execution and large deals
internally. There are also other
programs, some small, some mid-sizes which go up and down. So that whole internal composition is something
which we work with, but it
is not something which we have shared in the past and are even today sharing externally.
Ankur
Rudra
Understand. I
wanted a color
as opposed to maybe a quantification?
Salil
Parekh
Yes. So same,
I think at this
stage, the outcome is what we have. We have not given any more on that in terms of color as well, Ankur.
Ankur
Rudra
Understood.
Maybe moving to
margins. Just one question. Obviously, this quarter, if I take out the impact of the ransomware incident, it
appears that margins would
have been up by 60 basis points. Is that right? Number one. Number two, if you could elaborate where we are on
the various Project Maximus
levers? And where is the remaining support, let us say, over next year or so?
Nilanjan
Roy
Yes, we have
given the margin
walk in the initial script, and quite clear about the one-offs, the salary, etc.
From Maximus,
there are a lot
of tracks which are currently in play. Utilization is one you are seeing, in fact, that is the biggest one,
straight up in your metrics,
you can see that and how that is flowing into margins. There are other internal programs on the pyramid, a lot
of work there onsite-offshore,
is the first time we have seen some positive movement after a lot of quarters.
On automation
and Gen AI, a
lot of work going on, with Gen AI coming in with additional sort of levers available to us more than the
traditional automation which
we used to do. Pricing has been much better. There is a lot of work happening on value-based selling. And in
fact, that is also reflected
in overall RPP that we are seeing a much more stable pricing, in the underlying pricing regime, and that is
something which we are pushing
on.
So all the
levers are in
play.
We have quarters where we are able to squeeze more and many new ideas. I think with Project Maximus, which
have come into the fray as
well, looking at large programs and whether we can early on get into a margin improvement program rather than
what was originally budgeted
during the bid phase. So there is a lot of stuff happening, and I think we are already seeing the early
results.
Ankur
Rudra
A quick
follow-up, if I can.
There is some concern that some of the cost takeout contracts won in the last 9 months may drive some margin
headwinds. Is that something
that should impact on a portfolio basis next year?
Nilanjan
Roy
That is
something we have
always
talked about. We have a portfolio of contracts in the first, second, third, fourth, fifth year. So while new
contracts come in, which
are initially potentially at lower margins, at the same time, we have contracts which have been going into a
steady state. Some of these
questions were raised two, three years back in one of our segments as well.
And you have seen
the improvement for that segment particularly over the period of time where it is nearly closer to the average
margin for company. So
that is something which we have really fine-tuned and mastered over the few years. So in that sense, that is
always built into our projections
and forecast.
Ankur Rudra
I appreciate the
color. Thanks and best of luck.
Moderator
Thank you. Next
question is from the line of Bryan Bergin from TD Cowen. Please go ahead.
Bryan Bergin
Hi, good evening,
thank you. First question I have is demand by geography. Can you talk about pipeline and client spending plans
across the U.S. versus
Europe, maybe also based on what you have in backlog? I am curious if you think the recent trends of North
America weakness being offset
by solid Europe performance is likely to continue or whether that may change as you go through fiscal '25?
Salil Parekh
On the geography,
as you point out, we had good growth in Europe in Q3, weaker in North America. In terms of pipeline, we
don’t share the pipeline
split by geography. We do see our large deals that Nilanjan shared by geography in good momentum at least on
the large deals on both U.S.
and European side, but we don’t specifically call out pipeline or outlook by geography within our
business.
Bryan Bergin
Okay. Any reason
that the current growth trajectory should change near term or should it remain somewhat consistent?
Salil Parekh
So, if you look
at guidance for the full year, which is for the remaining quarter, it’s for the entire business and we
don’t have a specific
view that we share externally on the U.S. or Europe there.
Bryan Bergin
Okay. Follow-up
on the third-party items. So another uptick here, just I think, over 8% of revenue now. Can you talk about
whether you expect third-party
items to continue to rise as mix revenue or may this start to come down as you go forward and deal composition
potentially change? I am
just trying to think about sustainable level here as this has moved up meaningfully over the last couple of
years?
Nilanjan Roy
Yes. So as we
have talked about this before, as we are involved in larger transformation deal, the longer-term
transformation deals across the entire
IT stack, infra, cyber, application development, data, I think many of these are bundled deals, which have
software, hardware elements
in it. And in a way, that is also giving us the benefit of taking these larger deals off the table and at the
same time, we are able to
manage our margins as well.
So,
we are able to navigate both, the impact of this. So we have no number in mind to say that this is where
we target or this is optimal
level. As long as we are able to get incremental market share and get our margins in-line, which is what
the program of Maximus is also
about, I think we are comfortable with that.
Bryan Bergin
Okay. And just
last one for you, just on the headcount resourcing plans. Can you just give us a sense how you are thinking
about resourcing plans near
term? I know it was down again, sequentially about 2%. I am just curious if you have kind of reached a
stabilization point?
Nilanjan Roy
Yes, so we still
have a lot of headroom and we have talked about it in the last two quarters that our utilizations are still
quite low. We have operated
a much higher utilization, 84%, 85% and of course in the COVID years, maybe 87%, 88%. So that is one, and we
are still below 84% as we
speak. We also have an on-tap demand fulfillment from our fresher model, so we can absorb in freshers very
fast, because we do not have
to just go for colleges and wait for the annual cycle.
Now we have a
source of supply from off-campus as well. And with attrition slowing down, there is a lot of talent, even from
a lateral basis available
across the country as well. So I do not think that is a big concern for us.
Bryan Bergin
Good luck to you, Nilanjan.
Thank you.
Nilanjan Roy
Thank you.
Moderator
Thank you. Next
question is from the line of Keith Bachman from BMO. Please go ahead.
Keith Bachman
Hi. Thank you.
I want to ask a couple of questions, if I could. First on pricing, you mentioned specific segment of pricing,
but I wanted to ask about,
pricing on renewals, are you seeing pricing pressure that is different from past cycles at the time of
renewals? And then also, you had
good deal signings for large deals. I wanted to talk, if you could address pricing for those large deals and
how that might be impacting
your margins? And then I have a follow-up, please.
Nilanjan Roy
Yes. We have seen
much better pricing stability over the last few years. And in fact, we are also very conscious with our
value-based selling program that
we are not leaving any pennies on the table when we are going after deals, because in the hubris, we want to
make sure that we are not
leaving a lot of dollars on the table. So I think there is a lot of work happening there.
But overall, from
a competitive positioning, pricing really has been stable across. And that is reflected on the cost pressure
that people are also conscious
of, in their margins and in where they are.
So, in that sense,
there is no more concern. We, of course, have the one-offs, etc., specific clients, specific segments where
they are in trouble. And of
course, they may want to rebid some of that. But overall, it is not been something which is really concerning
us in that sense today.
Keith Bachman
Okay. And my follow-up
relates to duration, this was asked a little bit differently earlier in the call. But as you are getting good
signings of large deals,
is the duration of those large deals extending so that investors should be thinking about the book-to-bill
being a bit longer?
Nilanjan Roy
So, we do not
give out the duration of the deal wins. We have deals which come with longer-term periods. And you could see
some of the announcements
we have made. But nothing specifically whether they are going up across. So, we do not comment on that.
Keith Bachman
Okay. Well, then
maybe I could sneak in one more. As you just look out over the next couple of quarters, if you could just help
us on the puts-and-takes
on margins that we should be thinking about. I am not asking for guidance. You have already said that
utilization perhaps is a source
of potential margin upside as it goes up. I would think that wage pressures would be less going forward, but
not sure how mix fits into
that.
But anything you
just want to highlight beyond the March quarter, but just the puts and takes that we should at least be
considering as we are creating
our margin profile over the next, four, five quarters?
Nilanjan Roy
Yes. So, I think
one of the earlier question was on this and probably I talked about it in Project Maximus, as well. There are
other benefits, which we
don’t factor in into any of our models. For instance, operating leverage, you can see the impact of
SG&A benefits on operating
margins when we were growing during '21, '22, '23. So, that is something which automatically flows into the
P&L with growth. And in
a way it gets reversed, the operating leverage works against you when revenues are down. So, that is something
from a pure margin perspective,
which you know flexes.
Secondly, similarly
on the currency, we don’t build in anything into our programs. And that also comes in the future as
well, but it is not part of
Maximus. Of course, there are things out there, what the expectations of dollar movements are. So, these are
some things more extraneous
as well which can impact, but we are more confident of what we are able to control within the 20 tracks of
Maximus and we have talked
about that.
Keith Bachman
Okay. All right,
thank you.
Moderator
Thank you. The
next question is from the line of Jamie Friedman from Susquehanna International Group. Please go ahead.
Jamie Friedman
Hi. Good evening.
Nilanjan, in your prepared remarks you expressed confidence in growth in the medium term. I was just hoping
you could unpack that a little.
When you say medium term is that just a comment about the fourth quarter or is that longer in duration?
Nilanjan Roy
Yes. Medium term
is medium term. It is definitely more than the fourth quarter.
Jamie Friedman
Okay. Thank you.
Also, Nilanjan and Salil, I have tried to reconcile when Salil observes the strength in the TCV and a record
TCV in nine months and when
Nilanjan, you used the word subdued in your prepared remarks. It seems like you are saying, it is hot and cold
at the same time. So, I
know these are where many of these questions are going, but how can the weather be both?
Salil Parekh
Hi, maybe the
way that we are thinking about this, we can share with you. The large deals really give us good confidence of
revenue over the next several
periods in terms of the wins, both for net new and renewals. And the comment, which was more around subdued,
we look at it from a perspective
of where we see less activity on digital programs and less activity on some of those type of projects, where
that takes away a little
bit from the revenue.
So, that is the
sort of balance in our mind. One of them giving us that revenue outlook and the other where clients are under
constraints on their own
spend, reducing some of that. That is how we see the balance on that.
Hopefully, that clarifies the comments.
Jamie Friedman
Thank you, Salil.
I will jump back in the queue.
Moderator
Thank you. Next
question is from the line of Sumeet Jain from CLSA. Please go ahead.
Sumeet Jain
Yes. Hi, thanks
for the opportunity. Firstly, I wanted to ask around the one-time loss what you had around McCamish, are you
expecting it to reverse back
in Q4 and include it in your guidance? Or will it reverse some time in FY '25?
Nilanjan Roy
No, this is one-time.
There is no reversal.
Sumeet Jain
Got it. And secondly,
I wanted to check around your platform business. I mean we have seen for the last 2 years, there has
absolutely been no growth in that
particular business. But although we keep seeing deal wins around your Finacle platform with various regional
banks in the Middle East
geography and other regional banks in North America as well. So can you share any plans to grow that part of
the piece where we are seeing
the other SaaS companies globally have actually seen a lot of traction post the Gen AI offerings and their
solutions?
Nilanjan Roy
Yes. So I think
we continue to do well. I think Finacle business continues to motor ahead, a very nice deal wins across. And
overall platforms is a more
generic usage. And I mean, we track it across various things, but Finacle actually overall has been doing very
well.
Sumeet Jain
So any reasons
for the platform business to be flat over the last 2 years?
Nilanjan Roy
So I think we
can get back to you on that.
Sumeet Jain
Okay, that is
all I had. Thank you.
Nilanjan Roy
Okay. I think
Sandeep is just prompting me that we also use it for internal productivity as well for services.
Sumeet Jain
Okay. Got it.
Thank you.
Moderator
The next question
is from the line of Yogesh Agarwal from HSBC. Please go ahead,
Yogesh Agarwal
Yes, hi. Just
one quick question. The number of employees are down 7% year-on-year, but the total wage bill is up around 1%
or 2%, which means that
the wage bill per head is up around 9%, 10% year-on-year. So I would have assumed that the pyramid would have
kicked in, in a slower growth
last few quarters. So any particular reason why the wage bill per head has gone up so much? Thanks.
Nilanjan Roy
I think one of
the things is the comp increase also has happened this quarter. And, of course, in the initial part of the
year, we had more lateral movements
coming in, in the top end of the pyramid. But if you see the latest quarter, you will see a reversal of that.
I think the employee costs
have come down, in this quarter as well. So you will see that trend reversing.
Yogesh Agarwal
Great. Thanks.
Thanks, Nilanjan, all the best for your future endeavors.
Nilanjan Roy
Thank you.
Moderator
Thank you. The
next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.
Vibhor Singhal
Yes, hi. Thanks
for taking my question.
Moderator
Please use your
handset. There is an echo in the line.
Vibhor Singhal
Sure. Is it better
now?
Moderator
Yes, please go
ahead.
Vibhor Singhal
Yes, thanks a
lot for taking my question. So, Salil, just a question on the deal flow number. I know we have already had a
bit on it. So, I just wanted
to take a bit of feedback. We know this quarter was basically on the softer side, both in terms of seasonality
and probably furloughs
being higher than the last year itself. But on the overall demand environment that we are looking at, both,
let us say, in terms of the
cost takeout deals or the discretionary spends or basically the different verticals that we are looking at, is
there any change in the
overall demand environment that we are looking at from 3 months ago? I mean, when we met for the second
quarter results?
And how do you
see this playing out over the next couple of months as clients get into the budget cycle and any specific
verticals or pockets that you
might want to call?
Salil Parekh
So, there, you
know, the thing that we have observed is, as we look at a large client base, the way clients are behaving in
terms of spend, we have not
seen a change in the way they are looking at it. So, we still see, what we were discussing earlier on digital
transformation programs
being more impacted, where cost efficiency being much more in play, there is also more consolidation that we
are seeing, and that was
coming through in the past quarter as well.
And then, there
is a lot of interest in almost every conversation we have, where Generative AI is part of the mix. So, in that
sense, I do not have a
feeling that there is a change that we are seeing. Now, this is also the start of the calendar year. We will
get a sense fairly quickly
on how clients are looking at their spend. And as we come to the end of our financial year and as we plan for
next year, that will give
us, let us say, more view into that spending pattern.
Vibhor Singhal
Got it. And in
terms of the deal flow, I mean, the deal wins that we had in the first half of the year were very rock solid
deal wins. Any color on some
of those deals getting into execution mode driven by the conversation with your clients? I mean, are we seeing
incremental intent from
the clients on starting those deals, which were maybe a bit delayed on their side? Or, any color on that that
we have seen incrementally
over the last three months?
Salil Parekh
So, there we have
seen, essentially, in this last 3-month cycle, the deal starting or ramping up being as we anticipated. So
nothing has changed in this
3-months cycle. There are places in some of the large deals where there is need for incremental work, which is
also starting to be visible,
which will hopefully flow through.
So, there will
be no delay that we have seen. In fact, we have seen more of those on track in the last three months.
Vibhor Singhal
Got it. Thanks
for taking my questions and I wish you all the best.
Salil Parekh
Thank you.
Moderator
Thank you. The
next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Gaurav Rateria
Hi. Thanks for
taking my question. The first question is with respect to the mega deal signed in 2Q. The transition period
was expected to be a little
longer, and some of them were supposed to come into revenues in the fourth quarter itself. So is the
expectation remaining similar on
that? Or has anything changed with respect to the transition period and flow-through of the revenue?
Salil Parekh
There, as we had
shared previously, it was towards the end of the year and that is where we are, so we do not see that
changing.
Gaurav Rateria
Got it. Second
question is with respect to the underlying leakage in the business on small deals, discretionary spend that
has been continuing now for
some time. How do you characterize your 3Q versus, let us say, 1Q and 2Q has the leakage remained largely
similar or has that kind of
come down compared to the pace at it was leaking in the first two quarters?
Salil Parekh
Let me try to
give color in the way we look at it. In the last quarter, so in the last three months, we have not seen those
things change in direction,
they appear to be stable or similar.
Gaurav Rateria
And is that the
similar thing built in your outlook for the fourth quarter as well, when you tightened your guided band?
Salil Parekh
At this stage
that is what we have put into the Q4 outlook, yes.
Gaurav Rateria
Got it. Last question
is on the margins. Given that you will have some bit of more headwind in fourth quarter because there will be
full three-month impact
of the wages that you have provided for in this quarter, your margins probably will have some more headwinds,
plus your implied guidance
points to again, weak revenue trajectory in the fourth quarter also, so no major massive operating leverage
per se.
It is just that
you are exiting the year with margins closer to the lower end of the guide, is that the bottom for the
margins? And given the Project
Maximus is underway from here on the margin should only be going in the upward direction? Is that the way to
look for it? I am not specifically
looking for fiscal '25, but just trying to understand is that the bottom for the margins? Thank you.
Nilanjan Roy
Yes, so in Q4,
I mean, it will work out of Q3 as well and you know there are puts-and-takes in Q4. And like we have said,
Project Maximus continues to
deliver very strongly and in our overall commentary, we have talked about the optimism in the medium-term for
our margins coming out of
Maximus.
Gaurav Rateria
Thank you.
Moderator
Thank you. Next
question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.
Sandeep Shah
Yes, thanks. Thanks
for the opportunity. Most of the questions have been answered. Just wanted to understand the 60 bps impact on
our cybersecurity, is it
possible to break down in terms of revenue and cost? And is it fair to assume the impact, which could have
been there because of the cost,
will actually no longer be there? It would be a tailwind in the fourth quarter?
Nilanjan Roy
Firstly we can’t
split it, but both these are one-time impacts - the loss of revenue and the cost impact. So, this was like the
puts-and-take. So, in Q4,
as we see it now, this is not going to be there.
Sandeep Shah
Okay. And so even
the revenue will come back in the fourth quarter, right?
Nilanjan Roy
Yes,
so I think in the statement, you have seen that the systems are back substantially by the end of
December, right? The system is
up and running. So I think that part goes away and the work that we do in Q4, should translate to revenues.
Sandeep Shah
Okay. And Nilanjan
for two months of wage hike, 60 bps to 70 bps wage impact looks slightly lower. So, is the almost 100% of the
eligible employees have
been covered? And is it fair to assume the wage impact would be much lower in the fourth quarter because it
would be one month impact?
Nilanjan Roy
Going to be a
one-month impact, absolutely. Every time we do a wage hike, we look at, of course, the competitive scenario we
look at the market, attrition,
employees, tenure, what are the pay point grids. So, it is a very complex exercise. And based on this, this is
what we have rolled out.
And of course, you can see the attrition figures are also good.
Sandeep Shah
Okay. And last
question, Salil, I think one of the responses, you said the furloughs in the December quarter may continue in
the March quarter, have
I heard correctly or I have been mistaken?
Salil Parekh
So there, my point
was on more Q3, we had the furloughs and that is a seasonal impact. In Q4, we typically see a little bit of
that always in our business
in Australia and that is really the reference I was making.
Sandeep Shah
Okay, okay. Thanks
and all the best. And all the best Nilanjan.
Nilanjan Roy
Thank you.
Moderator
Thank you. The
next question is from the line of Kawaljeet Saluja from Kotak. Please go ahead.
Kawaljeet Saluja
Hey, hi. My question
is for Nilanjan. And Nilanjan you know the margins for this quarter, is it based on your normal variable
compensation provision? Or is
that something which has taken a hit in this quarter?
Nilanjan Roy
So Kawal, we do
not talk about the variable pay, of course. I think there will be enough news in the papers about that, but we
do not give any commentary
on variable pay.
Kawaljeet Saluja
Yes. I mean I
think it will make its way to the media after a month, so might as well talk about it now Nilanjan.
Nilanjan Roy
We never confirm
at any case.
Kawaljeet Saluja
Okay. Got that.
Yes. All the best for your future endeavors, Nilanjan.
Nilanjan Roy
Thanks, Kawal.
Moderator
Thank you. Next
question is from the line of Manik Taneja from Axis Capital. Please go ahead,
Manik Taneja
Hi. Thank you
for the opportunity. I just wanted to understand over the course of last 9 to 12 months, the industry has been
complaining about the leakage
on the existing projects as well as non-extension of discretionary projects. Are you seeing any change on that
front? That is question
number one. The second question was with regards to the expansion in terms of captive centers, and we continue
to see news flow on that
front. Any comments from you on that front?
Salil Parekh
I think, on the
first part, our sense is in the last quarter, so in this Q3, we have not seen any change in the work on those
projects that had essentially
a similar type of trajectory. On the captive centers there, typically, we see that any time there is new
technology shifts, whether there
was digital or cloud or Generative AI, there is definitely more interest in
some clients building out
captives. Equally as technologies age, we see some clients are looking to exit and especially to be more
optimized.
And we have seen
that in several of our large deals, if you look back over the last several quarters. We have had these where,
in addition to the transformation,
we have taken on the task of optimizing pre-existing captives and so on.
So, we do not
see a change. It is just maybe it is that new technology moment where we see the activity. But we also see
converse activity of things
which were let us say, set up 5, 7, 10 years ago, which are going through that change or decline in that
situation.
Manik Taneja
Sure. And one
last question from my end, we have been seeing our headcount reduced for the last several quarters. Any sense
on how we should be thinking
about the optimization on this front given the kind of deal wins that we have had in the last three quarters?
Nilanjan Roy
Yes. So I have
mentioned that a couple of times, utilization is something where we have headroom. So the decline in headcount
really does not concern
us too much. And both from availability of talent to ramp-up, we now have a very strong off-campus program.
This is something over the
last three or four years, we have perfected post COVID and that is really on tap without having to give out
requests to colleges one year
in advance.
And of course,
from a lateral perspective, like I mentioned, with the market being soft, there is of course, talent available
even laterally. So in that
sense, we are very, very comfortable with any volume requirements and ability to fulfill.
Manik Taneja
Sure. Thank you
and all the best for the future.
Moderator
Ladies and gentlemen,
that was the last question for today. I now hand the conference over to the management for their closing
remarks. Thank you and over to
you.
Salil Parekh
Thank you. Just,
first, everyone on the call thanks very much for joining us and for your questions. I want to just summarize
with a few points. First,
we are very excited with the large deals at $3.2 bn, 71% net new. It really shows the foundation of what we
see for the future, very happy
with the strong margin and also for an extremely strong margin improvement program that is in play.
Our Generative
AI work is really pervasive. It is across all of our client discussions, in our service lines and we believe
we are building extremely
deep capability within our Topaz set of capabilities. We see continued strong focus on cost takeout,
consolidation and we have extreme
strength in that. We feel good that, that will continue. If that continues, we have a good play into that.
And then finally,
we feel good overall about the resilience of our business given the quarter and the seasonality that we had
and the overall economic environment.
We feel really good about the resilience of our business and the future.
So thank you,
everyone, again and look forward to catching up at the next quarter call.
Moderator
Thank you. Ladies and gentlemen, on behalf of
Infosys Limited, that concludes
this conference. Thank you for joining us, and you may now disconnect your lines.
Exhibit
99.6
Form of Release to Stock Exchanges
INDEPENDENT
Auditor’s Report ON THE AUDIT OF THE CONSOLIDATED FINANCIAL RESULTS
To
The Board of Directors of INFOSYS Limited
Opinion
We have audited the accompanying Statement
of Consolidated Financial Results of INFOSYS Limited (the “Company”)
and its subsidiaries (the Company and its subsidiaries together referred to as the “Group”) for the quarter and nine months
ended December 31, 2023, (the “Statement”) being submitted by the Company pursuant to the requirements of Regulation 33 of
the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).
In our opinion and to the best of our
information and according to the explanations given to us, the Statement:
| i. | includes
the results of the subsidiaries as given in the Annexure to this report; |
| ii. | is presented
in accordance with the requirements of Regulation 33 of the Listing Regulations; and |
| iii. | gives a
true and fair view in conformity with the recognition and measurement principles laid down in the Indian Accounting Standard 34 “Interim
Financial Reporting” (“Ind AS 34”) prescribed under section 133 of the Companies Act, 2013 (the “Act”) read
with relevant rules issued thereunder and other accounting principles generally accepted in India of the consolidated net profit and consolidated
total comprehensive income and other financial information of the Group for the quarter and nine months ended December 31, 2023. |
Basis for Opinion
We conducted our audit in accordance
with the Standards on Auditing (“SA”s) specified under Section 143(10) of the Act. Our responsibilities under those Standards
are further described in Auditor’s Responsibilities for audit of the consolidated financial results section of our report. We are
independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”)
together with the ethical requirements that are relevant to our audit of the consolidated financial results for the quarter and nine months
ended December 31, 2023 under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient
and appropriate to provide a basis for our audit opinion.
Emphasis of Matter
As described in note 1(c) to the statement,
certain costs relating to possible damages or claims relating to a cybersecurity incident in a subsidiary are indeterminable as at the
date of this report because of reasons stated in the note. Our opinion is not modified in respect of this matter.
Management’s Responsibilities
for the Consolidated Financial Results
The Statement which includes Consolidated
financial results is the responsibility of the Company’s Board of Directors and has been approved by it for the issuance. The Statement
has been compiled from the related audited interim condensed consolidated financial statements for the three and nine months ended December
31, 2023. This responsibility includes the preparation and presentation of the consolidated financial results for the quarter and nine
months ended December 31, 2023 that give a true and fair view of the consolidated net profit and consolidated other comprehensive income
and other financial information of the Group in accordance with the recognition and measurement principles laid down in the Ind AS 34,
prescribed under Section 133 of the Act, read with relevant rules issued thereunder and other accounting principles generally accepted
in India and in compliance with Regulation 33 of the Listing Regulations. The respective Boards of Directors/Trustees of entities included
in the Group are responsible for maintenance of the adequate accounting records in accordance with the provisions of the Act for safeguarding
the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal
financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to
the preparation and presentation of the respective financial results that give a true and fair view and are free from material misstatement,
whether due to fraud or error, which have been used for the purpose of preparation of the consolidated financial results by the Directors
of the Company, as aforesaid.
In preparing the consolidated financial
results, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing the ability of
the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the respective Boards of Directors/Trustees either intend to liquidate their respective entities or
to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees
of entities included in the Group are responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities
for Audit of the Consolidated Financial Results
Our objectives are to obtain reasonable
assurance about whether the consolidated financial results as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial results.
As part of an audit in accordance with
SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify
and assess the risks of material misstatement of the consolidated financial results, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| · |
Obtain an understanding of internal financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of such controls.
|
| · | Evaluate
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
| · |
Evaluate the appropriateness and reasonableness
of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing Regulations.
|
| · |
Conclude on the appropriateness of the
Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the consolidated financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
|
| · |
Evaluate the overall presentation, structure
and content of the consolidated financial results, including the disclosures, and whether the consolidated financial results represent
the underlying transactions and events in a manner that achieves fair presentation.
|
| · |
Perform procedures in accordance with
the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations to the extent applicable.
|
| · | Obtain
sufficient appropriate audit evidence regarding the Financial Information of the entities within the Group to express an opinion on the
consolidated financial results. We are responsible for the direction, supervision and performance of the audit of financial information
of such entities included in the consolidated financial results of which we are the independent auditors. |
Materiality is the magnitude of misstatements
in the consolidated financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably
knowledgeable user of the consolidated financial results may be influenced. We consider quantitative materiality and qualitative factors
in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified
misstatements in the consolidated financial results.
We communicate with those charged with
governance of the Company and such other entities included in the consolidated financial results of which we are the independent auditors
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance
with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: January 11, 2024
|
For DELOITTE HASKINS &
SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCL8373
|
Annexure to Auditor’s Report
List of Entities:
| 1. | Infosys
Technologies (China) Co. Limited |
| 2. | Infosys
Technologies S. de R. L. de C. V. |
| 3. | Infosys
Technologies (Sweden) AB |
| 4. | Infosys
Technologies (Shanghai) Company Limited |
| 5. | Infosys
Nova Holdings LLC. |
| 6. | EdgeVerve
Systems Limited |
| 8. | Skava Systems
Private Limited (under liquidation) |
| 10. | Infosys
Arabia Limited (under liquidation) |
| 11. | Infosys
Consulting Ltda. |
| 12. | Infosys
Luxembourg S.a.r.l |
| 13. | Infosys
Americas Inc. (liquidated effective July 14, 2023) |
| 14. | Infosys
Public Services, Inc. USA |
| 16. | Infosys
(Czech Republic) Limited s.r.o. |
| 17. | Infosys
Poland Sp z.o.o |
| 18. | Infosys
McCamish Systems LLC |
| 19. | Portland
Group Pty Ltd |
| 20. | Infosys
BPO Americas LLC. |
| 21. | Infosys
Consulting Holding AG |
| 22. | Infosys
Management Consulting Pty Limited |
| 24. | Infosys
Consulting GmbH |
| 25. | Infosys
Consulting S.R.L (Romania) |
| 26. | Infosys
Consulting SAS |
| 27. | Infy Consulting Company Ltd. |
| 29. | Infosys
Consulting S.R.L (Argentina) (formerly a wholly-owned subsidiary of Infosys Consulting Holding AG) became the majority owned and controlled
subsidiary of Infosys Limited with effect from April 1, 2022 |
| 30. | Infosys
Consulting (Belgium) NV |
| 32. | Infosys
Financial Services GmbH (formerly known as Panaya GmbH) became a wholly owned subsidiary of Infosys Singapore Pte. Ltd with effect from
February 23, 2023 |
| 34. | Brilliant
Basics Holdings Limited (under liquidation) |
| 35. | Brilliant
Basics Limited (under liquidation) |
| 36. | Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) |
| 37. | Infosys
Middle East FZ LLC |
| 39. | Fluido
Sweden AB (Extero) |
| 43. | Infosys
Compaz Pte. Ltd. |
| 44. | Infosys
South Africa (Pty) Ltd |
| 51. | Stater
Participations B.V. (wholly owned subsidiary of Stater N.V. merged with Stater N.V. with effect from November 24, 2023) |
| 52. | Stater
Belgium N.V./S.A. (formerly a wholly owned subsidiary of Stater Participations B.V., became the wholly owned subsidiary of Stater N.V.
with effect from November 24, 2023) |
| 53. | Outbox
systems Inc. dba Simplus (US) |
| 55. | Simplus
Australia Pty Ltd |
| 56. | Simplus
Philippines, Inc. |
| 57. | Infosys
Fluido UK, Ltd. (formerly Simplus U.K, Ltd) |
| 58. | Infosys
Fluido Ireland, Ltd. (formerly Simplus Ireland, Ltd) |
| 59. | Infosys
Limited Bulgaria EOOD |
| 60. | Infosys
BPM UK Limited |
| 61. | Blue Acorn
iCi Inc. (formerly known as Beringer Commerce Inc) |
| 62. | Kaleidoscope
Animations, Inc. |
| 63. | Kaleidoscope
Prototyping LLC (liquidated effective November 1, 2023) |
| 65. | GuideVision
Deutschland GmbH |
| 67. | GuideVision
Magyarorszag Kft |
| 68. | GuideVision
Polska Sp. z.o.o |
| 69. | Infosys
Business Solutions LLC |
| 70. | Infosys
Germany GmbH (formerly known as Kristall 247. GmbH) |
| 71. | GuideVision
UK Ltd (under liquidation) |
| 72. | Infosys
Turkey Bilgi Teknolojileri Limited Sirketi |
| 73. | Infosys
Germany Holding Gmbh |
| 74. | Infosys
Automotive and Mobility GmbH & Co. KG |
| 77. | Infosys (Malaysia) SDN. BHD.
(formerly Global Enterprise International (Malaysia) Sdn. Bhd. |
| 78. | oddity space GmbH (acquired by
Infosys Germany GmbH on April 20, 2022, merged into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023) |
| 79. | oddity jungle GmbH (acquired
by Infosys Germany GmbH on April 20, 2022, merged into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023) |
| 80. | oddity waves GmbH (acquired by
Infosys Germany GmbH on April 20, 2022, merged into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023) |
| 81. | oddity group Services GmbH (acquired
by Infosys Germany GmbH on April 20, 2022, merged into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023) |
| 82. | oddity code GmbH (acquired by
Infosys Germany GmbH on April 20, 2022, merged into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023) |
| 83. | oddity code d.o.o. (renamed as
WongDoody d.o.o) which was formerly a subsidiary of oddity Code GmbH acquired by Infosys Germany GmbH on April 20, 2022 has become a subsidiary
of Wongdoody Gmbh (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 84. | oddity GmbH renamed as WongDoody
GmbH (acquired by Infosys Germany GmbH on April 20, 2022) |
| 85. | oddity (Shanghai) Co. Ltd. (subsidiary
of oddity GmbH) acquired by Infosys Germany GmbH on April 20, 2022 |
| 86. | oddity Limited (Taipei) (subsidiary
of oddity GmbH) acquired by Infosys Germany GmbH on April 20, 2022 |
| 87. | Infosys Public Services Canada
Inc. (a wholly owned subsidiary of Infosys Public Services Inc.) incorporated on July 8, 2022 |
| 88. | BASE life science A/S acquired
by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on September 1, 2022 |
| 89. | BASE life science AG (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 90. | BASE life science GmbH (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 91. | BASE life science Ltd. (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 92. | BASE life science S.A.S. (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 93. | BASE life science S.r.l. (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 94. | Innovisor Inc. (a wholly owned
subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on September
1, 2022 |
| 95. | BASE life science Inc. (a wholly
owned subsidiary of BASE life science A/S) acquired by Infosys Singapore Pte. Ltd. (formerly known as Infosys Consulting Pte. Ltd.) on
September 1, 2022 |
| 96. | BASE life science SL. (a wholly
owned subsidiary of BASE life science A/S) incorporated on September 6, 2022 |
| 97. | Panaya Germany GmbH, a wholly
owned subsidiary of Panaya Inc. was incorporated on December 15, 2022 |
| 98. | Infosys Norway, a wholly owned
subsidiary of Infosys Singapore Pte. Ltd. was incorporated on February 7, 2023 |
| 99. | Infosys BPM Canada Inc. (Wholly-owned
subsidiary of Infosys BPM Limited) incorporated on August 11, 2023 |
| 100. | Danske IT and Support Services
India Private Limited acquired by Infosys Limited on September 1, 2023 |
| 101. | Infosys Employees Welfare Trust |
| 102. | Infosys Employee Benefits Trust |
| 103. | Infosys Science Foundation |
| 104. | Infosys Expanded Stock Ownership
Trust |
INDEPENDENT
AUDITOR’S REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL RESULTS
TO
THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Opinion
We have audited the accompanying Statement of Standalone
Financial Results of INFOSYS LIMITED (the “Company”), for the quarter and nine months ended December 31, 2023, (the
“Statement”), being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).
In our opinion and to the best of our information
and according to the explanations given to us, the Statement:
| a. | is presented in accordance with
the requirements of Regulation 33 of the Listing Regulations; and |
| b. | gives a true and fair view in
conformity with the recognition and measurement principles laid down in the Indian Accounting Standard 34 “Interim Financial Reporting”
(“Ind AS 34”) prescribed under section 133 of the Companies Act, 2013 (the “Act”) read with relevant rules issued
thereunder and other accounting principles generally accepted in India of the net profit and total comprehensive income, and other financial
information of the Company for the quarter and nine months ended December 31, 2023. |
Basis for Opinion
We conducted our audit of the Statement in accordance
with the Standards on Auditing (“SA”s) specified under Section 143(10) of the Act. Our responsibilities under those Standards
are further described in Auditor’s Responsibilities for the Audit of the Standalone Financial Results section of our report. We
are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”)
together with the ethical requirements that are relevant to our audit of the Standalone Financial Results for the quarter and nine months
ended December 31, 2023 under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities
in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence obtained by us is sufficient
and appropriate to provide a basis for our audit opinion.
Management’s Responsibilities for
the Standalone Financial Results
The Statement, which includes the Standalone financial
results is the responsibility of the Company’s Board of Directors, and has been approved by it for the issuance. The Statement has
been compiled from the related audited interim condensed standalone financial statements for the three and nine months ended December
31, 2023. This responsibility includes the preparation and presentation of the standalone financial results for the quarter and nine months
ended December 31, 2023 that give a true and fair view of the net profit and other comprehensive income and other financial information
in accordance with the recognition and measurement principles laid down in Ind AS 34, prescribed under Section 133 of the Act, read with
relevant rules issued thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the
Listing Regulations. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application
of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and
maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the
accounting records, relevant to the preparation and presentation of the standalone financial results that give a true and fair view and
is free from material misstatement, whether due to fraud or error.
In preparing the standalone financial results,
the Board of Directors is responsible for assessing the Company’s ability, to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for
overseeing the financial reporting process of the Company.
Auditor’s Responsibilities for the
Audit of the Standalone Financial Results
Our objectives are to obtain reasonable assurance
about whether the standalone financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these standalone financial results.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| • | Identify and assess the risks
of material misstatement of the standalone financial results, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal
financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of such controls. |
| • | Evaluate the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
| • | Evaluate the appropriateness
and reasonableness of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing
Regulations. |
| • | Conclude on the appropriateness
of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern. |
| • | Evaluate the overall presentation,
structure and content of the standalone financial results, including the disclosures, and whether the standalone financial results represent
the underlying transactions and events in a manner that achieves fair presentation. |
| • | Obtain sufficient appropriate
audit evidence regarding the standalone financial results of the Company to express an opinion on the standalone financial results. |
Materiality is the magnitude of misstatements in
the standalone financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable
user of the standalone financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning
the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements
in the standalone financial results.
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: January 11, 2024
|
For DELOITTE HASKINS &
SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCN5706
|
|
Infosys
Limited
Regd.
office: Electronics City, Hosur Road,
Bengaluru
– 560 100, India
|
CIN
: L85110KA1981PLC013115
Website:
www.infosys.com
email:
investors@infosys.com
T:
91 80 2852 0261, F: 91 80 2852 0362
|
Statement of Consolidated Audited Results of Infosys
Limited and its subsidiaries for the quarter and nine months ended December 31, 2023 prepared in compliance with the Indian Accounting
Standards (Ind-AS)
(in crore, except per equity share data)
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months
ended
December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| |
Audited |
Audited |
Audited |
Audited |
Audited |
Audited |
| Revenue from operations |
38,821 |
38,994 |
38,318 |
115,748 |
109,326 |
146,767 |
| Other income, net |
789 |
632 |
769 |
1,982 |
2,030 |
2,701 |
| Total Income |
39,610 |
39,626 |
39,087 |
117,730 |
111,356 |
149,468 |
| Expenses |
|
|
|
|
|
|
| Employee benefit expenses |
20,651 |
20,796 |
20,272 |
62,228 |
58,048 |
78,359 |
| Cost of technical sub-contractors |
3,066 |
3,074 |
3,343 |
9,264 |
10,946 |
14,062 |
| Travel expenses |
387 |
439 |
360 |
1,288 |
1,099 |
1,525 |
| Cost of software packages and others |
3,722 |
3,387 |
3,085 |
9,828 |
8,017 |
10,902 |
| Communication expenses |
169 |
179 |
183 |
531 |
542 |
713 |
| Consultancy and professional charges |
504 |
387 |
401 |
1,237 |
1,296 |
1,684 |
| Depreciation and amortisation expenses |
1,176 |
1,166 |
1,125 |
3,515 |
3,104 |
4,225 |
| Finance cost |
131 |
138 |
80 |
360 |
202 |
284 |
| Other expenses |
1,185 |
1,292 |
1,307 |
3,731 |
3,246 |
4,392 |
| Total expenses |
30,991 |
30,858 |
30,156 |
91,982 |
86,500 |
116,146 |
| Profit before tax |
8,619 |
8,768 |
8,931 |
25,748 |
24,856 |
33,322 |
| Tax expense: |
|
|
|
|
|
|
| Current tax |
2,419 |
2,491 |
2,195 |
7,216 |
7,027 |
9,287 |
| Deferred tax |
87 |
62 |
150 |
258 |
(145) |
(73) |
| Profit for the period |
6,113 |
6,215 |
6,586 |
18,274 |
17,974 |
24,108 |
| |
|
|
|
|
|
|
| Other comprehensive income |
|
|
|
|
|
|
| |
|
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
71 |
(64) |
29 |
94 |
(17) |
8 |
| Equity instruments through other comprehensive income, net |
(9) |
40 |
1 |
31 |
8 |
(7) |
| |
|
|
|
|
|
|
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedges, net |
(46) |
23 |
(57) |
(17) |
(43) |
(7) |
| Exchange differences on translation of foreign operations |
436 |
5 |
676 |
457 |
715 |
776 |
| Fair value changes on investments, net |
52 |
(20) |
48 |
107 |
(298) |
(256) |
| Total other comprehensive income/(loss), net of tax |
504 |
(16) |
697 |
672 |
365 |
514 |
| |
|
|
|
|
|
|
| Total comprehensive income for the period |
6,617 |
6,199 |
7,283 |
18,946 |
18,339 |
24,622 |
| |
|
|
|
|
|
|
| Profit attributable to: |
|
|
|
|
|
|
| Owners of the company |
6,106 |
6,212 |
6,586 |
18,264 |
17,967 |
24,095 |
| Non-controlling interest |
7 |
3 |
– |
10 |
7 |
13 |
| |
6,113 |
6,215 |
6,586 |
18,274 |
17,974 |
24,108 |
| |
|
|
|
|
|
|
| Total comprehensive income attributable to: |
|
|
|
|
|
|
| Owners of the company |
6,605 |
6,196 |
7,268 |
18,934 |
18,322 |
24,598 |
| Non-controlling interest |
12 |
3 |
15 |
12 |
17 |
24 |
| |
6,617 |
6,199 |
7,283 |
18,946 |
18,339 |
24,622 |
| |
|
|
|
|
|
|
| Paid up share capital (par value 5/- each, fully paid) |
2,070 |
2,070 |
2,086 |
2,070 |
2,086 |
2,069 |
| Other equity *# |
73,338 |
73,338 |
73,252 |
73,338 |
73,252 |
73,338 |
| |
|
|
|
|
|
|
| Earnings per equity share (par value 5/- each)** |
|
|
|
|
|
|
| Basic (in per share) |
14.76 |
15.01 |
15.72 |
44.13 |
42.85 |
57.63 |
| Diluted (in per share) |
14.74 |
14.99 |
15.70 |
44.08 |
42.79 |
57.54 |
| * | | Balances for the quarter and nine months ended December 31, 2023 and quarter ended September
30, 2023 represent balances as per the audited Balance Sheet as at March 31, 2023 and balances for the quarter and nine months ended
December 31, 2022 represent balances as per the audited Balance Sheet as at March 31, 2022 as required by SEBI (Listing and Other Disclosure
Requirements) Regulations, 2015 |
| ** | | EPS is not annualized for the quarter and nine months ended December 31, 2023, quarter
ended September 30, 2023 and quarter and nine months ended December 31, 2022. |
| # | | Excludes non-controlling interest |
1. Notes pertaining to the current quarter
a) The audited interim condensed consolidated
financial statements for the quarter and nine months ended December 31, 2023 have been taken on record by the Board of Directors at its
meeting held on January 11, 2024. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion.
The information presented above is extracted from the audited interim condensed consolidated financial statements. These interim condensed
consolidated financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section
133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules
thereafter.
b) Board and Management changes
i) The Board, based on the recommendation of the Nomination
and Remuneration Committee, considered and approved the re-appointment of Chitra Nayak (DIN - 09101763), as an Independent Director for
the second term of three years from March 25, 2024 to March 24, 2027, subject to shareholders’ approval.
ii) The Board appointed Jayesh Sanghrajka as the Chief
Financial Officer of the Company with effect from April 1, 2024.
iii) Nilanjan Roy resigned as the Chief Financial Officer
of the Company. He will continue to be with Infosys till March 31, 2024 as the Chief Financial Officer. The Board placed on record its
appreciation for the services rendered by him and for his contributions to the Company.
c) Update on McCamish Cybersecurity incident
In November 2023, Infosys McCamish Systems LLC (McCamish)
a step down subsidiary of Infosys Limited, experienced a cybersecurity incident resulting in the non-availability of certain applications
and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of
and response to the incident and remediation and restoration of impacted applications and systems. By December 31, 2023, McCamish, with
external specialists’ assistance, substantially remediated and restored the affected applications and systems.
Loss of contracted
revenues and costs incurred with respect to remediations, restoration, communication efforts and others amounted to approximately 250
crore ($30 million).
