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, 2021

 

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, Bangalore - 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
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 99.1
EXHIBIT 99.2
EXHIBIT 99.3
EXHIBIT 99.4
EXHIBIT 99.5
EXHIBIT 99.6
EXHIBIT 99.7
EXHIBIT 99.8
EXHIBIT 99.9
EXHIBIT 99.10

 

 

 

 

 

 

 

  

DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

Infosys Limited (“Infosys” or “the Company” or “we”) 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, 2021.

 

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 12, 2022, we announced our results of operations for the quarter and nine months ended December 31, 2021. 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 12, 2022, 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 web site, www.infosys.com, a fact sheet that provides details on our profit and loss account summary for the quarters and nine months ended December 31, 2021 and 2020 (as per IFRS); revenue by client geography offering, business segment; 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 12, 2022, 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, 2021, 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 web site, 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 Auditors Report; Audited Interim Ind AS condensed Consolidated Financial Statements and Auditors Report for the quarter and nine months ended December 31, 2021. 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 18, 2022

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 12, 2022 press conference
99.4 Fact Sheet regarding extract of Registrant's Statement of Profit and Loss for the quarter and nine months ended December 31, 2021 and 2020 (as per IFRS); revenue by Business Segment, revenue by Offering, revenue by Client Geography, information regarding Client Concentration; Employee Information and Metrics, Consolidated IT Services Information and cash flow information
99.5 Transcript of January 12, 2022 Earnings 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 Condensed 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, 2021 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, 2021 and Auditors Report thereon.

 

 

 


 Exhibit 99.1
IFRS USD Press Release

 

 

Revenue guidance for FY22 revised upwards to 19.5%-20.0%, powered by sequential growth of 7.0% in Q3

Differentiated digital and cloud capabilities drive broad-based growth; healthy operating margins at 23.5%

 

Bengaluru, India – January 12, 2022: Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, delivered strong Q3 performance with sequential growth of 7.0% in a seasonally weak quarter and year-on-year growth of 21.5% in constant currency. Growth remained broad-based and deal momentum robust, with digital transformation rapidly scaling across verticals and regions. Large deal wins accelerated with TCV of $2.53 billion in Q3. Operating margin for the quarter was healthy at 23.5%, with Free Cash Flow conversion at 92.6%. Our talent strategy continued to be a key focus area marked by efforts to further strengthen employee skilling and well-being while nurturing our workforce to fulfil client requirements.

 

"Our strong performance and market share gains are a testament to the enormous confidence our clients have in us to help them in their digital transformation. This stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continued re-skilling of our people, and deep relationships of trust that our clients have with us. This is reflected in an upgrade in our revenue guidance to 19.5%-20.0% for FY22. We expect the healthy technology spend to continue with large enterprises progressing on their digital transformations”, said Salil Parekh, CEO and MD. “I am immensely proud of the relentless commitment of our employees during these challenging times and grateful for their extraordinary efforts in delivering success for our clients”, he added.

 

 

 

1.Key highlights

 

 

For the quarter ended December 31, 2021

 

For nine months ended December 31, 2021

         
·  Revenues in CC terms grew by 21.5% YoY and 7.0% QoQ   ·  Revenues in CC terms grew by 19.3% YoY
         
·  Reported revenues at $4,250 million, growth of 20.9% YoY   ·  Reported revenues at $12,031 million, growth of 20.9% YoY
         
·  Digital revenues at 58.5% of total revenues, YoY CC growth of 42.6%   ·  Digital revenues at 56.3% of total revenues, YoY CC growth of 42.1%
         
·  Operating margin at 23.5%, decline of 1.9% YoY and 0.1% QoQ   ·  Operating margin at 23.6%, decline of 1.0% YoY
         
·  Basic EPS at $0.18, growth of 11.2% YoY   ·  Basic EPS at $0.52, growth of 16.1% YoY
         
·  FCF at $719 million, YoY decline of 6.9%; FCF conversion at 92.6% of net profit   ·  FCF at $2,294 million, YoY growth of 5.5%; FCF conversion at 103.6% of net profit

 

“Despite the cost escalations driven primarily by supply side challenges, we delivered another quarter of healthy margins, with improved cost optimization, continued operating leverage and a stable pricing environment”, said Nilanjan Roy, Chief Financial Officer. “We continue to prioritize investments in talent acquisition and development and have further increased our global graduate hiring program to over 55,000 for FY22 to support our growth ambitions”, he added.

 

 

2.Client wins & Testimonials

 

·Infosys accelerated Daimler’s transition to sustainable mobility by transferring its High Performance Computing (HPC) workloads used to design vehicles and automated driving technologies to one of Europe’s greenest data centers, Lefdal Mine Datacenter, in Norway. Infosys provided ‘Green Data Center as a Service’, part of Infosys Cobalt, to facilitate Daimler’s journey to net zero. Jan Brecht, Chief Information Officer, Daimler and Mercedes-Benz, said, “A large proportion of our IT energy consumption comes from our data centers which require significant power for computing and cooling. That's why we're transforming our data centers with the support of our partner Infosys, bringing particularly the high-performance computing into one energy efficient solution at Lefdal Mine Datacenter. Not only will we benefit from natural cooling thanks to the cold weather, our operations will also be run on 100% green energy. This initiative marks another important milestone on our journey to becoming CO2 neutral.”
·Infosys integrated its flagship human-centric digital commerce platform, Infosys Equinox, with Packable IQ (Packable’s proprietary e-commerce platform) to help strengthen Packable’s ability to offer its brand partners an engaging, innovative, and agile Direct to Consumer platform (D2C): “D2C-in-a-box.” Andrew Vagenas, Chief Executive Officer, Packable, said, “We’re thrilled to partner with Infosys. This exciting partnership marks another milestone in the execution of Packable’s strategy of augmenting our D2C platform ecosystem to accelerate brand partners’ revenues and profitability across e-commerce channels. As we continue our journey to becoming a public company, we’re diligently looking for partnerships to help bring the highest-quality services to customers, and this agreement with Infosys Equinox allows us to do just that.”
·Infosys and bp agreed to develop and pilot an energy as a service (EaaS) solution, which will aim to help businesses improve the energy efficiency of infrastructure and help meet their decarbonization goals. Sashi Mukundan, President, bp India and Senior Vice President, bp Group, said, “At bp, we set out to provide solutions to enable cities and hard to abate industries decarbonize. Integrating advances in energy, mobility and digital technologies and services has huge potential to accelerate the progress towards a more sustainable and resilient future. By bringing together our complementary capabilities, products, and services from bp’s different joint ventures in India, bp and Infosys can help each other – and our customers – achieve energy and sustainability goals faster.”
·Infosys extended its strategic collaboration with Proximus, Belgium’s leading digital services and communications solutions provider, to digitally transform, develop, and maintain their IT applications with leading AI and automation solutions. Antonietta Mastroianni, Chief Digital & IT Officer, Proximus, said, “As we continue on this journey to elevate our digital initiatives, we were looking for a partner that could understand and provide strength to our digital vision. IT services companies play an imperative role during these times of transformation. Infosys continues to be our strategic partner to drive efficiency in our IT landscape and support us in our digital transformation journey. Having shared a bond with Infosys for over 24 years, its knowledge of the existing landscape and skilled resources will help ensure the success of our initiative. We are happy to extend this collaboration with Infosys and are looking forward to a successful journey together.”
·Infosys extended its digital innovation partnership with the Australian Open (AO) until the end of 2026. Craig Tiley, CEO of Tennis Australia and Australian Open Tournament Director said, “We are excited to extend our partnership with Infosys until 2026 as part of our ongoing journey of innovation. We look forward to working together to continue to change the way fans, players, coaches and audiences around the world engage with the Australian Open and our sport.”
·Infosys and ATP recently launched a suite of exciting match stats and analysis tools designed to bring fans, coaches, and media closer to the action of men’s professional tennis through digital innovation. Daniele Sano, ATP Chief Business Officer, said: “As an organisation we are constantly looking for new ways to make the experience of our sport more compelling. Tennis is incredibly data-rich, and Infosys has both technological expertise and passion for tennis to bring it to life in an intuitive way. We are excited for fans to interact with these new features and look forward to future digital innovation together with Infosys.”
·Infosys and Financial Times collaborated to enhance immersive journalism. Infosys will leverage digital innovation to support the latest creative and engaging data-led storytelling experiences for FT’s readers. James Lamont, Director of Strategic Partnerships, Financial Times, said: “Our readers expect the best from the FT, and we are experimenting with exciting digital ways to bring stories and features to a wider audience. With Infosys' help, we can use technology better and faster to deliver editorial features in more enterprising and eye-catching ways. The expertise Infosys provides to these newsroom projects will help foster a spirit of innovation and reader service that supports our mission to delight and inform the FT's audience.”
·Infosys recently became the official digital innovation partner of Madison Square Garden (MSG) Sports and MSG Entertainment “Madison Square Garden welcomes millions of people each year and one of our most important priorities is finding new ways to deliver a world-class experience to each and every one of them, down to the smallest detail – this Infosys partnerships helps us do just that,” said Andrew Lustgarten, president and CEO of MSG Sports and president of MSG Entertainment. “Infosys shares our vision for using data and analytics to improve the guest experience, and we couldn’t be more excited that they are joining us in such a significant and integrated partnership.”