Actions taken by McCamish included investigative analysis conducted by a third-party cybersecurity firm to determine,
among other things, whether and the extent to which company or customer data was subject to unauthorized access or exfiltration. On the
basis of analysis conducted by the cybersecurity firm, McCamish believes that certain data was exfiltrated by unauthorized third parties
during the incident and this exfiltrated data included certain customer data. McCamish has engaged a third-party e-discovery vendor in
assessing the extent and nature of such data. This review process is ongoing. McCamish may incur additional costs including indemnities
or damages/claims, which are indeterminable at this time.
Infosys had previously communicated the occurence of this cybersecurity incident
to BSE Limited, National Stock Exchange of India Limited, New York Stock Exchange and to United States Securities and Exchange Commission
on November 3, 2023.
d) Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
e) Update on stock grants
The Board, on January 11, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved the annual time-based stock incentives in the form of Restricted Stock Units (RSUs)
to Salil Parekh, CEO & MD having a market value of 3 crore as on the date of grant under the 2015 Stock Incentive Compensation
Plan (2015 Plan) in accordance with the terms of his employment agreement. The RSUs will vest in line with the employment agreement. The
RSUs will be granted w.e.f February 1, 2024 and the number of RSUs will be calculated based on the market price at the close of trading
on February 1, 2024. The exercise price of RSUs will be equal to the par value of the share.
2. Information on dividends for the quarter and
nine months ended December 31, 2023
The Board of Directors (in the meeting held on October
12, 2023) declared an interim dividend of 18/- per equity share. The record date for the payment was October 25, 2023 and the same
was paid on November 6, 2023. The interim dividend declared in the previous year was 16.50/- per equity share.
(in )
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine
months ended
December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| Dividend per share (par value 5/- each) |
|
|
|
|
|
|
| Interim dividend |
– |
18.00 |
– |
18.00 |
16.50 |
16.50 |
| Final dividend |
– |
– |
– |
– |
– |
17.50 |
3. Segment reporting (Consolidated - Audited)
(in crore)
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months ended December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| Revenue by business segment |
|
|
|
|
|
|
| Financial Services (1)# |
10,783 |
10,705 |
11,235 |
32,149 |
32,945 |
43,763 |
| Retail (2) |
5,649 |
5,913 |
5,480 |
17,075 |
15,667 |
21,204 |
| Communication (3) |
4,421 |
4,463 |
4,710 |
13,325 |
13,675 |
18,086 |
| Energy, Utilities, Resources and Services |
5,121 |
4,957 |
4,957 |
14,966 |
13,714 |
18,539 |
| Manufacturing |
5,786 |
5,574 |
5,099 |
16,710 |
13,957 |
19,035 |
| Hi-Tech |
2,985 |
3,053 |
3,095 |
9,095 |
8,878 |
11,867 |
| Life Sciences (4) |
2,954 |
3,050 |
2,695 |
8,753 |
7,404 |
10,085 |
| All other segments (5) |
1,122 |
1,279 |
1,047 |
3,675 |
3,086 |
4,188 |
| Total |
38,821 |
38,994 |
38,318 |
115,748 |
109,326 |
146,767 |
| Less: Inter-segment revenue |
– |
– |
– |
– |
– |
– |
| Net revenue from operations |
38,821 |
38,994 |
38,318 |
115,748 |
109,326 |
146,767 |
| Segment profit before tax, depreciation and non-controlling interests: |
|
|
|
|
|
|
| Financial Services (1)# |
2,260 |
2,579 |
2,678 |
7,384 |
8,243 |
10,843 |
| Retail (2) |
1,715 |
1,674 |
1,646 |
5,018 |
4,761 |
6,396 |
| Communication (3) |
860 |
1,035 |
1,042 |
2,879 |
2,801 |
3,759 |
| Energy, Utilities , Resources and Services |
1,450 |
1,352 |
1,457 |
4,091 |
3,853 |
5,155 |
| Manufacturing |
1,110 |
1,033 |
1,035 |
3,116 |
2,212 |
3,113 |
| Hi-Tech |
758 |
788 |
813 |
2,349 |
2,209 |
2,959 |
| Life Sciences (4) |
766 |
799 |
684 |
2,266 |
1,861 |
2,566 |
| All other segments (5) |
218 |
180 |
12 |
538 |
192 |
339 |
| Total |
9,137 |
9,440 |
9,367 |
27,641 |
26,132 |
35,130 |
| Less: Other Unallocable expenditure |
1,176 |
1,166 |
1,125 |
3,515 |
3,104 |
4,225 |
| Add: Unallocable other income |
789 |
632 |
769 |
1,982 |
2,030 |
2,701 |
| Less: Finance cost |
131 |
138 |
80 |
360 |
202 |
284 |
| Profit before tax and non-controlling interests |
8,619 |
8,768 |
8,931 |
25,748 |
24,856 |
33,322 |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | All other segments include operating segments of businesses in India, Japan, China, Infosys
Public Services & other enterprises in Public Services |
| # | | Includes impact on account of McCamish cybersecurity incident. Refer note 1.c) above. |
Notes on segment information
Business segments
Based on the "management approach" as defined
in Ind-AS 108 - Operating Segments, the Chief Operating Decision Maker evaluates the Group's performance and allocates resources based
on an analysis of various performance indicators by business segments. Accordingly, information has been presented along these business
segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and
expenditure in individual segments.
Segmental capital employed
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. The Management believes that
it is not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation of the available
data is onerous.
4. Audited financial results of Infosys Limited
(Standalone Information)
(in crore)
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months ended December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| Revenue from operations |
32,491 |
32,629 |
32,389 |
96,932 |
93,483 |
124,014 |
| Profit before tax |
8,876 |
8,517 |
8,295 |
25,539 |
23,686 |
31,643 |
| Profit for the period |
6,552 |
6,245 |
6,210 |
18,754 |
17,364 |
23,268 |
The audited results of Infosys Limited for the above mentioned
periods are available on our website, www.infosys.com and on the Stock Exchange website www.nseindia.com and www.bseindia.com. The information
above has been extracted from the audited interim standalone condensed financial statements as stated.
| |
By order of the Board for Infosys Limited |
| |
| Bengaluru, India |
Salil Parekh |
| January 11, 2024 |
Chief Executive Officer and Managing Director |
The Board has also taken on record the condensed consolidated
results of Infosys Limited and its subsidiaries for the quarter and nine months ended December 31, 2023, prepared as per International
Financial Reporting Standards (IFRS) and reported in US dollars. A summary of the financial statements is as follows:
(in US$ million, except per equity share data)
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months ended December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| |
Audited |
Audited |
Audited |
Audited |
Audited |
Audited |
| Revenues |
4,663 |
4,718 |
4,659 |
13,997 |
13,657 |
18,212 |
| Cost of sales |
3,274 |
3,271 |
3,230 |
9,755 |
9,544 |
12,709 |
| Gross profit |
1,389 |
1,447 |
1,429 |
4,242 |
4,113 |
5,503 |
| Operating expenses |
433 |
447 |
428 |
1,325 |
1,245 |
1,678 |
| Operating profit |
956 |
1,000 |
1,001 |
2,917 |
2,868 |
3,825 |
| Other income, net |
95 |
77 |
94 |
239 |
254 |
335 |
| Finance cost |
16 |
17 |
10 |
43 |
25 |
35 |
| Profit before income taxes |
1,035 |
1,060 |
1,085 |
3,113 |
3,097 |
4,125 |
| Income tax expense |
301 |
309 |
285 |
904 |
859 |
1,142 |
| Net profit |
734 |
751 |
800 |
2,209 |
2,238 |
2,983 |
| Earnings per equity share * |
|
|
|
|
|
|
| Basic (in $ per share) |
0.18 |
0.18 |
0.19 |
0.53 |
0.53 |
0.71 |
| Diluted (in $ per share) |
0.18 |
0.18 |
0.19 |
0.53 |
0.53 |
0.71 |
| Total assets |
15,606 |
15,689 |
15,226 |
15,606 |
15,226 |
15,312 |
| Cash and cash equivalents and current investments |
2,598 |
2,805 |
2,456 |
2,598 |
2,456 |
2,322 |
| * | | EPS is not annualized for the quarter and nine months ended December 31, 2023, quarter
ended September 30, 2023 and quarter and nine months ended December 31, 2022. |
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident are forward-looking statements
intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks
and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking statements. The
risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the execution
of our business strategy, our ability to attract and retain personnel, our transition to hybrid work model, economic uncertainties, technological
innovations such as Generative AI, the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision,
our capital allocation policy and expectations concerning our market position, future operations, margins, profitability, liquidity, capital
resources, our corporate actions including acquisitions, the actual or anticipated findings of the ongoing assessment of the extent and
nature of exfiltrated data in relation to the McCamish cybersecurity incident and customer reaction to such findings, and the amount of
any additional costs, including indemnities or damages / claims, resulting from the McCamish cybersecurity incident. Important factors
that may cause actual results or outcomes to differ from those implied by the forward-looking statements are discussed in more detail
in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2023.
These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements,
including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The
Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company
unless it is required by law.
|
|
Infosys
Limited
Regd.
office: Electronics City, Hosur Road,
Bengaluru
– 560 100, India
|
CIN
: L85110KA1981PLC013115
Website:
www.infosys.com
email:
investors@infosys.com
T:
91 80 2852 0261, F: 91 80 2852 0362
|
Statement of Audited Results of Infosys Limited for
the quarter and nine months ended December 31, 2023 prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore, except per equity share data)
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months
ended
December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| |
Audited |
Audited |
Audited |
Audited |
Audited |
Audited |
| Revenue from operations |
32,491 |
32,629 |
32,389 |
96,932 |
93,483 |
124,014 |
| Other income, net |
1,582 |
1,350 |
1,177 |
3,934 |
3,093 |
3,859 |
| Total income |
34,073 |
33,979 |
33,566 |
100,866 |
96,576 |
127,873 |
| Expenses |
|
|
|
|
|
|
| Employee benefit expenses |
16,304 |
16,435 |
16,395 |
49,092 |
47,182 |
62,764 |
| Cost of technical sub-contractors |
4,670 |
4,645 |
4,720 |
13,991 |
14,545 |
19,096 |
| Travel expenses |
296 |
345 |
284 |
1,001 |
892 |
1,227 |
| Cost of software packages and others |
1,811 |
1,809 |
1,728 |
4,793 |
4,339 |
5,214 |
| Communication expenses |
119 |
131 |
132 |
379 |
386 |
502 |
| Consultancy and professional charges |
282 |
275 |
280 |
772 |
975 |
1,236 |
| Depreciation and amortisation expense |
738 |
738 |
713 |
2,222 |
2,039 |
2,753 |
| Finance cost |
82 |
89 |
41 |
215 |
115 |
157 |
| Other expenses |
895 |
995 |
978 |
2,862 |
2,417 |
3,281 |
| Total expenses |
25,197 |
25,462 |
25,271 |
75,327 |
72,890 |
96,230 |
| Profit before tax |
8,876 |
8,517 |
8,295 |
25,539 |
23,686 |
31,643 |
| Tax expense: |
|
|
|
|
|
|
| Current tax |
2,231 |
2,180 |
1,916 |
6,476 |
6,261 |
8,167 |
| Deferred tax |
93 |
92 |
169 |
309 |
61 |
208 |
| Profit for the period |
6,552 |
6,245 |
6,210 |
18,754 |
17,364 |
23,268 |
| Other comprehensive income |
|
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
|
| Remeasurement of the net defined benefit liability / asset, net |
73 |
(68) |
28 |
92 |
(28) |
(19) |
| Equity instruments through other comprehensive income, net |
(9) |
40 |
2 |
31 |
9 |
(6) |
| |
|
|
|
|
|
|
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedges, net |
(46) |
23 |
(57) |
(17) |
(43) |
(7) |
| Fair value changes on investments, net |
49 |
(22) |
42 |
95 |
(275) |
(236) |
| |
|
|
|
|
|
|
| Total other comprehensive income/ (loss), net of tax |
67 |
(27) |
15 |
201 |
(337) |
(268) |
| |
|
|
|
|
|
|
| Total comprehensive income for the period |
6,619 |
6,218 |
6,225 |
18,955 |
17,027 |
23,000 |
| |
|
|
|
|
|
|
| Paid-up share capital (par value 5/- each fully paid) |
2,075 |
2,075 |
2,091 |
2,075 |
2,091 |
2,074 |
| Other Equity* |
65,671 |
65,671 |
67,203 |
65,671 |
67,203 |
65,671 |
| Earnings per equity share ( par value 5 /- each)** |
|
|
|
|
|
|
| Basic (in per share) |
15.79 |
15.05 |
14.77 |
45.19 |
41.28 |
55.48 |
| Diluted (in per share) |
15.78 |
15.04 |
14.76 |
45.15 |
41.24 |
55.42 |
| * | | Balances for the quarter and nine months ended December 31, 2023 and quarter ended September
30, 2023 represent balances as per the audited Balance Sheet as at March 31, 2023 and balances for the quarter and nine months ended
December 31, 2022 represent balances as per the audited Balance Sheet as at March 31, 2022 as required by SEBI (Listing and Other Disclosure
Requirements) Regulations, 2015. |
| ** | | EPS is not annualized for the quarter and nine months ended December 31, 2023, quarter
ended September 30, 2023 and quarter and nine months ended December 31, 2022. |
1. Notes pertaining to the current quarter
a) The audited interim condensed standalone financial
statements for the quarter and nine months ended December 31, 2023 have been taken on record by the Board of Directors at its meeting
held on January 11, 2024. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion.
The information presented above is extracted from the audited interim condensed consolidated financial statements. These interim condensed
consolidated financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section
133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules
thereafter.
b) Board and Management changes
i) The Board, based on the recommendation of the Nomination
and Remuneration Committee, considered and approved the re-appointment of Chitra Nayak (DIN - 09101763), as an Independent Director for
the second term of three years from March 25, 2024 to March 24, 2027, subject to shareholders’ approval.
ii) The Board appointed Jayesh Sanghrajka as the Chief
Financial Officer of the Company with effect from April 1, 2024.
iii) Nilanjan Roy resigned as the Chief Financial Officer
of the Company. He will continue to be with Infosys till March 31, 2024 as the Chief Financial Officer. The Board placed on record its
appreciation for the services rendered by him and for his contributions to the Company.
c) Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
d) Update on stock grants
The Board, on January 11, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved the annual time-based stock incentives in the form of Restricted Stock Units (RSUs)
to Salil Parekh, CEO & MD having a market value of 3 crore as on the date of grant under the 2015 Stock Incentive Compensation
Plan (2015 Plan) in accordance with the terms of his employment agreement. The RSUs will vest in line with the employment agreement. The
RSUs will be granted w.e.f February 1, 2024 and the number of RSUs will be calculated based on the market price at the close of trading
on February 1, 2024. The exercise price of RSUs will be equal to the par value of the share.
2. Information on dividends for the quarter and
nine months ended December 31, 2023
The Board of Directors (in the meeting held on October
12, 2023) declared an interim dividend of 18/- per equity share. The record date for the payment was October 25, 2023 and the same
was paid on November 6, 2023. The interim dividend declared in the previous year was 16.50/- per equity share.
(in )
| Particulars |
Quarter
ended
December 31, |
Quarter
ended
September 30, |
Quarter
ended
December 31, |
Nine months ended
December 31, |
Year ended
March 31, |
| |
2023 |
2023 |
2022 |
2023 |
2022 |
2023 |
| Dividend per share (par value 5/- each) |
|
|
|
|
|
|
| Interim dividend |
– |
18.00 |
– |
18.00 |
16.50 |
16.50 |
| Final dividend |
– |
– |
– |
– |
– |
17.50 |
3. Segment Reporting
The Company publishes standalone financial statements
along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment
information in the audited interim condensed consolidated financial statements. Accordingly, the segment information is given in the audited
consolidated financial results of Infosys Limited and its subsidiaries for the quarter and nine months ended December 31, 2023.
| |
By order of the Board for Infosys Limited |
| |
| Bengaluru, India |
Salil Parekh |
| January 11, 2024 |
Chief Executive Officer and Managing Director |
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident are forward-looking statements
intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks
and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking statements. The
risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the execution
of our business strategy, our ability to attract and retain personnel, our transition to hybrid work model, economic uncertainties, technological
innovations such as Generative AI, the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision,
our capital allocation policy and expectations concerning our market position, future operations, margins, profitability, liquidity, capital
resources, our corporate actions including acquisitions, the actual or anticipated findings of the ongoing assessment of the extent and
nature of exfiltrated data in relation to the McCamish cybersecurity incident and customer reaction to such findings, and the amount of
any additional costs, including indemnities or damages / claims, resulting from the McCamish cybersecurity incident. Important factors
that may cause actual results or outcomes to differ from those implied by the forward-looking statements are discussed in more detail
in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2023.
These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements,
including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The
Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company
unless it is required by law.
|
|
Infosys
Limited
Regd.
office: Electronics City, Hosur Road,
Bengaluru
– 560 100, India
|
CIN
: L85110KA1981PLC013115
Website:
www.infosys.com
email:
investors@infosys.com
T:
91 80 2852 0261, F: 91 80 2852 0362
|
Extract of Consolidated Audited Financial Results of
Infosys Limited and its subsidiaries for the quarter and nine months ended December 31, 2023 prepared in compliance with the Indian Accounting
Standards (Ind-AS)
( in crore except
per equity share data)
| Particulars |
|
Quarter
ended
December 31, |
Nine months
ended
December 31, |
Quarter
ended
December 31, |
| |
|
2023 |
2023 |
2022 |
| Revenue from operations |
|
38,821 |
115,748 |
38,318 |
| Profit before tax |
|
8,619 |
25,748 |
8,931 |
| Profit for the period |
|
6,113 |
18,274 |
6,586 |
| Total comprehensive income for the period (comprising profit for the period after tax and other comprehensive income after tax) |
|
6,617 |
18,946 |
7,283 |
| |
|
|
|
|
| Profit attributable to: |
|
|
|
|
| Owners of the company |
|
6,106 |
18,264 |
6,586 |
| Non-controlling interest |
|
7 |
10 |
- |
| |
|
6,113 |
18,274 |
6,586 |
| |
|
|
|
|
| Total comprehensive income attributable to: |
|
|
|
|
| Owners of the company |
|
6,605 |
18,934 |
7,268 |
| Non-controlling interest |
|
12 |
12 |
15 |
| |
|
6,617 |
18,946 |
7,283 |
| |
|
|
|
|
| Paid-up share capital (par value 5/- each fully paid) |
|
2,070 |
2,070 |
2,086 |
| Other equity *# |
|
73,338 |
73,338 |
73,252 |
| Earnings per equity share (par value 5/- each)** |
|
|
|
|
| Basic (in per share) |
|
14.76 |
44.13 |
15.72 |
| Diluted (in per share) |
|
14.74 |
44.08 |
15.70 |
| * | | Balances for the quarter and nine months ended December 31, 2023 represent balances as
per the audited Balance Sheet as at March 31, 2023 and balances for the quarter ended December 31, 2022 represent balances as per the
audited Balance Sheet as at March 31, 2022 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015 |
| ** | | EPS is not annualized for the quarter and nine months ended December 31, 2023 and quarter
ended December 31, 2022. |
| # | | Excludes non-controlling interest |
1. Notes pertaining to the current quarter
a) The audited interim condensed consolidated financial
statements for the quarter and nine months ended December 31, 2023 have been taken on record by the Board of Directors at its meeting
held on January 11, 2024. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion.
The information presented above is extracted from the audited interim condensed consolidated financial statements. These interim condensed
consolidated financial statements are prepared in accordance with the Indian Accounting Standards (Ind-AS) as prescribed under Section
133 of the Companies Act, 2013 read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules
thereafter.
b) Board and Management changes
i) The Board, based on the recommendation of the Nomination
and Remuneration Committee, considered and approved the re-appointment of Chitra Nayak (DIN - 09101763), as an Independent Director for
the second term of three years from March 25, 2024 to March 24, 2027, subject to shareholders’ approval.
ii) The Board appointed Jayesh Sanghrajka as the Chief
Financial Officer of the Company with effect from April 1, 2024.
iii) Nilanjan Roy resigned as the Chief Financial Officer
of the Company. He will continue to be with Infosys till March 31, 2024 as the Chief Financial Officer. The Board placed on record its
appreciation for the services rendered by him and for his contributions to the Company.
c) Update on McCamish Cybersecurity incident
In November 2023, Infosys McCamish Systems LLC (McCamish)
a step down subsidiary of Infosys Limited, experienced a cybersecurity incident resulting in the non-availability of certain applications
and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of
and response to the incident and remediation and restoration of impacted applications and systems. By December 31, 2023, McCamish, with
external specialists’ assistance, substantially remediated and restored the affected applications and systems.
Loss of contracted
revenues and costs incurred with respect to remediations, restoration, communication efforts and others amounted to approximately 250
crore ($30 million).
Actions taken by McCamish included investigative analysis conducted by a third-party cybersecurity firm to determine,
among other things, whether and the extent to which company or customer data was subject to unauthorized access or exfiltration. On the
basis of analysis conducted by the cybersecurity firm, McCamish believes that certain data was exfiltrated by unauthorized third parties
during the incident and this exfiltrated data included certain customer data. McCamish has engaged a third-party e-discovery vendor in
assessing the extent and nature of such data. This review process is ongoing. McCamish may incur additional costs including indemnities
or damages/claims, which are indeterminable at this time.
Infosys had previously communicated the occurence of this cybersecurity incident
to BSE Limited, National Stock Exchange of India Limited, New York Stock Exchange and to United States Securities and Exchange Commission
on November 3, 2023.
d) Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
e) Update on stock grants
The Board, on January 11, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved the annual time-based stock incentives in the form of Restricted Stock Units (RSUs)
to Salil Parekh, CEO & MD having a market value of 3 crore as on the date of grant under the 2015 Stock Incentive Compensation
Plan (2015 Plan) in accordance with the terms of his employment agreement. The RSUs will vest in line with the employment agreement. The
RSUs will be granted w.e.f February 1, 2024 and the number of RSUs will be calculated based on the market price at the close of trading
on February 1, 2024. The exercise price of RSUs will be equal to the par value of the share.
2. Information on dividends for the quarter and
nine months ended December 31, 2023
The Board of Directors (in the meeting held on October
12, 2023) declared an interim dividend of 18/- per equity share. The record date for the payment was October 25, 2023 and the same
was paid on November 6, 2023. The interim dividend declared in the previous year was 16.50/- per equity share.
(in )
| Particulars |
Quarter
ended
December 31, |
Nine months
ended
December 31, |
Quarter
ended
December 31, |
| |
2023 |
2023 |
2022 |
| Dividend per share (par value 5/- each) |
|
|
|
| Interim dividend |
– |
18.00 |
– |
| Final dividend |
– |
– |
– |
3. Audited financial results of Infosys
Limited (Standalone information)
(in crore)
| Particulars |
Quarter
ended
December 31, |
Nine months
ended
December 31, |
Quarter
ended
December 31, |
| |
2023 |
2023 |
2022 |
| Revenue from operations |
32,491 |
96,932 |
32,389 |
| Profit before tax |
8,876 |
25,539 |
8,295 |
| Profit for the period |
6,552 |
18,754 |
6,210 |
The above is an extract of the detailed format of
Quarterly audited financial results filed with Stock Exchanges under Regulation 33 of the SEBI (Listing and Other Disclosure Requirements)
Regulations, 2015. The full format of the Quarterly Audited Financial Results are available on the Stock Exchange websites, www.nseindia.com
and www.bseindia.com, and on the Company's website, www.infosys.com.
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident are forward-looking statements
intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which involve a number of risks
and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking statements. The
risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the execution
of our business strategy, our ability to attract and retain personnel, our transition to hybrid work model, economic uncertainties, technological
innovations such as Generative AI, the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision,
our capital allocation policy and expectations concerning our market position, future operations, margins, profitability, liquidity, capital
resources, our corporate actions including acquisitions, the actual or anticipated findings of the ongoing assessment of the extent and
nature of exfiltrated data in relation to the McCamish cybersecurity incident and customer reaction to such findings, and the amount of
any additional costs, including indemnities or damages / claims, resulting from the McCamish cybersecurity incident. Important factors
that may cause actual results or outcomes to differ from those implied by the forward-looking statements are discussed in more detail
in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2023.
These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements,
including statements contained in the Company's filings with the Securities and Exchange Commission and our reports to shareholders. The
Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company
unless it is required by law.
| |
By order of the Board for Infosys Limited |
| |
| Bengaluru, India |
Salil Parekh |
| January 11, 2024 |
Chief Executive Officer and Managing Director |
Exhibit 99.7
IFRS USD Earning Release
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under International Financial Reporting Standards (IFRS)
in US Dollars for the three months and nine months ended December
31, 2023
| Index |
| Condensed Consolidated Balance Sheet |
| Condensed Consolidated Statement of Comprehensive Income |
| Condensed Consolidated Statement of Changes in Equity |
| Condensed Consolidated Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Consolidated Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Basis of consolidation |
| 1.4 Use of estimates and judgments |
| 1.5 Critical accounting estimates and judgments |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Cash and cash equivalents |
| 2.2 Investments |
| 2.3 Financial instruments |
| 2.4 Prepayments and other assets |
| 2.5 Other liabilities |
| 2.6 Provisions and other contingencies |
| 2.7 Property, plant and equipment |
| 2.8 Leases |
| 2.9 Goodwill and Intangible assets |
| 2.10 Business combinations |
| 2.11 Employees' Stock Option Plans (ESOP) |
| 2.12 Income Taxes |
| 2.13 Basic and diluted shares used in computing earnings per equity share |
| 2.14 Related party transactions |
| 2.15 Segment reporting |
| 2.16 Revenue from Operations |
| 2.17 Unbilled Revenue |
| 2.18 Equity |
| 2.19 Break-up of expenses and other income, net |
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed
consolidated financial statements of INFOSYS LIMITED (the “Company”), and its subsidiaries (the Company and its subsidiaries
together referred to as the “Group”), which comprise the Condensed Consolidated Balance Sheet as at December 31, 2023, the
Condensed Consolidated Statement of Comprehensive Income for the three months and nine months ended on that date, the Condensed Consolidated
Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the nine months ended on that date, and a summary
of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed consolidated
financial statements”).
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair
view in conformity with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) as issued
by the International Accounting Standards Board (“IASB”), of the consolidated state of affairs of the Group as at December
31, 2023, its consolidated profit and its consolidated total comprehensive income for the three months and nine months ended on that date,
its consolidated changes in equity and its consolidated cash flows for the nine months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed
consolidated financial statements in accordance with the Standards on Auditing (“SA”s) issued by the Institute of Chartered
Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities
for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance
with the Code of Ethics issued by the ICAI, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim
condensed consolidated financial statements.
Emphasis of Matter
As described in note 2.6.2 to the interim condensed
consolidated financial statements, certain costs relating to possible damages or claims relating to a cybersecurity incident in a subsidiary
are indeterminable as at the date of this report because of reasons stated in the note. Our opinion is not modified in respect of this
matter.
Responsibilities of Management and Those Charged
with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed consolidated financial statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with IAS 34 as issued by the IASB. The respective Boards of Directors/Trustees
of the entities included in the Group are responsible for maintenance of the adequate accounting records for safeguarding assets of the
Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation
and presentation of the respective interim financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error which have been used for the purpose of preparation of the interim condensed consolidated financial statements
by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated
financial statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing
the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities
or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees of
the entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the interim condensed consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial
statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within
the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision
and performance of the audit of financial statements of such entities included in the interim condensed consolidated financial statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements in
the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance
of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: January 11, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCQ1901 |
Infosys Limited and subsidiaries
(Dollars in millions except equity share data)
| Condensed Consolidated Balance Sheet as at |
Note |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
2.1 |
1,640 |
1,481 |
| Current investments |
2.2 |
958 |
841 |
| Trade receivables |
|
3,680 |
3,094 |
| Unbilled revenue |
2.17 |
1,589 |
1,861 |
| Prepayments and other current assets |
2.4 |
1,395 |
1,336 |
| Income tax assets |
2.12 |
21 |
1 |
| Derivative financial instruments |
2.3 |
9 |
12 |
| Total current assets |
|
9,292 |
8,626 |
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.7 |
1,547 |
1,679 |
| Right-of-use assets |
2.8 |
828 |
837 |
| Goodwill |
2.9 |
894 |
882 |
| Intangible assets |
|
181 |
213 |
| Non-current investments |
2.2 |
1,354 |
1,530 |
| Unbilled revenue |
2.17 |
202 |
176 |
| Deferred income tax assets |
2.12 |
84 |
152 |
| Income tax assets |
2.12 |
823 |
785 |
| Other non-current assets |
2.4 |
401 |
432 |
| Total non-current assets |
|
6,314 |
6,686 |
| Total assets |
|
15,606 |
15,312 |
| LIABILITIES AND EQUITY |
|
|
|
| Current liabilities |
|
|
|
| Trade payables |
|
460 |
470 |
| Lease liabilities |
2.8 |
249 |
151 |
| Derivative financial instruments |
2.3 |
17 |
10 |
| Current income tax liabilities |
2.12 |
483 |
412 |
| Unearned revenue |
|
922 |
872 |
| Employee benefit obligations |
|
326 |
292 |
| Provisions |
2.6 |
220 |
159 |
| Other current liabilities |
2.5 |
2,001 |
2,403 |
| Total current liabilities |
|
4,678 |
4,769 |
| Non-current liabilities |
|
|
|
| Lease liabilities |
2.8 |
802 |
859 |
| Deferred income tax liabilities |
2.12 |
113 |
149 |
| Employee benefit obligations |
|
11 |
10 |
| Other non-current liabilities |
2.5 |
334 |
301 |
| Total non-current liabilities |
|
1,260 |
1,319 |
| Total liabilities |
|
5,938 |
6,088 |
| Equity |
|
|
|
| Share capital - 5 ($0.16) par value 4,800,000,000 (4,800,000,000) equity shares authorized, issued and outstanding 4,139,198,089 (4,136,387,925) equity shares fully paid up, net of 11,249,465 (12,172,119) treasury shares as at December 31, 2023 (March 31, 2023) |
2.18 |
325 |
325 |
| Share premium |
|
413 |
366 |
| Retained earnings |
|
11,613 |
11,401 |
| Cash flow hedge reserves |
|
(2) |
- |
| Other reserves |
|
1,593 |
1,370 |
| Capital redemption reserve |
|
24 |
24 |
| Other components of equity |
|
(4,349) |
(4,314) |
| Total equity attributable to equity holders of the Company |
|
9,617 |
9,172 |
| Non-controlling interests |
|
51 |
52 |
| Total equity |
|
9,668 |
9,224 |
| Total liabilities and equity |
|
15,606 |
15,312 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| |
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
| Firm's Registration No: |
|
117366W/W-100018
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
(Dollars in millions except equity share and per equity
share data)
| Condensed Consolidated Statement of Comprehensive Income for the |
Note |
Three months ended |
Nine months ended |
| |
|
December 31, 2023 |
December 31, 2022 |
December 31, 2023 |
December 31, 2022 |
| Revenues |
2.16 |
4,663 |
4,659 |
13,997 |
13,657 |
| Cost of sales |
2.19 |
3,274 |
3,230 |
9,755 |
9,544 |
| Gross profit |
|
1,389 |
1,429 |
4,242 |
4,113 |
| Operating expenses: |
|
|
|
|
|
| Selling and marketing expenses |
2.19 |
204 |
196 |
633 |
574 |
| Administrative expenses |
2.19 |
229 |
232 |
692 |
671 |
| Total operating expenses |
|
433 |
428 |
1,325 |
1,245 |
| Operating profit |
|
956 |
1,001 |
2,917 |
2,868 |
| Other income, net |
2.19 |
95 |
94 |
239 |
254 |
| Finance cost |
|
16 |
10 |
43 |
25 |
| Profit before income taxes |
|
1,035 |
1,085 |
3,113 |
3,097 |
| Income tax expense |
2.12 |
301 |
285 |
904 |
859 |
| Net profit |
|
734 |
800 |
2,209 |
2,238 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
8 |
4 |
11 |
- |
| Equity instruments through other comprehensive income, net |
|
(1) |
(1) |
4 |
(2) |
| |
|
7 |
3 |
15 |
(2) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on investments, net |
|
7 |
6 |
13 |
(34) |
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(6) |
(7) |
(2) |
(5) |
| Exchange differences on translation of foreign operations |
|
34 |
(84) |
(63) |
(771) |
| |
|
35 |
(85) |
(52) |
(810) |
| Total other comprehensive income/(loss), net of tax |
|
42 |
(82) |
(37) |
(812) |
| Total comprehensive income |
|
776 |
718 |
2,172 |
1,426 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
733 |
800 |
2,208 |
2,237 |
| Non-controlling interests |
|
1 |
– |
1 |
1 |
| |
|
734 |
800 |
2,209 |
2,238 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
775 |
718 |
2,171 |
1,425 |
| Non-controlling interests |
|
1 |
– |
1 |
1 |
| |
|
776 |
718 |
2,172 |
1,426 |
| Earnings per equity share |
|
|
|
|
|
| Basic (in $ per share) |
|
0.18 |
0.19 |
0.53 |
0.53 |
| Diluted (in $ per share) |
|
0.18 |
0.19 |
0.53 |
0.53 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
|
|
| Basic (in shares) |
2.13 |
4,138,963,794 |
4,190,550,470 |
4,138,282,170 |
4,192,969,201 |
| Diluted (in shares) |
2.13 |
4,143,565,697 |
4,195,924,920 |
4,143,506,821 |
4,199,312,062 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| |
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
| Firm's Registration No: |
|
117366W/W-100018
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
Infosys Limited and subsidiaries
Condensed Consolidated Statement of Changes in Equity
(Dollars
in millions except equity share data)
|
Number of Shares(1) |
Share capital |
Share premium |
Retained earnings |
Other reserves(2) |
Capital redemption reserve |
Cash flow hedge reserve |
Other components of equity |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| Balance as at April 1, 2022 |
4,193,012,929 |
328 |
337 |
11,672 |
1,170 |
21 |
1 |
(3,588) |
9,941 |
53 |
9,994 |
| Impact on adoption of amendment to IAS 37## |
– |
– |
– |
(2) |
– |
– |
– |
– |
(2) |
– |
(2) |
| |
4,193,012,929 |
328 |
337 |
11,670 |
1,170 |
21 |
1 |
(3,588) |
9,939 |
53 |
9,992 |
| Changes in equity for the nine months ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
2,237 |
– |
– |
– |
– |
2,237 |
1 |
2,238 |
| Fair value changes on derivatives designated as Cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
(5) |
– |
(5) |
– |
(5) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
(771) |
(771) |
– |
(771) |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
(2) |
(2) |
– |
(2) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
(34) |
(34) |
– |
(34) |
| Total comprehensive income for the period |
– |
– |
– |
2,237 |
– |
– |
(5) |
(807) |
1,425 |
1 |
1,426 |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
2,499,692 |
– |
3 |
– |
– |
– |
– |
– |
3 |
– |
3 |
| Buyback of equity shares (Refer to note 2.18)** |
(25,164,000) |
(1) |
(40) |
(704) |
– |
– |
– |
– |
(745) |
– |
(745) |
| Transaction cost relating to buyback* |
– |
– |
(3) |
– |
– |
– |
– |
– |
(3) |
– |
(3) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
– |
(1) |
– |
1 |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
48 |
– |
– |
– |
– |
– |
48 |
– |
48 |
| Income tax benefit arising on exercise of stock options |
– |
– |
5 |
– |
– |
– |
– |
– |
5 |
– |
5 |
| Transferred to other reserves |
– |
– |
– |
(312) |
312 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
108 |
(108) |
– |
– |
– |
– |
– |
– |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(3) |
(3) |
|
Dividends#
|
– |
– |
– |
(1,697) |
– |
– |
– |
– |
(1,697) |
– |
(1,697) |
|
Balance as at December 31, 2022
|
4,170,348,621 |
327 |
350 |
11,301 |
1,374 |
22 |
(4) |
(4,395) |
8,975 |
51 |
9,026 |
|
Balance as at April 1, 2023
|
4,136,387,925 |
325 |
366 |
11,401 |
1,370 |
24 |
– |
(4,314) |
9,172 |
52 |
9,224 |
| Changes in equity for the nine months ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
2,208 |
– |
– |
– |
– |
2,208 |
1 |
2,209 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
11 |
11 |
– |
11 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
4 |
4 |
– |
4 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
(2) |
– |
(2) |
– |
(2) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
(63) |
(63) |
– |
(63) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
13 |
13 |
– |
13 |
| Total comprehensive income for the period |
– |
– |
– |
2,208 |
– |
– |
(2) |
(35) |
2,171 |
1 |
2,172 |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
2,810,164 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
(4) |
4 |
– |
– |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
51 |
– |
– |
– |
– |
– |
51 |
– |
51 |
| Transferred to other reserves |
– |
– |
– |
(281) |
281 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
58 |
(58) |
– |
– |
– |
– |
– |
– |
| Buyback of shares pertaining to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(2) |
(2) |
| Dividends# |
– |
– |
– |
(1,777) |
– |
– |
– |
– |
(1,777) |
– |
(1,777) |
| Balance as at December 31, 2023 |
4,139,198,089 |
325 |
413 |
11,613 |
1,593 |
24 |
(2) |
(4,349) |
9,617 |
51 |
9,668 |
| ** | | Including tax on buyback of $141 million for the nine months ended December 31, 2022. |
| ## | | Impact on account of adoption of amendment to IAS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (1) | | excludes treasury shares of 11,249,465 as at December 31, 2023, 12,172,119 as at April
1, 2023, 12,568,222 as at December 31, 2022 and 13,725,712 as at April 1, 2022 held by consolidated trust. |
| (2) | | 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 Group
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. |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| |
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
| Firm's Registration No: |
|
117366W/W-100018
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
Condensed Consolidated Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and items of income or expenses associated with investing or financing cash flows. The cash flows
from operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that
are readily convertible to known amounts of cash to be cash equivalents.
(Dollars in millions)
| Particulars |
Note |
Nine months ended December 31, |
| |
|
2023 |
2022 |
| Operating activities: |
|
|
|
| Net Profit |
|
2,209 |
2,238 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Depreciation and amortization |
|
425 |
388 |
| Interest income |
|
(95) |
(105) |
| Finance cost |
|
43 |
25 |
| Income tax expense |
2.12 |
904 |
859 |
| Exchange differences on translation of assets and liabilities, net |
|
15 |
47 |
| Impairment loss recognized/(reversed) under expected credit loss model |
|
27 |
25 |
| Stock compensation expense |
|
52 |
48 |
| Provision for post sale client support |
|
25 |
24 |
| Other adjustments |
|
132 |
60 |
| Changes in working capital |
|
|
|
| Trade receivables and unbilled revenue |
|
(429) |
(915) |
| Prepayments and other assets |
|
(83) |
(311) |
| Trade payables |
|
(5) |
80 |
| Unearned revenue |
|
61 |
98 |
| Other liabilities and provisions |
|
(183) |
308 |
| Cash generated from operations |
|
3,098 |
2,869 |
| Income taxes paid |
|
(864) |
(824) |
| Net cash generated by operating activities |
|
2,234 |
2,045 |
| Investing activities: |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(200) |
(224) |
| Deposits placed with Corporation |
|
(89) |
(113) |
| Redemption of deposits placed with Corporation |
|
76 |
84 |
| Interest received |
|
91 |
97 |
| Payment for acquisition of business, net of cash acquired |
|
- |
(113) |
| Payment of contingent consideration pertaining to acquisition of business |
|
(12) |
(8) |
| Escrow and other deposits pertaining to Buyback |
|
- |
(72) |
| Payments to acquire Investments |
|
|
|
| Liquid mutual funds units |
|
(6,439) |
(6,793) |
| Certificates of deposit |
|
(510) |
(846) |
| Quoted debt securities |
|
(41) |
(228) |
| Commercial paper |
|
(580) |
(291) |
| Other investments |
|
(1) |
(2) |
| Proceeds on sale of investments |
|
|
|
| Quoted debt securities |
|
173 |
273 |
| Certificates of deposit |
|
723 |
947 |
| Commercial paper |
|
435 |
162 |
| Liquid mutual funds units |
|
6,316 |
6,666 |
| Other investments |
|
2 |
12 |
| Other receipts |
|
15 |
7 |
| Net cash used in investing activities |
|
(41) |
(442) |
| Financing activities: |
|
|
|
| Payment of lease liabilities |
|
(174) |
(107) |
| Payment of dividends |
|
(1,777) |
(1,697) |
| Payment of dividends to non-controlling interests of subsidiary |
|
- |
(3) |
| Payment towards buyback of shares pertaining to non controlling interest of subsidiary |
|
(2) |
- |
| Shares issued on exercise of employee stock options |
|
- |
3 |
| Other payments |
|
(64) |
(45) |
| Other receipts |
|
- |
15 |
| Buyback of equity shares including transaction costs and tax on buyback |
|
- |
(475) |
| Net cash used in financing activities |
|
(2,017) |
(2,309) |
| Net increase/(decrease) in cash and cash equivalents |
|
176 |
(706) |
| Effect of exchange rate changes on cash and cash equivalents |
|
(17) |
(198) |
| Cash and cash equivalents at the beginning of the period |
2.1 |
1,481 |
2,305 |
| Cash and cash equivalents at the end of the period |
2.1 |
1,640 |
1,401 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.1 |
45 |
46 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| |
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
|
| Firm's Registration No: |
|
117366W/W-100018
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
INFOSYS LIMITED AND SUBSIDIARIES
Overview and Notes to the Interim Condensed Consolidated
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is herein after referred to as the "Group".
The company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics city, Hosur Road, Bengaluru 560100, Karnataka, India. The company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the company's Board of Directors on January 11, 2024.
1.2 Basis of preparation of financial statements
The interim condensed consolidated financial statements
have been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board ("IASB"),
under the historical cost convention on the accrual basis except for certain financial instruments which have been measured at fair values.
Accordingly, these interim condensed consolidated financial statements do not include all the information required for a complete set
of financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the company’s Annual Report on Form 20-F for the year ended March 31, 2023. 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.
The material accounting policy information used in
preparation of the audited condensed consolidated interim financial statements have been discussed in the respective notes.
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 interim condensed 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. The 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.
1.4 Use of estimates and judgments
The preparation of the interim condensed consolidated
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 interim condensed consolidated financial statements and reported amounts of revenues and expenses
during the period. The 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 and judgements are reflected in the interim condensed
consolidated financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to
the interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to the contract are committed
to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of the contract because
the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment
and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore, is
acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, 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.
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. (Refer to note 2.12)
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS
3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain
the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted by external
valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements
and intangible assets. These measurements are based on information available at the acquisition date and are based on expectations and
assumptions that have been deemed reasonable by Management. (Refer to note 2.10 and 2.9.2)
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 asset’s 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. (Refer to note 2.7)
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 (CGUs) is less than it’s carrying amount.
For the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based
on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current
economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins.
(Refer to note 2.9.1)
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not yet
effective:
| Amendments to IFRS 16 Leases |
Lease Liability in a Sale and Leaseback |
| Amendments to IAS 7 Statement of Cash Flows and IFRS 7
Financial Instruments |
Disclosure regarding supplier finance arrangements |
| Amendments to IAS 21 The Effects of Changes in Foreign
Exchange Rates |
Lack of Exchangeability |
Amendments to IFRS 16
On September 22, 2022, International Accounting Standards
Board (IASB) has issued amendments to IFRS 16 Leases, which added requirements explaining the subsequent measurement for a sale and leaseback
transaction. These amendments will not change the accounting for leases other than those arising in a sale and leaseback transaction.
The effective date for the adoption of this amendment
is annual reporting periods beginning on or after January 1, 2024, although early adoption is permitted. The Group does not expect this
amendment to have any significant impact in its financial statements.
Amendments to IAS 7 and IFRS 7
On May 25, 2023 International Accounting Standards
Board (IASB) has issued amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosure which requires entities
to disclose information that enables users of financial statement to assess how supplier finance arrangements affect its liabilities and
cash flows and to understand the effect of supplier finance arrangements on an entity’s exposure to liquidity risk and how the entity
might be affected if the arrangements were no longer available to it.
The effective date for adoption of this amendment is
annual periods beginning on or after January 1, 2024, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
Amendments to IAS 21
On August 15, 2023, International Accounting Standards
Board (IASB) has issued amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require
companies to provide more useful information in their financial statements when a currency cannot be exchanged into another currency.
These amendments specify when a currency is exchangeable into another currency and when it is not and specify how an entity determines
the exchange rate to apply when a currency is not exchangeable.
The effective date for adoption of this amendment is
annual periods beginning on or after January 1, 2025, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
2. Notes to the Interim Condensed Consolidated Financial
Statements
2.1 Cash and cash equivalents
Cash and cash equivalents consist of the following:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Cash and bank deposits |
1,640 |
1,220 |
| Deposits with financial institutions |
– |
261 |
| Total Cash and cash equivalents |
1,640 |
1,481 |
Cash and cash equivalents as at December 31, 2023 and
March 31, 2023 include restricted cash and bank balances of $45 million and $44 million, respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the company.
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.
2.2 Investments
The carrying value of the investments are as follows:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| (i) Current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
– |
18 |
| Fair Value through profit or loss |
|
|
| Liquid mutual fund units |
257 |
119 |
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
226 |
179 |
| Certificates of deposits |
229 |
435 |
| Commercial paper |
246 |
90 |
| Total current investments |
958 |
841 |
| (ii) Non-current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
212 |
215 |
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
1,042 |
1,221 |
| Quoted equity securities |
16 |
– |
| Unquoted equity and preference securities |
10 |
24 |
| Fair Value through profit or loss |
|
|
| Target maturity fund units |
51 |
49 |
| Others(1) |
23 |
21 |
| Total non-current investments |
1,354 |
1,530 |
| Total investments |
2,312 |
2,371 |
| Investments carried at amortized cost |
212 |
233 |
| Investments carried at fair value through other comprehensive income |
1,769 |
1,949 |
| Investments carried at fair value through profit or loss |
331 |
189 |
| (1) | | Uncalled capital commitments outstanding as on December 31, 2023 and March 31, 2023 was
$10 million and $11 million, respectively. |
Refer to note 2.3 for accounting policies on financial
instruments.
Method of fair valuation:
(Dollars in millions)
| Class of investment |
Method |
Fair value |
| |
|
December 31, 2023 |
March 31, 2023 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
257 |
119 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
51 |
49 |
| Quoted debt securities- carried at amortized cost |
Quoted price and market observable inputs |
234 |
261 |
| Quoted debt securities- carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
1,268 |
1,400 |
| Commercial paper - carried at fair value through other comprehensive income |
Market observable inputs |
246 |
90 |
| Certificates of deposit - carried at fair value through other comprehensive income |
Market observable inputs |
229 |
435 |
| Quoted equity securities |
Quoted price |
16 |
– |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
10 |
24 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
23 |
21 |
| Total |
|
2,334 |
2,399 |
Note: Certain quoted investments are classified as Level
2 in the absence of active market for such investments.
2.3 Financial instruments
Accounting Policy
2.3.1 Initial recognition
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.
2.3.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss (FVTPL)
A financial asset which is not classified in any of
the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration and financial liability under option arrangements recognized
in a business combination which is subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
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
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities, carried
at fair value through profit or loss
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under IFRS 9, Financial Instruments. Any derivative
that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, is categorized as a financial asset or financial
liability carried 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 comprehensive income 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.
(ii) Cash flow hedge
The group 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 transaction.
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 comprehensive income. 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 comprehensive income 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 consolidated statement of comprehensive income.
2.3.3 Derecognition of financial instruments
The group derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under IFRS 9. A financial liability (or a part of a financial liability) is derecognized from the group's balance sheet when the obligation
specified in the contract is discharged or cancelled or expires.
2.3.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods
of assessing fair value result in general approximation of value, and such value may never actually be realized.
Refer to table ‘Financial instruments by category’
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to
the short maturity of these instruments.
2.3.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues 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 Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at December 31, 2023 were as follows:
(Dollars in millions)
| Particulars |
Amortized cost |
Financial assets / liabilities at fair value through profit or loss |
Financial assets / liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
1,640 |
– |
– |
– |
– |
1,640 |
1,640 |
| Investments (Refer to note 2.2) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
257 |
– |
– |
257 |
257 |
| Target maturity fund units |
– |
– |
51 |
– |
– |
51 |
51 |
| Quoted debt securities |
212 |
– |
– |
– |
1,268 |
1,480 |
1,502(1) |
| Certificates of deposit |
– |
– |
– |
– |
229 |
229 |
229 |
| Commercial Papers |
– |
– |
– |
– |
246 |
246 |
246 |
| Quoted equity securities |
– |
– |
– |
16 |
– |
16 |
16 |
| Unquoted equity and preference securities |
– |
– |
– |
10 |
– |
10 |
10 |
| Unquoted investment others |
– |
– |
23 |
– |
– |
23 |
23 |
| Trade receivables |
3,680 |
– |
– |
– |
– |
3,680 |
3,680 |
| Unbilled revenues (Refer to note 2.17)(3) |
1,058 |
– |
– |
– |
– |
1,058 |
1,058 |
| Prepayments and other assets (Refer to note 2.4) |
663 |
– |
– |
– |
– |
663 |
656(2) |
| Derivative financial instruments |
– |
– |
7 |
– |
2 |
9 |
9 |
| Total |
7,253 |
– |
338 |
26 |
1,745 |
9,362 |
9,377 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
460 |
– |
– |
– |
– |
460 |
460 |
| Lease liabilities (Refer to note 2.8) |
1,051 |
– |
– |
– |
– |
1,051 |
1,051 |
| Derivative financial instruments |
– |
– |
14 |
– |
3 |
17 |
17 |
Financial liability under option arrangements
(Refer to note 2.5) |
– |
– |
78 |
– |
– |
78 |
78 |
Other liabilities including contingent consideration
(Refer to note 2.5) |
1,789 |
– |
– |
– |
– |
1,789 |
1,789 |
| Total |
3,300 |
– |
92 |
– |
3 |
3,395 |
3,395 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of $7 million |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 were as follows:
(Dollars in millions)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
1,481 |
– |
– |
– |
– |
1,481 |
1,481 |
| Investments (Refer to note 2.2) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
119 |
– |
– |
119 |
119 |
| Target maturity fund units |
– |
– |
49 |
– |
– |
49 |
49 |
| Quoted debt securities |
233 |
– |
– |
– |
1,400 |
1,633 |
1,661(1) |
| Certificates of deposit |
– |
– |
– |
– |
435 |
435 |
435 |
| Commercial Papers |
– |
– |
– |
– |
90 |
90 |
90 |
| Unquoted equity and preference securities |
– |
– |
– |
24 |
– |
24 |
24 |
| Unquoted investments others |
– |
– |
21 |
– |
– |
21 |
21 |
| Trade receivables |
3,094 |
– |
– |
– |
– |
3,094 |
3,094 |
| Unbilled revenues(Refer to note 2.17)(3) |
1,157 |
– |
– |
– |
– |
1,157 |
1,157 |
| Prepayments and other assets (Refer to note 2.4) |
624 |
– |
– |
– |
– |
624 |
614(2) |
| Derivative financial instruments |
– |
– |
8 |
– |
4 |
12 |
12 |
| Total |
6,589 |
– |
197 |
24 |
1,929 |
8,739 |
8,757 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
470 |
– |
– |
– |
– |
470 |
470 |
| Lease liabilities (Refer to note 2.8) |
1,010 |
– |
– |
– |
– |
1,010 |
1,010 |
| Derivative financial instruments |
– |
– |
8 |
– |
2 |
10 |
10 |
Financial liability under option arrangements
(Refer to note 2.5) |
– |
– |
73 |
– |
– |
73 |
73 |
| Other liabilities including contingent consideration (Refer to note 2.5) |
2,112 |
– |
12 |
– |
– |
2,124 |
2,124 |
| Total |
3,592 |
– |
93 |
– |
2 |
3,687 |
3,687 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of $10 million |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
For trade receivables, trade payables, other assets and
payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of
these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities measured
at fair value on a recurring basis as at December 31, 2023 is as follows:
(Dollars in millions)
| Particulars |
As at December 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.2) |
|
|
|
|
| Investments in liquid mutual fund units |
257 |
257 |
– |
– |
| Investments in target maturity fund units |
51 |
51 |
– |
– |
| Investments in quoted debt securities |
1,502 |
1,377 |
125 |
– |
| Investments in certificates of deposit |
229 |
– |
229 |
– |
| Investments in commercial paper |
246 |
– |
246 |
– |
| Investments in quoted equity securities |
16 |
16 |
– |
– |
| Investments in unquoted equity and preference securities |
10 |
– |
– |
10 |
| Investments in unquoted investments others |
23 |
– |
– |
23 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts |
9 |
– |
9 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts |
17 |
– |
17 |
– |
| Financial liability under option arrangements (Refer to note 2.5)(1) |
78 |
– |
– |
78 |
| (1) | | Discount rate ranges from 10% to 17% |
During the nine months ended December 31, 2023, quoted
debt securities of $202 million were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted
price and quoted debt securities of $18 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2023 is as follows:
(Dollars in millions)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.2) |
|
|
|
|
| Investments in liquid mutual fund units |
119 |
119 |
– |
– |
| Investments in target maturity fund units |
49 |
49 |
– |
– |
| Investments in quoted debt securities |
1,661 |
1,302 |
359 |
– |
| Investments in certificates of deposit |
435 |
– |
435 |
– |
| Investments in commercial paper |
90 |
– |
90 |
– |
| Investments in unquoted equity and preference securities |
24 |
– |
– |
24 |
| Investments in unquoted investments others |
21 |
– |
– |
21 |
| Others |
|
|
|
|
| Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts |
12 |
– |
12 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts |
10 |
– |
10 |
– |
| Financial liability under option arrangements (Refer to note 2.5)(1) |
73 |
– |
– |
73 |
| Liability towards contingent consideration (Refer to note 2.5)(1) |
12 |
– |
– |
12 |
| (1) | | Discount rate ranges from 10% to 15% |
During the year ended March 31, 2023, quoted debt securities
of $47 million were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and quoted
debt securities of $196 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market
observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
quoted debt securities, certificates of deposit, commercial paper, quoted bonds issued by government and quasi-government organizations.
The Group invests after considering counterparty risks based on multiple criteria including Tier I Capital, Capital Adequacy Ratio, Credit
Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per Group’s
risk management program.
2.4 Prepayments and other assets
Prepayments and other assets consist of the following:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Rental deposits(1) |
7 |
4 |
| Security deposits(1) |
1 |
1 |
| Loans to employees(1) |
28 |
35 |
| Prepaid expenses(2) |
436 |
334 |
| Interest accrued and not due(1) |
46 |
59 |
| Withholding taxes and others(2) |
356 |
398 |
| Advance payments to vendors for supply of goods(2) |
9 |
25 |
| Deposit with corporations(1)(3) |
305 |
286 |
| Deferred contract cost(2) |
|
|
| Cost of obtaining a contract(2)(4) |
31 |
104 |
| Cost of fulfillment(2) |
40 |
21 |
| Net investment in sublease of right-of-use asset(1) |
1 |
6 |
| Other non financial assets(2) |
27 |
32 |
| Other financial assets(1) |
108 |
31 |
| Total Current prepayment and other assets |
1,395 |
1,336 |
| Non-current |
|
|
| Loans to employees(1) |
4 |
5 |
| Security deposits(1) |
6 |
6 |
| Deposit with corporations(1)(3) |
2 |
12 |
| Defined benefit plan assets(2) |
4 |
4 |
| Prepaid expenses(2) |
42 |
41 |
| Deferred contract cost(2) |
|
|
| Cost of obtaining a contract (2)(4) |
18 |
23 |
| Cost of fulfillment(2) |
86 |
79 |
| Withholding taxes and others(2) |
82 |
83 |
| Net investment in sublease of right-of-use asset(1) |
– |
37 |
| Rental deposits(1) |
27 |
29 |
| Other non financial assets(2) |
2 |
– |
| Other financial assets(1) |
128 |
113 |
| Total Non- current prepayment and other assets |
401 |
432 |
| Total prepayment and other assets |
1,796 |
1,768 |
| (1) Financial assets carried at amortized cost |
663 |
624 |
Withholding taxes and others primarily consist of input
tax credits and Cenvat/VAT recoverable from Government of India.
| (3) | | Deposit with corporation represents amounts deposited to settle certain employee-related
obligations as and when they arise during the normal course of business. |
| (4) | | Includes technology assets taken over by the Group from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Group in
accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total
contract value and accounted as Deferred contract cost. The Group has entered into financing arrangements with a third party for these
assets. As at December 31, 2023, the financial liability pertaining to such arrangements amounts to $43 million. (Refer to note 2.5) |
2.5 Other liabilities
Other liabilities comprise the following:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Accrued compensation to employees(1) |
454 |
508 |
| Accrued expenses(1) |
933 |
949 |
| Accrued defined benefit liability(3) |
1 |
– |
| Withholding taxes and others(3) |
421 |
442 |
| Retention money(1) |
2 |
2 |
| Liabilities of controlled trusts(1) |
25 |
26 |
| Deferred income - government grants(3) |
1 |
4 |
| Liability towards contingent consideration(2) |
– |
12 |
| Capital Creditors(1) |
27 |
82 |
| Financial liability under option arrangements(2)# |
66 |
73 |
| Other financial liabilities(1)(4) |
71 |
305 |
| Total current other liabilities |
2,001 |
2,403 |
| Non-current |
|
|
| Accrued compensation to employees(1) |
1 |
1 |
| Accrued expenses(1) |
265 |
198 |
| Accrued defined benefit liability (3) |
35 |
54 |
| Deferred income - government grants(3) |
8 |
5 |
| Deferred income(3) |
1 |
1 |
| Financial liability under option arrangements(2)# |
12 |
– |
| Other non-financial liabilities(3) |
1 |
1 |
| Other financial liabilities(1)(4) |
11 |
41 |
| Total non-current other liabilities |
334 |
301 |
| Total other liabilities |
2,335 |
2,704 |
| (1) Financial liability carried at amortized cost |
1,789 |
2,112 |
| (2) Financial liability carried at fair value through profit or loss |
78 |
85 |
| (3) | | Non financial liabilities |
| (4) | | Deferred contract cost (Refer to note 2.4) includes technology assets taken over by the Group
from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to
the assets is not transferred to the Group in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has
been considered as a reduction to the total contract value and accounted as Deferred contract cost. The Group has entered into financing
arrangements with a third party for these assets. As at December 31, 2023, the financial liability pertaining to such arrangements amounts
to $43 million. |
| # | | Represents liability related to options issued by the Group over the non-controlling interests
in its subsidiaries. |
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 and cost of third party software and hardware.
2.6 Provisions and other contingencies
Accounting Policy
2.6.1 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.
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognised because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support for 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. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete 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.
Provision for post sales client support and other
provisions
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Post sales client support and other provisions |
220 |
159 |
| Total provisions |
220 |
159 |
Provision for post sales client support represents
costs 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 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the interim condensed consolidated statement of comprehensive income.
As at December 31, 2023 and March 31, 2023, claims
against the Group, not acknowledged as debts, (excluding demands from income tax authorities- Refer to Note 2.12) amounted to $91 million
(759 crore) and $85 million (700 crore), respectively.
2.6.2 McCamish cybersecurity incident
In November 2023, Infosys McCamish Systems (McCamish)
a step down subsidiary of Infosys Limited experienced a cybersecurity incident resulting in the non-availability of certain applications
and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of
and response to the incident and remediation and restoration of impacted applications and systems. By December 31, 2023, McCamish, with
external specialists’ assistance, substantially remediated and restored the affected applications and systems.
Loss of contracted revenues and costs incurred with
respect to remediations, restoration, communication efforts and others amounted to approximately $30 million.
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. On the basis of analysis conducted by the cybersecurity firm, McCamish believes that
certain data was exfiltrated by unauthorized third parties during the incident and this exfiltrated data included certain customer data.
McCamish has engaged a third-party e- discovery vendor in assessing the extent and nature of such data. This review process is ongoing.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time.
Infosys had previously communicated the occurence of
this cybersecurity incident to BSE Limited, National Stock Exchange of India Limited, New York Stock Exchange and to United States Securities
and Exchange Commission on November 3, 2023.
2.6.3 Legal proceedings
The Group is subject to legal proceedings and claims,
which have arisen in the ordinary course of business. The Group’s Management reasonably expects that these legal actions, when ultimately
concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.7 Property, plant and equipment
Accounting Policy
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 charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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 |
22-25 years |
| Plant and machinery(1) |
5 years |
| Computer equipment |
3-5 years |
| Furniture and fixtures |
5 years |
| Vehicles |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Includes solar plant with a useful life of 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet date and the cost of assets not ready 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.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset.
Impairment
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 Cash Generating Unit (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 depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2023 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at October 1, 2023 |
172 |
1,388 |
623 |
1,023 |
411 |
6 |
3,623 |
| Additions |
– |
1 |
4 |
25 |
1 |
– |
31 |
| Deletions** |
– |
(7) |
(6) |
(27) |
(7) |
– |
(47) |
| Translation difference |
– |
(1) |
1 |
– |
1 |
– |
1 |
| Gross carrying value as at December 31, 2023 |
172 |
1,381 |
622 |
1,021 |
406 |
6 |
3,608 |
| Accumulated depreciation as at October 1, 2023 |
– |
(572) |
(483) |
(739) |
(314) |
(5) |
(2,113) |
| Depreciation |
– |
(14) |
(13) |
(41) |
(12) |
– |
(80) |
| Accumulated depreciation on deletions** |
– |
7 |
5 |
27 |
7 |
– |
46 |
| Translation difference |
– |
1 |
– |
– |
(1) |
– |
– |
| Accumulated depreciation as at December 31, 2023 |
– |
(578) |
(491) |
(753) |
(320) |
(5) |
(2,147) |
| Capital work-in progress as at October 1, 2023 |
|
|
|
|
|
|
77 |
| Carrying value as at October 1, 2023 |
172 |
816 |
140 |
284 |
97 |
1 |
1,587 |
| Capital work-in progress as at December 31, 2023 |
|
|
|
|
|
|
86 |
| Carrying value as at December 31, 2023 |
172 |
803 |
131 |
268 |
86 |
1 |
1,547 |
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2022 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at October 1, 2022 |
176 |
1,393 |
618 |
1,094 |
409 |
5 |
3,695 |
| Additions |
– |
20 |
16 |
42 |
14 |
– |
92 |
| Deletions* |
– |
– |
– |
(48) |
(2) |
– |
(50) |
| Translation difference |
(3) |
(19) |
(11) |
(13) |
(4) |
1 |
(49) |
| Gross carrying value as at December 31, 2022 |
173 |
1,394 |
623 |
1,075 |
417 |
6 |
3,688 |
| Accumulated depreciation as at October 1, 2022 |
– |
(530) |
(472) |
(782) |
(318) |
(5) |
(2,107) |
| Depreciation |
– |
(13) |
(14) |
(42) |
(11) |
– |
(80) |
| Accumulated depreciation on deletions* |
– |
– |
– |
48 |
2 |
– |
50 |
| Translation difference |
– |
8 |
8 |
10 |
3 |
– |
29 |
| Accumulated depreciation as at December 31, 2022 |
– |
(535) |
(478) |
(766) |
(324) |
(5) |
(2,108) |
| Capital work-in progress as at October 1, 2022 |
|
|
|
|
|
|
59 |
| Carrying value as at October 1, 2022 |
176 |
863 |
146 |
312 |
91 |
– |
1,647 |
| Capital work-in progress as at December 31, 2022 |
|
|
|
|
|
|
42 |
| Carrying value as at December 31, 2022 |
173 |
859 |
145 |
309 |
93 |
1 |
1,622 |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2023 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
174 |
1,407 |
625 |
1,037 |
409 |
6 |
3,658 |
| Additions |
– |
2 |
18 |
71 |
14 |
– |
105 |
| Deletions** |
– |
(7) |
(14) |
(75) |
(13) |
– |
(109) |
| Translation difference |
(2) |
(21) |
(7) |
(12) |
(4) |
– |
(46) |
| Gross carrying value as at December 31, 2023 |
172 |
1,381 |
622 |
1,021 |
406 |
6 |
3,608 |
| Accumulated depreciation as at April 1, 2023 |
– |
(552) |
(468) |
(709) |
(300) |
(5) |
(2,034) |
| Depreciation |
– |
(41) |
(42) |
(127) |
(36) |
– |
(246) |
| Accumulated depreciation on deletions** |
– |
7 |
13 |
75 |
12 |
– |
107 |
| Translation difference |
– |
8 |
6 |
8 |
4 |
– |
26 |
| Accumulated depreciation as at December 31, 2023 |
– |
(578) |
(491) |
(753) |
(320) |
(5) |
(2,147) |
| Capital work-in progress as at April 1, 2023 |
|
|
|
|
|
|
55 |
| Carrying value as at April 1, 2023 |
174 |
855 |
157 |
328 |
109 |
1 |
1,679 |
| Capital work-in progress as at December 31, 2023 |
|
|
|
|
|
|
86 |
| Carrying value as at December 31, 2023 |
172 |
803 |
131 |
268 |
86 |
1 |
1,547 |
** During each of the three months ended and nine months
ended December 31, 2023, certain assets which were not in use having gross book value of $16 million (net book value: Nil) and $71 million
(net book value: Nil) respectively, were retired.
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2022 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2022 |
188 |
1,481 |
653 |
1,125 |
423 |
6 |
3,876 |
| Additions |
– |
38 |
33 |
127 |
35 |
– |
233 |
| Additions - Business Combination |
– |
– |
1 |
1 |
– |
– |
2 |
| Deletions* |
– |
– |
(5) |
(84) |
(6) |
– |
(95) |
| Translation difference |
(15) |
(125) |
(59) |
(94) |
(35) |
– |
(328) |
| Gross carrying value as at December 31, 2022 |
173 |
1,394 |
623 |
1,075 |
417 |
6 |
3,688 |
| Accumulated depreciation as at April 1, 2022 |
– |
(541) |
(484) |
(796) |
(324) |
(5) |
(2,150) |
| Depreciation |
– |
(41) |
(44) |
(121) |
(33) |
– |
(239) |
| Accumulated depreciation on deletions* |
– |
– |
5 |
84 |
6 |
– |
95 |
| Translation difference |
– |
47 |
45 |
67 |
27 |
– |
186 |
| Accumulated depreciation as at December 31, 2022 |
– |
(535) |
(478) |
(766) |
(324) |
(5) |
(2,108) |
| Capital work-in progress as at April 1, 2022 |
|
|
|
|
|
|
67 |
| Carrying value as at April 1, 2022 |
188 |
940 |
169 |
329 |
99 |
1 |
1,793 |
| Capital work-in progress as at December 31, 2022 |
|
|
|
|
|
|
42 |
| Carrying value as at December 31, 2022 |
173 |
859 |
145 |
309 |
93 |
1 |
1,622 |
* During each of the three months ended and nine months
ended December 31, 2022, certain assets which were not in use having gross book value of $33 million (net book value: Nil) and $62 million
(net book value: Nil) respectively, were retired.
The aggregate depreciation expense is included in cost
of sales in the interim condensed consolidated statement of comprehensive income.
Repairs and maintenance costs are recognized in the
interim condensed consolidated statement of comprehensive income when incurred.
The Group had contractual commitments for capital expenditure
primarily comprising of commitments for infrastructure facilities and computer equipments aggregating to $87 million and $117 million
as at December 31, 2023 and March 31, 2023, respectively.
2.8 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist
of leases for land, buildings and computers. The group assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether:
(1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the
asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight-line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended December 31, 2023:
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of October 1, 2023 |
74 |
459 |
2 |
302 |
837 |
| Additions* |
– |
1 |
– |
63 |
64 |
| Deletions |
(1) |
(6) |
– |
(16) |
(23) |
| Depreciation |
– |
(22) |
– |
(27) |
(49) |
| Impairment# |
– |
(10) |
– |
– |
(10) |
| Translation difference |
– |
2 |
– |
7 |
9 |
| Balance as of December 31, 2023 |
73 |
424 |
2 |
329 |
828 |
| * | | Net of adjustments on account of modifications |
| # | | included under other expenses. Refer note 2.19 |
Following are the changes in the carrying value of right-of-use
assets for the three months ended December 31, 2022:
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of October 1, 2022 |
77 |
472 |
2 |
141 |
692 |
| Additions* |
– |
17 |
– |
122 |
139 |
| Deletions |
– |
(1) |
– |
(11) |
(12) |
| Depreciation |
(1) |
(20) |
– |
(20) |
(41) |
| Translation difference |
(1) |
(3) |
– |
9 |
5 |
| Balance as of December 31, 2022 |
75 |
465 |
2 |
241 |
783 |
| * | | Net of adjustments on account of modifications and lease incentives |
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2023:
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2023 |
76 |
474 |
2 |
285 |
837 |
| Additions* |
– |
39 |
1 |
181 |
221 |
| Deletions |
(1) |
(11) |
– |
(65) |
(77) |
| Impairment# |
– |
(10) |
– |
– |
(10) |
| Depreciation |
– |
(66) |
(1) |
(75) |
(142) |
| Translation difference |
(2) |
(2) |
– |
3 |
(1) |
| Balance as of December 31, 2023 |
73 |
424 |
2 |
329 |
828 |
| * | | Net of adjustments on account of modifications and lease incentives |
| # | | included under other expenses. Refer note 2.19 |
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2022:
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2022 |
83 |
489 |
2 |
62 |
636 |
| Additions* |
– |
79 |
1 |
248 |
328 |
| Deletions |
– |
(1) |
– |
(31) |
(32) |
| Depreciation |
(1) |
(62) |
(1) |
(39) |
(103) |
| Translation difference |
(7) |
(40) |
– |
1 |
(46) |
| Balance as of December 31, 2022 |
75 |
465 |
2 |
241 |
783 |
| * | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included in cost of sales in the interim condensed consolidated statement of comprehensive income.
The following is the break-up of current and non-current
lease liabilities as of December 31, 2023 and March 31, 2023:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current lease liabilities |
249 |
151 |
| Non-current lease liabilities |
802 |
859 |
| Total |
1,051 |
1,010 |
2.9 Goodwill and Intangible assets
2.9.1 Goodwill
Accounting Policy
Goodwill represents purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the purchase consideration, the
fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement
of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition and
which represents the lowest level at which goodwill is monitored for internal management purposes. 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. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Carrying value at the beginning |
882 |
817 |
| Goodwill on acquisitions |
– |
79 |
| Translation differences |
12 |
(14) |
| Carrying value at the end |
894 |
882 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition.
2.9.2 Intangible assets
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to prepare
the asset for its intended use.
Impairment
Intangible assets 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 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 the 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) had no impairment loss been recognized for the asset in prior years.
2.10 Business combinations
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under common
control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and
liabilities assumed.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognised.
Transaction costs that the Group incurs in connection
with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are
expensed as incurred.
Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
2.11 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in net profit in the interim condensed consolidated statement of comprehensive income on a straight-line basis
over the requisite service period for each separately vesting portion of the award as if the award was in-substance, multiple awards with
a corresponding increase to share premium.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan)
On June 22, 2019 pursuant to approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000
equity shares. To implement the 2019 Plan, upto 45,000,000 equity shares may be issued by way of secondary acquisition of shares by Infosys
Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined
annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters will
be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan):
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Stock Incentive Compensation Plan. The maximum number of shares under the 2015 plan
shall not exceed 24,038,883 equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as
at March 31, 2016). These instruments will generally vest over a period of 4 years The plan numbers mentioned above are further adjusted
with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). 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 the market price as on the date of grant.
Controlled trust holds 11,249,465 and 12,172,119 shares
as at December 31, 2023 and March 31, 2023, respectively under the 2015 plan. Out of these shares, 2,00,000 equity shares each have been
earmarked for welfare activities of the employees as at December 31, 2023 and March 31, 2023, respectively.
The following is the summary of grants made during
three months and nine months ended December 31, 2023 and December 31, 2022:
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended December 31, |
Nine months ended December 31, |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
| Equity settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
35,990 |
– |
114,271 |
176,893 |
88,040 |
– |
421,636 |
287,325 |
| Employees other than KMP |
464,260 |
3,814 |
464,260 |
374,774 |
1,169,660 |
48,050 |
1,197,940 |
48,050 |
| |
500,250 |
3,814 |
578,531 |
551,667 |
1,257,700 |
48,050 |
1,619,576 |
335,375 |
| Cash settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
– |
– |
– |
– |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
|
|
|
|
|
|
|
|
| Total Grants |
500,250 |
3,814 |
578,531 |
551,667 |
1,265,650 |
48,050 |
1,627,526 |
335,375 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 34.75 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain performance targets. Accordingly, 2,72,026 performance based RSU’s were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain environment, social and governance milestones as determined by the Board. Accordingly, 15,656 performance based RSU’s
were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board. Accordingly, 39,140 performance based RSU’s
were granted effective May 2, 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of December 31, 2023, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with IFRS 2, Share
based payment. The grant date for this purpose in accordance with IFRS 2, Share based payment is July 1, 2022.
Under the 2019 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2024 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 78,281 performance based RSU’s
were granted effective May 2, 2023.
Other KMP
Under the 2015 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved 88,040 time based RSUs and 6,774 performance based RSUs
to other KMP under the 2015 plan. The time based RSUs will vest over three years and performance based RSUs will vest over three years
based on certain performance targets.
Under the 2019 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved performance based grants of 35,990 RSUs to other KMP under
the 2019 plan. These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Granted to: |
|
|
|
|
| KMP |
2 |
– |
6 |
5 |
| Employees other than KMP |
16 |
14 |
46 |
43 |
| Total (1) |
18 |
14 |
52 |
48 |
| (1) | | Cash settled stock compensation expense included in the above |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options 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 options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
Fiscal 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,321 |
16.41 |
1,525 |
18.08 |
| Exercise price ()/ ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-31 |
25-33 |
23-32 |
27-34 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
4-5 |
5-7 |
2-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,151 |
14.31 |
1,210 |
13.69 |
The expected life of the RSU/ESOP is estimated based on
the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.12 Income Taxes
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the consolidated statement of comprehensive income except to the extent that it
relates to items recognized directly in equity, in which case it is recognized in equity or 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; deferred tax assets and deferred 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. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the interim condensed consolidated
statement of comprehensive income comprises:
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Current taxes |
|
|
|
|
| Domestic taxes |
223 |
194 |
644 |
642 |
| Foreign taxes |
67 |
73 |
229 |
236 |
| |
290 |
267 |
873 |
878 |
| Deferred taxes |
|
|
|
|
| Domestic taxes |
21 |
29 |
66 |
33 |
| Foreign taxes |
(10) |
(11) |
(35) |
(52) |
| |
11 |
18 |
31 |
(19) |
| Income tax expense |
301 |
285 |
904 |
859 |
Income tax expense for the three months ended December
31, 2023 and December 31, 2022 includes reversal (net of provisions) of $8 million and $9 million, respectively. Income tax expense for
the nine months ended December 31, 2023 and December 31, 2022 includes reversal (net of provisions) of $16 million and $4 million, respectively.
These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed matters, upon filing of tax return
and completion of assessments, across various jurisdictions.
Deferred income tax for the three months and nine months
ended December 31, 2023 and December 31, 2022 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at December 31, 2023, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to $518 million (4,307 crore). As at March 31, 2023, claims against
the Group not acknowledged as debts from the Income tax authorities amounted to $494 million (4,062 crore).
Amount paid to statutory authorities against the tax
claims amounted to $754 million (6,275 crore) and $794 million (6,528 crore) as at December 31, 2023 and March 31, 2023
respectively.
The claims against the group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances
such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees
under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises
held as liable for withholding of taxes. These matters are pending before various Income Tax Authorities and the Management including
the Company's tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse
effect on the Group's financial position and results of operations.
2.13 Basic and diluted shares used in computing
earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group 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 Group 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.
2.14 Related party transactions
Refer Note 2.20 "Related party transactions"
in the Company’s 2023 Annual Report on Form 20-F for the full names and other details of the Company's subsidiaries and controlled
trusts.
Changes in Subsidiaries
During the nine months ended December 31, 2023, the
following are the changes in the subsidiaries.
| - | | Infosys Americas Inc., (Infosys Americas) a Wholly-owned subsidiary of Infosys Limited is
liquidated effective July 14, 2023. |
| - | | oddity GmbH renamed as WongDoody GmbH |
| - | | On September 29, 2023, oddity space GmbH, oddity waves GmbH, oddity jungle GmbH, oddity group
services GmbH and oddity code GmbH merged into WongDoody GmbH and oddity code d.o.o which was formerly a subsidiary of oddity code Gmbh
has become a subsidiary of Wongdoody Gmbh (formerly known as oddity GmbH). |
| - | | On September 1, 2023 Infosys Ltd. acquired 100% of voting interests in Danske IT and Support
Services India Private Limited (“Danske IT”). |
| - | | Infosys BPM Canada Inc, a Wholly-owned subsidiary of Infosys BPM Limited was incorporated
on August 11, 2023. |
| - | | Kaleidoscope Prototyping LLC, a Wholly-owned subsidiary of Kaleidoscope Animations is liquidated
effective November 1, 2023. |
| - | | oddity Code d.o.o renamed as WongDoody d.o.o |
| - | | On November 24, 2023 Stater Participations B.V (Wholly-owned subsidiary of Stater N.V) merged
with Stater N.V and Stater Belgium N.V./S.A which was formerly a wholly owned subsidiary of Stater Participations B.V. became a wholly
owned subsidiary of Stater N.V. |
Changes in key management personnel
The following are the changes in the key management
personnel:
Independent directors:
| - | | Helene Auriol Potier (appointed as independent director effective May 26, 2023) |
| - | | Nitin Paranjpe (appointed as an additional and independent director effective January 1,
2024) |
Executive Officers:
| - | | Mohit Joshi (resigned as President effective March 11, 2023 and was on leave till June 9,
2023 which was his last date with the company) |
| - | | Nilanjan Roy (resigned as Chief Financial Officer of the Company effective March 31, 2024) |
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transactions with key management personnel
The table below describes the related party transactions
with key management personnel which comprise directors and executive officers:
(Dollars in millions)
| |
Three months ended December 31, |
Nine months ended December 31, |
| Particulars |
2023 |
2022 |
2023 |
2022 |
| Salaries and other short term employee benefits to whole-time directors and executive officers(1)(2) |
3 |
2 |
10 |
11 |
| Commission and other benefits to non-executive/ independent directors |
– |
1 |
1 |
2 |
| Total |
3 |
3 |
11 |
13 |
| (1) | | Total employee stock compensation expense for the three months ended December 31, 2023
and December 31, 2022 includes a charge of $2 million and less than a million respectively, towards key management personnel. For the
nine months ended December 31, 2023 and December 31, 2022, includes a charge of $6 million and $5 million respectively, towards key management
personnel. (Refer note 2.11). |
| (2) | | Does not include post-employment benefits and other long-term benefits, based on actuarial
valuation as these are done for the Company as a whole. |
2.15 Segment reporting
IFRS 8 Operating Segments 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.
The Chief Operating Decision Maker (CODM) evaluates
the Group's performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly,
information has been presented along business 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 accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
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 Infosys Public Services and revenue generated from customers located in India, Japan and China and other enterprises
in public service. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The 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. The 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.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.16 Revenue from operations.
2.15.1 Business segments
For the three months ended December 31, 2023 and
December 31, 2022
(Dollars in millions)
| Particulars |
Financial Services(1)* |
Retail(2) |
Communication(3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other segments(5) |
Total |
| Revenue |
1,295 |
679 |
531 |
614 |
696 |
358 |
355 |
135 |
4,663 |
| |
1,366 |
667 |
573 |
603 |
619 |
376 |
328 |
127 |
4,659 |
| Identifiable operating expenses |
781 |
357 |
334 |
330 |
455 |
210 |
205 |
81 |
2,753 |
| |
796 |
345 |
348 |
315 |
390 |
217 |
192 |
91 |
2,694 |
| Allocated expenses |
243 |
115 |
94 |
110 |
107 |
58 |
58 |
28 |
813 |
| |
244 |
122 |
98 |
111 |
104 |
60 |
53 |
35 |
827 |
| Segment Profit |
271 |
207 |
103 |
174 |
134 |
90 |
92 |
26 |
1,097 |
| |
326 |
200 |
127 |
177 |
125 |
99 |
83 |
1 |
1,138 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
141 |
| |
|
|
|
|
|
|
|
|
137 |
| Operating profit |
|
|
|
|
|
|
|
|
956 |
| |
|
|
|
|
|
|
|
|
1,001 |
| Other income, net (Refer to note 2.19) |
|
|
|
|
|
|
|
|
95 |
| |
|
|
|
|
|
|
|
|
94 |
| Finance Cost |
|
|
|
|
|
|
|
|
16 |
| |
|
|
|
|
|
|
|
|
10 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
1,035 |
| |
|
|
|
|
|
|
|
|
1,085 |
| Income tax expense |
|
|
|
|
|
|
|
|
301 |
| |
|
|
|
|
|
|
|
|
285 |
| Net profit |
|
|
|
|
|
|
|
|
734 |
| |
|
|
|
|
|
|
|
|
800 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
141 |
| |
|
|
|
|
|
|
|
|
137 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
– |
For the nine months ended December 31, 2023 and December
31, 2022
(Dollars in millions)
| Particulars |
Financial Services(1)* |
Retail(2) |
Communication(3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other segments(5) |
Total |
| Revenue |
3,888 |
2,066 |
1,611 |
1,807 |
2,024 |
1,099 |
1,058 |
444 |
13,997 |
| |
4,118 |
1,958 |
1,710 |
1,713 |
1,739 |
1,109 |
925 |
385 |
13,657 |
| Identifiable operating expenses |
2,266 |
1,102 |
972 |
982 |
1,323 |
633 |
614 |
277 |
8,169 |
| |
2,353 |
1,002 |
1,062 |
913 |
1,156 |
653 |
540 |
263 |
7,942 |
| Allocated expenses |
729 |
356 |
291 |
333 |
321 |
183 |
170 |
103 |
2,486 |
| |
735 |
361 |
298 |
320 |
312 |
181 |
153 |
99 |
2,459 |
| Segment Profit |
893 |
608 |
348 |
492 |
380 |
283 |
274 |
64 |
3,342 |
| |
1,030 |
595 |
350 |
480 |
271 |
275 |
232 |
23 |
3,256 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
425 |
| |
|
|
|
|
|
|
|
|
388 |
| Operating profit |
|
|
|
|
|
|
|
|
2,917 |
| |
|
|
|
|
|
|
|
|
2,868 |
| Other income, net (Refer to note 2.19) |
|
|
|
|
|
|
|
|
239 |
| |
|
|
|
|
|
|
|
|
254 |
| Finance Cost |
|
|
|
|
|
|
|
|
43 |
| |
|
|
|
|
|
|
|
|
25 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
3,113 |
| |
|
|
|
|
|
|
|
|
3,097 |
| Income tax expense |
|
|
|
|
|
|
|
|
904 |
| |
|
|
|
|
|
|
|
|
859 |
| Net profit |
|
|
|
|
|
|
|
|
2,209 |
| |
|
|
|
|
|
|
|
|
2,238 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
425 |
| |
|
|
|
|
|
|
|
|
388 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
– |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
| * | | Includes impact on account of McCamish cybersecurity incident.Refer note 2.6.2. |
2.15.2 Significant clients
No client individually accounted for more than 10%
of the Revenue for the three months and nine months ended December 31, 2023 and December 31, 2022, respectively.
2.16 Revenue from Operations
Accounting Policy:
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-timeframe basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing, by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS).When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in
estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service
the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably
on a straight-line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is
acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on
a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored
regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient
to recover the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in
its Consolidated Statement of Comprehensive Income.
Revenues for the three months and nine months ended
December 31, 2023 and December 31, 2022 is as follows:
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenue from software services |
4,416 |
4,362 |
13,208 |
12,790 |
| Revenue from products and platforms |
247 |
297 |
789 |
867 |
| Total revenue from operations |
4,663 |
4,659 |
13,997 |
13,657 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms including Finacle – core banking solution, Edge Suite of products, Panaya platform, Infosys Equinox, Infosys Helix,
Infosys Applied AI, Infosys Cortex, Stater digital platform and Infosys McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer note 2.15). The table below presents disaggregated revenues from contracts with customers by geography
and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues
and cash flows are affected by industry, market and other economic factors.
Three months and nine months ended December 31,
2023 and December 31, 2022
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenues by Geography* |
|
|
|
|
| North America |
2,752 |
2,889 |
8,442 |
8,482 |
| Europe |
1,313 |
1,202 |
3,797 |
3,443 |
| India |
111 |
113 |
369 |
360 |
| Rest of the world |
487 |
455 |
1,389 |
1,372 |
| Total |
4,663 |
4,659 |
13,997 |
13,657 |
| * | | Geographical revenues are based on the domicile of customer. |
The percentage of revenue from fixed-price contracts
for the three months ended December 31, 2023 and December 31, 2022 is 55% and 53%, respectively. The percentage of revenue from fixed-price
contracts for the nine months ended December 31, 2023 and December 31, 2022 is 53% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore, unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset
because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivable and unbilled revenues are presented
net of impairment in the consolidated statement of balance sheet.
2.17 Unbilled Revenue
(Dollars in millions)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Unbilled financial asset (1) |
1,058 |
1,157 |
| Unbilled non financial asset (2) |
733 |
880 |
| Total |
1,791 |
2,037 |
| (1) | | Right to consideration is unconditional and is due only after a passage of time. |
| (2) | | Right to consideration is dependent on completion of contractual milestones. |
2.18 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity,
net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/ from Share premium.
Description of reserves
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Share premium
The amount received in excess of the par value of equity
shares has been classified as share premium. Additionally, share-based compensation recognized in net profit in the interim condensed
consolidated statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback
from share premium account.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been 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.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Other components of equity
Other components of equity include currency translation,
re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive
income, changes on fair valuation of investments, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the net profit in the consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
2.18.1 Capital allocation policy
Effective fiscal 2020, the company expects to return
approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi annual dividends and/or share
buyback and/or special dividends, subject to applicable laws and requisite approvals, if any. Free cash flow is defined as net cash provided
by operating activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback
include applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of December 31, 2023, the Company has only one class of equity shares
and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.18.2 Dividend
The final dividend on shares is 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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders in accordance with Companies Act 2013 is as follows:
| Particulars |
Nine months ended December 31, 2023 |
Nine months ended December 31, 2022 |
| |
in |
in US Dollars |
in |
in US Dollars |
| Interim dividend for fiscal 2024 |
18.00 |
0.22 |
– |
– |
| Final dividend for fiscal 2023 |
17.50 |
0.21 |
– |
– |
| Interim dividend for fiscal 2023 |
– |
– |
16.50 |
0.20 |
| Final dividend for fiscal 2022 |
– |
– |
16.00 |
0.21 |
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share (approximately $0.21 per equity share) for the financial year
ended March 31, 2023. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June 28, 2023
which resulted in a net cash outflow of $882 million (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on October
12, 2023 declared an interim dividend of 18/- (approximately $0.22 per equity share) per equity share which resulted in a net cash
outflow of $895 million (excluding dividend paid on treasury shares).
2.18.3 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 11,249,465 shares and 12,172,119 shares were held by controlled trust, as at December
31, 2023 and March 31, 2023, respectively.
2.19 Break-up of expenses and other income, net
Accounting policy
2.19.1 Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit
method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
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 and are not reclassified to profit or loss in subsequent periods. 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 is recognized in net profits in the consolidated statement
of comprehensive income.
2.19.2 Superannuation
Certain employees of Infosys, Infosys BPM 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.
2.19.3 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 of the contributions 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 of India. 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.
2.19.4 Compensated absences
The Group 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.
2.19.5 Other income, net
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
2.19.6 Foreign Currency
Functional currency and presentation currency
The functional currency of Infosys, Infosys BPM, EdgeVerve,
Skava, Infosys Green Forum, Danske IT and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are
their respective local currencies. These financial statements are presented in U.S. dollars (rounded off to the nearest million) to facilitate
the investors’ ability to evaluate Infosys’ performance and financial position in comparison to similar companies domiciled
in other geographic locations.
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 recognized in the interim condensed Consolidated Statement of Comprehensive Income and reported within exchange
gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow
hedges. 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 transaction. The related
revenue and expense are recognised using the same exchange rate.
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 cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the Statement of Comprehensive Income. However, when a change in the parent's
ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
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.
2.19.7 Government grants
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income on a systematic
and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the
statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
2.19.8 Operating Profits
Operating profit of the Group is computed considering
the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
The table below provides details of break-up of
expenses:
Cost of sales
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31,
|
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
2,237 |
2,236 |
6,784 |
6,583 |
| Depreciation and amortization |
141 |
137 |
425 |
388 |
| Travelling costs |
34 |
31 |
111 |
97 |
| Cost of technical sub-contractors |
368 |
407 |
1,120 |
1,371 |
| Cost of software packages for own use |
65 |
60 |
182 |
170 |
| Third party items bought for service delivery to clients |
379 |
312 |
995 |
819 |
| Consultancy and professional charges |
15 |
4 |
22 |
12 |
| Communication costs |
10 |
10 |
32 |
34 |
| Repairs and maintenance |
12 |
13 |
40 |
39 |
| Provision for post-sales client support |
4 |
16 |
25 |
24 |
| Others |
9 |
4 |
19 |
7 |
| Total |
3,274 |
3,230 |
9,755 |
9,544 |
Selling and marketing expenses
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31,
|
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
163 |
154 |
499 |
447 |
| Travelling costs |
8 |
8 |
27 |
25 |
| Branding and marketing |
26 |
27 |
87 |
79 |
| Consultancy and professional charges |
4 |
4 |
13 |
11 |
| Communication costs |
– |
– |
1 |
1 |
| Others |
3 |
3 |
6 |
11 |
| Total |
204 |
196 |
633 |
574 |
Administrative expenses
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31,
|
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
81 |
76 |
244 |
229 |
| Consultancy and professional charges |
41 |
41 |
114 |
139 |
| Repairs and maintenance |
30 |
30 |
91 |
85 |
| Power and fuel |
6 |
6 |
18 |
16 |
| Communication costs |
10 |
12 |
31 |
33 |
| Travelling costs |
5 |
5 |
18 |
15 |
| Rates and taxes |
10 |
9 |
29 |
28 |
| Insurance charges |
6 |
5 |
19 |
16 |
| Commission to non-whole time directors |
– |
– |
1 |
1 |
| Impairment loss recognized/(reversed) under expected credit loss model |
1 |
13 |
27 |
25 |
| Contribution towards Corporate Social Responsibility |
16 |
18 |
42 |
40 |
| Others |
23 |
17 |
58 |
44 |
| Total |
229 |
232 |
692 |
671 |
Other income for the three months and nine months
ended December 31, 2023 and December 31, 2022 is as follows:
(Dollars in millions)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
31 |
26 |
98 |
83 |
| Interest income on financial assets carried at fair value through other comprehensive income |
28 |
29 |
83 |
91 |
| Gain/(loss) on investments carried at fair value through profit or loss |
12 |
6 |
24 |
11 |
| Exchange gains / (losses) on forward and options contracts |
(18) |
(44) |
(11) |
(98) |
| Exchange gains / (losses) on translation of other assets and liabilities |
27 |
67 |
25 |
143 |
| Others |
15 |
10 |
20 |
24 |
| Total |
95 |
94 |
239 |
254 |
for and on behalf of the Board of Directors of Infosys
Limited
| Nandan M. Nilekani |
Salil Parekh |
Bobby Parikh |
| Chairman |
Chief Executive Officer and Managing Director |
Director
|
| Nilanjan Roy |
Jayesh Sanghrajka |
A.G.S. Manikantha |
| Chief Financial Officer |
Executive Vice President and Deputy Chief Financial Officer |
Company Secretary |
Bengaluru |
|
|
| January 11, 2024 |
|
|
Exhibit 99.8
IFRS INR Earning Release
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed
consolidated financial statements of INFOSYS LIMITED (the “Company”), and its subsidiaries (the Company and its subsidiaries
together referred to as the “Group”), which comprise the Condensed Consolidated Balance Sheet as at December 31, 2023, the
Condensed Consolidated Statement of Comprehensive Income for the three months and nine months ended on that date, the Condensed Consolidated
Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the nine months ended on that date, and a summary
of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim condensed consolidated
financial statements”).
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair
view in conformity with International Accounting Standard 34 “Interim Financial Reporting” (“IAS 34”) as issued
by the International Accounting Standards Board (“IASB”), of the consolidated state of affairs of the Group as at December
31, 2023, its consolidated profit and its consolidated total comprehensive income for the three months and nine months ended on that date,
its consolidated changes in equity and its consolidated cash flows for the nine months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed
consolidated financial statements in accordance with the Standards on Auditing (“SA”s) issued by the Institute of Chartered
Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities
for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance
with the Code of Ethics issued by the ICAI, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim
condensed consolidated financial statements.
Emphasis of Matter
As described in note 2.6.2 to the interim
condensed consolidated financial statements, certain costs relating to possible damages or claims relating to a cybersecurity incident
in a subsidiary are indeterminable as at the date of this report because of reasons stated in the note. Our opinion is not modified in
respect of this matter.
Responsibilities of Management and Those
Charged with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed consolidated financial statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with IAS 34 as issued by the IASB. The respective Boards of Directors/Trustees
of the entities included in the Group are responsible for maintenance of the adequate accounting records for safeguarding assets of the
Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation
and presentation of the respective interim financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error which have been used for the purpose of preparation of the interim condensed consolidated financial statements
by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated
financial statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing
the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities
or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees of
the entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks
of material misstatement of the interim condensed consolidated financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| · | Obtain an understanding of internal
financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness
of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. |
| · | Conclude on the appropriateness
of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the interim condensed consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause
the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation,
structure and content of the interim condensed consolidated financial statements, including the disclosures, and whether the interim condensed
consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate
audit evidence regarding the financial information of the entities within the Group to express an opinion on the interim condensed consolidated
financial statements. We are responsible for the direction, supervision and performance of the audit of financial statements of such entities
included in the interim condensed consolidated financial statements of which we are independent auditors. |
Materiality is the magnitude of misstatements
in the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance
of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: January 11, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCP8167 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under International Financial Reporting Standards (IFRS) in Indian Rupee for the three months and nine months ended December 31, 2023
| Index |
| Condensed Consolidated Balance Sheet |
| Condensed Consolidated Statement of Comprehensive Income |
| Condensed Consolidated Statement of Changes in Equity |
| Condensed Consolidated Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Consolidated Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Basis of consolidation |
| 1.4 Use of estimates and judgments |
| 1.5 Critical accounting estimates and judgments |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Cash and cash equivalents |
| 2.2 Investments |
| 2.3 Financial instruments |
| 2.4 Prepayments and other assets |
| 2.5 Other liabilities |
| 2.6 Provisions and other contingencies |
| 2.7 Property, plant and equipment |
| 2.8 Leases |
| 2.9 Goodwill and Intangible Assets |
| 2.10 Business combinations |
| 2.11 Employees' Stock Option Plans (ESOP) |
| 2.12 Income Taxes |
| 2.13 Basic and diluted shares used in computing earnings per equity share |
| 2.14 Related party transactions |
| 2.15 Segment reporting |
| 2.16 Revenue from Operations |
| 2.17 Unbilled Revenue |
| 2.18 Equity |
| 2.19 Break-up of expenses and other income, net |
Infosys Limited and subsidiaries
(In crore except equity share data)
| Condensed Consolidated Balance Sheet as at |
Note |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
2.1 |
13,645 |
12,173 |
| Current investments |
2.2 |
7,974 |
6,909 |
| Trade receivables |
|
30,618 |
25,424 |
| Unbilled revenue |
2.17 |
13,227 |
15,289 |
| Prepayments and other current assets |
2.4 |
11,609 |
10,979 |
| Income tax assets |
2.12 |
173 |
6 |
| Derivative financial instruments |
2.3 |
75 |
101 |
| Total current assets |
|
77,321 |
70,881 |
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.7 |
12,870 |
13,793 |
| Right-of-use assets |
2.8 |
6,892 |
6,882 |
| Goodwill |
2.9 |
7,435 |
7,248 |
| Intangible assets |
|
1,508 |
1,749 |
| Non-current investments |
2.2 |
11,270 |
12,569 |
| Unbilled revenue |
2.17 |
1,677 |
1,449 |
| Deferred income tax assets |
2.12 |
702 |
1,245 |
| Income tax assets |
2.12 |
6,851 |
6,453 |
| Other non-current assets |
2.4 |
3,340 |
3,547 |
| Total non-current assets |
|
52,545 |
54,935 |
| Total assets |
|
129,866 |
125,816 |
| LIABILITIES AND EQUITY |
|
|
|
| Current liabilities |
|
|
|
| Trade payables |
|
3,825 |
3,865 |
| Lease liabilities |
2.8 |
2,074 |
1,242 |
| Derivative financial instruments |
2.3 |
144 |
78 |
| Current income tax liabilities |
2.12 |
4,019 |
3,384 |
| Unearned revenue |
|
7,674 |
7,163 |
| Employee benefit obligations |
|
2,717 |
2,399 |
| Provisions |
2.6 |
1,827 |
1,307 |
| Other current liabilities |
2.5 |
16,649 |
19,748 |
| Total current liabilities |
|
38,929 |
39,186 |
| Non-current liabilities |
|
|
|
| Lease liabilities |
2.8 |
6,670 |
7,057 |
| Deferred income tax liabilities |
2.12 |
942 |
1,220 |
| Employee benefit obligations |
|
90 |
83 |
| Other non-current liabilities |
2.5 |
2,785 |
2,475 |
| Total non-current liabilities |
|
10,487 |
10,835 |
| Total liabilities |
|
49,416 |
50,021 |
| Equity |
|
|
|
| Share capital - 5 par value 4,800,000,000 (4,800,000,000) equity shares authorized, issued and outstanding 4,139,198,089 (4,136,387,925) equity shares fully paid up, net of 11,249,465 (12,172,119) treasury shares as at December 31, 2023 (March 31, 2023) |
2.18 |
2,070 |
2,069 |
| Share premium |
|
1,453 |
1,065 |
| Retained earnings |
|
61,826 |
60,063 |
| Cash flow hedge reserves |
|
(22) |
(5) |
| Other reserves |
|
11,855 |
10,014 |
| Capital redemption reserve |
|
169 |
169 |
| Other components of equity |
|
2,719 |
2,032 |
| Total equity attributable to equity holders of the Company |
|
80,070 |
75,407 |
| Non-controlling interests |
|
380 |
388 |
| Total equity |
|
80,450 |
75,795 |
| Total liabilities and equity |
|
129,866 |
125,816 |
The accompanying notes form an integral part of the interim condensed
consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Infosys Limited and subsidiaries
(In crore except equity share and per equity
share data)
| Condensed Consolidated Statement of Comprehensive Income for the |
|
Three months ended December 31, |
Nine months ended December 31, |
| |
Note |
2023 |
2022 |
2023 |
2022 |
| Revenues |
2.16 |
38,821 |
38,318 |
115,748 |
109,326 |
| Cost of sales |
2.19 |
27,253 |
26,561 |
80,666 |
76,342 |
| Gross profit |
|
11,568 |
11,757 |
35,082 |
32,984 |
| Operating expenses |
|
|
|
|
|
| Selling and marketing expenses |
2.19 |
1,700 |
1,611 |
5,238 |
4,591 |
| Administrative expenses |
2.19 |
1,907 |
1,904 |
5,718 |
5,365 |
| Total operating expenses |
|
3,607 |
3,515 |
10,956 |
9,956 |
| Operating profit |
|
7,961 |
8,242 |
24,126 |
23,028 |
| Other income, net |
2.19 |
789 |
769 |
1,982 |
2,030 |
| Finance cost |
|
131 |
80 |
360 |
202 |
| Profit before income taxes |
|
8,619 |
8,931 |
25,748 |
24,856 |
| Income tax expense |
2.12 |
2,506 |
2,345 |
7,474 |
6,882 |
| Net profit |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
71 |
29 |
94 |
(17) |
| Equity instruments through other comprehensive income, net |
2.2 |
(9) |
1 |
31 |
8 |
| |
|
62 |
30 |
125 |
(9) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(46) |
(57) |
(17) |
(43) |
| Exchange differences on translation of foreign operations |
|
436 |
676 |
457 |
715 |
| Fair value changes on investments, net |
2.2 |
52 |
48 |
107 |
(298) |
| |
|
442 |
667 |
547 |
374 |
| Total other comprehensive income/(loss), net of tax |
|
504 |
697 |
672 |
365 |
| Total comprehensive income |
|
6,617 |
7,283 |
18,946 |
18,339 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,106 |
6,586 |
18,264 |
17,967 |
| Non-controlling interests |
|
7 |
- |
10 |
7 |
| |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,605 |
7,268 |
18,934 |
18,322 |
| Non-controlling interests |
|
12 |
15 |
12 |
17 |
| |
|
6,617 |
7,283 |
18,946 |
18,339 |
| Earnings per equity share |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic (in per share) |
|
14.76 |
15.72 |
44.13 |
42.85 |
| Diluted (in per share) |
|
14.74 |
15.70 |
44.08 |
42.79 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
|
|
| Basic (in shares) |
2.13 |
4,138,963,794 |
4,190,550,470 |
4,138,282,170 |
4,192,969,201 |
| Diluted (in shares) |
2.13 |
4,143,565,697 |
4,195,924,920 |
4,143,506,821 |
4,199,312,062 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Infosys Limited and subsidiaries
(In crore except equity share data)
|
Condensed Consolidated Statement of Changes in Equity
|
Number
of Shares(1) |
Share
capital |
Share
premium |
Retained
earnings |
Other
reserves(2) |
Capital
redemption
reserve |
Other
components
of equity |
Cash flow
hedge reserve |
Total equity
attributable to equity
holders of the Company |
Non-controlling
interest |
Total equity |
|
Balance as at April 1, 2022
|
4,193,012,929 |
2,098 |
827 |
62,423 |
8,339 |
139 |
1,522 |
2 |
75,350 |
386 |
75,736 |
| Impact on adoption of amendment to IAS 37## |
– |
– |
– |
(19) |
– |
– |
– |
– |
(19) |
– |
(19) |
| |
4,193,012,929 |
2,098 |
827 |
62,404 |
8,339 |
139 |
1,522 |
2 |
75,331 |
386 |
75,717 |
| Changes in equity for the nine months ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
17,967 |
– |
– |
– |
– |
17,967 |
7 |
17,974 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
(17) |
– |
(17) |
– |
(17) |
| Fair value changes on derivatives designated as Cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
(43) |
(43) |
– |
(43) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
705 |
– |
705 |
10 |
715 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
8 |
– |
8 |
– |
8 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
(298) |
– |
(298) |
– |
(298) |
| Total comprehensive income for the period |
– |
– |
– |
17,967 |
– |
– |
398 |
(43) |
18,322 |
17 |
18,339 |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
2,499,692 |
1 |
22 |
– |
– |
– |
– |
– |
23 |
– |
23 |
| Buyback of equity shares (Refer to note 2.18)** |
(25,164,000) |
(13) |
(332) |
(5,820) |
– |
– |
– |
– |
(6,165) |
– |
(6,165) |
| Transaction cost relating to buyback* |
– |
– |
(17) |
(1) |
– |
– |
– |
– |
(18) |
– |
(18) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
– |
(11) |
– |
11 |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
382 |
– |
– |
– |
– |
– |
382 |
– |
382 |
| Income tax benefit arising on exercise of stock options (Refer to note 2.12) |
– |
– |
49 |
– |
– |
– |
– |
– |
49 |
– |
49 |
| Transfer on account of options not exercised |
– |
– |
(2) |
2 |
– |
– |
– |
– |
– |
– |
– |
| Transferred to other reserves |
– |
– |
– |
(2,575) |
2,575 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
869 |
(869) |
– |
– |
– |
– |
– |
– |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(22) |
(22) |
|
Dividends#
|
– |
– |
– |
(13,632) |
– |
– |
– |
– |
(13,632) |
– |
(13,632) |
| Balance as at December 31, 2022 |
4,170,348,621 |
2,086 |
929 |
59,203 |
10,045 |
150 |
1,920 |
(41) |
74,292 |
381 |
74,673 |
|
Balance as at April 1, 2023
|
4,136,387,925 |
2,069 |
1,065 |
60,063 |
10,014 |
169 |
2,032 |
(5) |
75,407 |
388 |
75,795 |
| Changes in equity for the nine months ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
18,264 |
– |
– |
– |
– |
18,264 |
10 |
18,274 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
94 |
– |
94 |
– |
94 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
31 |
– |
31 |
– |
31 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
(17) |
(17) |
– |
(17) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
455 |
– |
455 |
2 |
457 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
107 |
– |
107 |
– |
107 |
| Total comprehensive income for the period |
– |
– |
– |
18,264 |
– |
– |
687 |
(17) |
18,934 |
12 |
18,946 |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
2,810,164 |
1 |
3 |
– |
– |
– |
– |
– |
4 |
– |
4 |
| Transferred on account of options not exercised |
– |
– |
(32) |
32 |
– |
– |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
417 |
– |
– |
– |
– |
– |
417 |
– |
417 |
| Transferred to other reserves |
|
– |
– |
– |
(2,326) |
2,326 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
485 |
(485) |
– |
– |
– |
– |
– |
– |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(2) |
(2) |
| Buyback of shares pertaining to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(18) |
(18) |
|
Dividends#
|
– |
– |
– |
(14,692) |
– |
– |
– |
– |
(14,692) |
– |
(14,692) |
| Balance as at December 31, 2023 |
4,139,198,089 |
2,070 |
1,453 |
61,826 |
11,855 |
169 |
2,719 |
(22) |
80,070 |
380 |
80,450 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| ** | | Including tax on buyback of 1,165 crore for the nine
months ended December 31, 2022. |
| ## | | Impact on account of adoption of amendment to IAS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (1) | | excludes treasury shares of 11,249,465 as at December 31, 2023, 12,172,119 as at April
1, 2023, 12,568,222 as at December 31, 2022, and 13,725,712 as at April 1, 2022, held by consolidated trust. |
| (2) | | 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 Group
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. |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Infosys Limited and subsidiaries
Condensed Consolidated Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
|
Nine months ended December 31, |
| |
Note |
2023 |
2022 |
| Operating activities: |
|
|
|
| Net Profit |
|
18,274 |
17,974 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Depreciation and amortization |
|
3,515 |
3,104 |
| Income tax expense |
2.12 |
7,474 |
6,882 |
| Finance cost |
|
360 |
202 |
| Interest income |
|
(790) |
(847) |
| Exchange differences on translation of assets and liabilities, net |
|
129 |
373 |
| Impairment loss recognised/(reversed) under expected credit loss model |
|
219 |
197 |
| Stock compensation expense |
|
426 |
386 |
| Provision for post sale client support |
|
203 |
200 |
| Other adjustments |
|
1,095 |
489 |
| Changes in working capital |
|
|
|
| Trade receivables and unbilled revenue |
|
(3,555) |
(7,350) |
| Prepayments and other assets |
|
(683) |
(2,498) |
| Trade payables |
|
(39) |
644 |
| Unearned revenue |
|
511 |
789 |
| Other liabilities and provisions |
|
(1,513) |
2,474 |
| Cash generated from operations |
|
25,626 |
23,019 |
| Income taxes paid |
|
(7,146) |
(6,615) |
| Net cash generated by operating activities |
|
18,480 |
16,404 |
| Investing activities: |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(1,647) |
(1,805) |
| Deposits placed with corporation |
|
(737) |
(904) |
| Redemption of deposits placed with corporation |
|
628 |
671 |
| Interest received |
|
750 |
777 |
| Payment for acquisition of business, net of cash acquired |
|
– |
(910) |
| Payment of contingent consideration pertaining to acquisition of business |
|
(101) |
(60) |
| Escrow and other deposits pertaining to Buyback |
|
– |
(592) |
| Payments to acquire Investments |
|
|
|
| - Quoted debt securities |
|
(337) |
(1,831) |
| - Liquid mutual fund units |
|
(53,255) |
(54,567) |
| - Certificates of deposit |
|
(4,219) |
(6,794) |
| - Commercial paper |
|
(4,804) |
(2,338) |
| - Other investments |
|
(11) |
(18) |
| Proceeds on sale of investments |
|
|
|
| - Other investments |
|
18 |
99 |
| - Quoted debt securities |
|
1,429 |
2,190 |
| - Liquid mutual fund units |
|
52,238 |
53,546 |
| - Certificates of deposit |
|
5,981 |
7,605 |
| - Commercial paper |
|
3,599 |
1,300 |
| Other receipts |
|
128 |
57 |
| Net cash (used)/generated in investing activities |
|
(340) |
(3,574) |
| Financing activities: |
|
|
|
| Payment of lease liabilities |
|
(1,448) |
(866) |
| Payment of dividends |
|
(14,695) |
(13,633) |
| Payment of dividends to non-controlling interests of subsidiary |
|
(2) |
(22) |
| Other payments |
|
(528) |
(360) |
| Other receipts |
|
2 |
121 |
| Payment towards buyback of shares pertaining to non controlling interest of subsidiary |
|
(18) |
– |
| Buyback of equity shares including transaction costs and tax on buyback |
|
– |
(3,928) |
| Shares issued on exercise of employee stock options |
|
4 |
23 |
| Net cash used in financing activities |
|
(16,685) |
(18,665) |
| Net increase/(decrease) in cash and cash equivalents |
|
1,455 |
(5,835) |
| Effect of exchange rate changes on cash and cash equivalents |
|
17 |
(50) |
| Cash and cash equivalents at the beginning of the period |
2.1 |
12,173 |
17,472 |
| Cash and cash equivalents at the end of the period |
2.1 |
13,645 |
11,587 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.1 |
376 |
384 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
INFOSYS LIMITED AND SUBSIDIARIES
Overview and Notes to the Interim Condensed Consolidated
Financial Statements
1. Overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is herein after referred to as the "Group".
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics City, Hosur Road, Bengaluru -560100, Karnataka, India. The Company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the Company's Board of Directors on January 11, 2024.
1.2 Basis of preparation of financial statements
These interim consolidated financial statements have
been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board, ("IASB")
under the historical cost convention on accrual basis except for certain financial instruments which have been measured at fair values.
Accordingly, these interim condensed consolidated financial statements do not include all the information required for a complete set
of financial statements. These interim condensed consolidated financial statements should be read in conjunction with the consolidated
financial statements and related notes included in the Company’s consolidated financial statements under IFRS in Indian rupee for
the year ended March 31, 2023. 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.
The material accounting policy information used in
preparation of the audited condensed consolidated interim financial statements have been discussed in the respective notes.
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 interim 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.
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.
1.4 Use of estimates and judgments
The preparation of the interim condensed consolidated
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 interim consolidated 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 and judgments 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 interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to the contract are committed
to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from a fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore, is
acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, 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.
In assessing the realizability of deferred income tax
assets, the 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, the 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. (Refer to Note 2.12)
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS
3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain
the fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted by external
valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements
and intangible assets. These measurements are based on information available at the acquisition date and are based on expectations and
assumptions that have been deemed reasonable by Management. (Refer to Note 2.10 and 2.9.2).
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 asset’s 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. (Refer to Note 2.7).
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 (CGUs) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based
on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current
economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins.
(Refer to note 2.9.1)
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not
yet effective:
| Amendments to IFRS 16 Leases |
Lease Liability in a Sale and Leaseback |
| Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments |
Disclosure regarding supplier finance arrangements |
| Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates |
Lack of Exchangeability |
Amendments to IFRS 16
On September 22, 2022, International Accounting Standards
Board (IASB) has issued amendments to IFRS 16 Leases, which added requirements explaining the subsequent measurement for a sale and leaseback
transaction. These amendments will not change the accounting for leases other than those arising in a sale and leaseback transaction.
The effective date for the adoption of this amendment
is annual reporting periods beginning on or after January 1, 2024, although early adoption is permitted. The Group does not expect this
amendment to have any significant impact in its financial statements.
Amendments to IAS 7 and IFRS 7
On May 25, 2023 IASB has issued amendments to IAS 7
Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosure which requires entities to disclose information that enables users
of financial statement to assess how supplier finance arrangements affect its liabilities and cash flows and to understand the effect
of supplier finance arrangements on an entity’s exposure to liquidity risk and how the entity might be affected if the arrangements
were no longer available to it.
The effective date for adoption of this amendment is
annual periods beginning on or after January 1, 2024, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
Amendments to IAS 21
On August 15, 2023, IASB has issued amendments to IAS
21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require companies to provide more useful information
in their financial statements when a currency cannot be exchanged into another currency. These amendments specify when a currency is exchangeable
into another currency and when it is not and specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
The effective date for adoption of this amendment is
annual periods beginning on or after January 1, 2025, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
2. Notes to the Interim Condensed Consolidated Financial
Statements
2.1 Cash and cash equivalents
Cash and cash equivalents consist of the following:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Cash and bank deposits |
13,645 |
10,026 |
| Deposits with financial institutions |
– |
2,147 |
| Total Cash and cash equivalents |
13,645 |
12,173 |
Cash and cash equivalents as at December 31, 2023 and
March 31, 2023 include restricted cash and bank balances of 376 crore and 362 crore, respectively. The restrictions are
primarily on account of bank balances held by irrevocable trusts controlled by the Company.
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.
2.2 Investments
The carrying value of investments are as follows:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| (i) Current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
– |
150 |
| Fair Value through profit or loss |
|
|
| Liquid mutual fund units |
2,138 |
975 |
| Fair Value through other comprehensive income |
|
|
| Quoted Debt Securities |
1,882 |
1,468 |
| Commercial Papers |
2,045 |
742 |
| Certificate of Deposit |
1,909 |
3,574 |
| Total current investments |
7,974 |
6,909 |
| (ii) Non-current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
1,762 |
1,770 |
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
8,673 |
10,032 |
| Quoted equity securities |
137 |
- |
| Unquoted equity and preference securities |
81 |
196 |
| Fair Value through profit or loss |
|
|
| Target maturity fund units |
422 |
402 |
| Others(1) |
195 |
169 |
| Total non-current investments |
11,270 |
12,569 |
| |
|
|
| Total investments |
19,244 |
19,478 |
| Investments carried at amortized cost |
1,762 |
1,920 |
| Investments carried at fair value through other comprehensive income |
14,727 |
16,012 |
| Investments carried at fair value through profit or loss |
2,755 |
1,546 |
| (1) | | Uncalled capital commitments outstanding as at December 31, 2023 and March 31, 2023 was
81 crore and 92 crore, respectively. |
Refer to note 2.3 for accounting policies on financial
instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
December 31, 2023 |
March 31, 2023 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
2,138 |
975 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
422 |
402 |
| Quoted debt securities- carried at amortized cost |
Quoted price and market observable inputs |
1,947 |
2,148 |
| Quoted debt securities- carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
10,555 |
11,500 |
| Commercial papers- carried at fair value through other comprehensive income |
Market observable inputs |
2,045 |
742 |
| Certificates of deposit- carried at fair value through other comprehensive income |
Market observable inputs |
1,909 |
3,574 |
| Quoted equity securities carried at fair value through other comprehensive income |
Quoted price |
137 |
- |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
81 |
196 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
195 |
169 |
| Total |
|
19,429 |
19,706 |
Note: Certain quoted investments are classified as
Level 2 in the absence of active market for such investments.
2.3 Financial instruments
Accounting Policy
2.3.1 Initial recognition
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 which 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.
2.3.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets at fair value through other
comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets at fair value through
profit or loss (FVTPL)
A financial asset which is not classified in any of
the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration and financial liability under option arrangements recognized
in a business combination which is subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
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
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities, carried
at fair value through profit or loss
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the Group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under IFRS 9, Financial Instruments. Any derivative
that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, 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 interim consolidated statement of comprehensive
income 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.
(ii) Cash flow hedge
The Group 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 interim consolidated statement of comprehensive income. 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 consolidated statement of comprehensive income 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 consolidated statement of comprehensive income.
2.3.3 Derecognition of financial instruments
The Group derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under IFRS 9. A financial liability (or a part of a financial liability) is derecognized from the Group's Balance Sheet when the obligation
specified in the contract is discharged or cancelled or expires.
2.3.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods
of assessing fair value result in general approximation of value, and such value may never actually be realized.
Refer to table 'Financial instruments by category'
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to
the short maturity of these instruments.
2.3.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues 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 Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in the interim consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at December 31, 2023 were as follows:
(In crore)
| (In crore) |
| Particulars |
Amortized cost |
Financial assets / liabilities at fair value through profit or loss |
Financial assets / liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
13,645 |
– |
– |
– |
– |
13,645 |
13,645 |
| Investments (Refer to note 2.2) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
2,138 |
– |
– |
2,138 |
2,138 |
| Target maturity fund units |
– |
– |
422 |
– |
– |
422 |
422 |
| Quoted debt securities |
1,762 |
– |
– |
– |
10,555 |
12,317 |
12,502 (1) |
| Commercial Papers |
– |
– |
– |
– |
2,045 |
2,045 |
2,045 |
| Certificates of deposit |
– |
– |
– |
– |
1,909 |
1,909 |
1,909 |
| Unquoted equity and preference securities |
– |
– |
– |
81 |
– |
81 |
81 |
| Quoted equity securities |
– |
– |
– |
137 |
– |
137 |
137 |
| Unquoted investment others |
– |
– |
195 |
– |
– |
195 |
195 |
| Trade receivables |
30,618 |
– |
– |
– |
– |
30,618 |
30,618 |
| Unbilled revenues (Refer to note 2.17)(3) |
8,807 |
– |
– |
– |
– |
8,807 |
8,807 |
| Prepayments and other assets (Refer to note 2.4) |
5,525 |
– |
– |
– |
– |
5,525 |
5,470 (2) |
| Derivative financial instruments |
– |
– |
62 |
– |
13 |
75 |
75 |
| Total |
60,357 |
– |
2,817 |
218 |
14,522 |
77,914 |
78,044 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,825 |
– |
– |
– |
– |
3,825 |
3,825 |
| Lease liabilities (Refer to note 2.8) |
8,744 |
– |
– |
– |
– |
8,744 |
8,744 |
| Derivative financial instruments |
– |
– |
114 |
– |
30 |
144 |
144 |
Financial liability under option arrangements
(Refer to note 2.5) |
– |
– |
648 |
– |
– |
648 |
648 |
Other liabilities including contingent consideration
(Refer to note 2.5) |
14,892 |
– |
– |
– |
– |
14,892 |
14,892 |
| Total |
27,461 |
– |
762 |
– |
30 |
28,253 |
28,253 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of 55
crore |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
12,173 |
– |
– |
– |
– |
12,173 |
12,173 |
| Investments (Refer to note 2.2) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
975 |
– |
– |
975 |
975 |
| Target maturity fund units |
– |
– |
402 |
– |
– |
402 |
402 |
| Quoted debt securities |
1,920 |
– |
– |
– |
11,500 |
13,420 |
13,648 (1) |
| Commercial Paper |
– |
– |
– |
– |
742 |
742 |
742 |
| Certificates of deposit |
– |
– |
– |
– |
3,574 |
3,574 |
3,574 |
| Unquoted equity and preference securities |
– |
– |
– |
196 |
– |
196 |
196 |
| Unquoted investments others |
– |
– |
169 |
– |
– |
169 |
169 |
| Trade receivables |
25,424 |
– |
– |
– |
– |
25,424 |
25,424 |
| Unbilled revenue (Refer to note 2.17)(3) |
9,502 |
– |
– |
– |
– |
9,502 |
9,502 |
| Prepayments and other assets (Refer to note 2.4) |
5,127 |
– |
– |
– |
– |
5,127 |
5,043 (2) |
| Derivative financial instruments |
– |
– |
69 |
– |
32 |
101 |
101 |
| Total |
54,146 |
– |
1,615 |
196 |
15,848 |
71,805 |
71,949 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,865 |
– |
– |
– |
– |
3,865 |
3,865 |
| Lease liabilities (Refer to note 2.8) |
8,299 |
– |
– |
– |
– |
8,299 |
8,299 |
| Derivative financial instruments |
– |
– |
64 |
– |
14 |
78 |
78 |
Financial liability under option arrangements
(Refer to note 2.5) |
– |
– |
600 |
– |
– |
600 |
600 |
| Other liabilities including contingent consideration (Refer to note 2.5) |
17,359 |
– |
97 |
– |
– |
17,456 |
17,456 |
| Total |
29,523 |
– |
761 |
– |
14 |
30,298 |
30,298 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of 84
crore |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
For trade receivables, trade payables and other assets
and payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at December 31, 2023 is as follows:
(In crore)
| Particulars |
As at December 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.2) |
|
|
|
|
| Investments in liquid mutual fund units |
2,138 |
2,138 |
– |
– |
| Investments in target maturity fund units |
422 |
422 |
– |
– |
| Investments in quoted debt securities |
12,502 |
11,460 |
1,042 |
– |
| Investments in unquoted equity and preference securities |
81 |
– |
– |
81 |
| Investments in quoted equity securities |
137 |
137 |
– |
– |
| Investments in certificates of deposit |
1,909 |
– |
1,909 |
– |
| Investments in commercial papers |
2,045 |
– |
2,045 |
– |
| Investments in unquoted investments others |
195 |
– |
– |
195 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts |
75 |
– |
75 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts |
144 |
– |
144 |
– |
| Financial liability under option arrangements (Refer to note 2.5)(1) |
648 |
– |
– |
648 |
| (1) | | Discount rate ranges from 10% to 17% |
During the nine months ended December 31, 2023, quoted
debt securities of 1,679 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price and quoted debt securities of 147 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since
these were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2023 was as follows:
(In crore)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.2) |
|
|
|
|
| Investments in liquid mutual fund units |
975 |
975 |
– |
– |
| Investments in target maturity fund units |
402 |
402 |
– |
– |
| Investments in quoted debt securities |
13,648 |
10,701 |
2,947 |
– |
| Investments in unquoted equity and preference securities |
196 |
– |
– |
196 |
| Investments in certificates of deposit |
3,574 |
– |
3,574 |
– |
| Investments in commercial papers |
742 |
– |
742 |
– |
| Investments in unquoted investments others |
169 |
– |
– |
169 |
| Others |
|
|
|
|
| Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts |
101 |
– |
101 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts |
78 |
– |
78 |
– |
| Financial liability under option arrangements (Refer to note 2.5)(1) |
600 |
– |
– |
600 |
| Liability towards contingent consideration (Refer to note 2.5)(1) |
97 |
– |
– |
97 |
| (1) | | Discount rate ranges from 10% to 15% |
During the year ended March 31, 2023, quoted debt securities
of 383 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and
quoted debt securities of 1,611 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
quoted debt securities, certificates of deposit, commercial paper, quoted bonds issued by government and quasi-government organizations.
The Group invests after considering counterparty risks based on multiple criteria including Tier I Capital, Capital Adequacy Ratio, Credit
Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per Group’s
risk management program.
2.4 Prepayments and other assets
Prepayments and other assets consist of the following:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Rental deposits(1) |
57 |
32 |
| Security deposits(1) |
11 |
10 |
| Loans to employees(1) |
238 |
289 |
| Prepaid expenses(2) |
3,630 |
2,745 |
| Interest accrued and not due(1) |
383 |
488 |
| Withholding taxes and others(2) |
2,961 |
3,268 |
| Advance payments to vendors for supply of goods(2) |
78 |
202 |
| Deposit with corporations(1)(3) |
2,535 |
2,348 |
| Deferred contract cost(2) |
|
|
| Cost of obtaining a contract (2)(4) |
256 |
853 |
| Cost of fulfillment (2) |
331 |
175 |
| Net investment in sublease of right of use asset(1) |
6 |
53 |
| Other non financial assets (2) |
221 |
261 |
| Other financial assets(1) |
902 |
255 |
| Total Current prepayment and other assets |
11,609 |
10,979 |
| Non-current |
|
|
| Loans to employees(1) |
35 |
39 |
| Deposit with corporations(1)(3) |
18 |
96 |
| Rental deposits(1) |
224 |
240 |
| Security deposits(1) |
47 |
47 |
| Withholding taxes and others(2) |
685 |
684 |
| Deferred contract cost(2) |
|
|
| Cost of obtaining a contract (2)(4) |
147 |
191 |
| Cost of fulfillment (2) |
717 |
652 |
| Prepaid expenses(2) |
346 |
332 |
| Net investment in sublease of right of use asset(1) |
4 |
305 |
| Defined benefit plan assets(2) |
32 |
36 |
| Other non financial assets(2) |
20 |
– |
| Other financial assets(1) |
1,065 |
925 |
| Total Non- current prepayment and other assets |
3,340 |
3,547 |
| Total prepayment and other assets |
14,949 |
14,526 |
| (1) Financial assets carried at amortized cost |
5,525 |
5,127 |
Withholding taxes and others primarily consist of input
tax credits and Cenvat/VAT recoverable from Government of India.
| (3) | | Deposit with corporations represents amounts deposited to settle certain employee-related
obligations as and when they arise during the normal course of business. |
| (4) | | Includes technology assets taken over by the Group from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Group in
accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total
contract value and accounted as Deferred contract cost. The Group has entered into financing arrangements with a third party for these
assets. As at December 31, 2023, the financial liability pertaining to such arrangements amounts to 356
crore. (Refer to note 2.5) |
2.5 Other liabilities
Other liabilities comprise the following:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Accrued compensation to employees(1) |
3,774 |
4,174 |
| Accrued expenses(1) |
7,763 |
7,802 |
| Withholding taxes and others(3) |
3,506 |
3,632 |
| Retention money(1) |
19 |
20 |
| Liabilities of controlled trusts(1) |
211 |
211 |
| Deferred income - government grants(3) |
6 |
29 |
| Accrued defined benefit liability (3) |
5 |
4 |
| Liability towards contingent consideration(2) |
– |
97 |
| Capital Creditors(1) |
221 |
674 |
| Other non-financial liabilities (3) |
– |
2 |
| Other financial liabilities(1)(4) |
593 |
2,503 |
| Financial liability under option arrangements(2)# |
551 |
600 |
| Total current other liabilities |
16,649 |
19,748 |
| Non-current |
|
|
| Accrued expenses(1) |
2,204 |
1,628 |
| Accrued defined benefit liability (3) |
296 |
445 |
| Accrued compensation to employees(1) |
13 |
5 |
| Deferred income - government grants(3) |
69 |
43 |
| Deferred income(3) |
5 |
6 |
| Other financial liabilities(1)(4) |
94 |
342 |
| Financial liability under option arrangements(2)# |
97 |
– |
| Other non-financial liabilities(3) |
7 |
6 |
| Total non-current other liabilities |
2,785 |
2,475 |
| Total other liabilities |
19,434 |
22,223 |
| (1) Financial liability carried at amortized cost |
14,892 |
17,359 |
| (2) Financial liability carried at fair value through profit or loss |
648 |
697 |
| (3) | | Non financial liabilities |
| (4) | | Deferred contract cost (Refer to note 2.4) includes technology assets taken over by the Group
from a customer as a part of transformation project which is not considered as distinct goods or services and the control related to
the assets is not transferred to the Group in accordance with IFRS 15 - Revenue from contract with customers. Accordingly, the same has
been considered as a reduction to the total contract value and accounted as Deferred contract cost. The Group has entered into financing
arrangements with a third party for these assets. As at December 31, 2023, the financial liability pertaining to such arrangements amounts
to 356 crore. |
# Represents liability related to options issued by
the Group over the non-controlling interests in its subsidiaries
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 and cost of third party software and hardware.
2.6 Provisions and other contingencies
Accounting Policy
2.6.1 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.
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support on 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. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete 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.
Provision for post sales client support and other
provisions
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Post sales client support and other provisions |
1,827 |
1,307 |
| Total provisions |
1,827 |
1,307 |
Provision for post sales client support 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 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the interim consolidated statement of comprehensive income.
As at December 31, 2023 and March 31, 2023 claims against
the Group, not acknowledged as debts, (excluding demands from income tax authorities - Refer to note 2.12) amounted to 759 crore
and 700 crore, respectively.
2.6.2 McCamish Cybersecurity incident
In November 2023, Infosys McCamish Systems (McCamish)
a step down subsidiary of Infosys Limited experienced a cybersecurity incident resulting in the non-availability of certain applications
and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of
and response to the incident and remediation and restoration of impacted applications and systems. By December 31, 2023, McCamish, with
external specialists’ assistance, substantially remediated and restored the affected applications and systems.
Loss of contracted revenues and costs incurred with
respect to remediations, restoration, communication efforts and others amounted to approximately 250 crore ($30 million).
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. On the basis of analysis conducted by the cybersecurity firm, McCamish believes that
certain data was exfiltrated by unauthorized third parties during the incident and this exfiltrated data included certain customer data.
McCamish has engaged a third-party e- discovery vendor in assessing the extent and nature of such data. This review process is ongoing.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time.
Infosys had previously communicated the occurence of
this cybersecurity incident to BSE Limited, National Stock Exchange of India Limited, New York Stock Exchange and to United States Securities
and Exchange Commission on November 3, 2023.
2.6.3 Legal proceedings
The Group is subject to legal proceedings and claims,
which have arisen in the ordinary course of business. The Group’s management reasonably expects that these legal actions, when ultimately
concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.7 Property, plant and equipment
Accounting Policy
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 the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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 |
22-25 years |
| Plant and machinery(1) |
5 years |
| Computer equipment |
3-5 years |
| Furniture and fixtures |
5 years |
| Vehicles |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
(1) Includes solar plant with a useful
life of 25 years
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet date and the cost of assets not ready 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.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset.
Impairment
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 Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in net profit in the interim condensed consolidated 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 consolidated 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 depreciation) had no impairment loss been recognized for the asset in prior
years.
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at October 1, 2023 |
1,429 |
11,527 |
5,201 |
8,496 |
3,421 |
45 |
30,119 |
| Additions |
1 |
4 |
40 |
203 |
7 |
1 |
256 |
| Deletions** |
– |
(55) |
(43) |
(222) |
(65) |
(1) |
(386) |
| Translation difference |
– |
22 |
5 |
20 |
15 |
– |
62 |
| Gross carrying value as at December 31, 2023 |
1,430 |
11,498 |
5,203 |
8,497 |
3,378 |
45 |
30,051 |
| Accumulated depreciation as at October 1, 2023 |
– |
(4,749) |
(4,040) |
(6,132) |
(2,614) |
(42) |
(17,577) |
| Depreciation |
– |
(114) |
(114) |
(340) |
(97) |
(1) |
(666) |
| Accumulated depreciation on deletions** |
– |
55 |
43 |
218 |
64 |
1 |
381 |
| Translation difference |
– |
(6) |
(4) |
(13) |
(13) |
– |
(36) |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,814) |
(4,115) |
(6,267) |
(2,660) |
(42) |
(17,898) |
| Capital work-in progress as at October 1, 2023 |
|
|
|
|
|
|
637 |
| Carrying value as at October 1, 2023 |
1,429 |
6,778 |
1,161 |
2,364 |
807 |
3 |
13,179 |
| Capital work-in progress as at December 31, 2023 |
|
|
|
|
|
|
717 |
| Carrying value as at December 31, 2023 |
1,430 |
6,684 |
1,088 |
2,230 |
718 |
3 |
12,870 |
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2022 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at October 1, 2022 |
1,429 |
11,328 |
5,050 |
8,897 |
3,328 |
44 |
30,076 |
| Additions |
– |
165 |
132 |
348 |
120 |
– |
765 |
| Deletions* |
– |
– |
(7) |
(393) |
(18) |
– |
(418) |
| Translation difference |
– |
37 |
9 |
43 |
25 |
– |
114 |
| Gross carrying value as at December 31, 2022 |
1,429 |
11,530 |
5,184 |
8,895 |
3,455 |
44 |
30,537 |
| Accumulated depreciation as at October 1, 2022 |
– |
(4,308) |
(3,864) |
(6,360) |
(2,587) |
(38) |
(17,157) |
| Depreciation |
– |
(109) |
(119) |
(343) |
(93) |
(1) |
(665) |
| Accumulated depreciation on deletions* |
– |
– |
7 |
392 |
17 |
– |
416 |
| Translation difference |
– |
(8) |
(8) |
(28) |
(20) |
– |
(64) |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,425) |
(3,984) |
(6,339) |
(2,683) |
(39) |
(17,470) |
| Capital work-in progress as at October 1, 2022 |
|
|
|
|
|
|
483 |
| Carrying value as at October 1, 2022 |
1,429 |
7,020 |
1,186 |
2,537 |
741 |
6 |
13,402 |
| Capital work-in progress as at December 31, 2022 |
|
|
|
|
|
|
350 |
| Carrying value as at December 31, 2022 |
1,429 |
7,105 |
1,200 |
2,556 |
772 |
5 |
13,417 |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,429 |
11,562 |
5,169 |
8,519 |
3,365 |
45 |
30,089 |
| Additions |
1 |
13 |
148 |
586 |
118 |
1 |
867 |
| Deletions** |
– |
(55) |
(113) |
(622) |
(111) |
(1) |
(902) |
| Translation difference |
– |
(22) |
(1) |
14 |
6 |
– |
(3) |
| Gross carrying value as at December 31, 2023 |
1,430 |
11,498 |
5,203 |
8,497 |
3,378 |
45 |
30,051 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,535) |
(3,877) |
(5,826) |
(2,465) |
(40) |
(16,743) |
| Depreciation |
– |
(339) |
(349) |
(1,051) |
(297) |
(3) |
(2,039) |
| Accumulated depreciation on deletions** |
– |
55 |
112 |
617 |
107 |
1 |
892 |
| Translation difference |
– |
5 |
(1) |
(7) |
(5) |
– |
(8) |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,814) |
(4,115) |
(6,267) |
(2,660) |
(42) |
(17,898) |
| Capital work-in progress as at April 1, 2023 |
|
|
|
|
|
|
447 |
| Carrying value as at April 1, 2023 |
1,429 |
7,027 |
1,292 |
2,693 |
900 |
5 |
13,793 |
| Capital work-in progress as at December 31, 2023 |
|
|
|
|
|
|
717 |
| Carrying value as at December 31, 2023 |
1,430 |
6,684 |
1,088 |
2,230 |
718 |
3 |
12,870 |
** During the three months and nine months ended December
31, 2023, certain assets which were not in use having gross book value of 137 crore (net book value: Nil) and 594 crore
(net book value: Nil), respectively were retired.
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2022 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2022 |
1,429 |
11,224 |
4,950 |
8,527 |
3,201 |
44 |
29,375 |
| Additions - Business Combination (Refer to Note 2.10) |
– |
– |
5 |
6 |
3 |
– |
14 |
| Additions |
– |
308 |
267 |
1,016 |
283 |
1 |
1,875 |
| Deletions* |
– |
– |
(43) |
(686) |
(49) |
(1) |
(779) |
| Translation difference |
– |
(2) |
5 |
32 |
17 |
– |
52 |
| Gross carrying value as at December 31, 2022 |
1,429 |
11,530 |
5,184 |
8,895 |
3,455 |
44 |
30,537 |
| Accumulated depreciation as at April 1, 2022 |
– |
(4,100) |
(3,677) |
(6,034) |
(2,452) |
(37) |
(16,300) |
| Depreciation |
– |
(325) |
(345) |
(968) |
(266) |
(3) |
(1,907) |
| Accumulated depreciation on deletions* |
– |
– |
42 |
685 |
49 |
1 |
777 |
| Translation difference |
– |
– |
(4) |
(22) |
(14) |
– |
(40) |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,425) |
(3,984) |
(6,339) |
(2,683) |
(39) |
(17,470) |
| Capital work-in progress as at April 1, 2022 |
|
|
|
|
|
|
504 |
| Carrying value as at April 1, 2022 |
1,429 |
7,124 |
1,273 |
2,493 |
749 |
7 |
13,579 |
| Capital work-in progress as at December 31, 2022 |
|
|
|
|
|
|
350 |
| Carrying value as at December 31, 2022 |
1,429 |
7,105 |
1,200 |
2,556 |
772 |
5 |
13,417 |
* During the three months and nine months ended December
31, 2022, certain assets which were not in use having gross book value of 275 crore (net book value: Nil) and 504 crore
(net book value: Nil), respectively were retired.
The aggregate depreciation expense is included in cost
of sales in the interim condensed consolidated statement of comprehensive income.
Repairs and maintenance costs are recognized in the
interim condensed consolidated statement of comprehensive income when incurred.
The Group had contractual commitments for capital expenditure
primarily comprising of commitments for infrastructure facilities and computer equipment aggregating to 727 crore and 959
crore as at December 31, 2023 and March 31, 2023, respectively.
2.8 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist
of leases for land, buildings and computers. The Group assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
(1) the contract involves the use of an identified asset (2) the Group has substantially all of the economic benefits from use of the
asset through the period of the lease and (3) the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of October 1, 2023 |
616 |
3,811 |
15 |
2,508 |
6,950 |
| Additions* |
– |
7 |
5 |
521 |
533 |
| Deletions |
(10) |
(49) |
(1) |
(133) |
(193) |
| Impairment# |
– |
(88) |
– |
– |
(88) |
| Depreciation |
(1) |
(180) |
(2) |
(223) |
(406) |
| Translation difference |
2 |
26 |
1 |
67 |
96 |
| Balance as of December 31, 2023 |
607 |
3,527 |
18 |
2,740 |
6,892 |
* Net of adjustments on account of modifications
# included under other expenses. Refer note 2.19
Following are the changes in the carrying value of
right-of-use assets for the three months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of October 1, 2022 |
622 |
3,843 |
14 |
1,146 |
5,625 |
| Additions* |
– |
133 |
2 |
1,010 |
1,145 |
| Deletions |
– |
(10) |
– |
(97) |
(107) |
| Depreciation |
(1) |
(170) |
(2) |
(162) |
(335) |
| Translation difference |
3 |
51 |
1 |
97 |
152 |
| Balance as of December 31, 2022 |
624 |
3,847 |
15 |
1,994 |
6,480 |
* Net of adjustments on account of modifications
and lease incentives
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
| Additions* |
– |
333 |
10 |
1,496 |
1,839 |
| Deletions |
(10) |
(89) |
(1) |
(540) |
(640) |
| Impairment# |
– |
(88) |
– |
– |
(88) |
| Depreciation |
(5) |
(543) |
(7) |
(617) |
(1,172) |
| Translation difference |
(1) |
18 |
1 |
53 |
71 |
| Balance as of December 31, 2023 |
607 |
3,527 |
18 |
2,740 |
6,892 |
* Net of adjustments on account of modifications
and lease incentives
# included under other expenses. Refer
note 2.19
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
| Additions* |
– |
619 |
6 |
2,004 |
2,629 |
| Deletions |
– |
(12) |
– |
(250) |
(262) |
| Depreciation |
(4) |
(500) |
(7) |
(320) |
(831) |
| Translation difference |
– |
29 |
– |
92 |
121 |
| Balance as of December 31, 2022 |
624 |
3,847 |
15 |
1,994 |
6,480 |
* Net of adjustments on account of modifications
and lease incentives
The aggregate depreciation expense on ROU assets is
included in cost of sales in the interim condensed consolidated statement of comprehensive income.
The following is the break-up of current and non-current
lease liabilities as of December 31, 2023 and March 31, 2023:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current lease liabilities |
2,074 |
1,242 |
| Non-current lease liabilities |
6,670 |
7,057 |
| Total |
8,744 |
8,299 |
2.9 Goodwill and Intangible assets
2.9.1 Goodwill
Accounting Policy
Goodwill represents the purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the purchase consideration, the
fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement
of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition and
which represents the lowest level at which goodwill is monitored for internal management purposes. 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. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Carrying value at the beginning |
7,248 |
6,195 |
| Goodwill on acquisitions |
– |
630 |
| Translation differences |
187 |
423 |
| Carrying value at the end |
7,435 |
7,248 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition.
2.9.2 Intangible assets
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to preparing
the asset for its intended use.
Impairment
Intangible assets 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) had no impairment loss been recognized for the asset in prior years.
2.10 Business combinations
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the Interim Condensed Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under common
control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and
liabilities assumed.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized.
Transaction costs that the Group incurs in connection
with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are
expensed as incurred.
Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
2.11 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in net profit in the interim condensed consolidated statement of comprehensive income on a straight-line basis
over the requisite service period for each separately vesting portion of the award as if the award was in-substance, multiple awards with
a corresponding increase to share premium.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan):
On June 22, 2019 pursuant to the approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000
equity shares. To implement the 2019 Plan , up to 45,000,000 equity shares may be issued by way of secondary acquisition of shares by
the Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement
of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters
will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan):
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Stock Incentive Compensation Plan. The maximum number of shares under the 2015 plan
shall not exceed 24,038,883 equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as
at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers mentioned above are further adjusted
with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). 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 the market price as on the date of grant.
Controlled trust holds 11,249,465 and 12,172,119 shares
as at December 31, 2023 and March 31, 2023, respectively under the 2015 plan, out of which 200,000 equity shares each have been earmarked
for welfare activities of the employees as at December 31, 2023 and March 31, 2023.
The following is the summary of grants made during
the three months and nine months ended December 31, 2023 and December 31, 2022:
| |
2019 Plan |
2015 Plan |
| Particulars |
Three months ended
December 31, |
Nine months ended December 31, |
Three months ended
December 31, |
Nine months ended
December 31, |
| |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
| Equity settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
35,990 |
– |
114,271 |
176,893 |
88,040 |
– |
421,636 |
287,325 |
| Employees other than KMP |
464,260 |
3,814 |
464,260 |
374,774 |
1,169,660 |
48,050 |
1,197,940 |
48,050 |
| |
500,250 |
3,814 |
578,531 |
551,667 |
1,257,700 |
48,050 |
1,619,576 |
335,375 |
| Cash settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
– |
– |
– |
– |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| Total Grants |
500,250 |
3,814 |
578,531 |
551,667 |
1,265,650 |
48,050 |
1,627,526 |
335,375 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 34.75 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain performance targets. Accordingly, 2,72,026 performance based RSU’s were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain environment, social and governance milestones as determined by the Board. Accordingly, 15,656 performance based RSU’s
were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board. Accordingly, 39,140 performance based RSU’s
were granted effective May 2, 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of December 31, 2023, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with IFRS 2, Share
based payments. The grant date for this purpose in accordance with IFRS 2, Share based payments is July 1, 2022.
Under the 2019 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2024 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 78,281 performance based RSU’s
were granted effective May 2, 2023.
Other KMP
Under the 2015 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved 88,040 time based RSUs and 6,774 performance based RSUs
to other KMP under the 2015 plan. The time based RSUs will vest over three years and performance based RSUs will vest over three years
based on certain performance targets.
Under the 2019 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved performance based grants of 35,990 RSUs to other KMP under
the 2019 plan. These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended
December 31, |
Nine months ended
December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Granted to: |
|
|
|
|
| KMP |
14 |
– |
51 |
41 |
| Employees other than KMP |
133 |
117 |
375 |
345 |
| Total (1) |
147 |
117 |
426 |
386 |
| (1) Cash settled stock compensation expense included in the above |
2 |
5 |
9 |
4 |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options 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 options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
Fiscal 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,321 |
16.41 |
1,525 |
18.08 |
| Exercise price ()/ ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-31 |
25-33 |
23-32 |
27-34 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
4-5 |
5-7 |
2-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,151 |
14.31 |
1,210 |
13.69 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/Stock
option.
2.12 Income Taxes
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the Interim Condensed Consolidated Statement of Comprehensive income except to
the extent that it relates to items recognized directly in equity, in which case it is recognized in equity or 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; deferred tax assets and deferred 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. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the interim consolidated statement
of comprehensive income comprises:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Current taxes |
|
|
|
|
| Domestic taxes |
1,858 |
1,598 |
5,325 |
5,142 |
| Foreign taxes |
561 |
597 |
1,891 |
1,885 |
| |
2,419 |
2,195 |
7,216 |
7,027 |
| Deferred taxes |
|
|
|
|
| Domestic taxes |
174 |
242 |
548 |
267 |
| Foreign taxes |
(87) |
(92) |
(290) |
(412) |
| |
87 |
150 |
258 |
(145) |
| Income tax expense |
2,506 |
2,345 |
7,474 |
6,882 |
Income tax expense for the three months ended December
31, 2023 and December 31, 2022 includes reversal (net of provisions) of 64 crores and 76 crores, respectively. Income tax
expense for the nine months ended December 31, 2023 and December 31, 2022 includes reversal (net of provisions) of 136 crores and
36 crores, respectively. These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months and nine months
ended December 31, 2023 and December 31, 2022 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at December 31, 2023, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to 4,307 crore. As at March 31, 2023, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to 4,062 crore.
The amount paid to statutory authorities against the
tax claims amounted to 6,275 crore and 6,528 crore as at December 31, 2023 and March 31, 2023, respectively.
The claims against the group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances
such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees
under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises
held as liable for withholding of taxes. These matters are pending before various Income Tax Authorities and the management including
its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on
the Group's financial position and results of operations.
2.13 Basic and diluted shares used in computing
earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group 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 Group 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 at 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.
2.14 Related party transactions
Refer to note 2.14 "Related party transactions"
in the Company’s 2023 Consolidated financial statements under IFRS in Indian rupee for the full names and other details of the Company's
subsidiaries and controlled trusts.
During the nine months ended December 31, 2023, the
following are the changes in the subsidiaries.
-
Infosys Americas Inc., (Infosys Americas) a Wholly-owned
subsidiary of Infosys Limited is liquidated effective July 14, 2023.
-
oddity GmbH renamed as WongDoody GmbH.
-
On September 29, 2023, oddity space GmbH, oddity waves
GmbH, oddity jungle GmbH, oddity group services GmbH and oddity code GmbH merged into WongDoody GmbH and oddity code d.o.o which was formerly
a subsidiary of oddity code Gmbh has become a subsidiary of Wongdoody Gmbh (formerly known as oddity GmbH).
-
On September 1, 2023 Infosys Ltd. acquired 100% of voting
interests in Danske IT and Support Services India Private Limited (“Danske IT”).
-
Infosys BPM Canada Inc, a Wholly-owned subsidiary of Infosys
BPM Limited was incorporated on August 11, 2023.
-
Kaleidoscope Prototyping LLC, a Wholly-owned subsidiary
of Kaleidoscope Animations is liquidated effective November 1, 2023.
-
oddity Code d.o.o renamed as WongDoody d.o.o
-
On November 24, 2023 Stater Participations B.V (Wholly-owned
subsidiary of Stater N.V) merged with Stater N.V and Stater Belgium N.V./S.A which was formerly a wholly owned subsidiary of Stater Participations
B.V. became a wholly owned subsidiary of Stater N.V.
Change in key management personnel
The following are the changes in the key management
personnel:
Independent directors:
-
Helene Auriol Potier (appointed as independent director effective May 26, 2023)
-
Nitin Paranjpe (appointed as an additional and independent director effective January 1,
2024)
Executive Officers:
-
Mohit Joshi (resigned as President effective March 11,
2023 and was on leave till June 9, 2023 which was his last date with the company)
-
Nilanjan Roy (resigned as Chief Financial Officer of the
Company effective March 31, 2024)
-
Jayesh Sanghrajka (appointed as Chief Financial Officer
effective April 1, 2024)
Transactions with key management personnel
The table below describes the related party transactions
with key management personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Salaries and other short term employee benefits to whole-time directors and executive officers(1)(2) |
24 |
12 |
82 |
86 |
| Commission and other benefits to non-executive/ independent directors |
4 |
5 |
12 |
12 |
| Total |
28 |
17 |
94 |
98 |
| (1) | | Total employee stock compensation expense for the three months ended December 31, 2023
and December 31, 2022, includes a charge of 14 crore and less than a crore respectively, towards key
management personnel. For the nine months ended December 31, 2023 and December 31, 2022, includes a charge of 51
crore and 41 crore respectively, towards key management personnel. (Refer to note 2.11). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.15 Segment reporting
IFRS 8 Operating Segments 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. The Chief Operating Decision Maker (CODM) evaluates the Group's performance and allocates resources
based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along business
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 accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represents the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
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 Infosys Public Services and revenue generated from customers located in India, Japan and China and other enterprises
in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The 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. The 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.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.16 Revenue from operations.
2.15.1 Business segments
Three months ended December 31, 2023 and December
31, 2022
(In crore)
| Particulars |
Financial
Services(1)* |
Retail(2) |
Communication(3) |
Energy, Utilities,
Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other
segments(5) |
Total |
| Revenue |
10,783 |
5,649 |
4,421 |
5,121 |
5,786 |
2,985 |
2,954 |
1,122 |
38,821 |
| |
11,235 |
5,480 |
4,710 |
4,957 |
5,099 |
3,095 |
2,695 |
1,047 |
38,318 |
| Identifiable operating expenses |
6,504 |
2,974 |
2,781 |
2,751 |
3,787 |
1,745 |
1,703 |
675 |
22,920 |
| |
6,549 |
2,837 |
2,858 |
2,594 |
3,206 |
1,786 |
1,580 |
746 |
22,156 |
| Allocated expenses |
2,019 |
960 |
780 |
920 |
889 |
482 |
485 |
229 |
6,764 |
| |
2,008 |
997 |
810 |
906 |
858 |
496 |
431 |
289 |
6,795 |
| Segment Profit |
2,260 |
1,715 |
860 |
1,450 |
1,110 |
758 |
766 |
218 |
9,137 |
| |
2,678 |
1,646 |
1,042 |
1,457 |
1,035 |
813 |
684 |
12 |
9,367 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
1,176 |
| |
|
|
|
|
|
|
|
|
1,125 |
| Operating profit |
|
|
|
|
|
|
|
|
7,961 |
| |
|
|
|
|
|
|
|
|
8,242 |
| Other income, net (Refer to note 2.19) |
|
|
|
|
|
|
|
|
789 |
| |
|
|
|
|
|
|
|
|
769 |
| Finance cost |
|
|
|
|
|
|
|
|
131 |
| |
|
|
|
|
|
|
|
|
80 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
8,619 |
| |
|
|
|
|
|
|
|
|
8,931 |
| Income tax expense |
|
|
|
|
|
|
|
|
2,506 |
| |
|
|
|
|
|
|
|
|
2,345 |
| Net profit |
|
|
|
|
|
|
|
|
6,113 |
| |
|
|
|
|
|
|
|
|
6,586 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
1,176 |
| |
|
|
|
|
|
|
|
|
1,125 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
|
|
|
Nine months ended December 31, 2023 and December
31, 2022
(In crore)
| Particulars |
Financial
Services(1)* |
Retail(2) |
Communication(3) |
Energy, Utilities,
Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other
segments(5) |
Total |
| Revenue |
32,149 |
17,075 |
13,325 |
14,966 |
16,710 |
9,095 |
8,753 |
3,675 |
115,748 |
| |
32,945 |
15,667 |
13,675 |
13,714 |
13,957 |
8,878 |
7,404 |
3,086 |
109,326 |
| Identifiable operating expenses |
18,740 |
9,113 |
8,038 |
8,121 |
10,941 |
5,237 |
5,077 |
2,286 |
67,553 |
| |
18,829 |
8,023 |
8,488 |
7,309 |
9,245 |
5,225 |
4,320 |
2,100 |
63,539 |
| Allocated expenses |
6,025 |
2,944 |
2,408 |
2,754 |
2,653 |
1,509 |
1,410 |
851 |
20,554 |
| |
5,873 |
2,883 |
2,386 |
2,552 |
2,500 |
1,444 |
1,223 |
794 |
19,655 |
| Segment Profit |
7,384 |
5,018 |
2,879 |
4,091 |
3,116 |
2,349 |
2,266 |
538 |
27,641 |
| |
8,243 |
4,761 |
2,801 |
3,853 |
2,212 |
2,209 |
1,861 |
192 |
26,132 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
3,515 |
| |
|
|
|
|
|
|
|
|
3,104 |
| Operating profit |
|
|
|
|
|
|
|
|
24,126 |
| |
|
|
|
|
|
|
|
|
23,028 |
| Other income, net (Refer to note 2.19) |
|
|
|
|
|
|
|
|
1,982 |
| |
|
|
|
|
|
|
|
|
2,030 |
| Finance cost |
|
|
|
|
|
|
|
|
360 |
| |
|
|
|
|
|
|
|
|
202 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
25,748 |
| |
|
|
|
|
|
|
|
|
24,856 |
| Income tax expense |
|
|
|
|
|
|
|
|
7,474 |
| |
|
|
|
|
|
|
|
|
6,882 |
| Net profit |
|
|
|
|
|
|
|
|
18,274 |
| |
|
|
|
|
|
|
|
|
17,974 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
3,515 |
| |
|
|
|
|
|
|
|
|
3,104 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
|
|
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
| * | | Includes impact on account of McCamish cybersecurity incident. Refer note 2.6.2. |
2.15.2 Significant clients
No client individually accounted for more than 10%
of the revenues for the three months and nine months ended December 31, 2023 and December 31, 2022, respectively.
2.16 Revenue from Operations
Accounting Policy
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-timeframe basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in
estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service
the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably
on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is
acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on
a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored
regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient
to recover the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in
its Interim Condensed Consolidated Statement of Comprehensive Income.
Revenues for the three months and nine months ended
December 31, 2023 and December 31, 2022 is as follows:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenue from software services |
36,767 |
35,870 |
109,221 |
102,375 |
| Revenue from products and platforms |
2,054 |
2,448 |
6,527 |
6,951 |
| Total revenue from operations |
38,821 |
38,318 |
115,748 |
109,326 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms including Finacle – core banking solution, Edge Suite of products, Panaya platform, Infosys Equinox, Infosys Helix,
Infosys Applied AI, Infosys Cortex, Stater digital platform and Infosys McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer note 2.15). The table below presents disaggregated revenues from contracts with customers by geography
and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues
and cash flows are affected by industry, market and other economic factors.
For the three months and nine months ended December
31, 2023 and December 31, 2022
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenues by Geography* |
|
|
|
|
| North America |
22,911 |
23,756 |
69,805 |
67,881 |
| Europe |
10,934 |
9,895 |
31,407 |
27,587 |
| India |
920 |
927 |
3,048 |
2,880 |
| Rest of the world |
4,056 |
3,740 |
11,488 |
10,978 |
| Total |
38,821 |
38,318 |
115,748 |
109,326 |
* Geographical revenues are based on
the domicile of customer.
The percentage of revenue from fixed-price contracts
for the three months ended December 31, 2023 and December 31, 2022 is 55% and 53%, respectively. The percentage of revenue from fixed-price
contracts for the nine months ended December 31, 2023 and December 31, 2022 is 53% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s Receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore, unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset
because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the consolidated statement of balance sheet.
2.17 Unbilled Revenue
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Unbilled financial asset (1) |
8,807 |
9,502 |
| Unbilled non financial asset (2) |
6,097 |
7,236 |
| Total |
14,904 |
16,738 |
| (1) | | Right to consideration is unconditional and is due only after a passage of time. |
| (2) | | Right to consideration is dependent on completion of contractual milestones. |
2.18 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity,
net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from Share premium.
Description of reserves
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Share premium
The amount received in excess of the par value of equity
shares has been classified as share premium. Additionally, share-based compensation recognized in net profit in the interim condensed
consolidated statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback
from share premium account.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been 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.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Other components of equity
Other components of equity include currency translation,
re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive
income, changes on fair valuation of investments, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the net profit in the interim condensed consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
2.18.1 Dividend
The final dividend on shares is 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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay / distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders in accordance with Companies Act 2013 is as follows:
(In )
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interim dividend for fiscal 2024 |
18.00 |
– |
18.00 |
– |
| Final dividend for fiscal 2023 |
– |
– |
17.50 |
– |
| Interim dividend for fiscal 2023 |
– |
16.50 |
– |
16.50 |
| Final dividend for fiscal 2022 |
– |
– |
– |
16.00 |
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share for the financial year ended March 31, 2023. The same was approved
by the shareholders at the Annual General Meeting (AGM) of the Company held on June 28, 2023 which resulted in a net cash outflow of 7,242
crore (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on October
12, 2023 declared an interim dividend of 18/- per equity share which resulted in a net cash outflow of 7,450 crore (excluding
dividend paid on treasury shares).
2.18.2 Capital allocation policy
Effective fiscal 2020, the company expects to return
approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual dividends and/or share
buyback and/or special dividends, subject to applicable laws and requisite approvals, if any. Free cash flow is defined as net cash provided
by operating activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback
include applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of December 31, 2023, the Company has only one class of equity shares
and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.18.3 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 11,249,465 shares and 12,172,119 shares were held by controlled trust, as at December
31, 2023 and March 31, 2023, respectively.
2.19 Break-up of expenses and other income, net
a. Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement and/or a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit
method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
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 and are not reclassified to profit or loss in subsequent periods. 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 is recognized in net profit in the Consolidated Statement
of Comprehensive Income.
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 of India. 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.
Superannuation
Certain employees of Infosys, Infosys BPM 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.
Compensated absences
The Group 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.
Other income, net
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
Foreign currency
Functional currency
The functional currency of Infosys, Infosys BPM, EdgeVerve,
Skava, Infosys Green Forum, Danske IT and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are
their respective local currencies. 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 recognized in the Interim Condensed Consolidated Statement of Comprehensive Income and reported within exchange
gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow
hedges. 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 transaction. The related
revenue and expense are recognized using the same exchange rate.
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 cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the statement of comprehensive income. However when a change in the parent's
ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
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.
Government grants
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income on a systematic
and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the
statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
Operating Profits
Operating profit of the Group is computed considering
the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
b. The table below provides details of break-up
of expenses:
Cost of sales
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
18,621 |
18,383 |
56,088 |
52,649 |
| Depreciation and amortization |
1,176 |
1,125 |
3,515 |
3,104 |
| Travelling costs |
283 |
257 |
915 |
776 |
| Cost of technical sub-contractors |
3,064 |
3,343 |
9,261 |
10,944 |
| Cost of software packages for own use |
540 |
495 |
1,504 |
1,357 |
| Third party items bought for service delivery to clients |
3,152 |
2,567 |
8,238 |
6,575 |
| Consultancy and professional charges |
124 |
32 |
187 |
96 |
| Communication costs |
85 |
86 |
262 |
271 |
| Repairs and maintenance |
103 |
107 |
333 |
310 |
| Provision for post-sales client support |
35 |
130 |
203 |
200 |
| Others |
70 |
36 |
160 |
60 |
| Total |
27,253 |
26,561 |
80,666 |
76,342 |
Selling and marketing expenses
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
1,358 |
1,264 |
4,125 |
3,570 |
| Travelling costs |
64 |
64 |
228 |
200 |
| Branding and marketing |
219 |
226 |
717 |
633 |
| Communication costs |
3 |
3 |
10 |
10 |
| Consultancy and professional charges |
36 |
30 |
106 |
89 |
| Others |
20 |
24 |
52 |
89 |
| Total |
1,700 |
1,611 |
5,238 |
4,591 |
Administrative expenses
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit costs |
672 |
625 |
2,015 |
1,829 |
| Consultancy and professional charges |
344 |
339 |
944 |
1,111 |
| Repairs and maintenance |
248 |
243 |
747 |
677 |
| Power and fuel |
49 |
47 |
150 |
129 |
| Communication costs |
81 |
94 |
259 |
261 |
| Travelling costs |
40 |
39 |
145 |
123 |
| Impairment loss recognized/(reversed) under expected credit loss model |
13 |
106 |
219 |
197 |
| Rates and taxes |
80 |
74 |
241 |
220 |
| Insurance |
49 |
43 |
155 |
129 |
| Commission to non-whole time directors |
4 |
4 |
11 |
11 |
| Contribution towards Corporate Social Responsibility |
137 |
146 |
351 |
320 |
| Others |
190 |
144 |
481 |
358 |
| Total |
1,907 |
1,904 |
5,718 |
5,365 |
c. Other income
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
258 |
212 |
807 |
664 |
| Interest income on financial assets carried at fair value through other comprehensive income |
232 |
241 |
689 |
724 |
| Gain/(loss) on investments carried at fair value through profit or loss |
97 |
46 |
197 |
87 |
| Gain/(loss) on investments carried at fair value through other comprehensive income |
– |
– |
– |
1 |
| Exchange gains / (losses) on forward and options contracts |
(152) |
(363) |
(89) |
(789) |
| Exchange gains / (losses) on translation of other assets and liabilities |
230 |
552 |
210 |
1,153 |
| Others |
124 |
81 |
168 |
190 |
| Total |
789 |
769 |
1,982 |
2,030 |
for and on behalf of the Board of Directors of Infosys
Limited
|
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
Exhibit 99.9
Ind AS Standalone
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Standalone Financial Statements
Opinion
We have audited the accompanying interim condensed
standalone financial statements of INFOSYS LIMITED (the “Company”), which comprise the Condensed Balance Sheet as at
December 31, 2023, the Condensed Statement of Profit and Loss (including Other Comprehensive Income) for the three months and nine months
ended on that date, the Condensed Statement of Changes in Equity and the Condensed Statement of Cash Flows for the nine months ended on
that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as the “interim
condensed standalone financial statements”).
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim condensed standalone financial statements give a true and fair view
in conformity with Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”) prescribed under
section 133 of the Companies Act, 2013 (the “Act”), read with relevant rules issued thereunder and other accounting principles
generally accepted in India, of the state of affairs of the Company as at December 31, 2023, its profit and total comprehensive income
for the three months and nine months ended on that date, changes in equity and its cash flows for the nine months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed
standalone financial statements in accordance with the Standards on Auditing (“SA”s) specified under section 143 (10) of the
Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim
Condensed Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics
issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant
to our audit of the interim condensed standalone financial statements under the provisions of the Act and the Rules made thereunder, and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe
that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed
standalone financial statements.
Responsibilities of Management and Those
Charged with Governance for the Interim Condensed Standalone Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed standalone financial statements that give a true and fair view of the
financial position, financial performance, including total comprehensive income, changes in equity and cash flows of the Company in accordance
with Ind AS 34 and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively
for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the interim condensed
standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the interim condensed standalone financial
statements, Boards of Directors is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless Boards of Directors either intends to liquidate the Company
or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing
the Company’s financial reporting process.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Standalone Financial Statements
Our objectives are to obtain reasonable assurance
about whether the interim condensed standalone financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed standalone financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the interim condensed standalone financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the interim condensed standalone financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the interim condensed standalone financial
statements, including the disclosures, and whether the interim condensed standalone financial statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
Materiality is the magnitude of misstatements in
the interim condensed standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed standalone financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed standalone financial statements.
We also communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
| |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018) |
| |
|
|
Place: Bengaluru
Date: January 11, 2024 |
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCO3212
|
`
INFOSYS LIMITED
Condensed Standalone Financial Statements
under Indian Accounting Standards (Ind AS)
for the three months and nine months ended December 31, 2023
| Index |
| Condensed Balance Sheet |
| Condensed Statement of Profit and Loss |
| Condensed Statement of Changes in Equity |
| Condensed Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Standalone Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Use of estimates and judgments |
| 1.4 Critical accounting estimates and judgements |
| 2. Notes to Interim Condensed Financial Statements |
| 2.1 Property, plant and equipment |
| 2.2 Goodwill and intangible assets |
| 2.3 Leases |
| 2.4 Investments |
| 2.5 Loans |
| 2.6 Other financial assets |
| 2.7 Trade Receivables |
| 2.8 Cash and cash equivalents |
| 2.9 Other assets |
| 2.10 Financial instruments |
| 2.11 Equity |
| 2.12 Other financial liabilities |
| 2.13 Trade payables |
| 2.14 Other liabilities |
| 2.15 Provisions |
| 2.16 Income taxes |
| 2.17 Revenue from operations |
| 2.18 Other income, net |
| 2.19 Expenses |
| 2.20 Basic and diluted shares used in computing earnings per equity share |
| 2.21 Contingent liabilities and commitments |
| 2.22 Related party transactions |
| 2.23 Segment Reporting |
INFOSYS LIMITED
(In crore)
| Condensed Balance Sheet as at |
Note No. |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.1 |
10,635 |
11,656 |
| Right-of-use assets |
2.3 |
3,487 |
3,561 |
| Capital work-in-progress |
|
530 |
275 |
| Goodwill |
2.2 |
211 |
211 |
| Other intangible assets |
|
– |
3 |
| Financial assets |
|
|
|
| Investments |
2.4 |
22,927 |
23,686 |
| Loans |
2.5 |
35 |
39 |
| Other financial assets |
2.6 |
1,386 |
1,341 |
| Deferred tax assets (net) |
|
246 |
779 |
| Income tax assets (net) |
|
6,307 |
5,916 |
| Other non-current assets |
2.9 |
1,924 |
1,788 |
| Total non - current assets |
|
47,688 |
49,255 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.4 |
6,057 |
4,476 |
| Trade receivables |
2.7 |
25,434 |
20,773 |
| Cash and cash equivalents |
2.8 |
7,210 |
6,534 |
| Loans |
2.5 |
198 |
291 |
| Other financial assets |
2.6 |
9,482 |
9,088 |
| Other current assets |
2.9 |
9,900 |
10,920 |
| Total current assets |
|
58,281 |
52,082 |
| Total assets |
|
105,969 |
101,337 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.11 |
2,075 |
2,074 |
| Other equity |
|
70,310 |
65,671 |
| Total equity |
|
72,385 |
67,745 |
| LIABILITIES |
|
|
|
| Non-current liabilities |
|
|
|
| Financial liabilities |
|
|
|
| Lease liabilities |
2.3 |
3,423 |
3,553 |
| Other financial liabilities |
2.12 |
1,968 |
1,317 |
| Deferred tax liabilities (net) |
|
638 |
866 |
| Other non-current liabilities |
2.14 |
290 |
414 |
| Total non - current liabilities |
|
6,319 |
6,150 |
| Current liabilities |
|
|
|
| Financial liabilities |
|
|
|
| Lease liabilities |
2.3 |
794 |
713 |
| Trade payables |
2.13 |
|
|
| Total outstanding dues of micro enterprises and small enterprises |
|
17 |
97 |
| Total outstanding dues of creditors other than micro enterprises and small enterprises |
|
2,399 |
2,329 |
| Other financial liabilities |
2.12 |
10,733 |
12,697 |
| Other current liabilities |
2.14 |
8,426 |
7,609 |
| Provisions |
2.15 |
1,510 |
1,163 |
| Income tax liabilities (net) |
|
3,386 |
2,834 |
| Total current liabilities |
|
27,265 |
27,442 |
| Total equity and liabilities |
|
105,969 |
101,337 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
INFOSYS LIMITED
(In crore except equity share and per equity
share data)
| Condensed Statement of Profit and Loss for the |
Note No. |
Three months ended December 31, |
Nine months ended December 31, |
| |
|
2023 |
2022 |
2023 |
2022 |
| Revenue from operations |
2.17 |
32,491 |
32,389 |
96,932 |
93,483 |
| Other income, net |
2.18 |
1,582 |
1,177 |
3,934 |
3,093 |
| Total income |
|
34,073 |
33,566 |
100,866 |
96,576 |
| Expenses |
|
|
|
|
|
| Employee benefit expenses |
2.19 |
16,304 |
16,395 |
49,092 |
47,182 |
| Cost of technical sub-contractors |
|
4,670 |
4,720 |
13,991 |
14,545 |
| Travel expenses |
|
296 |
284 |
1,001 |
892 |
| Cost of software packages and others |
2.19 |
1,811 |
1,728 |
4,793 |
4,339 |
| Communication expenses |
|
119 |
132 |
379 |
386 |
| Consultancy and professional charges |
|
282 |
280 |
772 |
975 |
| Depreciation and amortization expenses |
|
738 |
713 |
2,222 |
2,039 |
| Finance cost |
|
82 |
41 |
215 |
115 |
| Other expenses |
2.19 |
895 |
978 |
2,862 |
2,417 |
| Total expenses |
|
25,197 |
25,271 |
75,327 |
72,890 |
| Profit before tax |
|
8,876 |
8,295 |
25,539 |
23,686 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.16 |
2,231 |
1,916 |
6,476 |
6,261 |
| Deferred tax |
2.16 |
93 |
169 |
309 |
61 |
| Profit for the period |
|
6,552 |
6,210 |
18,754 |
17,364 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
73 |
28 |
92 |
(28) |
| Equity instruments through other comprehensive income, net |
|
(9) |
2 |
31 |
9 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(46) |
(57) |
(17) |
(43) |
| Fair value changes on investments, net |
|
49 |
42 |
95 |
(275) |
| |
|
|
|
|
|
| Total other comprehensive income/ (loss), net of tax |
|
67 |
15 |
201 |
(337) |
| |
|
|
|
|
|
| Total comprehensive income for the period |
|
6,619 |
6,225 |
18,955 |
17,027 |
| Earnings per equity share |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic (in per share) |
|
15.79 |
14.77 |
45.19 |
41.28 |
| Diluted (in per share) |
|
15.78 |
14.76 |
45.15 |
41.24 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
|
|
| Basic (in shares) |
2.20 |
4,150,398,147 |
4,203,307,369 |
4,149,948,587 |
4,206,048,595 |
| Diluted (in shares) |
2.20 |
4,153,337,842 |
4,206,813,168 |
4,153,265,047 |
4,210,104,735 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
INFOSYS LIMITED
Condensed Statement of Changes in Equity
(In crore)
| Particulars |
|
Other Equity |
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
| |
Equity Share Capital |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
Equity Instruments through other comprehensive income |
Effective portion of Cash flow hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
| |
|
Capital reserve |
Other reserves (2) |
|
|
|
|
|
|
|
|
|
|
| Balance as at April 1, 2022 |
2,103 |
54 |
2,844 |
139 |
172 |
55,449 |
9 |
606 |
7,926 |
266 |
2 |
(264) |
69,306 |
| Impact on adoption of amendment to Ind AS 37# |
– |
– |
– |
– |
– |
(9) |
– |
– |
– |
– |
– |
– |
(9) |
| |
2,103 |
54 |
2,844 |
139 |
172 |
55,440 |
9 |
606 |
7,926 |
266 |
2 |
(264) |
69,297 |
| Changes in equity for the nine months ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
– |
17,364 |
– |
– |
– |
– |
– |
– |
17,364 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(28) |
(28) |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
9 |
– |
– |
9 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(43) |
– |
(43) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(275) |
(275) |
| Total comprehensive income for the period |
– |
– |
– |
– |
– |
17,364 |
– |
– |
– |
9 |
(43) |
(303) |
17,027 |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
– |
(2,562) |
– |
– |
2,562 |
– |
– |
– |
– |
| Buyback of equity shares** |
(13) |
– |
– |
– |
(332) |
(5,820) |
– |
– |
– |
– |
– |
– |
(6,165) |
| Transaction cost relating to buyback* |
– |
– |
– |
– |
(17) |
(1) |
– |
– |
– |
– |
– |
– |
(18) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
– |
11 |
– |
(2) |
(9) |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
– |
817 |
– |
– |
(817) |
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to note 2.11) |
– |
– |
– |
– |
191 |
– |
– |
(191) |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
– |
2 |
(2) |
– |
– |
– |
– |
– |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
1 |
– |
– |
– |
17 |
– |
– |
– |
– |
– |
– |
– |
18 |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
– |
– |
– |
– |
– |
383 |
– |
– |
– |
– |
383 |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
– |
49 |
– |
– |
– |
– |
49 |
| Dividends |
– |
– |
– |
– |
– |
(13,675) |
– |
– |
– |
– |
– |
– |
(13,675) |
| Balance as at December 31, 2022 |
2,091 |
54 |
2,844 |
150 |
31 |
51,561 |
2 |
845 |
9,671 |
275 |
(41) |
(567) |
66,916 |
INFOSYS LIMITED
Condensed Statement of Changes in Equity (contd.)
(In crore)
| Particulars |
|
Other Equity |
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
| |
Equity Share Capital |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
Equity Instruments through other comprehensive income |
Effective portion of Cash flow hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
| |
|
Capital reserve |
Other reserves (2) |
|
|
|
|
|
|
|
|
|
|
| Balance as at April 1, 2023 |
2,074 |
54 |
2,862 |
169 |
133 |
52,183 |
2 |
878 |
9,654 |
260 |
(5) |
(519) |
67,745 |
| Changes in equity for the nine months ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
– |
18,754 |
– |
– |
– |
– |
– |
– |
18,754 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
92 |
92 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
31 |
– |
– |
31 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(17) |
– |
(17) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
95 |
95 |
| Total comprehensive income for the period |
– |
– |
– |
– |
– |
18,754 |
– |
– |
– |
31 |
(17) |
187 |
18,955 |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
– |
(2,326) |
– |
– |
2,326 |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
– |
461 |
– |
– |
(461) |
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to note 2.11) |
– |
– |
– |
– |
351 |
– |
– |
(351) |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
– |
32 |
(32) |
– |
– |
– |
– |
– |
| Shares issued on exercise of employee stock options (Refer to note 2.11) |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
| Employee stock compensation expense (Refer to note 2.11) |
– |
– |
– |
– |
– |
– |
– |
417 |
– |
– |
– |
– |
417 |
| Dividends |
– |
– |
– |
– |
– |
(14,733) |
– |
– |
– |
– |
– |
– |
(14,733) |
| Balance as at December 31, 2023 |
2,075 |
54 |
2,862 |
169 |
484 |
54,339 |
34 |
912 |
11,519 |
291 |
(22) |
(332) |
72,385 |
| ** | | Including tax on buyback of 1,165 crore for the nine months ended December 31, 2022.
|
| # | | Impact on account of adoption of amendment to Ind AS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (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 / loss on transfer of business between entities under common control taken to reserve. |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
INFOSYS LIMITED
Condensed Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that
are readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
Note No. |
Nine months ended December 31, |
| |
|
2023 |
2022 |
| Cash flow from operating activities: |
|
|
|
| Profit for the period |
|
18,754 |
17,364 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Depreciation and Amortization |
|
2,222 |
2,039 |
| Income tax expense |
2.16 |
6,785 |
6,322 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
194 |
112 |
| Finance cost |
|
215 |
115 |
| Interest and dividend income |
|
(3,325) |
(2,401) |
| Stock compensation expense |
|
378 |
343 |
| Provision for post sale client support |
|
205 |
201 |
| Other adjustments |
|
162 |
40 |
| Exchange differences on translation of assets and liabilities, net |
|
48 |
98 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(3,459) |
(6,476) |
| Loans, other financial assets and other assets |
|
(1,016) |
(873) |
| Trade payables |
|
(10) |
408 |
| Other financial liabilities, other liabilities and provisions |
|
(170) |
2,410 |
| Cash generated from operations |
|
20,983 |
19,702 |
| Income taxes paid |
|
(6,313) |
(5,791) |
| Net cash generated by operating activities |
|
14,670 |
13,911 |
| Cash flow from investing activities: |
|
|
|
| Expenditure on property, plant and equipment |
|
(1,373) |
(1,475) |
| Deposits placed with corporation |
|
(625) |
(569) |
| Redemption of deposits placed with corporation |
|
459 |
417 |
| Interest and dividend received |
|
1,252 |
1,090 |
| Dividend received from subsidiary |
|
2,118 |
1,187 |
| Loan given to subsidiaries |
|
– |
(427) |
| Loan repaid by subsidiaries |
|
4 |
393 |
| Investment in subsidiaries |
|
(63) |
(1,530) |
| Proceeds from liquidation of a subsidiary |
|
80 |
– |
| Escrow and other deposits pertaining to Buyback |
|
– |
(592) |
| Other receipts |
|
123 |
47 |
| Payments to acquire investments |
|
|
|
| Liquid mutual fund units |
|
(46,790) |
(48,592) |
| Commercial papers |
|
(4,270) |
(2,116) |
| Certificates of deposit |
|
(3,169) |
(5,912) |
| Government Securities |
|
– |
(1,370) |
| Non-convertible debentures |
|
(337) |
– |
| Other investments |
|
(2) |
(4) |
| Proceeds on sale of investments |
|
|
|
| Tax free bonds and government bonds |
|
150 |
13 |
| Liquid mutual fund units |
|
45,744 |
47,770 |
| Non-convertible debentures |
|
800 |
220 |
| Certificates of deposit |
|
4,387 |
7,155 |
| Commercial papers |
|
3,045 |
1,100 |
| Government Securities |
|
5 |
1,532 |
| Other investments |
|
13 |
99 |
| Net cash (used in) / generated from investing activities |
|
1,551 |
(1,564) |
| Cash flow from financing activities: |
|
|
|
| Buyback of equity shares including transaction costs and tax on buyback |
|
– |
(3,928) |
| Payment of lease liabilities |
|
(624) |
(494) |
| Shares issued on exercise of employee stock options |
|
1 |
18 |
| Other receipts |
|
– |
57 |
| Other payments |
|
(158) |
(61) |
| Payment of dividends |
|
(14,736) |
(13,676) |
| Net cash used in financing activities |
|
(15,517) |
(18,084) |
| Net increase / (decrease) in cash and cash equivalents |
|
704 |
(5,737) |
| Effect of exchange differences on translation of foreign currency cash and cash equivalents |
|
(28) |
(59) |
| Cash and cash equivalents at the beginning of the period |
2.8 |
6,534 |
12,270 |
| Cash and cash equivalents at the end of the period |
2.8 |
7,210 |
6,474 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.8 |
54 |
66 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
INFOSYS LIMITED
Overview and Notes to the Interim Condensed Standalone
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics City, Hosur Road, Bengaluru 560100, Karnataka, India. The company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The interim condensed standalone financial statements
are approved for issue by the Company's Board of Directors on January 11, 2024.
1.2 Basis of preparation of financial statements
These interim condensed standalone financial statements
are prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting, under the historical cost convention
on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013
(''the Act'') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed standalone
financial statements do not include all the information required for a complete set of financial statements. These interim condensed standalone
financial statements should be read in conjunction with the standalone financial statements and related notes included in the Company’s
Annual Report for the year ended March 31, 2023. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
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. The material accounting policy information used in preparation of the audited condensed standalone
interim financial statements have been discussed in the respective notes.
As the quarter and year to date figures are taken from
the source and rounded to the nearest digits, 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 and judgments
The preparation of the interim condensed standalone
financial statements in conformity with Ind AS requires the 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 interim condensed standalone financial statements and reported amounts of revenues
and expenses during the period. The 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 no. 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 and judgements are reflected in the interim
condensed standalone financial statements in the period in which changes are made and, if material, their effects are disclosed in the
notes to the interim condensed standalone financial statements.
1.4 Critical accounting estimates and judgments
a. Revenue recognition
The Company’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to
perform their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and Company’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Company uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Company to determine the actual
efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have
been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer
and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it controls
the good or service before it is transferred to the customer. The Company considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore, is
acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Company's two major tax jurisdictions are
India and the United States, 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.
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 company 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. (Refer to note 2.16)
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 asset’s 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 the 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. (Refer to note 2.1)
2. Notes to the Interim Condensed Standalone Financial
Statements
2.1 PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
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 the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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(1) |
22-25 years |
| Plant and machinery(1) |
5 years |
| Office equipment |
5 years |
| Computer equipment(1) |
3-5 years |
| Furniture and fixtures(1) |
5 years |
| Vehicles(1) |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Based on technical evaluation, the Management believes that the useful lives as given
above best represent the period over which Management expects to use these assets. Hence, the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
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 ready 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. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
Impairment
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 Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the condensed 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 condensed 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
depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at October 1, 2023 |
1,429 |
10,454 |
3,160 |
1,333 |
7,211 |
2,163 |
1,021 |
45 |
26,816 |
| Additions |
1 |
4 |
9 |
28 |
168 |
– |
4 |
1 |
215 |
| Deletions** |
– |
(55) |
(15) |
(7) |
(139) |
(22) |
(48) |
(1) |
(287) |
| Gross carrying value as at December 31, 2023 |
1,430 |
10,403 |
3,154 |
1,354 |
7,240 |
2,141 |
977 |
45 |
26,744 |
| Accumulated depreciation as at October 1, 2023 |
– |
(4,427) |
(2,654) |
(1,101) |
(5,230) |
(1,643) |
(727) |
(42) |
(15,824) |
| Depreciation |
– |
(103) |
(55) |
(29) |
(282) |
(57) |
(43) |
(1) |
(570) |
| Accumulated depreciation on deletions** |
– |
55 |
15 |
7 |
139 |
20 |
48 |
1 |
285 |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,475) |
(2,694) |
(1,123) |
(5,373) |
(1,680) |
(722) |
(42) |
(16,109) |
| Carrying value as at October 1, 2023 |
1,429 |
6,027 |
506 |
232 |
1,981 |
520 |
294 |
3 |
10,992 |
| Carrying value as at December 31, 2023 |
1,430 |
5,928 |
460 |
231 |
1,867 |
461 |
255 |
3 |
10,635 |
The changes in the carrying value of property, plant and
equipment for the three months ended December 31, 2022 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at October 1, 2022 |
1,429 |
10,258 |
3,122 |
1,272 |
7,525 |
2,158 |
897 |
44 |
26,705 |
| Additions |
– |
165 |
88 |
27 |
309 |
92 |
1 |
– |
682 |
| Deletions* |
– |
– |
(1) |
(3) |
(272) |
(1) |
– |
– |
(277) |
| Gross carrying value as at December 31, 2022 |
1,429 |
10,423 |
3,209 |
1,296 |
7,562 |
2,249 |
898 |
44 |
27,110 |
| Accumulated depreciation as at October 1, 2022 |
– |
(4,027) |
(2,607) |
(1,036) |
(5,443) |
(1,713) |
(575) |
(38) |
(15,439) |
| Depreciation |
– |
(99) |
(61) |
(27) |
(281) |
(55) |
(41) |
(1) |
(565) |
| Accumulated depreciation on deletions* |
– |
– |
1 |
3 |
272 |
1 |
– |
– |
277 |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,126) |
(2,667) |
(1,060) |
(5,452) |
(1,767) |
(616) |
(39) |
(15,727) |
| Carrying value as at October 1, 2022 |
1,429 |
6,231 |
515 |
236 |
2,082 |
445 |
322 |
6 |
11,266 |
| Carrying value as at December 31, 2022 |
1,429 |
6,297 |
542 |
236 |
2,110 |
482 |
282 |
5 |
11,383 |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,429 |
10,445 |
3,144 |
1,314 |
7,235 |
2,129 |
968 |
45 |
26,709 |
| Additions |
1 |
13 |
43 |
61 |
467 |
52 |
54 |
1 |
692 |
| Additions through business transfer (Refer to note 2.4) |
– |
– |
– |
2 |
12 |
8 |
12 |
– |
34 |
| Deletions** |
– |
(55) |
(33) |
(23) |
(474) |
(48) |
(57) |
(1) |
(691) |
| Gross carrying value as at December 31, 2023 |
1,430 |
10,403 |
3,154 |
1,354 |
7,240 |
2,141 |
977 |
45 |
26,744 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,223) |
(2,558) |
(1,060) |
(4,977) |
(1,549) |
(646) |
(40) |
(15,053) |
| Depreciation |
– |
(307) |
(169) |
(86) |
(867) |
(177) |
(132) |
(3) |
(1,741) |
| Accumulated depreciation on deletions** |
– |
55 |
33 |
23 |
471 |
46 |
56 |
1 |
685 |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,475) |
(2,694) |
(1,123) |
(5,373) |
(1,680) |
(722) |
(42) |
(16,109) |
| Carrying value as at April 1, 2023 |
1,429 |
6,222 |
586 |
254 |
2,258 |
580 |
322 |
5 |
11,656 |
| Carrying value as at December 31, 2023 |
1,430 |
5,928 |
460 |
231 |
1,867 |
461 |
255 |
3 |
10,635 |
| ** | | During the three months and nine months ended December 31, 2023, certain assets which were
old having gross book value of 129 crore (net book value: Nil) and 490 crore (net book value: Nil), respectively were retired. |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2022 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2022 |
1,429 |
10,115 |
3,054 |
1,250 |
7,239 |
2,070 |
817 |
44 |
26,018 |
| Additions |
– |
308 |
161 |
60 |
826 |
184 |
81 |
1 |
1,621 |
| Deletions* |
– |
– |
(6) |
(14) |
(503) |
(5) |
– |
(1) |
(529) |
| Gross carrying value as at December 31, 2022 |
1,429 |
10,423 |
3,209 |
1,296 |
7,562 |
2,249 |
898 |
44 |
27,110 |
| Accumulated depreciation as at April 1, 2022 |
– |
(3,834) |
(2,494) |
(993) |
(5,163) |
(1,614) |
(499) |
(37) |
(14,634) |
| Depreciation |
– |
(292) |
(179) |
(81) |
(792) |
(158) |
(117) |
(3) |
(1,622) |
| Accumulated depreciation on deletions* |
– |
– |
6 |
14 |
503 |
5 |
– |
1 |
529 |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,126) |
(2,667) |
(1,060) |
(5,452) |
(1,767) |
(616) |
(39) |
(15,727) |
| Carrying value as at April 1, 2022 |
1,429 |
6,281 |
560 |
257 |
2,076 |
456 |
318 |
7 |
11,384 |
| Carrying value as at December 31, 2022 |
1,429 |
6,297 |
542 |
236 |
2,110 |
482 |
282 |
5 |
11,383 |
| * | | During the three months and nine months ended December 31, 2022, certain assets which were
old having gross book value of 252 crore (net book value: Nil) and 401 crore (net book value: Nil), respectively were retired. |
| (1) | | Buildings include 250/- being the value of five shares of 50/- each in Mittal
Towers Premises Co-operative Society Limited. |
| (2) | | Includes certain assets provided on cancellable operating lease to subsidiaries. |
The aggregate depreciation has been included under
depreciation and amortization expense in the statement of Profit and Loss.
Repairs and maintenance costs are recognized in the
statement of Profit and Loss when incurred.
2.2 GOODWILL AND INTANGIBLE ASSETS
2.2.1 Goodwill
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Carrying value at the beginning |
211 |
211 |
| Carrying value at the end |
211 |
211 |
2.2.2 Intangible Assets:
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry,
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured
reliably. The costs which can be capitalized include the cost of material, direct labor, overhead costs that are directly attributable
to prepare the asset for its intended use.
2.3 LEASES
Accounting Policy
The Company as a lessee
The Company’s lease asset classes primarily consist
of leases for land, buildings and computers. The Company assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the
asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Company determines the lease term
as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right-of-use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will
exercise an extension or a termination option. Lease liability and ROU asset have been separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.
The Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right of use assets for the three months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at October 1, 2023 |
546 |
2,689 |
433 |
3,668 |
| Additions* |
– |
2 |
145 |
147 |
| Deletions |
(10) |
(47) |
(13) |
(70) |
| Impairment# |
– |
(88) |
– |
(88) |
| Depreciation |
(1) |
(121) |
(48) |
(170) |
| Balance as at December 31, 2023 |
535 |
2,435 |
517 |
3,487 |
| * | | Net of adjustments on account of modifications |
| # | | included under other expenses. Refer note 2.19 |
Following are the changes in the carrying value of
right of use assets for the three months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at October 1, 2022 |
550 |
2,790 |
178 |
3,518 |
| Additions* |
– |
23 |
160 |
183 |
| Deletions |
– |
(2) |
(16) |
(18) |
| Depreciation |
(1) |
(111) |
(33) |
(145) |
| Balance as at December 31, 2022 |
549 |
2,700 |
289 |
3,538 |
| * | | Net of adjustments on account of modifications and lease incentives |
Following are the changes in the carrying value of
right of use assets for the nine months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at April 1, 2023 |
548 |
2,669 |
344 |
3,561 |
| Additions* |
– |
290 |
370 |
660 |
| Deletions |
(10) |
(77) |
(76) |
(163) |
| Impairment# |
– |
(88) |
– |
(88) |
| Depreciation |
(3) |
(359) |
(121) |
(483) |
| Balance as at December 31, 2023 |
535 |
2,435 |
517 |
3,487 |
| * | | Net of adjustments on account of modifications and lease incentives |
| # | | included under other expenses. Refer note 2.19 |
Following are the changes in the carrying value of
right of use assets for the nine months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at April 1, 2022 |
552 |
2,621 |
138 |
3,311 |
| Additions* |
– |
411 |
266 |
677 |
| Deletions |
– |
(3) |
(50) |
(53) |
| Depreciation |
(3) |
(329) |
(65) |
(397) |
| Balance as at December 31, 2022 |
549 |
2,700 |
289 |
3,538 |
| * | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included under depreciation and amortization expense in the interim condensed statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at December 31, 2023 and March 31, 2023:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current lease liabilities |
794 |
713 |
| Non-current lease liabilities |
3,423 |
3,553 |
| Total |
4,217 |
4,266 |
2.4 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current investments |
|
|
| Equity instruments of subsidiaries |
9,145 |
9,078 |
| Redeemable Preference shares of subsidiary |
2,831 |
2,831 |
| Preference securities and equity securities |
218 |
196 |
| Target maturity fund units |
422 |
402 |
| Others |
95 |
82 |
| Tax free bonds |
1,733 |
1,742 |
| Government bonds |
15 |
14 |
| Non-convertible debentures |
1,818 |
2,490 |
| Government Securities |
6,650 |
6,851 |
| Total non-current investments |
22,927 |
23,686 |
| Current investments |
|
|
| Liquid mutual fund units |
1,418 |
260 |
| Commercial Papers |
1,725 |
420 |
| Certificates of deposit |
1,613 |
2,765 |
| Tax free bonds |
– |
150 |
| Government Securities |
201 |
5 |
| Non-convertible debentures |
1,100 |
876 |
| Total current investments |
6,057 |
4,476 |
| Total carrying value |
28,984 |
28,162 |
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current investments |
|
|
| Unquoted |
|
|
| Investment carried at cost |
|
|
| Investments in equity instruments of subsidiaries |
|
|
| Infosys BPM Limited |
662 |
662 |
| 33,828 (33,828) equity shares of 10,000/- each, fully paid up |
|
|
| Infosys Technologies (China) Co. Limited |
369 |
369 |
| Infosys Technologies, S. de R.L. de C.V., Mexico |
65 |
65 |
| 17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up |
|
|
| Infosys Technologies (Sweden) AB |
76 |
76 |
| 1,000 (1,000) equity shares of SEK 100 par value, fully paid |
|
|
| Infosys Technologies (Shanghai) Company Limited |
1,010 |
1,010 |
| Infosys Public Services, Inc. |
99 |
99 |
| 3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid |
|
|
| Infosys Consulting Holding AG |
1,323 |
1,323 |
| 23,350 (23,350) - Class A shares of CHF 1,000 each and |
|
|
| 26,460 (26,460) - Class B Shares of CHF 100 each, fully paid up |
|
|
| Infosys Americas Inc. |
– |
1 |
| Nil (10,000) shares of USD 10 per share, fully paid up |
|
|
| EdgeVerve Systems Limited |
1,312 |
1,312 |
| 1,31,18,40,000 (1,31,18,40,000) equity shares of 10/- each, fully paid up |
|
|
| Infosys Nova Holdings LLC# |
2,637 |
2,637 |
| Infosys Singapore Pte Ltd |
10 |
10 |
| 1,09,90,000 (1,09,90,000) shares of SGD 1.00 par value, fully paid |
|
|
| Brilliant Basics Holding Limited |
59 |
59 |
| 1,346 (1,346) shares of GBP 0.005 each, fully paid up |
|
|
| Infosys Arabia Limited |
2 |
2 |
| 70 (70) shares |
|
|
| Skava Systems Private Limited |
– |
59 |
| 25,000 (25,000) shares of 10/- each, fully paid up |
|
|
| Panaya Inc. |
582 |
582 |
| 2 (2) shares of USD 0.01 per share, fully paid up |
|
|
| Infosys Chile SpA |
7 |
7 |
| 100 (100) shares |
|
|
| WongDoody, Inc. |
380 |
380 |
| 100 (100) shares |
|
|
| Infosys Luxembourg S.a r.l. |
26 |
17 |
| 30,000 (20,000) shares |
|
|
| Infosys Austria GmbH |
– |
– |
| 80,000 (80,000) shares of EUR 1 par value, fully paid up |
|
|
| Infosys Consulting Brazil |
337 |
337 |
| 27,50,71,070 (27,50,71,070) shares of BRL 1 per share, fully paid up |
|
|
| Infosys Consulting S.R.L. (Romania) |
34 |
34 |
| 99,183 (99,183) shares of RON 100 per share, fully paid up |
|
|
| Infosys Limited Bulgaria EOOD |
2 |
2 |
| 4,58,000 (4,58,000) shares of BGN 1 per share, fully paid up |
|
|
| Infosys Germany Holdings GmbH |
2 |
2 |
| 25,000 (25,000) shares EUR 1 per share, fully paid up |
|
|
| Infosys Green Forum |
1 |
1 |
| 10,00,000 (10,00,000) shares 10 per share, fully paid up |
|
|
| Infosys Automotive and Mobility GmbH |
15 |
15 |
| Infosys Turkey Bilgi Teknolojileri Limited Sirketi |
48 |
7 |
| 1,508,060 (1,30,842) share Turkish Liras 100 (10,000) per share, fully paid up |
|
|
| Infosys Consulting S.R.L. (Argentina) |
2 |
2 |
| 2,94,500 (2,94,500) shares AR$ 100 per share, fully paid up |
|
|
| Infosys Business Solutions LLC |
8 |
8 |
| 10,000 (10,000) shares USD 100 per share, fully paid up |
|
|
| Danske IT and Support Services India Private Limited |
77 |
– |
| 3,27,789 (Nil) shares 10 per share fully paid up |
|
|
| Investments in Redeemable Preference shares of subsidiary |
|
|
| Infosys Singapore Pte Ltd |
2,831 |
2,831 |
| 45,62,00,000 (45,62,00,000) shares of SGD 1 per share, fully paid up |
|
|
| 40,000,000 (40,000,000) shares of USD 1 per share, fully paid up |
|
|
| |
11,976 |
11,909 |
| Investments carried at fair value through profit or loss |
|
|
| Target maturity fund units |
422 |
402 |
| Others (1) |
95 |
82 |
| |
517 |
484 |
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
79 |
193 |
| Equity securities |
2 |
3 |
| |
81 |
196 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Tax free bonds |
1,733 |
1,742 |
| Government bonds |
15 |
14 |
| |
1,748 |
1,756 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non-convertible debentures |
1,818 |
2,490 |
| Equity Securities |
137 |
– |
| Government Securities |
6,650 |
6,851 |
| |
8,605 |
9,341 |
| Total non-current investments |
22,927 |
23,686 |
| Current investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
1,418 |
260 |
| |
1,418 |
260 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Papers |
1,725 |
420 |
| Certificates of deposit |
1,613 |
2,765 |
| |
3,338 |
3,185 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Tax free bonds |
– |
150 |
| |
– |
150 |
| Investments carried at fair value through other comprehensive income |
|
|
| Government Securities |
201 |
5 |
| Non-convertible debentures |
1,100 |
876 |
| |
1,301 |
881 |
| Total current investments |
6,057 |
4,476 |
| Total investments |
28,984 |
28,162 |
| Aggregate amount of quoted investments |
11,654 |
12,128 |
| Market value of quoted investments (including interest accrued), current |
1,302 |
1,050 |
| Market value of quoted investments (including interest accrued), non-current |
10,542 |
11,336 |
| Aggregate amount of unquoted investments |
17,330 |
16,034 |
| # Aggregate amount of impairment in value of investments |
94 |
94 |
| Reduction in the fair value of assets held for sale |
854 |
854 |
| Investments carried at cost |
11,976 |
11,909 |
| Investments carried at amortized cost |
1,748 |
1,906 |
| Investments carried at fair value through other comprehensive income |
13,325 |
13,603 |
| Investments carried at fair value through profit or loss |
1,935 |
744 |
| (1) | | Uncalled capital commitments outstanding as of December 31, 2023 and March 31, 2023 was
5 crore and 8 crore, respectively. |
Refer to note 2.10 for accounting policies on financial
instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
December 31, 2023 |
March 31, 2023 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
1,418 |
260 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
422 |
402 |
| Tax free bonds and government bonds - carried at amortized cost |
Quoted price and market observable inputs |
1,933 |
2,134 |
| Non-convertible debentures - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
2,918 |
3,366 |
| Government securities - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
6,851 |
6,856 |
| Commercial Papers - carried at fair value through other comprehensive income |
Market observable inputs |
1,725 |
420 |
| Certificates of deposit - carried at fair value through other comprehensive income |
Market observable inputs |
1,613 |
2,765 |
| Quoted Equity Securities - carried at fair value through other comprehensive income |
Quoted price |
137 |
– |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
81 |
196 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
95 |
82 |
| Total |
|
17,193 |
16,481 |
Note : Certain quoted investments are classified as
Level 2 in the absence of active market for such investments.
Danske IT and Support Services India Private Limited
On September 1, 2023, Infosys acquired 100% of the
voting interests in Danske IT and Support Services India Private Limited, which is Danske Bank's IT center in India. The acquisition was
conducted by entering into a share purchase agreement. The estimated consideration is approximately DKK 63 million (approximately 77
crore) which may be subjected to a further adjustment on finalization of the opening net assets value as agreed in the Share Purchase
Agreement.
Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
2.5 LOANS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non- Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other Loans |
|
|
| Loans to employees |
35 |
39 |
| |
35 |
39 |
| Loans credit impaired - Unsecured |
|
|
| Other Loans |
|
|
| Loans to employees |
– |
– |
| Less: Allowance for credit impairment |
– |
– |
| |
– |
– |
| Total non - current loans |
35 |
39 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Loans to subsidiaries |
– |
43 |
| Other Loans |
|
|
| Loans to employees |
198 |
248 |
| Total current loans |
198 |
291 |
| Total Loans |
233 |
330 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Security deposits (1) |
43 |
43 |
| Net investment in Sublease of right of use asset (1) |
– |
298 |
| Rental deposits (1) |
163 |
183 |
| Unbilled revenues (1)(5)# |
956 |
686 |
| Others(1) |
224 |
131 |
| Total non-current other financial assets |
1,386 |
1,341 |
| Current |
|
|
| Security deposits (1) |
1 |
1 |
| Rental deposits (1) |
29 |
5 |
| Restricted deposits (1)* |
2,283 |
2,116 |
| Unbilled revenues (1)(5)# |
4,489 |
5,166 |
| Interest accrued but not due (1) |
329 |
441 |
| Foreign currency forward and options contracts (2)(3) |
31 |
79 |
| Net investment in Sublease of right-of-use asset (1) |
– |
48 |
| Others (1)(4) |
2,320 |
1,232 |
| Total current other financial assets |
9,482 |
9,088 |
| Total other financial assets |
10,868 |
10,429 |
| (1) Financial assets carried at amortized cost |
10,837 |
10,350 |
| (2) Financial assets carried at fair value through other comprehensive income |
13 |
32 |
| (3) Financial assets carried at fair value through Profit or Loss |
18 |
47 |
| (4) Includes dues from subsidiaries |
2,081 |
1,051 |
| (5) Includes dues from subsidiaries |
141 |
290 |
| * | | Restricted deposits represent deposit with financial institutions to settle employee related
obligations as and when they arise during the normal course of business. |
| # | | Classified as financial asset as right to consideration is unconditional and is due only
after a passage of time. |
2.7 TRADE RECEIVABLES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Trade Receivable considered good - Unsecured (1) |
25,907 |
21,202 |
| Less: Allowance for expected credit loss |
473 |
429 |
| Trade Receivable considered good - Unsecured |
25,434 |
20,773 |
| Trade Receivable - credit impaired - Unsecured |
157 |
106 |
| Less: Allowance for credit impairment |
157 |
106 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables (2) |
25,434 |
20,773 |
| (1) Includes dues from subsidiaries |
322 |
611 |
| (2) Includes dues from companies where directors are interested |
– |
– |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Balances with banks |
|
|
| In current and deposit accounts |
7,210 |
4,864 |
| Cash on hand |
– |
– |
| Others |
|
|
| Deposits with financial institutions |
– |
1,670 |
| Total Cash and cash equivalents |
7,210 |
6,534 |
| Balances with banks in unpaid dividend accounts |
34 |
37 |
| Deposit with more than 12 months maturity |
– |
700 |
Cash and cash equivalents as at December 31, 2023 and
March 31, 2023 include restricted cash and bank balances of 54 crore and 46 crore, respectively.
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.
2.9 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Capital advances |
119 |
141 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Prepaid expenses |
49 |
63 |
| Defined benefit plan assets |
9 |
9 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract(3) |
103 |
139 |
| Cost of fulfillment |
666 |
601 |
| Other receivables |
20 |
– |
| Unbilled revenues(2) |
290 |
167 |
| Withholding taxes and others |
668 |
668 |
| Total non-current other assets |
1,924 |
1,788 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
38 |
171 |
| Others |
|
|
| Prepaid expenses (1) |
2,122 |
1,705 |
| Unbilled revenues(2) |
5,251 |
6,365 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract(3) |
188 |
400 |
| Cost of fulfillment |
234 |
109 |
| Withholding taxes and others |
2,055 |
2,047 |
| Other receivables |
12 |
123 |
| Total current other assets |
9,900 |
10,920 |
| Total other assets |
11,824 |
12,708 |
| (1) Includes dues from subsidiaries |
174 |
198 |
| (2) | | Classified as non-financial asset as the contractual right to consideration is dependent
on completion of contractual milestones. |
| (3) | | Includes technology assets taken over by the Company from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Company
in accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the
total contract value and accounted as Deferred contract cost. The Company has entered into a financing arrangement with a third party
for these assets which has been considered as financial liability. As at December 31, 2023, the financial liability pertaining to such
arrangements amounts to 63 crore. (Refer to note 2.12) |
Withholding taxes and others primarily consist of input
tax credits and Cenvat/ VAT recoverable from Government of India.
2.10 FINANCIAL INSTRUMENTS
Accounting Policy
2.10.1 Initial recognition
The Company 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, which 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.
2.10.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss
A financial asset which is not classified in any of
the above categories are subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently
measured at fair value through profit or loss.
(v) Investment in subsidiaries
Investment in subsidiaries is carried at cost in the
separate financial statements.
b. Derivative financial instruments
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 counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities,
carried at fair value through profit or loss.
This category includes derivative financial assets
or liabilities which are not designated as hedges.
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 as 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.
(ii) Cash flow hedge
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 hedge 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 hedge 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 hedge reserve till
the period the hedge was effective remains in cash flow hedge reserve until the forecasted transaction occurs. The cumulative gain or
loss previously recognized in the cash flow hedge reserve is transferred to the net profit in the condensed 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 hedge reserve is reclassified to net profit in the Statement of Profit and Loss.
2.10.3 Derecognition of financial instruments
The Company derecognizes a financial asset when the
contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for
derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company's Balance
Sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.10.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, option pricing model, market multiples, available quoted market
prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
Refer to table 'Financial instruments by category'
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to
the short maturity of these instruments.
2.10.5 Impairment
The Company recognizes loss allowances using the
expected credit loss (ECL) model for the financial assets and unbilled revenues which are not fair valued through profit or loss.
Loss allowance for trade receivables and unbilled revenues 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
Company determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated
future economic conditions. The Company considers current and anticipated future economic conditions relating to industries the
Company deals with and the countries where it operates. The amount of ECLs (or reversal) that is required to adjust the loss
allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain in
statement of profit and loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at December 31, 2023 are as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.8) |
7,210 |
– |
– |
– |
– |
7,210 |
7,210 |
| Investments (Refer to note 2.4) |
|
|
|
|
|
|
|
| Preference securities, Equity securities and others |
– |
– |
95 |
218 |
– |
313 |
313 |
| Tax free bonds and government bonds |
1,748 |
– |
– |
– |
– |
1,748 |
1,933(1) |
| Liquid mutual fund units |
– |
– |
1,418 |
– |
– |
1,418 |
1,418 |
| Target maturity fund units |
– |
– |
422 |
– |
– |
422 |
422 |
| Commercial Papers |
– |
– |
– |
– |
1,725 |
1,725 |
1,725 |
| Certificates of deposit |
– |
– |
– |
– |
1,613 |
1,613 |
1,613 |
| Non convertible debentures |
– |
– |
– |
– |
2,918 |
2,918 |
2,918 |
| Government Securities |
– |
– |
– |
– |
6,851 |
6,851 |
6,851 |
| Trade receivables (Refer to note 2.7) |
25,434 |
– |
– |
– |
– |
25,434 |
25,434 |
| Loans (Refer to note 2.5) |
233 |
– |
– |
– |
– |
233 |
233 |
| Other financial assets (Refer to note 2.6) (3) |
10,837 |
– |
18 |
– |
13 |
10,868 |
10,813(2) |
| Total |
45,462 |
– |
1,953 |
218 |
13,120 |
60,753 |
60,883 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables (Refer to note 2.13) |
2,416 |
– |
– |
– |
– |
2,416 |
2,416 |
| Lease liabilities (Refer to note 2.3) |
4,217 |
– |
– |
– |
– |
4,217 |
4,217 |
| Other financial liabilities (Refer to note 2.12) |
10,308 |
– |
112 |
– |
30 |
10,450 |
10,450 |
| Total |
16,941 |
– |
112 |
– |
30 |
17,083 |
17,083 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 55 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.8) |
6,534 |
– |
– |
– |
– |
6,534 |
6,534 |
| Investments (Refer to note 2.4) |
|
|
|
|
|
|
|
| Preference securities, Equity securities and others |
– |
– |
82 |
196 |
– |
278 |
278 |
| Tax free bonds and government bonds |
1,906 |
– |
– |
– |
– |
1,906 |
2,134(1) |
| Target maturity fund units |
|
– |
402 |
– |
– |
402 |
402 |
| Liquid mutual fund units |
– |
– |
260 |
– |
– |
260 |
260 |
| Commercial Papers |
– |
– |
– |
– |
420 |
420 |
420 |
| Certificates of deposit |
– |
– |
– |
– |
2,765 |
2,765 |
2,765 |
| Non convertible debentures |
– |
– |
– |
– |
3,366 |
3,366 |
3,366 |
| Government Securities |
– |
– |
– |
– |
6,856 |
6,856 |
6,856 |
| Trade receivables (Refer to note 2.7) |
20,773 |
– |
– |
– |
– |
20,773 |
20,773 |
| Loans (Refer to note 2.5) |
330 |
– |
– |
– |
– |
330 |
330 |
| Other financial assets (Refer to note 2.6)(3) |
10,350 |
– |
47 |
– |
32 |
10,429 |
10,345(2) |
| Total |
39,893 |
– |
791 |
196 |
13,439 |
54,319 |
54,463 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables (Refer to note 2.13) |
2,426 |
– |
– |
– |
– |
2,426 |
2,426 |
| Lease Liabilities (Refer to note 2.3) |
4,266 |
– |
– |
– |
– |
4,266 |
4,266 |
| Other financial liabilities (Refer to note 2.12) |
11,989 |
– |
42 |
– |
14 |
12,045 |
12,045 |
| Total |
18,681 |
– |
42 |
– |
14 |
18,737 |
18,737 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 84 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
For trade receivables, trade payables, other assets
and payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at December 31, 2023 is as follows:
(In crore)
| Particulars |
As at December 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in tax free bonds |
1,918 |
1,692 |
226 |
– |
| Investments in government bonds |
15 |
15 |
– |
– |
| Investments in liquid mutual fund units |
1,418 |
1,418 |
– |
– |
| Investments in target maturity fund units |
422 |
422 |
– |
– |
| Investments in certificates of deposit |
1,613 |
– |
1,613 |
– |
| Investments in commercial papers |
1,725 |
– |
1,725 |
– |
| Investments in non convertible debentures |
2,918 |
2,248 |
670 |
– |
| Investments in government securities |
6,851 |
6,851 |
– |
– |
| Investments in equity securities |
139 |
137 |
– |
2 |
| Investments in preference securities |
79 |
– |
– |
79 |
| Other investments |
95 |
– |
– |
95 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) |
31 |
– |
31 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to note 2.12) |
142 |
– |
142 |
– |
During the nine months ended December 31, 2023, tax
free bonds and non-convertible debentures of 1,525 crore were transferred from Level 2 to Level 1 of fair value hierarchy since
these were valued based on quoted price.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2023 was as follows:
(In crore)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in tax free bonds |
2,120 |
1,331 |
789 |
– |
| Investments in target maturity fund units |
402 |
402 |
– |
– |
| Investments in government bonds |
14 |
14 |
– |
– |
| Investments in liquid mutual fund units |
260 |
260 |
– |
– |
| Investments in certificates of deposit |
2,765 |
– |
2,765 |
– |
| Investments in commercial papers |
420 |
– |
420 |
– |
| Investments in non convertible debentures |
3,366 |
1,364 |
2,002 |
– |
| Investments in government securities |
6,856 |
6,856 |
– |
– |
| Investments in equity securities |
3 |
– |
– |
3 |
| Investments in preference securities |
193 |
– |
– |
193 |
| Other investments |
82 |
– |
– |
82 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) |
79 |
– |
79 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer note 2.12) |
56 |
– |
56 |
– |
During the year ended March 31, 2023, tax free bonds
and government securities of 383 crore were transferred from Level 2 to Level 1 of fair value hierarchy since these were valued
based on quoted price. Further non-convertible debentures of 1,611 crore were transferred from Level 1 to Level 2 of fair value
hierarchy, since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Company are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
tax free bonds, certificates of deposit, commercial papers, treasury bills, government securities, quoted bonds issued by government and
quasi-government organizations and non-convertible debentures. The Company invests after considering counterparty risks based on multiple
criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial
institutions. These risks are monitored regularly as per Company's risk management program.
2.11 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity share capital.
Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction
from equity, net of any tax effects.
Description of reserves
Capital redemption reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Company.
Securities premium
The amount received in excess of the par value of equity
shares has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The Share options outstanding account is used to record
the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account
are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not
exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been 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.
Other components of equity
Other components of equity include remeasurement of
net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on fair valuation of
investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the Statement of Profit and Loss upon the occurrence of the related forecasted transaction.
2.11.1 EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Authorized |
|
|
| Equity shares, 5/- par value |
|
|
| 4,80,00,00,000 (4,80,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5/- par value (1) |
2,075 |
2,074 |
| 4,15,04,47,554 (4,14,85,60,044) equity shares fully paid-up |
|
|
| |
2,075 |
2,074 |
| (1) | | Refer to note 2.20 for details of basic and diluted shares |
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 Depository Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying
equity share.
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. For details
of shares reserved for issue under the employee stock option plan of the Company, refer to the note below.
The reconciliation of the number of shares outstanding
and the amount of share capital as at December 31, 2023 and March 31, 2023 is set out below:
(in crore, except as stated otherwise)
| Particulars |
As at December 31, 2023 |
As at March 31, 2023 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
4,14,85,60,044 |
2,074 |
4,20,67,38,641 |
2,103 |
| Add: Shares issued on exercise of employee stock options |
1,887,510 |
1 |
2,247,751 |
1 |
| Less: Shares bought back |
– |
– |
60,426,348 |
30 |
| As at the end of the period |
4,15,04,47,554 |
2,075 |
4,14,85,60,044 |
2,074 |
Capital allocation policy
Effective fiscal 2020, the company expects to return
approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi annual dividends and/or share
buyback and/or special dividends, subject to applicable laws and requisite approvals, if any. Free cash flow is defined as net cash provided
by operating activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback
include applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of December 31, 2023, the Company has only one class of equity shares
and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.11.2 DIVIDEND
The final dividend on shares is 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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders in accordance with Companies Act, 2013 is as follows:-
(in )
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interim dividend for fiscal 2024 |
18.00 |
– |
18.00 |
– |
| Final dividend for fiscal 2023 |
– |
– |
17.50 |
– |
| Interim dividend for fiscal 2023 |
– |
16.50 |
– |
16.50 |
| Final dividend for fiscal 2022 |
– |
– |
– |
16.00 |
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share for the financial year ended March 31, 2023. The same was approved
by the shareholders at the Annual General Meeting (AGM) of the Company held on June 28, 2023 which resulted a net cash outflow of 7,262
crore.
The Board of Directors in their meeting held on October
12, 2023 declared an interim dividend of 18/- per equity share which resulted in a net cash outflow of 7,471 crore.
2.11.3 Employee Stock Option Plan (ESOP):
Accounting Policy
The Company recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in the statement of profit and loss on a straight-line basis over the requisite service period for each separately
vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding
account.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan): On June 22, 2019 pursuant to approval by the shareholders in the Annual General Meeting, the Board has been authorized
to introduce, offer, issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019
Plan. The maximum number of shares under the 2019 plan shall not exceed 5,00,00,000 equity shares. To implement the 2019 Plan, up to 4,50,00,000
equity shares may be issued by way of secondary acquisition of shares by Infosys Expanded Stock Ownership Trust. The Restricted Stock
Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined annual performance parameters as determined by
the administrator (Nomination and Remuneration Committee). The performance parameters will be based on a combination of relative Total
Shareholder Return (TSR) against selected industry peers and certain broader market domestic and global indices and operating performance
metrics of the company as decided by administrator. Each of the above performance parameters will be distinct for the purposes of calculation
of quantity of shares to vest based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years
from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan): On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was authorized 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 are held
by the trust towards the 2011 Plan as at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers
mentioned above are further adjusted with the September 2018 bonus issue.The equity settled and cash settled RSUs and stock options would
vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee
(NARC). 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 the market price as on the date of grant.
Controlled trust holds 11,249,465 shares and 12,172,119
shares as at December 31, 2023 and March 31, 2023, respectively under the 2015 plan. Out of these shares, 200,000 equity shares each have
been earmarked for welfare activities of the employees as at December 31, 2023 and March 31, 2023.
The following is the summary of grants during the three
months and nine months ended December 31, 2023 and December 31, 2022:
| |
2019 Plan |
2015 Plan |
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
| Equity settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
35,990 |
– |
114,271 |
176,893 |
88,040 |
– |
421,636 |
287,325 |
| Employees other than KMP |
464,260 |
3,814 |
464,260 |
374,774 |
1,169,660 |
48,050 |
1,197,940 |
48,050 |
| |
500,250 |
3,814 |
578,531 |
551,667 |
1,257,700 |
48,050 |
1,619,576 |
335,375 |
| Cash settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
– |
– |
– |
– |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| Total Grants |
500,250 |
3,814 |
578,531 |
551,667 |
1,265,650 |
48,050 |
1,627,526 |
335,375 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 34.75 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain performance targets. Accordingly, 2,72,026 performance based RSU’s were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain environment, social and governance milestones as determined by the Board. Accordingly, 15,656 performance based RSU’s
were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board. Accordingly, 39,140 performance based RSU’s
were granted effective May 2, 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of December 31, 2023, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with Ind AS 102,
Share based payment. The grant date for this purpose in accordance with Ind AS 102, Share based payment is July 1, 2022.
Under the 2019 plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2024 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 78,281 performance based RSU’s
were granted effective May 2, 2023.
Other KMP
Under the 2015 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved 88,040 time based RSUs and 6,774 performance based RSUs
to other KMP under the 2015 plan. The time based RSUs will vest over three years and performance based RSUs will vest over three years
based on certain performance targets.
Under the 2019 plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved performance based grants of 35,990 RSUs to other KMP under
the 2019 plan. These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Granted to: |
|
|
|
|
| KMP |
14 |
– |
51 |
41 |
| Employees other than KMP |
117 |
101 |
327 |
302 |
| Total (1) |
131 |
101 |
378 |
343 |
| (1) Cash settled stock compensation expense included in the above |
- |
2 |
3 |
- |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance-based options and Monte Carlo simulation model is used for TSR based options.The
inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and
the risk free rate of interest. Expected volatility during the expected term of the options 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 options. Expected
volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity
shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity
and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADR-RSU |
Fiscal 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,321 |
16.41 |
1,525 |
18.08 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-31 |
25-33 |
23-32 |
27-34 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
4-5 |
5-7 |
2-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,151 |
14.31 |
1,210 |
13.69 |
The expected life of the RSU/ESOP is estimated based on
the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP
2.12 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Others |
|
|
| Compensated absences |
83 |
76 |
| Accrued compensation to employees (1) |
13 |
5 |
| Accrued expenses (1) |
1,866 |
1,184 |
| Other payables (1)(6) |
6 |
52 |
| Total non-current other financial liabilities |
1,968 |
1,317 |
| Current |
|
|
| Unpaid dividends (1) |
34 |
37 |
| Others |
|
|
| Accrued compensation to employees (1) |
2,796 |
3,072 |
| Accrued expenses (1)(4) |
4,506 |
4,430 |
| Retention monies (1) |
13 |
17 |
| Capital creditors (1) |
208 |
652 |
| Compensated absences |
2,168 |
1,893 |
| Other payables (1)(5)(6) |
866 |
2,540 |
| Foreign currency forward and options contracts (2)(3) |
142 |
56 |
| Total current other financial liabilities |
10,733 |
12,697 |
| Total other financial liabilities |
12,701 |
14,014 |
| (1) Financial liability carried at amortized cost |
10,308 |
11,989 |
| (2) Financial liability carried at fair value through profit or loss |
112 |
42 |
| (3) Financial liability carried at fair value through other comprehensive income |
30 |
14 |
| (4) Includes dues to subsidiaries |
29 |
30 |
| (5) Includes dues to subsidiaries |
381 |
422 |
(6) Deferred contract cost (Refer to
note 2.10) includes technology assets taken over by the Company from a customer as a part of transformation project which is not considered
as distinct goods or services and the control related to the assets is not transferred to the Company in accordance with Ind AS 115 -
Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted
as Deferred contract cost. The Company has entered into a financing arrangement with a third party for these assets which has been considered
as financial liability. As at December 31, 2023, the financial liability pertaining to such arrangements amounts to 63 crore.
Accrued expenses primarily relate to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses, office
maintenance and cost of third party software and hardware.
2.13 TRADE PAYABLES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Outstanding dues of micro enterprises and small enterprises |
17 |
97 |
| Outstanding dues of creditors other than micro enterprises and small enterprises(1) |
2,399 |
2,329 |
| Total trade payables |
2,416 |
2,426 |
| (1) Includes dues to
subsidiaries |
725 |
653 |
2.14 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Accrued defined benefit liability |
260 |
412 |
| Others |
|
|
| Deferred income |
2 |
2 |
| Deferred income - government grants |
28 |
- |
| Total non - current other liabilities |
290 |
414 |
| Current |
|
|
| Accrued defined benefit liability |
2 |
2 |
| Unearned revenue |
6,210 |
5,491 |
| Others |
|
|
| Deferred income - government grants |
5 |
28 |
| Withholding taxes and others |
2,209 |
2,088 |
| Total current other liabilities |
8,426 |
7,609 |
| Total other liabilities |
8,716 |
8,023 |
2.15 PROVISIONS
Accounting Policy
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 on 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. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete 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.
Provision for post-sales client support and other
provisions
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,510 |
1,163 |
| Total provisions |
1,510 |
1,163 |
Provision for post sales client support and other provisions
majorly 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 1 year.
2.16 INCOME TAXES
Accounting Policy
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 equity or 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; deferred tax assets and deferred 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. The income tax provision for the interim period is made based on the best estimate
of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of
employee share options in excess of compensation charged to income are credited to equity.
Income tax expense in the statement of Profit and Loss
comprises:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Current taxes |
2,231 |
1,916 |
6,476 |
6,261 |
| Deferred taxes |
93 |
169 |
309 |
61 |
| Income tax expense |
2,324 |
2,085 |
6,785 |
6,322 |
Income tax expense for the three months ended December
31, 2023 and December 31, 2022 includes reversal (net of provisions) of 71 crore and 79 crore, respectively. Income tax
expense for the nine months ended December 31, 2023 and December 31, 2022 includes reversal (net of provisions) of 151 crore and
65 crore, respectively. These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months and nine months
ended December 31, 2023 and December 31, 2022 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.17 REVENUE FROM OPERATIONS
Accounting Policy
The Company derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Company’s core and digital offerings (together called as “software
related services”). Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-timeframe
basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing, by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Company has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Company assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Company allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Company estimates the cost of satisfying the performance obligation and then
adds an appropriate margin based on similar services.
The Company’s contracts may include variable
consideration including rebates, volume discounts and penalties. The Company includes variable consideration as part of transaction price
when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal
of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Company’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as "unearned revenues").
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of a contract at its
relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Company is unable to determine the standalone selling price, the Company uses the expected cost plus
margin approach in estimating the standalone selling price. For software development and related services, the performance obligations
are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Company is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Company uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Company uses the expected cost plus margin approach
in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation
service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue
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 performance obligations are satisfied. ATS revenue is
recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer
and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it controls
the good or service before it is transferred to the customer. The Company considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is
acting as a principal or an agent.
The incremental costs of obtaining a contract
(i.e., costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Company
expects to recover them.Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not
represent a separate performance obligation are recognized as an asset when such costs (a) relate directly to the contract; (b)
generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future; and (c) are
expected to be recovered. Capitalized contract costs relating to upfront payments to customers are amortized to revenue and other
capitalized costs are amortized to expenses over the respective contract life on a systematic basis consistent with the transfer of
goods or services to customer to which the asset relates. Capitalized costs are monitored regularly for impairment. Impairment
losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover the carrying amount
of the capitalized costs.
The Company presents revenues net of indirect taxes
in its Statement of Profit and Loss.
Revenue from operations for the three months and nine
months ended December 31, 2023 and December 31, 2022 is as follows:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenue from software services |
32,405 |
32,328 |
96,697 |
93,312 |
| Revenue from products and platforms |
86 |
61 |
235 |
171 |
| Total revenue from operations |
32,491 |
32,389 |
96,932 |
93,483 |
Products & platforms
The Company derives revenues from the sale of products
and platforms including Infosys Applied AI which applies next-generation AI and machine learning.The percentage of revenue from fixed-price
contracts for the three months ended December 31, 2023 and December 31, 2022 is 58% and 55%, respectively. The percentage of revenue from
fixed-price contracts for the nine months ended December 31, 2023 and December 31, 2022 is 56% and 54%, respectively.
Trade receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Company’s Balance Sheet. Amounts are billed as
work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement
of contractual milestones.
The Company’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because
the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the Balance Sheet.
2.18 OTHER INCOME, NET
2.18.1 Other income
Accounting Policy
Other income is comprised primarily of interest income,
dividend income, gain / loss on investments and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
2.18.2 Foreign currency
Accounting Policy
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 recognized in the Statement of Profit and Loss and reported within exchange gains/(losses) on translation of
assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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. The related revenue and expense are recognized
using the same exchange rate.
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 cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
Government grant
The Company recognizes government grants only when
there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government
grants related to assets are treated as deferred income and are recognized in the net profit in the Statement of Profit and Loss on a
systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis
in the net profit in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended
to compensate.
Other income for the three months and nine months ended
December 31, 2023 and December 31, 2022 is as follows:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
|
|
|
|
| Tax free bonds and government bonds |
33 |
38 |
101 |
113 |
| Deposit with Bank and others |
159 |
136 |
505 |
451 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
|
|
| Non-convertible debentures, commercial papers, certificates of deposit and government securities |
208 |
215 |
601 |
650 |
| Income on investments carried at fair value through other comprehensive income |
– |
– |
– |
1 |
| Income on investments carried at fair value through profit or loss |
|
|
|
|
| Gain / (loss) on liquid mutual funds and other investments |
81 |
63 |
160 |
107 |
| Dividend received from subsidiary |
927 |
494 |
2,118 |
1,187 |
| Exchange gains/(losses) on foreign currency forward and options contracts |
(202) |
(413) |
(103) |
(673) |
| Exchange gains/(losses) on translation of other assets and liabilities |
289 |
562 |
340 |
1,073 |
| Miscellaneous income, net |
87 |
82 |
212 |
184 |
| Total other income |
1,582 |
1,177 |
3,934 |
3,093 |
2.19 EXPENSES
Accounting Policy
2.19.1 Gratuity and Pension
The Company provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible Indian employees of Infosys. 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 Company. The Company contributes Gratuity 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 the Life
Insurance Corporation of India as permitted by Indian law.
The Company operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit
method. These defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market risk.
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 and are not reclassified to profit or loss in subsequent periods. 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 is recognized in net profit in the Statement of Profit
and Loss.
2.19.2 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 of India. 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.
2.19.3 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.
2.19.4 Compensated absences
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.
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit expenses |
|
|
|
|
| Salaries including bonus |
15,569 |
15,757 |
47,033 |
45,248 |
| Contribution to provident and other funds |
511 |
499 |
1,502 |
1,425 |
| Share based payments to employees (Refer to note 2.11) |
131 |
101 |
378 |
343 |
| Staff welfare |
93 |
38 |
179 |
166 |
| |
16,304 |
16,395 |
49,092 |
47,182 |
| Cost of software packages and others |
|
|
|
|
| For own use |
429 |
379 |
1,215 |
1,082 |
| Third party items bought for service delivery to clients |
1,382 |
1,349 |
3,578 |
3,257 |
| |
1,811 |
1,728 |
4,793 |
4,339 |
| Other expenses |
|
|
|
|
| Power and fuel |
44 |
40 |
130 |
113 |
| Brand and Marketing |
182 |
184 |
601 |
526 |
| Rates and taxes |
58 |
54 |
188 |
157 |
| Repairs and Maintenance |
233 |
237 |
719 |
670 |
| Consumables |
7 |
5 |
18 |
18 |
| Insurance |
41 |
35 |
128 |
106 |
| Provision for post-sales client support and others |
31 |
132 |
205 |
201 |
| Commission to non-whole time directors |
4 |
4 |
11 |
11 |
| Impairment loss recognized / (reversed) under expected credit loss model |
10 |
59 |
194 |
112 |
| Auditor's remuneration |
|
|
|
|
| Statutory audit fees |
1 |
1 |
5 |
5 |
| Tax matters |
– |
– |
– |
– |
| Other services |
– |
– |
– |
– |
| Contributions towards Corporate Social Responsibility |
125 |
132 |
315 |
289 |
| Others |
159 |
95 |
348 |
209 |
| |
895 |
978 |
2,862 |
2,417 |
2.20 BASIC AND DILUTED SHARES USED IN COMPUTING
EARNINGS PER EQUITY SHARE
Accounting Policy
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 at 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.
2.21 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting Policy
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Contingent liabilities: |
|
|
| Claims against the Company, not acknowledged as debts(1) |
4,490 |
4,316 |
| [Amount paid to statutory authorities 5,900 crore (6,115 crore)] |
|
|
| Commitments: |
|
|
Estimated amount of contracts remaining to be executed on capital contracts and not provided for
(net of advances and deposits)(2) |
637 |
824 |
| Other Commitments* |
5 |
8 |
| * | | Uncalled capital pertaining to investments |
| (1) | | As at December 31, 2023 and March 31, 2023, claims against the Company not acknowledged as
debts in respect of income tax matters amounted to 4,083 crore and 3,953 crore, respectively.The claims against the Company
primarily represent demands arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account
of multiple issues of disallowances such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in
respect of employment of new employees under section 80JJAA, disallowance of expenditure towards software being held as capital in nature,
payments made to Associated Enterprises held as liable for withholding of taxes. These matters are pending before various Income Tax
Authorities and the management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will
not have a material adverse effect on the Company's financial position and results of operations.Amount paid to statutory authorities
against the tax claims amounted to 5,890 crore and 6,105 crore as at December 31, 2023 and March 31, 2023, respectively. |
| (2) | | Capital contracts primarily comprises of commitments for infrastructure facilities and computer
equipments. |
Legal Proceedings
The Company is subject to legal proceedings and claims,
which have arisen in the ordinary course of business. The Company’s management reasonably expects that these legal actions, when
ultimately concluded and determined, will not have a material and adverse effect on the Company’s results of operations or financial
condition.
2.22 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended
March 31, 2023 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the nine months ended December 31, 2023, the
following are the changes in the subsidiaries.
| - | | Infosys Americas Inc., (Infosys Americas) a Wholly-owned subsidiary of Infosys Limited is
liquidated effective July 14, 2023. |
| - | | oddity GmbH renamed as WongDoody GmbH. |
| - | | On September 29, 2023, oddity space GmbH, oddity waves GmbH, oddity jungle GmbH, oddity group
services GmbH and oddity code GmbH merged into WongDoody GmbH and oddity code d.o.o which was formerly a subsidiary of oddity code Gmbh
has become a subsidiary of Wongdoody Gmbh (formerly known as oddity GmbH). |
| - | | On September 1, 2023 Infosys Ltd. acquired 100% of voting interests in Danske IT and Support
Services India Private Limited (“Danske IT”). |
| - | | Infosys BPM Canada Inc, a Wholly-owned subsidiary of Infosys BPM Limited was incorporated
on August 11, 2023. |
| - | | Kaleidoscope Prototyping LLC, a Wholly-owned subsidiary of Kaleidoscope Animations is liquidated
effective November 1, 2023. |
| - | | oddity Code d.o.o renamed as WongDoody d.o.o |
| - | | On November 24, 2023 Stater Participations B.V (Wholly-owned subsidiary of Stater N.V) merged
with Stater N.V and Stater Belgium N.V./S.A which was formerly a wholly owned subsidiary of Stater Participations B.V. became a wholly
owned subsidiary of Stater N.V. |
The Company’s related party transactions during
the three months and nine months ended December 31, 2023 and December 31, 2022 and outstanding balances as at December 31, 2023 and March
31, 2023 are with its subsidiaries with whom the Company generally enters into transactions which are at arms length and in the ordinary
course of business.
Change in key management personnel
The following are the changes in the key management
personnel:
Independent directors:
| - | | Helene Auriol Potier (appointed as independent director effective May 26, 2023) |
| - | | Nitin Paranjpe (appointed as an additional and independent director effective January 1,
2024) |
Executive Officers:
| - | | Mohit Joshi (resigned as President effective March 11, 2023 and was on leave till June 9,
2023 which was his last date with the company) |
| - | | Nilanjan Roy (resigned as Chief Financial Officer of the Company effective March 31, 2024) |
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transactions with key management personnel
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Salaries and other short term employee benefits to whole-time directors and executive officers(1)(2) |
24 |
12 |
82 |
86 |
| Commission and other benefits to non-executive / independent directors |
4 |
5 |
12 |
12 |
| Total |
28 |
17 |
94 |
98 |
| (1) | | Total employee stock compensation expense for the three months ended December 31, 2023
and December 31, 2022 includes a charge of 14 crore and less than a crore, respectively, towards key management personnel. For
the nine months ended December 31, 2023 and December 31, 2022, includes a charge of 51 crore and 41 crore respectively,
towards key management personnel. (Refer to note 2.11). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.23 SEGMENT REPORTING
The Company publishes this financial statement along
with the interim condensed consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed
the segment information in the interim condensed consolidated financial statements.
for and on behalf of the Board of Directors of Infosys
Limited
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
Bengaluru
January 11, 2024 |
|
|
Exhibit 99.10
Ind AS Consolidated
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed
consolidated financial statements of INFOSYS LIMITED (the “Company”), and its subsidiaries (the Company and its subsidiaries
together referred to as the “Group”), which comprise the Condensed Consolidated Balance Sheet as at December 31, 2023, the
Condensed Consolidated Statement of Profit and Loss (including Other Comprehensive Income) for the three months and nine months ended
on that date, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated Statement of Cash Flows for the
nine months ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred
to as the “interim condensed consolidated financial statements”).
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair
view in conformity with the Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”) prescribed
under section 133 of the Companies Act, 2013 (the “Act”), read with relevant rules issued thereunder and other accounting
principles generally accepted in India, of the consolidated state of affairs of the Group as at December 31, 2023, its consolidated profit
and its consolidated total comprehensive income for the three months and nine months ended on that date, its consolidated changes in equity
and its consolidated cash flows for the nine months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed
consolidated financial statements in accordance with the Standards on Auditing (“SA”s) specified under section 143 (10) of
the Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the
Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code
of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that
are relevant to our audit of the interim condensed consolidated financial statements under the provisions of the Act and the Rules made
thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code
of Ethics. We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on
the interim condensed consolidated financial statements.
Emphasis of Matter
As described in note 2.21.3 to the interim condensed
consolidated financial statements, certain costs relating to possible damages or claims relating to a cybersecurity incident in a subsidiary
are indeterminable as at the date of this report because of reasons stated in the note. Our opinion is not modified in respect of this
matter.
Responsibilities of Management and Those Charged
with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed consolidated financial statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with Ind AS 34 and other accounting principles generally accepted in India.
The respective Boards of Directors/Trustees of the entities included in the Group are responsible for maintenance of the adequate accounting
records for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application
of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance
of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the respective interim financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the interim
condensed consolidated financial statements by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated
financial statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing
the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their own respective
entities or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees of
the entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the interim condensed consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial
statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within
the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision
and performance of the audit of financial statements of such entities included in the interim condensed consolidated financial statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements in
the interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance
of the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: January 11, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Sanjiv V. Pilgaonkar
Partner
(Membership No.039826)
UDIN: 24039826BKCOCM9487 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under Indian Accounting Standards (Ind AS) for the three months and nine months ended December
31, 2023
| Index |
| Condensed Consolidated Balance Sheet |
| Condensed Consolidated Statement of Profit and Loss |
| Condensed Consolidated Statement of Changes in Equity |
| Condensed Consolidated Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Consolidated Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Basis of consolidation |
| 1.4 Use of estimates and judgments |
| 1.5 Critical accounting estimates and judgments |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Business Combinations |
| 2.2 Property, plant and equipment |
| 2.3 Goodwill and intangible assets |
| 2.4 Investments |
| 2.5 Loans |
| 2.6 Other financial assets |
| 2.7 Trade receivables |
| 2.8 Cash and cash equivalents |
| 2.9 Other assets |
| 2.10 Financial instruments |
| 2.11 Equity |
| 2.12 Other financial liabilities |
| 2.13 Other liabilities |
| 2.14 Provisions |
| 2.15 Income taxes |
| 2.16 Revenue from operations |
| 2.17 Other income, net |
| 2.18 Expenses |
| 2.19 Leases |
| 2.20 Basic and diluted shares used in computing earnings per equity share |
| 2.21 Contingent liabilities and commitments |
| 2.22 Related party transactions |
| 2.23 Segment reporting |
| 2.24 Function wise classification of Condensed Consolidated Statement of Profit and Loss |
INFOSYS LIMITED AND SUBSIDIARIES
(In crore)
| Condensed Consolidated Balance Sheets as at |
Note No. |
December 31, 2023 |
March 31, 2023 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.2 |
12,153 |
13,346 |
| Right-of-use assets |
2.19 |
6,892 |
6,882 |
| Capital work-in-progress |
|
595 |
288 |
| Goodwill |
2.3 |
7,435 |
7,248 |
| Other intangible assets |
|
1,508 |
1,749 |
| Financial assets |
|
|
|
| Investments |
2.4 |
11,270 |
12,569 |
| Loans |
2.5 |
35 |
39 |
| Other financial assets |
2.6 |
2,701 |
2,798 |
| Deferred tax assets (net) |
|
702 |
1,245 |
| Income tax assets (net) |
|
6,851 |
6,453 |
| Other non-current assets |
2.9 |
2,403 |
2,318 |
| Total non-current assets |
|
52,545 |
54,935 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.4 |
7,974 |
6,909 |
| Trade receivables |
2.7 |
30,618 |
25,424 |
| Cash and cash equivalents |
2.8 |
13,645 |
12,173 |
| Loans |
2.5 |
238 |
289 |
| Other financial assets |
2.6 |
11,433 |
11,604 |
| Income tax assets (net) |
|
173 |
6 |
| Other current assets |
2.9 |
13,240 |
14,476 |
| Total current assets |
|
77,321 |
70,881 |
| Total assets |
|
129,866 |
125,816 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.11 |
2,070 |
2,069 |
| Other equity |
|
78,000 |
73,338 |
| Total equity attributable to equity holders of the Company |
|
80,070 |
75,407 |
| Non-controlling interests |
|
380 |
388 |
| Total equity |
|
80,450 |
75,795 |
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.19 |
6,670 |
7,057 |
| Other financial liabilities |
2.12 |
2,498 |
2,058 |
| Deferred tax liabilities (net) |
|
942 |
1,220 |
| Other non-current liabilities |
2.13 |
377 |
500 |
| Total non-current liabilities |
|
10,487 |
10,835 |
| Current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.19 |
2,074 |
1,242 |
| Trade payables |
|
3,825 |
3,865 |
| Other financial liabilities |
2.12 |
15,993 |
18,558 |
| Other current liabilities |
2.13 |
11,191 |
10,830 |
| Provisions |
2.14 |
1,827 |
1,307 |
| Income tax liabilities (net) |
|
4,019 |
3,384 |
| Total current liabilities |
|
38,929 |
39,186 |
| Total equity and liabilities |
|
129,866 |
125,816 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
(In crore, except equity share and per equity
share data)
| Condensed Consolidated Statement of Profit and Loss for the |
Note No. |
Three months ended December 31, |
Nine months ended December 31, |
| |
|
2023 |
2022 |
2023 |
2022 |
| Revenue from operations |
2.16 |
38,821 |
38,318 |
115,748 |
109,326 |
| Other income, net |
2.17 |
789 |
769 |
1,982 |
2,030 |
| Total income |
|
39,610 |
39,087 |
117,730 |
111,356 |
| Expenses |
|
|
|
|
|
| Employee benefit expenses |
2.18 |
20,651 |
20,272 |
62,228 |
58,048 |
| Cost of technical sub-contractors |
|
3,066 |
3,343 |
9,264 |
10,946 |
| Travel expenses |
|
387 |
360 |
1,288 |
1,099 |
| Cost of software packages and others |
2.18 |
3,722 |
3,085 |
9,828 |
8,017 |
| Communication expenses |
|
169 |
183 |
531 |
542 |
| Consultancy and professional charges |
|
504 |
401 |
1,237 |
1,296 |
| Depreciation and amortization expenses |
|
1,176 |
1,125 |
3,515 |
3,104 |
| Finance cost |
|
131 |
80 |
360 |
202 |
| Other expenses |
2.18 |
1,185 |
1,307 |
3,731 |
3,246 |
| Total expenses |
|
30,991 |
30,156 |
91,982 |
86,500 |
| Profit before tax |
|
8,619 |
8,931 |
25,748 |
24,856 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.15 |
2,419 |
2,195 |
7,216 |
7,027 |
| Deferred tax |
2.15 |
87 |
150 |
258 |
(145) |
| Profit for the period |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
71 |
29 |
94 |
(17) |
| Equity instruments through other comprehensive income, net |
|
(9) |
1 |
31 |
8 |
| |
|
62 |
30 |
125 |
(9) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(46) |
(57) |
(17) |
(43) |
| Exchange differences on translation of foreign operations |
|
436 |
676 |
457 |
715 |
| Fair value changes on investments, net |
|
52 |
48 |
107 |
(298) |
| |
|
442 |
667 |
547 |
374 |
| Total other comprehensive income /(loss), net of tax |
|
504 |
697 |
672 |
365 |
| Total comprehensive income for the period |
|
6,617 |
7,283 |
18,946 |
18,339 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,106 |
6,586 |
18,264 |
17,967 |
| Non-controlling interests |
|
7 |
– |
10 |
7 |
| |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,605 |
7,268 |
18,934 |
18,322 |
| Non-controlling interests |
|
12 |
15 |
12 |
17 |
| |
|
6,617 |
7,283 |
18,946 |
18,339 |
| Earnings per equity share |
|
|
|
|
|
| Equity shares of par value 5/- each |
|
|
|
|
|
| Basic (in per share) |
|
14.76 |
15.72 |
44.13 |
42.85 |
| Diluted (in per share) |
|
14.74 |
15.70 |
44.08 |
42.79 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
|
|
| Basic (in shares) |
2.20 |
4,138,963,794 |
4,190,550,470 |
4,138,282,170 |
4,192,969,201 |
| Diluted (in shares) |
2.20 |
4,143,565,697 |
4,195,924,920 |
4,143,506,821 |
4,199,312,062 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Condensed Consolidated Statement of Changes in Equity
(In crore)
| Particulars |
|
OTHER EQUITY |
|
|
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
Equity Share capital (1) |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (2) |
Other reserves (3) |
Equity instruments through other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| Balance as at April 1, 2022 |
2,098 |
54 |
139 |
200 |
61,313 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,350 |
386 |
75,736 |
| Impact on adoption of amendment to Ind AS 37# |
– |
– |
– |
– |
(19) |
– |
– |
– |
– |
– |
– |
– |
– |
(19) |
– |
(19) |
| |
2,098 |
54 |
139 |
200 |
61,294 |
1,061 |
606 |
8,339 |
16 |
254 |
1,560 |
2 |
(292) |
75,331 |
386 |
75,717 |
| Changes in equity for the nine months ended December 31, 2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
17,967 |
– |
– |
– |
– |
– |
– |
– |
– |
17,967 |
7 |
17,974 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(17) |
(17) |
– |
(17) |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
8 |
– |
– |
– |
8 |
– |
8 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(43) |
– |
(43) |
– |
(43) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
705 |
– |
– |
705 |
10 |
715 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(298) |
(298) |
– |
(298) |
| Total Comprehensive income for the period |
– |
– |
– |
– |
17,967 |
– |
– |
– |
– |
8 |
705 |
(43) |
(315) |
18,322 |
17 |
18,339 |
| Shares issued on exercise of employee stock options (Refer to Note 2.11) |
1 |
– |
– |
22 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
23 |
– |
23 |
| Employee stock compensation expense (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
382 |
– |
– |
– |
– |
– |
– |
382 |
– |
382 |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
2 |
(2) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Buyback of equity shares (Refer to Note 2.11)** |
(13) |
– |
– |
(332) |
(5,820) |
– |
– |
– |
– |
– |
– |
– |
– |
(6,165) |
– |
(6,165) |
| Transaction costs relating to buyback* |
– |
– |
– |
(17) |
(1) |
– |
– |
– |
– |
– |
– |
– |
– |
(18) |
– |
(18) |
| Amount transferred to capital redemption reserve upon buyback |
– |
– |
11 |
– |
(2) |
(9) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(2,575) |
– |
– |
2,575 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transfer to legal reserve |
– |
– |
– |
– |
(3) |
– |
– |
– |
3 |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to note 2.11) |
– |
– |
– |
191 |
– |
– |
(191) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
49 |
– |
– |
– |
– |
– |
– |
49 |
– |
49 |
| Dividends (1) |
– |
– |
– |
– |
(13,632) |
– |
– |
– |
– |
– |
– |
– |
– |
(13,632) |
– |
(13,632) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(22) |
(22) |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
869 |
– |
– |
(869) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at December 31, 2022 |
2,086 |
54 |
150 |
64 |
58,097 |
1,054 |
844 |
10,045 |
19 |
262 |
2,265 |
(41) |
(607) |
74,292 |
381 |
74,673 |
Condensed Consolidated Statement of Changes in Equity
(contd.)
(In crore)
| Particulars |
|
OTHER EQUITY |
|
|
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
Equity Share capital (1) |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (2) |
Other reserves (3) |
Equity instruments through other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| Balance as at April 1, 2023 |
2,069 |
54 |
169 |
166 |
58,957 |
1,054 |
878 |
10,014 |
19 |
247 |
2,325 |
(5) |
(540) |
75,407 |
388 |
75,795 |
| Changes in equity for the nine months ended December 31, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
18,264 |
– |
– |
– |
– |
– |
– |
– |
– |
18,264 |
10 |
18,274 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
94 |
94 |
– |
94 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
31 |
– |
– |
– |
31 |
– |
31 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(17) |
– |
(17) |
– |
(17) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
455 |
– |
– |
455 |
2 |
457 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
107 |
107 |
– |
107 |
| Total Comprehensive income for the period |
– |
– |
– |
– |
18,264 |
– |
– |
– |
– |
31 |
455 |
(17) |
201 |
18,934 |
12 |
18,946 |
| Shares issued on exercise of employee stock options (Refer to Note 2.11) |
1 |
– |
– |
3 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
4 |
– |
4 |
| Employee stock compensation expense (Refer to Note 2.11) |
– |
– |
– |
– |
– |
– |
417 |
– |
– |
– |
– |
– |
– |
417 |
– |
417 |
| Transferred on account of exercise of stock options (Refer to note 2.11) |
– |
– |
– |
351 |
– |
– |
(351) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
32 |
(32) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Dividends (1) |
– |
– |
– |
– |
(14,692) |
– |
– |
– |
– |
– |
– |
– |
– |
(14,692) |
– |
(14,692) |
| Dividends paid to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(2) |
(2) |
| Buyback of shares pertaining to non controlling interest of subsidiary |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(18) |
(18) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(2,326) |
– |
– |
2,326 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
485 |
– |
– |
(485) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at December 31, 2023 |
2,070 |
54 |
169 |
520 |
60,688 |
1,086 |
912 |
11,855 |
19 |
278 |
2,780 |
(22) |
(339) |
80,070 |
380 |
80,450 |
| ** | | Including tax on buyback of 1,165 crore for the nine months ended December 31,
2022. |
| # | | Impact on account of adoption of amendment to Ind AS 37 Provisions, Contingent Liabilities
and Contingents Assets |
| (1) | | Net of treasury shares |
| (2) | | 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 Group
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. |
| (3) | | 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 interim condensed consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Condensed Consolidated Statement of Cash Flows
Accounting policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
Note No. |
Nine months ended December 31, |
| |
|
2023 |
2022 |
| Cash flow from operating activities |
|
|
|
| Profit for the period |
|
18,274 |
17,974 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Income tax expense |
2.15 |
7,474 |
6,882 |
| Depreciation and amortization |
|
3,515 |
3,104 |
| Interest and dividend income |
|
(1,495) |
(1,388) |
| Finance cost |
|
360 |
202 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
219 |
197 |
| Exchange differences on translation of assets and liabilities, net |
|
129 |
373 |
| Stock compensation expense |
|
426 |
386 |
| Provision for post sale client support |
|
203 |
200 |
| Other adjustments |
|
1,089 |
477 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(3,555) |
(7,350) |
| Loans, other financial assets and other assets |
|
(738) |
(2,435) |
| Trade payables |
|
(39) |
644 |
| Other financial liabilities, other liabilities and provisions |
|
(1,002) |
3,263 |
| Cash generated from operations |
|
24,860 |
22,529 |
| Income taxes paid |
|
(7,146) |
(6,615) |
| Net cash generated by operating activities |
|
17,714 |
15,914 |
| Cash flows from investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(1,647) |
(1,805) |
| Deposits placed with corporation |
|
(737) |
(904) |
| Redemption of deposits placed with Corporation |
|
628 |
671 |
| Interest and dividend received |
|
1,516 |
1,267 |
| Payment towards acquisition of business, net of cash acquired |
2.1 |
– |
(910) |
| Payment of contingent consideration pertaining to acquisition of business |
|
(101) |
(60) |
| Escrow and other deposists pertaining to Buyback |
|
– |
(592) |
| Other receipts |
|
128 |
57 |
| Payments to acquire Investments |
|
|
|
| Liquid mutual fund units |
|
(53,255) |
(54,567) |
| Certificates of deposit |
|
(4,219) |
(6,794) |
| Commercial Papers |
|
(4,804) |
(2,338) |
| Non-convertible debentures |
|
(337) |
(249) |
| Tax free bonds |
|
– |
(13) |
| Government securities |
|
– |
(1,569) |
| Other Investments |
|
(11) |
(18) |
| Proceeds on sale of Investments |
|
|
|
| Tax free bonds and government bonds |
|
150 |
13 |
| Liquid mutual funds units |
|
52,238 |
53,546 |
| Certificates of deposit |
|
5,981 |
7,605 |
| Commercial Papers |
|
3,599 |
1,300 |
| Non-convertible debentures |
|
975 |
295 |
| Government securities |
|
304 |
1,882 |
| Equity and preference securities |
|
18 |
99 |
| Net cash generated / (used in) from investing activities |
|
426 |
(3,084) |
| Cash flows from financing activities |
|
|
|
| Payment of lease liabilities |
|
(1,448) |
(866) |
| Payment of dividends |
|
(14,695) |
(13,633) |
| Payment of dividend to non-controlling interest of subsidiary |
|
(2) |
(22) |
| Payment towards buyback of shares pertaining to non controlling interest of subsidiary |
|
(18) |
– |
| Shares issued on exercise of employee stock options |
|
4 |
23 |
| Other receipts |
|
2 |
121 |
| Other payments |
|
(528) |
(360) |
| Buyback of equity shares including transaction cost and tax on buyback |
|
- |
(3,928) |
| Net cash used in financing activities |
|
(16,685) |
(18,665) |
| Net increase / (decrease) in cash and cash equivalents |
|
1,455 |
(5,835) |
| Effect of exchange rate changes on cash and cash equivalents |
|
17 |
(50) |
| Cash and cash equivalents at the beginning of the period |
2.8 |
12,173 |
17,472 |
| Cash and cash equivalents at the end of the period |
2.8 |
13,645 |
11,587 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.8 |
376 |
384 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
|
|
|
| |
|
|
|
|
Sanjiv V. Pilgaonkar
Partner
Membership No. 039826 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
| |
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
|
Bengaluru
January 11, 2024 |
|
|
|
Overview and notes to the Interim Condensed Consolidated
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is hereinafter referred to as "the Group".
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics city, Hosur Road, Bengaluru 560100, Karnataka, India. The Company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the Company's Board of Directors on January 11, 2024.
1.2 Basis of preparation of financial statements
These interim condensed consolidated financial statements
are prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting , under the historical cost convention
on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013
('the Act') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed consolidated
financial statements do not include all the information required for a complete set of financial statements. These interim condensed consolidated
financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s
Annual Report for the year ended March 31, 2023. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
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. The material accounting policy information used in preparation of the audited condensed consolidated
interim financial statements have been discussed in the respective notes.
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 interim condensed 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.
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.
1.4 Use of estimates and judgments
The preparation of the interim condensed consolidated
financial statements in conformity with Ind AS requires the 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 interim condensed consolidated financial statements and reported amounts of revenues
and expenses during the period. The 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 no. 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 and judgements are reflected in the interim
condensed consolidated financial statements in the period in which changes are made and, if material, their effects are disclosed in the
notes to the interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to
perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgment.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the
latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore, is
acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, 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.
In assessing the realizability of deferred income tax
assets, the 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, the 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 (Refer to Notes 2.15).
c. Business combinations and intangible assets
Business combinations are accounted for using Ind AS
103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair valued in order
to ascertain the fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted
by external valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option
arrangements and intangible assets. These measurements are based on information available at the acquisition date and are based on expectations
and assumptions that have been deemed reasonable by the Management (Refer to Note 2.1).
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 asset’s 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 the 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 (Refer to Note 2.2).
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 (CGUs) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based
on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current
economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins (Refer
to Note 2.3.1).
2.1 BUSINESS COMBINATIONS
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of Ind AS 103, Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the Consolidated Statement of Profit and Loss.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under common
control is accounted for at carrying value of the assets acquired and liabilities assumed in the Group's consolidated financial statements.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized.
Transaction costs that the Group incurs in connection
with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are
expensed as incurred.
Proposed acquisition
On January 11, 2024, Infosys Limited entered into a
definitive agreement to acquire 100% of the equity share capital in InSemi Technology Services Private Limited, a semiconductor design
services company headquartered in India, for a consideration including earn-outs, and management incentives and retention bonuses totalling
up to 280 crore (approximately $34 million) , subject to customary closing adjustments.
2.2 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 the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. 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:
| Buildings (1) |
22-25 years |
| Plant and machinery (1)(2) |
5 years |
| Office equipment |
5 years |
| Computer equipment (1) |
3-5 years |
| Furniture and fixtures (1) |
5 years |
| Vehicles(1) |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Based on technical evaluation, the Management believes that the useful lives as given
above best represent the period over which the Management expects to use these assets. Hence, the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013 |
| (2) | | Includes Solar plant with a useful life of 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful 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.
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 ready 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. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
Impairment
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 Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the Consolidated 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 Consolidated 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 depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at October 1, 2023 |
1,431 |
11,527 |
3,307 |
1,487 |
8,496 |
2,331 |
1,495 |
45 |
30,119 |
| Additions |
1 |
4 |
12 |
30 |
203 |
– |
5 |
1 |
256 |
| Deletions** |
– |
(55) |
(16) |
(10) |
(222) |
(28) |
(54) |
(1) |
(386) |
| Translation difference |
– |
22 |
2 |
3 |
20 |
5 |
10 |
– |
62 |
| Gross carrying value as at December 31, 2023 |
1,432 |
11,498 |
3,305 |
1,510 |
8,497 |
2,308 |
1,456 |
45 |
30,051 |
| Accumulated depreciation as at October 1, 2023 |
– |
(4,749) |
(2,534) |
(1,228) |
(6,132) |
(1,768) |
(1,124) |
(42) |
(17,577) |
| Depreciation |
– |
(114) |
(64) |
(33) |
(340) |
(62) |
(52) |
(1) |
(666) |
| Accumulated depreciation on deletions** |
– |
55 |
16 |
10 |
218 |
27 |
54 |
1 |
381 |
| Translation difference |
– |
(6) |
(2) |
(2) |
(13) |
(4) |
(9) |
– |
(36) |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,814) |
(2,584) |
(1,253) |
(6,267) |
(1,807) |
(1,131) |
(42) |
(17,898) |
| Carrying value as at October 1, 2023 |
1,431 |
6,778 |
773 |
259 |
2,364 |
563 |
371 |
3 |
12,542 |
| Carrying value as at December 31, 2023 |
1,432 |
6,684 |
721 |
257 |
2,230 |
501 |
325 |
3 |
12,153 |
The changes in the carrying value of property, plant and
equipment for the three months ended December 31, 2022 were as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at October 1, 2022 |
1,431 |
11,328 |
3,276 |
1,435 |
8,897 |
2,359 |
1,306 |
44 |
30,076 |
| Additions |
– |
165 |
89 |
32 |
348 |
100 |
31 |
– |
765 |
| Deletions* |
– |
– |
(1) |
(6) |
(393) |
(17) |
(1) |
– |
(418) |
| Translation difference |
– |
37 |
4 |
5 |
43 |
8 |
17 |
– |
114 |
| Gross carrying value as at December 31, 2022 |
1,431 |
11,530 |
3,368 |
1,466 |
8,895 |
2,450 |
1,353 |
44 |
30,537 |
| Accumulated depreciation as at October 1, 2022 |
– |
(4,308) |
(2,473) |
(1,177) |
(6,360) |
(1,871) |
(930) |
(38) |
(17,157) |
| Depreciation |
– |
(109) |
(70) |
(32) |
(343) |
(61) |
(49) |
(1) |
(665) |
| Accumulated depreciation on deletions* |
– |
– |
– |
6 |
392 |
17 |
1 |
– |
416 |
| Translation difference |
– |
(8) |
(4) |
(3) |
(28) |
(7) |
(14) |
– |
(64) |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,425) |
(2,547) |
(1,206) |
(6,339) |
(1,922) |
(992) |
(39) |
(17,470) |
| Carrying value as at October 1, 2022 |
1,431 |
7,020 |
803 |
258 |
2,537 |
488 |
376 |
6 |
12,919 |
| Carrying value as at December 31, 2022 |
1,431 |
7,105 |
821 |
260 |
2,556 |
528 |
361 |
5 |
13,067 |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2023 are as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,431 |
11,562 |
3,302 |
1,482 |
8,519 |
2,303 |
1,445 |
45 |
30,089 |
| Additions |
1 |
13 |
53 |
73 |
586 |
67 |
73 |
1 |
867 |
| Deletions** |
– |
(55) |
(48) |
(46) |
(622) |
(65) |
(65) |
(1) |
(902) |
| Translation difference |
– |
(22) |
(2) |
1 |
14 |
3 |
3 |
– |
(3) |
| Gross carrying value as at December 31, 2023 |
1,432 |
11,498 |
3,305 |
1,510 |
8,497 |
2,308 |
1,456 |
45 |
30,051 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,535) |
(2,437) |
(1,198) |
(5,826) |
(1,675) |
(1,032) |
(40) |
(16,743) |
| Depreciation |
– |
(339) |
(196) |
(98) |
(1,051) |
(192) |
(160) |
(3) |
(2,039) |
| Accumulated depreciation on deletions** |
– |
55 |
48 |
45 |
617 |
63 |
63 |
1 |
892 |
| Translation difference |
– |
5 |
1 |
(2) |
(7) |
(3) |
(2) |
– |
(8) |
| Accumulated depreciation as at December 31, 2023 |
– |
(4,814) |
(2,584) |
(1,253) |
(6,267) |
(1,807) |
(1,131) |
(42) |
(17,898) |
| Carrying value as at April 1, 2023 |
1,431 |
7,027 |
865 |
284 |
2,693 |
628 |
413 |
5 |
13,346 |
| Carrying value as at December 31, 2023 |
1,432 |
6,684 |
721 |
257 |
2,230 |
501 |
325 |
3 |
12,153 |
| ** | | During the three months and nine months ended December 31, 2023, certain assets which were
not in use having gross book value of 137 crore (net book value: Nil) and 594 crore (net book value: Nil), respectively
were retired. |
The changes in the carrying value of property, plant
and equipment for the nine months ended December 31, 2022 are as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2022 |
1,431 |
11,224 |
3,210 |
1,427 |
8,527 |
2,278 |
1,234 |
44 |
29,375 |
| Additions - Business Combination (Refer to Note 2.1) |
– |
– |
– |
5 |
6 |
1 |
2 |
– |
14 |
| Additions |
– |
308 |
164 |
67 |
1,016 |
202 |
117 |
1 |
1,875 |
| Deletions* |
– |
– |
(7) |
(36) |
(686) |
(37) |
(12) |
(1) |
(779) |
| Translation difference |
– |
(2) |
1 |
3 |
32 |
6 |
12 |
– |
52 |
| Gross carrying value as at December 31, 2022 |
1,431 |
11,530 |
3,368 |
1,466 |
8,895 |
2,450 |
1,353 |
44 |
30,537 |
| Accumulated depreciation as at April 1, 2022 |
– |
(4,100) |
(2,344) |
(1,150) |
(6,034) |
(1,779) |
(856) |
(37) |
(16,300) |
| Depreciation |
– |
(325) |
(208) |
(90) |
(968) |
(174) |
(139) |
(3) |
(1,907) |
| Accumulated depreciation on deletions* |
– |
– |
6 |
36 |
685 |
37 |
12 |
1 |
777 |
| Translation difference |
– |
– |
(1) |
(2) |
(22) |
(6) |
(9) |
– |
(40) |
| Accumulated depreciation as at December 31, 2022 |
– |
(4,425) |
(2,547) |
(1,206) |
(6,339) |
(1,922) |
(992) |
(39) |
(17,470) |
| Carrying value as at April 1, 2022 |
1,431 |
7,124 |
866 |
277 |
2,493 |
499 |
378 |
7 |
13,075 |
| Carrying value as at December 31, 2022 |
1,431 |
7,105 |
821 |
260 |
2,556 |
528 |
361 |
5 |
13,067 |
| * | | During the three months and nine months ended December 31, 2022, certain assets which were
old and not in use having gross book value of 275 crore (net book value: Nil) and 504 crore (net book value: Nil), respectively
were retired. |
| (1) | | Buildings include 250/- being the value of five shares of 50/- each in Mittal
Towers Premises Co-operative Society Limited. |
The aggregate depreciation has been included under
depreciation and amortization expense in the interim condensed Consolidated Statement of Profit and Loss.
Repairs and maintenance costs are recognized in the
Consolidated Statement of Profit and Loss when incurred.
2.3 GOODWILL AND OTHER INTANGIBLE ASSETS
2.3.1 Goodwill
Accounting policy
Goodwill represents the purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds purchase consideration, the fair
value of net assets acquired is reassessed and the bargain purchase gain is recognized in capital reserve. Goodwill is measured at cost
less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represents the lowest level at which goodwill is monitored for internal management purposes. 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. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Carrying value at the beginning |
7,248 |
6,195 |
| Goodwill on acquisitions |
– |
630 |
| Translation differences |
187 |
423 |
| Carrying value at the end |
7,435 |
7,248 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition.
2.3.2 Intangible Assets
Accounting policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry,
and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labor, overhead costs that are directly attributable to prepare
the asset for its intended use.
Impairment
Intangible assets 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 Consolidated 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 Consolidated 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) had no impairment loss been recognized for the asset in prior years.
2.4 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
79 |
193 |
| Equity securities |
2 |
3 |
| |
81 |
196 |
| Investments carried at fair value through profit or loss |
|
|
| Target maturity fund units |
422 |
402 |
| Others (1) |
195 |
169 |
| |
617 |
571 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
29 |
28 |
| Tax free bonds |
1,733 |
1,742 |
| |
1,762 |
1,770 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
1,818 |
2,713 |
| Equity securities |
137 |
– |
| Government securities |
6,855 |
7,319 |
| |
8,810 |
10,032 |
| Total non-current investments |
11,270 |
12,569 |
| Current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
2,138 |
975 |
| |
2,138 |
975 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Papers |
2,045 |
742 |
| Certificates of deposit |
1,909 |
3,574 |
| |
3,954 |
4,316 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Tax free bonds |
– |
150 |
| |
– |
150 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
1,425 |
1,155 |
| Government securities |
457 |
313 |
| |
1,882 |
1,468 |
| Total current investments |
7,974 |
6,909 |
| Total investments |
19,244 |
19,478 |
| Aggregate amount of quoted investments |
12,454 |
13,420 |
| Market value of quoted investments (including interest accrued), current |
1,884 |
1,637 |
| Market value of quoted investments (including interest accrued), non current |
10,761 |
12,042 |
| Aggregate amount of unquoted investments |
6,790 |
6,058 |
| Investments carried at amortized cost |
1,762 |
1,920 |
| Investments carried at fair value through other comprehensive income |
14,727 |
16,012 |
| Investments carried at fair value through profit or loss |
2,755 |
1,546 |
| (1) | | Uncalled capital commitments outstanding as at December 31, 2023 and March 31, 2023 was
81 crore and 92 crore, respectively. |
Refer to Note 2.10 for Accounting policies on Financial
Instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
December 31, 2023 |
March 31, 2023 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
2,138 |
975 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
422 |
402 |
| Tax free bonds and government bonds - carried at amortized cost |
Quoted price and market observable inputs |
1,947 |
2,148 |
| Non-convertible debentures - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
3,243 |
3,868 |
| Government securities - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
7,312 |
7,632 |
| Commercial Papers - carried at fair value through other comprehensive income |
Market observable inputs |
2,045 |
742 |
| Certificates of deposit - carried at fair value through other comprehensive income |
Market observable inputs |
1,909 |
3,574 |
| Quoted Equity securities - carried at fair value through other comprehensive income |
Quoted price |
137 |
– |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
81 |
196 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
195 |
169 |
| Total |
|
19,429 |
19,706 |
Note: Certain quoted investments are classified
as Level 2 in the absence of active market for such investments.
2.5 LOANS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
35 |
39 |
| |
35 |
39 |
| Loans credit impaired - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
2 |
2 |
| Less: Allowance for credit impairment |
(2) |
(2) |
| |
– |
– |
| Total non-current loans |
35 |
39 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
238 |
289 |
| Total current loans |
238 |
289 |
| Total loans |
273 |
328 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non Current |
|
|
| Security deposits (1) |
47 |
47 |
| Rental deposits (1) |
224 |
240 |
| Unbilled revenues (1)# |
1,343 |
1,185 |
| Net investment in sublease of right-of-use asset (1) |
4 |
305 |
| Restricted deposits (1)* |
18 |
96 |
| Others (1) |
1,065 |
925 |
| Total non-current other financial assets |
2,701 |
2,798 |
| Current |
|
|
| Security deposits (1) |
11 |
10 |
| Rental deposits (1) |
57 |
32 |
| Restricted deposits (1)* |
2,535 |
2,348 |
| Unbilled revenues (1)# |
7,464 |
8,317 |
| Interest accrued but not due (1) |
383 |
488 |
| Foreign currency forward and options contracts (2) (3) |
75 |
101 |
| Net investment in sublease of right of-use-asset (1) |
6 |
53 |
| Others (1) |
902 |
255 |
| Total current other financial assets |
11,433 |
11,604 |
| Total other financial assets |
14,134 |
14,402 |
| (1) Financial assets carried at amortized cost |
14,059 |
14,301 |
| (2) Financial assets carried at fair value through other comprehensive income |
13 |
32 |
| (3) Financial assets carried at fair value through profit or loss |
62 |
69 |
| * | | Restricted deposits represent deposits with financial institutions to settle employee related
obligations as and when they arise during the normal course of business. |
| # | | Classified as financial asset as right to consideration is unconditional and is due only
after a passage of time. |
2.7 TRADE RECEIVABLES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Trade Receivable considered good - Unsecured |
31,196 |
25,965 |
| Less: Allowance for expected credit loss |
578 |
541 |
| Trade Receivable considered good - Unsecured |
30,618 |
25,424 |
| Trade Receivable - credit impaired - Unsecured |
198 |
142 |
| Less: Allowance for credit impairment |
198 |
142 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables |
30,618 |
25,424 |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Balances with banks |
|
|
| In current and deposit accounts |
13,645 |
10,026 |
| Cash on hand |
– |
– |
| Others |
|
|
| Deposits with financial institutions |
– |
2,147 |
| Total cash and cash equivalents |
13,645 |
12,173 |
| Balances with banks in unpaid dividend accounts |
34 |
37 |
| Deposit with more than 12 months maturity |
142 |
833 |
Cash and cash equivalents as at December 31, 2023 and
March 31, 2023 include restricted cash and bank balances of 376 crore and 362 crore respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the company.
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.
2.9 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Capital advances |
122 |
159 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Withholding taxes and others |
685 |
684 |
| Unbilled revenues # |
334 |
264 |
| Defined benefit plan assets |
32 |
36 |
| Prepaid expenses |
346 |
332 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract * |
147 |
191 |
| Cost of fulfillment |
717 |
652 |
| Other receivables |
20 |
– |
| Total non-current other assets |
2,403 |
2,318 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
78 |
202 |
| Others |
|
|
| Unbilled revenues # |
5,763 |
6,972 |
| Withholding taxes and others |
2,961 |
3,268 |
| Prepaid expenses |
3,630 |
2,745 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract * |
256 |
853 |
| Cost of fulfillment |
331 |
175 |
| Other receivables |
221 |
261 |
| Total current other assets |
13,240 |
14,476 |
| Total other assets |
15,643 |
16,794 |
| # | | Classified as non financial asset as the contractual right to consideration is dependent
on completion of contractual milestones. |
| * | | Includes technology assets taken over by the Group from a customer as a part of transformation
project which is not considered as distinct goods or services and the control related to the assets is not transferred to the Group in
accordance with Ind AS 115 - Revenue from contract with customers. Accordingly, the same has been considered as a reduction to the total
contract value and accounted as Deferred contract cost. The Group has entered into financing arrangements with a third party for these
assets. As at December 31, 2023, the financial liability pertaining to such arrangements amounts to 356 crore. (Refer to Note
2.13) |
Withholding taxes and others primarily consist of
input tax credits and Cenvat/VAT recoverable from Government of India.
2.10 FINANCIAL INSTRUMENTS
Accounting policy
2.10.1 Initial recognition
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, which 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.
2.10.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss
A financial asset which is not classified in any of
the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration and financial liability under option arrangements recognized
in a business combination which is subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
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
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities,
carried at fair value through profit or loss.
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the Group 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 as 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 Consolidated 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.
(ii) Cash flow hedge
The Group 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 Consolidated 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 Consolidated 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 Consolidated Statement of Profit and Loss.
2.10.3 Derecognition of financial instruments
The Group derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group's Balance Sheet when the obligation
specified in the contract is discharged or cancelled or expires.
2.10.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, option pricing model, market multiples, available quoted market
prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
Refer to table 'Financial instruments by category'
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximates fair value due
to the short maturity of these instruments.
2.10.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For
all other financial assets, ECLs 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 Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in Consolidated Statement of Profit and Loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at December 31, 2023 are as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to Note 2.8) |
13,645 |
– |
– |
– |
– |
13,645 |
13,645 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
218 |
– |
218 |
218 |
| Tax free bonds and government bonds |
1,762 |
– |
– |
– |
– |
1,762 |
1,947(1) |
| Liquid mutual fund units |
– |
– |
2,138 |
– |
– |
2,138 |
2,138 |
| Target maturity fund units |
– |
– |
422 |
– |
– |
422 |
422 |
| Non convertible debentures |
– |
– |
– |
– |
3,243 |
3,243 |
3,243 |
| Government securities |
– |
– |
– |
– |
7,312 |
7,312 |
7,312 |
| Commercial papers |
– |
– |
– |
– |
2,045 |
2,045 |
2,045 |
| Certificates of deposit |
– |
– |
– |
– |
1,909 |
1,909 |
1,909 |
| Other investments |
– |
– |
195 |
– |
– |
195 |
195 |
| Trade receivables (Refer to Note 2.7) |
30,618 |
– |
– |
– |
– |
30,618 |
30,618 |
| Loans (Refer to Note 2.5) |
273 |
– |
– |
– |
– |
273 |
273 |
| Other financials assets (Refer to Note 2.6)(3) |
14,059 |
– |
62 |
– |
13 |
14,134 |
14,079(2) |
| Total |
60,357 |
– |
2,817 |
218 |
14,522 |
77,914 |
78,044 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,825 |
– |
– |
– |
– |
3,825 |
3,825 |
| Lease liabilities (Refer to Note 2.19) |
8,744 |
– |
– |
– |
– |
8,744 |
8,744 |
| Financial Liability under option arrangements (Refer to Note 2.12) |
– |
– |
648 |
– |
– |
648 |
648 |
| Other financial liabilities (Refer to Note 2.12) |
14,892 |
– |
114 |
– |
30 |
15,036 |
15,036 |
| Total |
27,461 |
– |
762 |
– |
30 |
28,253 |
28,253 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 55 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2023 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to Note 2.8) |
12,173 |
– |
– |
– |
– |
12,173 |
12,173 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
196 |
– |
196 |
196 |
| Tax free bonds and government bonds |
1,920 |
– |
– |
– |
– |
1,920 |
2,148(1) |
| Liquid mutual fund units |
– |
– |
975 |
– |
– |
975 |
975 |
| Target maturity fund units |
– |
– |
402 |
– |
– |
402 |
402 |
| Non convertible debentures |
– |
– |
– |
– |
3,868 |
3,868 |
3,868 |
| Government securities |
– |
– |
– |
– |
7,632 |
7,632 |
7,632 |
| Commercial papers |
– |
– |
– |
– |
742 |
742 |
742 |
| Certificates of deposit |
– |
– |
– |
– |
3,574 |
3,574 |
3,574 |
| Other investments |
– |
– |
169 |
– |
– |
169 |
169 |
| Trade receivables (Refer to Note 2.7) |
25,424 |
– |
– |
– |
– |
25,424 |
25,424 |
| Loans (Refer to Note 2.5) |
328 |
– |
– |
– |
– |
328 |
328 |
| Other financials assets (Refer to Note 2.6)(3) |
14,301 |
– |
69 |
– |
32 |
14,402 |
14,318(2) |
| Total |
54,146 |
– |
1,615 |
196 |
15,848 |
71,805 |
71,949 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,865 |
– |
– |
– |
– |
3,865 |
3,865 |
| Lease liabilities (Refer to Note 2.19) |
8,299 |
– |
– |
– |
– |
8,299 |
8,299 |
| Financial Liability under option arrangements (Refer to Note 2.12) |
– |
– |
600 |
– |
– |
600 |
600 |
| Other financial liabilities (Refer to Note 2.12) |
17,359 |
– |
161 |
– |
14 |
17,534 |
17,534 |
| Total |
29,523 |
– |
761 |
– |
14 |
30,298 |
30,298 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 84 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
For trade receivables, trade payables, other assets
and payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at December 31, 2023 is as follows:
(In crore)
| Particulars |
As at December 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
2,138 |
2,138 |
– |
– |
| Investments in target maturity fund units |
422 |
422 |
– |
– |
| Investments in tax free bonds |
1,918 |
1,692 |
226 |
– |
| Investments in government bonds |
29 |
29 |
– |
– |
| Investments in non convertible debentures |
3,243 |
2,426 |
817 |
– |
| Investment in government securities |
7,312 |
7,312 |
– |
– |
| Investments in equity securities |
139 |
137 |
– |
2 |
| Investments in preference securities |
79 |
– |
– |
79 |
| Investments in commercial papers |
2,045 |
– |
2,045 |
– |
| Investments in certificates of deposit |
1,909 |
– |
1,909 |
– |
| Other investments |
195 |
– |
– |
195 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
75 |
– |
75 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) |
144 |
– |
144 |
– |
| Financial liability under option arrangements (Refer to Note 2.12)(1) |
648 |
– |
– |
648 |
| Liability towards contingent consideration (Refer to Note 2.12)(1) |
– |
– |
– |
– |
| (1) | | Discount rate ranges from 10% to 17% |
During the nine months ended December 31, 2023, non-convertible
debentures , government securities and tax free bonds of 1679 crore was transferred from Level 2 to Level 1 of fair value hierarchy,
since these were valued based on quoted price. Further, non-convertible debentures of 147 crore were transferred from Level 1
to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2023 was as follows:
(In crore)
| Particulars |
As at March 31, 2023 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
975 |
975 |
– |
– |
| Investments in target maturity fund units |
402 |
402 |
– |
– |
| Investments in tax free bonds |
2,120 |
1,331 |
789 |
– |
| Investments in government bonds |
28 |
28 |
– |
– |
| Investments in non convertible debentures |
3,868 |
1,793 |
2,075 |
– |
| Investment in government securities |
7,632 |
7,549 |
83 |
– |
| Investments in equity securities |
3 |
– |
– |
3 |
| Investments in preference securities |
193 |
– |
– |
193 |
| Investments in commercial papers |
742 |
– |
742 |
– |
| Investments in certificates of deposit |
3,574 |
– |
3,574 |
– |
| Other investments |
169 |
– |
– |
169 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
101 |
– |
101 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.12) |
78 |
– |
78 |
– |
| Financial liability under option arrangements (Refer to Note 2.12)(1) |
600 |
– |
– |
600 |
| Liability towards contingent consideration (Refer to Note 2.12)(1) |
97 |
– |
– |
97 |
| (1) | | Discount rate ranges from 10% to 15% |
During the year ended March 31, 2023, government securities
and tax free bonds of 383 crore was transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based
on quoted price. Further, non-convertible debentures of 1,611 crore were transferred from Level 1 to Level 2 of fair value hierarchy,
since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
tax free bonds, certificates of deposit, commercial papers, treasury bills, government securities, quoted bonds issued by government and
quasi-government organizations and non-convertible debentures. The Group invests after considering counterparty risks based on multiple
criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial
institutions. These risks are monitored regularly as per Group's risk management program.
2.11 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity share capital.
Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction
from equity, net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to / from securities premium.
Description of reserves
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Securities premium
The amount received in excess of the par value of equity
shares has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The share options outstanding account is used to record
the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account
are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not
exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been 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.
Other components of equity
Other components of equity include currency translation,
remeasurement of net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on
fair valuation of investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Currency translation reserve
The exchange differences arising from the translation
of financial statements of foreign subsidiaries with functional currency other than Indian rupees is recognized in other comprehensive
income and is presented within equity.
Cash flow hedge reserve
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. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the interim condensed Consolidated Statement of Profit and Loss upon the occurrence of the related forecasted transaction.
EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Authorized |
|
|
| Equity shares, 5/- par value |
|
|
| 4,80,00,00,000 (4,80,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5/- par value(1) |
2,070 |
2,069 |
| 4,13,91,98,089 (4,13,63,87,925) equity shares fully paid-up(2) |
|
|
| |
2,070 |
2,069 |
Note: Forfeited shares amounted to 1,500 (1,500)
| (1) | | Refer to Note 2.20 for details of basic and diluted shares |
| (2) | | Net of treasury shares 1,12,49,465 (1,21,72,119) |
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 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 favor of the beneficiaries.
For details of shares reserved for issue under the
employee stock option plan of the Company refer to the note below.
The reconciliation of the number of shares outstanding
and the amount of share capital as at December 31, 2023 and March 31, 2023 are as follows:
(In crore, except as stated otherwise)
| Particulars |
As at December 31, 2023 |
As at March 31, 2023 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
413,63,87,925 |
2,069 |
419,30,12,929 |
2,098 |
| Add: Shares issued on exercise of employee stock options |
28,10,164 |
1 |
38,01,344 |
1 |
| Less: Shares bought back |
– |
– |
6,04,26,348 |
30 |
| As at the end of the period |
413,91,98,089 |
2,070 |
413,63,87,925 |
2,069 |
Capital allocation policy
Effective fiscal 2020, the Company expects to return
approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual dividends and/or share
buyback and/or special dividends, subject to applicable laws and requisite approvals, if any. Free cash flow is defined as net cash provided
by operating activities less capital expenditure as per the Consolidated Statement of Cash Flows prepared under IFRS. Dividend and buyback
include applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of December 31, 2023, the Company has only one class of equity shares
and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
Dividend
The final dividend on shares is 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. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders in accordance with Companies Act 2013 is as follows:
(in )
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interim dividend for fiscal 2024 |
18.00 |
– |
18.00 |
– |
| Final dividend for fiscal 2023 |
– |
– |
17.50 |
– |
| Interim dividend for fiscal 2023 |
– |
16.50 |
– |
16.50 |
| Final dividend for fiscal 2022 |
– |
– |
– |
16.00 |
The Board of Directors in their meeting held on April
13, 2023 recommended a final dividend of 17.50/- per equity share for the financial year ended March 31, 2023. The same was approved
by the shareholders at the Annual General Meeting (AGM) of the Company held on June 28, 2023 which resulted in a net cash outflow of 7,242
crore (excluding dividend paid on treasury shares).
The Board of Directors in their meeting held on October
12, 2023 declared an interim dividend of 18/- per equity share which resulted in a net cash outflow of 7,450 crore (excluding
dividend paid on treasury shares).
Employee Stock Option Plan (ESOP):
Accounting policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in the statement of profit and loss on a straight-line basis over the requisite service period for each separately
vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding
account.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan) :
On June 22, 2019 pursuant to approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 Plan shall not exceed 5,00,00,000
equity shares. To implement the 2019 Plan, up to 4,50,00,000 equity shares may be issued by way of secondary acquisition of shares by
Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 Plan shall vest based on the achievement
of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters
will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the Company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan) :
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Stock Incentive Compensation 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 are held by the trust towards the 2011 Plan
as at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers mentioned above are further adjusted
with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). 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 the market price as on the date of grant.
Controlled trust holds 1,12,49,465 and 1,21,72,119
shares as at December 31, 2023 and March 31, 2023, respectively, under the 2015 Plan. Out of these shares, 2,00,000 equity shares each
have been earmarked for welfare activities of the employees as at December 31, 2023 and March 31, 2023.
The following is the summary of grants made during
the three months and nine months ended December 31, 2023 and December 31, 2022:
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended December 31, |
Nine months ended December 31, |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
2023 |
2022 |
| Equity Settled RSUs |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
35,990 |
– |
114,271 |
176,893 |
88,040 |
– |
421,636 |
287,325 |
| Employees other than KMP |
464,260 |
3,814 |
464,260 |
374,774 |
1,169,660 |
48,050 |
1,197,940 |
48,050 |
| |
500,250 |
3,814 |
578,531 |
551,667 |
1,257,700 |
48,050 |
1,619,576 |
335,375 |
| Cash settled RSU |
|
|
|
|
|
|
|
|
| Key Management Personnel (KMP) |
– |
– |
– |
– |
– |
– |
– |
– |
| Employees other than KMP |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
– |
– |
– |
– |
7,950 |
– |
7,950 |
– |
| |
|
|
|
|
|
|
|
|
| Total Grants |
500,250 |
3,814 |
578,531 |
551,667 |
1,265,650 |
48,050 |
1,627,526 |
335,375 |
Notes on grants to KMP:
CEO & MD
Under the 2015 Plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of performance-based RSUs (Annual performance equity grant) of fair value
of 34.75 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain performance targets. Accordingly, 2,72,026 performance based RSU’s were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance equity ESG grant) of fair
value of 2 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on achievement
of certain environment, social and governance milestones as determined by the Board. Accordingly, 15,656 performance based RSU’s
were granted effective May 2, 2023.
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved the performance-based grant of RSUs (Annual performance Equity TSR grant) of fair
value of 5 crore for fiscal 2024 under the 2015 Plan. These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board. Accordingly, 39,140 performance based RSU’s
were granted effective May 2, 2023.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of December 31, 2023, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with Ind AS 102,
Share based payment. The grant date for this purpose in accordance with Ind AS 102, Share based payment is July 1, 2022.
Under the 2019 Plan:
The Board, on April 13, 2023, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2024 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 78,281 performance based RSU’s
were granted effective May 2, 2023.
Other KMP
Under the 2015 Plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved 88,040 time based RSUs and 6,774 performance based RSUs
to other KMP under the 2015 plan. The time based RSUs will vest over three years and performance based RSUs will vest over three years
based on certain performance targets.
Under the 2019 Plan:
During the nine months ended December 31, 2023, based
on recommendations of Nomination and Remuneration Committee, the Board approved performance based grants of 35,990 RSUs to other KMP under
the 2019 plan. These RSUs will vest over three years based on achievement of certain performance targets.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31,
|
| |
2023 |
2022 |
2023 |
2022 |
| Granted to: |
|
|
|
|
| KMP |
14 |
– |
51 |
41 |
| Employees other than KMP |
133 |
117 |
375 |
345 |
| Total (1) |
147 |
117 |
426 |
386 |
| (1) Cash-settled stock compensation expense included in the above |
2 |
5 |
9 |
4 |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options 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 options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
|
| |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
Fiscal 2023-
Equity Shares-RSU |
Fiscal 2023-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,321 |
16.41 |
1,525 |
18.08 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-31 |
25-33 |
23-32 |
27-34 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
4-5 |
5-7 |
2-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,151 |
14.31 |
1,210 |
13.69 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.12 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Others |
|
|
| Accrued compensation to employees (1) |
13 |
5 |
| Accrued expenses (1) |
2,204 |
1,628 |
| Compensated absences |
90 |
83 |
| Financial liability under option arrangements (2) # |
97 |
– |
| Other Payables (1)(4) |
94 |
342 |
| Total non-current other financial liabilities |
2,498 |
2,058 |
| Current |
|
|
| Unpaid dividends (1) |
34 |
37 |
| Others |
|
|
| Accrued compensation to employees (1) |
3,774 |
4,174 |
| Accrued expenses (1) |
7,763 |
7,802 |
| Retention monies (1) |
19 |
20 |
| Payable for acquisition of business - Contingent consideration (2) |
– |
97 |
| Payable by controlled trusts (1) |
211 |
211 |
| Compensated absences |
2,717 |
2,399 |
| Financial liability under option arrangements (2) # |
551 |
600 |
| Foreign currency forward and options contracts (2) (3) |
144 |
78 |
| Capital creditors (1) |
221 |
674 |
| Other payables (1)(4) |
559 |
2,466 |
| Total current other financial liabilities |
15,993 |
18,558 |
| Total other financial liabilities |
18,491 |
20,616 |
| (1) Financial liability carried at amortized cost |
14,892 |
17,359 |
| (2) Financial liability carried at fair value through profit or loss |
762 |
761 |
| (3) Financial liability carried at fair value through other comprehensive income |
30 |
14 |
(4) Deferred contract cost (Refer to Note
2.9) includes technology assets taken over by the Group from a customer as a part of transformation project which is not considered as
distinct goods or services and the control related to the assets is not transferred to the Group in accordance with Ind AS 115 - Revenue
from contract with customers. Accordingly, the same has been considered as a reduction to the total contract value and accounted as Deferred
contract cost. The Group has entered into financing arrangements with a third party for these assets. As at December 31, 2023, the financial
liability pertaining to such arrangements amounts to 356 crore.
# Represents liability related to options issued by
the Group over the non-controlling interests in its subsidiaries
Accrued expenses primarily relate to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses, office
maintenance and cost of third party software and hardware.
2.13 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Non-current |
|
|
| Others |
|
|
| Deferred income - government grants |
69 |
43 |
| Accrued defined benefit liability |
296 |
445 |
| Deferred income |
5 |
6 |
| Others |
7 |
6 |
| Total non-current other liabilities |
377 |
500 |
| Current |
|
|
| Unearned revenue |
7,674 |
7,163 |
| Others |
|
|
| Withholding taxes and others |
3,506 |
3,632 |
| Accrued defined benefit liability |
5 |
4 |
| Deferred income - government grants |
6 |
29 |
| Others |
– |
2 |
| Total current other liabilities |
11,191 |
10,830 |
| Total other liabilities |
11,568 |
11,330 |
2.14 PROVISIONS
Accounting policy
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 on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time
related revenues are recorded and included in Consolidated Statement of Profit and Loss. 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. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete 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.
Provision for post-sales client support and other
provisions:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,827 |
1,307 |
| Total provisions |
1,827 |
1,307 |
Provision for post sales client support and other provisions
majorly 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 1 year.
Provision for post sales client support and other
provisions is included in cost of sales in the condensed consolidated statement of profit and loss.
2.15 INCOME TAXES
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the Consolidated 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 equity or 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; deferred tax assets and deferred 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. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the Consolidated Statement of
Profit and Loss comprises:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Current taxes |
2,419 |
2,195 |
7,216 |
7,027 |
| Deferred taxes |
87 |
150 |
258 |
(145) |
| Income tax expense |
2,506 |
2,345 |
7,474 |
6,882 |
Income tax expense for the three months ended December
31, 2023 and December 31, 2022 includes reversal (net of provisions) of 64 crore and 76 crore, respectively. Income tax
expense for the nine months ended December 31, 2023 and December 31, 2022 includes reversal (net of provisions) of 136 crore and
36 crore, respectively. These reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months and nine months
ended December 31, 2023 and December 31, 2022 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.16 REVENUE FROM OPERATIONS
Accounting policy
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-timeframe basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and the Group’s costs to fulfil the
contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue
from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license are made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS).When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in
estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service
the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue 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 performance obligations are satisfied. ATS revenue is recognized ratably
on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the group first evaluates whether it controls
the good or service before it is transferred to the customer. The Group considers whether it has the primary obligation to fulfil the
contract, inventory risk, pricing discretion and other factors to determine whether it controls the goods or service and therefore is
acting as a principal or an agent.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to expenses over the respective contract life on a systematic
basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored regularly
for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover
the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in
its Consolidated Statement of Profit and Loss.
Revenue from operation for the three months and nine
months ended December 31, 2023 and December 31, 2022 are as follows:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenue from software services |
36,767 |
35,870 |
109,221 |
102,375 |
| Revenue from products and platforms |
2,054 |
2,448 |
6,527 |
6,951 |
| Total revenue from operations |
38,821 |
38,318 |
115,748 |
109,326 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms including Finacle – core banking solution, Edge Suite of products, Panaya platform, Infosys Equinox, Infosys Helix,
Infosys Applied AI, Infosys Cortex, Stater digital platform and Infosys McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer to Note 2.23). The table below presents disaggregated revenues from contracts with customers
by geography and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty
of revenues and cash flows are affected by industry, market and other economic factors.
For the three months and nine months ended December
31, 2023 and December 31, 2022:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Revenues by Geography* |
|
|
|
|
| North America |
22,911 |
23,756 |
69,805 |
67,881 |
| Europe |
10,934 |
9,895 |
31,407 |
27,587 |
| India |
920 |
927 |
3,048 |
2,880 |
| Rest of the world |
4,056 |
3,740 |
11,488 |
10,978 |
| Total |
38,821 |
38,318 |
115,748 |
109,326 |
| * | | Geographical revenues is based on the domicile of customer. |
The percentage of revenue from fixed-price contracts
for the three months ended December 31, 2023 and December 31, 2022 is 55% and 53%, respectively. The percentage of revenue from fixed-price
contracts for the nine months ended December 31, 2023 and December 31, 2022 is 53% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because
the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the consolidated Balance Sheet.
2.17 OTHER INCOME, NET
Accounting policy
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
Foreign currency
Accounting policy
Functional currency
The functional currency of Infosys, Infosys BPM, EdgeVerve,
Skava, Infosys Green Forum, Danske IT and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are
their respective local currencies. 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 recognized in the Consolidated Statement of Profit and Loss and reported within exchange gains/ (losses) on
translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. 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 transaction. The related revenue and expense
are recognized using the same exchange rate.
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 cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the Consolidated Statement of Profit and Loss. However when a change in the
parent's ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
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.
Government grant
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in net profit in the Consolidated Statement of Profit and Loss on
a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic
basis in net profit in the Consolidated Statement of Profit and Loss over the periods necessary to match them with the related costs which
they are intended to compensate.
Other income for the three months and nine months ended
December 31, 2023 and December 31, 2022 is as follows:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Interest income on financial assets carried at amortized cost |
|
|
|
|
| Tax free bonds and Government bonds |
33 |
38 |
101 |
113 |
| Deposit with Bank and others |
225 |
174 |
706 |
551 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
|
|
| Non-convertible debentures, commercial papers, certificates of deposit and government securities |
232 |
241 |
689 |
724 |
| Income on investments carried at fair value through profit or loss |
|
|
|
|
| Gain / (loss) on liquid mutual funds and other investments |
97 |
46 |
197 |
87 |
| Income on investments carried at fair value through other comprehensive income |
– |
– |
– |
1 |
| Exchange gains / (losses) on forward and options contracts |
(152) |
(363) |
(89) |
(789) |
| Exchange gains / (losses) on translation of other assets and liabilities |
230 |
552 |
210 |
1,153 |
| Miscellaneous income, net |
124 |
81 |
168 |
190 |
| Total other income |
789 |
769 |
1,982 |
2,030 |
2.18 EXPENSES
Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly 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. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM 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 the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement and/or for a lumpsum payment as set out in rules of each fund and includes death and disability
benefits. The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of
the respective employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit
method. These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
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 and are not reclassified to profit or loss in subsequent periods. 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 is recognized in net profit in the Consolidated Statement
of Profit and Loss.
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 of India. 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.
Superannuation
Certain employees of Infosys, Infosys BPM 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.
Compensated absences
The Group 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.
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Employee benefit expenses |
|
|
|
|
| Salaries including bonus |
19,799 |
19,467 |
59,789 |
55,712 |
| Contribution to provident and other funds |
571 |
559 |
1,684 |
1,596 |
| Share based payments to employees (Refer to Note 2.11) |
147 |
117 |
426 |
386 |
| Staff welfare |
134 |
129 |
329 |
354 |
| |
20,651 |
20,272 |
62,228 |
58,048 |
| Cost of software packages and others |
|
|
|
|
| For own use |
570 |
518 |
1,590 |
1,442 |
| Third party items bought for service delivery to clients |
3,152 |
2,567 |
8,238 |
6,575 |
| |
3,722 |
3,085 |
9,828 |
8,017 |
| Other expenses |
|
|
|
|
| Repairs and maintenance |
314 |
312 |
962 |
876 |
| Power and fuel |
49 |
47 |
151 |
130 |
| Brand and marketing |
220 |
228 |
722 |
640 |
| Rates and taxes |
80 |
75 |
241 |
221 |
| Consumables |
40 |
39 |
122 |
118 |
| Insurance |
50 |
44 |
158 |
131 |
| Provision for post-sales client support and others |
35 |
130 |
203 |
200 |
| Commission to non-whole time directors |
4 |
4 |
11 |
11 |
| Impairment loss recognized / (reversed) under expected credit loss model |
13 |
106 |
219 |
197 |
| Contributions towards Corporate Social Responsibility |
137 |
146 |
351 |
320 |
| Others |
243 |
176 |
591 |
402 |
| |
1,185 |
1,307 |
3,731 |
3,246 |
2.19 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes consist of leases
for land, buildings and computers. The Group assesses whether a contract contains a lease, at inception of a contract. A contract is,
or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether: (1)
the contract involves the use of an identified asset (2) the Group has substantially all of the economic benefits from use of the asset
through the period of the lease and (3) the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets 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 Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the Group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the Group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of October 1, 2023 |
616 |
3,811 |
15 |
2,508 |
6,950 |
| Additions* |
– |
7 |
5 |
521 |
533 |
| Deletions |
(10) |
(49) |
(1) |
(133) |
(193) |
| Impairment# |
– |
(88) |
– |
– |
(88) |
| Depreciation |
(1) |
(180) |
(2) |
(223) |
(406) |
| Translation difference |
2 |
26 |
1 |
67 |
96 |
| Balance as of December 31, 2023 |
607 |
3,527 |
18 |
2,740 |
6,892 |
| * | | Net of adjustments on account of modifications |
| # | | included under other expenses. Refer note 2.18 |
Following are the changes in the carrying value of
right-of-use assets for the three months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of October 1, 2022 |
622 |
3,843 |
14 |
1,146 |
5,625 |
| Additions* |
– |
133 |
2 |
1,010 |
1,145 |
| Deletions |
– |
(10) |
– |
(97) |
(107) |
| Depreciation |
(1) |
(170) |
(2) |
(162) |
(335) |
| Translation difference |
3 |
51 |
1 |
97 |
152 |
| Balance as of December 31, 2022 |
624 |
3,847 |
15 |
1,994 |
6,480 |
| * | | Net of adjustments on account of modifications and lease incentives |
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2023:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of April 1, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
| Additions* |
– |
333 |
10 |
1,496 |
1,839 |
| Deletions |
(10) |
(89) |
(1) |
(540) |
(640) |
| Impairment # |
– |
(88) |
– |
– |
(88) |
| Depreciation |
(5) |
(543) |
(7) |
(617) |
(1,172) |
| Translation difference |
(1) |
18 |
1 |
53 |
71 |
| Balance as of December 31, 2023 |
607 |
3,527 |
18 |
2,740 |
6,892 |
| * | | Net of adjustments on account of modifications and lease incentives |
| # | | included under other expenses. Refer note 2.18 |
Following are the changes in the carrying value of
right-of-use assets for the nine months ended December 31, 2022:
(In crore)
| Particulars |
Category of ROU asset |
|
| |
Land |
Buildings |
Vehicles |
Computers |
Total |
| Balance as of April 1, 2022 |
628 |
3,711 |
16 |
468 |
4,823 |
| Additions* |
– |
619 |
6 |
2,004 |
2,629 |
| Deletions |
– |
(12) |
– |
(250) |
(262) |
| Depreciation |
(4) |
(500) |
(7) |
(320) |
(831) |
| Translation difference |
– |
29 |
– |
92 |
121 |
| Balance as of December 31, 2022 |
624 |
3,847 |
15 |
1,994 |
6,480 |
| * | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included under depreciation and amortization expense in the interim condensed Consolidated Statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at December 31, 2023 and March 31, 2023:
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Current lease liabilities |
2,074 |
1,242 |
| Non-current lease liabilities |
6,670 |
7,057 |
| Total |
8,744 |
8,299 |
2.20 BASIC AND DILUTED SHARES USED IN COMPUTING
EARNINGS PER EQUITY SHARE
Accounting policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group 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 Group 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 at 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.
2.21 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting policy
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
2.21.1 Contingent liability
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Contingent liabilities : |
|
|
| Claims against the Group, not acknowledged as debts(1) |
5,066 |
4,762 |
[Amount paid to statutory authorities 6,286
crore (6,539 crore)]
| (1) | | As at December 31, 2023 and March 31, 2023, claims against the Group not acknowledged as
debts in respect of income tax matters amounted to 4,307 crore and 4,062 crore, respectively. |
The claims against the Group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of multiple issues of disallowances
such as disallowance of profits earned from STP Units and SEZ Units, disallowance of deductions in respect of employment of new employees
under section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to Associated Enterprises
held as liable for withholding of taxes. These matters are pending before various Income Tax Authorities and the Management including
its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on
the Group's financial position and results of operations.
Amount paid to statutory authorities against the tax
claims amounted to 6,275 crore and 6,528 crore as at December 31, 2023 and March 31, 2023, respectively.
2.21.2 Legal Proceedings
The Group is subject to legal proceedings and claims,
which have arisen in the ordinary course of business. The Group’s management reasonably expects that these legal actions, when ultimately
concluded and determined, will not have a material and adverse effect on the Group’s results of operations or financial condition.
2.21.3 McCamish Cybersecurity incident
In November 2023, Infosys McCamish Systems (McCamish)
a step down subsidiary of Infosys Limited experienced a cybersecurity incident resulting in the non-availability of certain applications
and systems. McCamish initiated its incident response and engaged cybersecurity and other specialists to assist in its investigation of
and response to the incident and remediation and restoration of impacted applications and systems. By December 31, 2023, McCamish, with
external specialists’ assistance, substantially remediated and restored the affected applications and systems.
Loss of contracted revenues and costs incurred with
respect to remediations, restoration, communication efforts and others amounted to approximately 250 crore ($30 million).
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. On the basis of analysis conducted by the cybersecurity firm, McCamish believes that
certain data was exfiltrated by unauthorized third parties during the incident and this exfiltrated data included certain customer data.
McCamish has engaged a third-party e- discovery vendor in assessing the extent and nature of such data. This review process is ongoing.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time.
Infosys had previously communicated the occurence of
this cybersecurity incident to BSE Limited, National Stock Exchange of India Limited, New York Stock Exchange and to United States Securities
and Exchange Commission on November 3, 2023.
2.21.4 Commitments
(In crore)
| Particulars |
As at |
| |
December 31, 2023 |
March 31, 2023 |
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(1) |
727 |
959 |
| Other commitments* |
81 |
92 |
| (1) | | Capital contracts primarily comprises of commitments for infrastructure facilities and computer
equipment. |
| * | | Uncalled capital pertaining to investments |
2.22 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended
March 31, 2023 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the nine months ended December 31, 2023, the
following are the changes in the subsidiaries.
| - | | Infosys Americas Inc., (Infosys Americas) a Wholly-owned subsidiary of Infosys Limited is
liquidated effective July 14, 2023. |
| - | | oddity GmbH renamed as WongDoody GmbH |
| - | | On September 29, 2023, oddity space GmbH, oddity waves GmbH, oddity jungle GmbH, oddity group
services GmbH and oddity code GmbH merged into WongDoody GmbH and oddity code d.o.o which was formerly a subsidiary of oddity code Gmbh
has become a subsidiary of Wongdoody Gmbh (formerly known as oddity GmbH). |
| - | | On September 1, 2023 Infosys Ltd. acquired 100% of voting interests in Danske IT and Support
Services India Private Limited (“Danske IT”). |
| - | | Infosys BPM Canada Inc, a Wholly-owned subsidiary of Infosys BPM Limited was incorporated
on August 11, 2023. |
| - | | Kaleidoscope Prototyping LLC, a Wholly-owned subsidiary of Kaleidoscope Animations is liquidated
effective November 1, 2023. |
| - | | oddity Code d.o.o renamed as WongDoody d.o.o |
| - | | On November 24, 2023 Stater Participations B.V (Wholly-owned subsidiary of Stater N.V) merged
with Stater N.V and Stater Belgium N.V./S.A which was formerly a wholly owned subsidiary of Stater Participations B.V. became a wholly
owned subsidiary of Stater N.V. |
Changes in key management personnel
The following are the changes in the key management
personnel:
Independent directors:
| - | | Helene Auriol Potier (appointed as independent director effective May 26, 2023) |
| - | | Nitin Paranjpe (appointed as an additional and independent director effective January 1,
2024) |
Executive Officers:
| - | | Mohit Joshi (resigned as President effective March 11, 2023 and was on leave till June 9,
2023 which was his last date with the company) |
| - | | Nilanjan Roy (resigned as Chief Financial Officer of the Company effective March 31, 2024) |
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transaction with key management personnel:
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended December 31, |
Nine months ended December 31, |
| |
2023 |
2022 |
2023 |
2022 |
| Salaries and other short term employee benefits to whole-time directors and executive officers (1)(2) |
24 |
12 |
82 |
86 |
| Commission and other benefits to non-executive/independent directors |
4 |
5 |
12 |
12 |
| Total |
28 |
17 |
94 |
98 |
| (1) | | Total employee stock compensation expense for the three months ended December 31, 2023
and December 31, 2022 includes a charge of 14 crore and less than a crore, respectively, towards key management personnel. For
the nine months ended December 31, 2023 and December 31, 2022 includes a charge of 51 crore and 41 crore, respectively,
towards key management personnel (Refer to Note 2.11). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.23 SEGMENT REPORTING
Ind AS 108, Operating segments, 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. The Chief Operating Decision Maker (CODM) evaluates the Group's performance and allocates resources
based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along business
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 accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
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 Infosys Public services and revenue generated from customers located in India, Japan and China and other enterprises
in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The 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. The 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.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.16 Revenue from operations.
Business Segments
Three months ended December 31, 2023 and December 31,
2022:
(In crore)
| Particulars |
Financial Services (1)* |
Retail (2) |
Communication (3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences (4) |
All other segments (5) |
Total |
| Revenue from operations |
10,783 |
5,649 |
4,421 |
5,121 |
5,786 |
2,985 |
2,954 |
1,122 |
38,821 |
| |
11,235 |
5,480 |
4,710 |
4,957 |
5,099 |
3,095 |
2,695 |
1,047 |
38,318 |
| Identifiable operating expenses |
6,504 |
2,974 |
2,781 |
2,751 |
3,787 |
1,745 |
1,703 |
675 |
22,920 |
| |
6,549 |
2,837 |
2,858 |
2,594 |
3,206 |
1,786 |
1,580 |
746 |
22,156 |
| Allocated expenses |
2,019 |
960 |
780 |
920 |
889 |
482 |
485 |
229 |
6,764 |
| |
2,008 |
997 |
810 |
906 |
858 |
496 |
431 |
289 |
6,795 |
| Segment operating income |
2,260 |
1,715 |
860 |
1,450 |
1,110 |
758 |
766 |
218 |
9,137 |
| |
2,678 |
1,646 |
1,042 |
1,457 |
1,035 |
813 |
684 |
12 |
9,367 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
1,176 |
| |
|
|
|
|
|
|
|
|
1,125 |
| Other income, net (Refer to Note 2.17) |
|
|
|
|
|
|
|
|
789 |
| |
|
|
|
|
|
|
|
|
769 |
| Finance cost |
|
|
|
|
|
|
|
|
131 |
| |
|
|
|
|
|
|
|
|
80 |
| Profit before tax |
|
|
|
|
|
|
|
|
8,619 |
| |
|
|
|
|
|
|
|
|
8,931 |
| Income tax expense |
|
|
|
|
|
|
|
|
2,506 |
| |
|
|
|
|
|
|
|
|
2,345 |
| Net Profit |
|
|
|
|
|
|
|
|
6,113 |
| |
|
|
|
|
|
|
|
|
6,586 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
1,176 |
| |
|
|
|
|
|
|
|
|
1,125 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
Nine months ended December 31, 2023 and December 31, 2022:
(In crore)
| Particulars |
Financial Services (1)* |
Retail (2) |
Communication (3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences (4) |
All other segments (5) |
Total |
| Revenue from operations |
32,149 |
17,075 |
13,325 |
14,966 |
16,710 |
9,095 |
8,753 |
3,675 |
115,748 |
| |
32,945 |
15,667 |
13,675 |
13,714 |
13,957 |
8,878 |
7,404 |
3,086 |
109,326 |
| Identifiable operating expenses |
18,740 |
9,113 |
8,038 |
8,121 |
10,941 |
5,237 |
5,077 |
2,286 |
67,553 |
| |
18,829 |
8,023 |
8,488 |
7,309 |
9,245 |
5,225 |
4,320 |
2,100 |
63,539 |
| Allocated expenses |
6,025 |
2,944 |
2,408 |
2,754 |
2,653 |
1,509 |
1,410 |
851 |
20,554 |
| |
5,873 |
2,883 |
2,386 |
2,552 |
2,500 |
1,444 |
1,223 |
794 |
19,655 |
| Segment operating income |
7,384 |
5,018 |
2,879 |
4,091 |
3,116 |
2,349 |
2,266 |
538 |
27,641 |
| |
8,243 |
4,761 |
2,801 |
3,853 |
2,212 |
2,209 |
1,861 |
192 |
26,132 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
3,515 |
| |
|
|
|
|
|
|
|
|
3,104 |
| Other income, net (Refer to Note 2.17) |
|
|
|
|
|
|
|
|
1,982 |
| |
|
|
|
|
|
|
|
|
2,030 |
| Finance cost |
|
|
|
|
|
|
|
|
360 |
| |
|
|
|
|
|
|
|
|
202 |
| Profit before tax |
|
|
|
|
|
|
|
|
25,748 |
| |
|
|
|
|
|
|
|
|
24,856 |
| Income tax expense |
|
|
|
|
|
|
|
|
7,474 |
| |
|
|
|
|
|
|
|
|
6,882 |
| Net Profit |
|
|
|
|
|
|
|
|
18,274 |
| |
|
|
|
|
|
|
|
|
17,974 |
| Depreciation and amortization expense |
|
|
|
|
|
|
|
|
3,515 |
| |
|
|
|
|
|
|
|
|
3,104 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
| * | | Includes impact on account of McCamish cybersecurity incident. Refer note 2.21.3. |
Significant clients
No client individually accounted for more than 10% of
the revenues for the three months and nine months ended December 31, 2023 and December 31, 2022, respectively.
2.24 FUNCTION WISE CLASSIFICATION OF CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
(In crore)
| Particulars |
Note No. |
Three months ended December 31, |
Nine months ended December 31, |
| |
|
2023 |
2022 |
2023 |
2022 |
| Revenue from operations |
2.16 |
38,821 |
38,318 |
115,748 |
109,326 |
| Cost of Sales |
|
27,253 |
26,561 |
80,666 |
76,342 |
| Gross profit |
|
11,568 |
11,757 |
35,082 |
32,984 |
| Operating expenses |
|
|
|
|
|
| Selling and marketing expenses |
|
1,700 |
1,611 |
5,238 |
4,591 |
| General and administration expenses |
|
1,907 |
1,904 |
5,718 |
5,365 |
| Total operating expenses |
|
3,607 |
3,515 |
10,956 |
9,956 |
| Operating profit |
|
7,961 |
8,242 |
24,126 |
23,028 |
| Other income, net |
2.17 |
789 |
769 |
1,982 |
2,030 |
| Finance cost |
|
131 |
80 |
360 |
202 |
| Profit before tax |
|
8,619 |
8,931 |
25,748 |
24,856 |
| Tax expense: |
|
|
|
|
|
| Current tax |
2.15 |
2,419 |
2,195 |
7,216 |
7,027 |
| Deferred tax |
2.15 |
87 |
150 |
258 |
(145) |
| Profit for the period |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Other comprehensive income |
|
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
71 |
29 |
94 |
(17) |
| Equity instruments through other comprehensive income, net |
|
(9) |
1 |
31 |
8 |
| |
|
62 |
30 |
125 |
(9) |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(46) |
(57) |
(17) |
(43) |
| Exchange differences on translation of foreign operations |
|
436 |
676 |
457 |
715 |
| Fair value changes on investments, net |
|
52 |
48 |
107 |
(298) |
| |
|
442 |
667 |
547 |
374 |
| |
|
|
|
|
|
| Total other comprehensive income / (loss), net of tax |
|
504 |
697 |
672 |
365 |
| Total comprehensive income for the period |
|
6,617 |
7,283 |
18,946 |
18,339 |
| Profit attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,106 |
6,586 |
18,264 |
17,967 |
| Non-controlling interests |
|
7 |
— |
10 |
7 |
| |
|
6,113 |
6,586 |
18,274 |
17,974 |
| Total comprehensive income attributable to: |
|
|
|
|
|
| Owners of the Company |
|
6,605 |
7,268 |
18,934 |
18,322 |
| Non-controlling interests |
|
12 |
15 |
12 |
17 |
| |
|
6,617 |
7,283 |
18,946 |
18,339 |
| |
|
|
|
|
|
for and on behalf of the Board of Directors of Infosys
Limited
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
Nilanjan Roy
Chief Financial Officer |
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
| |
|
|
Bengaluru
January 11, 2024 |
|
|
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