 

3.Recognitions
   
·Infosys won Platinum Award at The Asset ESG Corporate Awards 2021, and won awards for Best Initiative in Diversity and Inclusion and for the Best Investor Relations Team
·Infosys recognized as a Top Employer in the 2021 India Workplace Equality Index (IWEI), won Silver for LGBT+ Inclusion
·Infosys recognized among Top 50 India’s Best Workplace for Women 2021 by Great Place To Work in the large companies’ category
·Infosys recognized as Exemplars of Inclusion in Working Mother & AVTAR Most Inclusive Companies Index 2021
·Infosys recognized among Top 10 Working Mother and AVTAR Best Company for Women in India in 2021
·Accredited as a Disability Confident Recruiter by the Australian Network on Disability (AND) for 2020-21
·Positioned as a leader in Everest – Insurance Platform IT Services PEAK Matrix®2022
·Positioned as a leader in Everest Group's Platform IT Services in BFS PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Group's Finastra IT Services PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Enterprise Blockchain Services PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Enterprise Quality Assurance (QA) Services PEAK Matrix® Assessment 2022
·Ranked as a leader in IDC MarketScape – Worldwide Managed Multicloud Services 2021 Vendor Assessment
·Ranked as a leader in IDC MarketScape – Asia/Pacific Microsoft Dynamics 365 Implementation Services 2021
·Ranked as a leader in IDC MarketScape – Worldwide Oil and Gas Upstream Asset Management Digital Services 2021
·Rated as a leader in HFS OneOffice™ Services Top 10: Data and Decision
·Rated as a leader in HFS OneOffice™ Services Top 10: Native Automation
·Rated as a leader in HFS Energy Services Top 10, 2021
·Rated as a leader in HFS Top 10 – Enterprise Blockchain Services, 2021
·Rated as a leader in HFS Top 10 – Pega Services 2021
·Positioned as a leader in NelsonHall – Digital Manufacturing NEAT
·Positioned as a leader in NelsonHall – Advanced Digital Workplace Services 2021
·Infosys positioned as a Leader in "Next-Gen Application Development and Maintenance Services 2021" ISG Provider Lens Study in U.S.
·Infosys positioned as a Leader in ‘Public Cloud – Services and Solutions 2021/ Analytics Services 2021 ISG Provider Lens Study 2021’ in ISG Provider Lens™ for U.S, U.K., Brazil and Germany Region.
·Infosys rated as a Leader in Avasant Intelligent IT Ops RadarView™
·Infosys rated as a Leader in Avasant’s Blockchain Services 2021-2022 RadarView report
·Infosys was the overall winner for delivery excellence for one of the largest external CSAT surveys sponsored by ISG - Star of Excellence Awards

 

 

About Infosys

Infosys is a global leader in next-generation digital services and consulting. We enable clients in more than 50 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.

 

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, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. 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 46999 63516

Harini_Babu@infosys.com

 

Infosys Limited and subsidiaries

 

Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:

(Dollars in millions)
  December 31, 2021 March 31, 2021
ASSETS    
Current assets    
Cash and cash equivalents 2,145 3,380
Current investments 558 320
Trade receivables 3,036 2,639
Unbilled revenue 1,325 1,030
Other Current assets 1,089 938
Total current assets 8,153 8,307
Non-current assets    
Property, plant and equipment and Right-of-use assets 2,433 2,519
Goodwill and other Intangible assets 1,062 1,115
Non-current investments 1,623 1,623
Unbilled revenue 126 81
Other non-current assets 1,276 1,180
Total non-current assets 6,520 6,518
Total assets 14,673 14,825
LIABILITIES AND EQUITY    
Current liabilities    
Trade payables 506 362
Unearned revenue 833 554
Employee benefit obligations 298 276
Other current liabilities and provisions 2,555 2,072
Total current liabilities 4,192 3,264
Non-current liabilities    
Lease liabilities 603 627
Other non-current liabilities 491 432
Total non-current liabilities 1,094 1,059
Total liabilities 5,286 4,323
Total equity attributable to equity holders of the company 9,335 10,442
Non-controlling interests 52 60
Total equity 9,387 10,502
Total liabilities and equity 14,673 14,825

 

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, 2021 3 months ended December 31, 2020 9 months ended December 31, 2021 9 months ended December 31, 2020
Revenues 4,250 3,516 12,031 9,948
Cost of sales 2,856 2,275 8,041 6,471
Gross profit 1,394 1,241 3,990 3,477
Operating expenses:        
 Selling and marketing expenses 177 156 513 459
 Administrative expenses 219 192 642 577
Total operating expenses 396 348 1,155 1,036
Operating profit 998 893 2,835 2,441
Other income, net (3) 61 77 203 203
Profit before income taxes 1,059 970 3,038 2,644
Income tax expense 283 263 823 718
Net profit (before minority interest) 776 707 2,215 1,926
Net profit (after minority interest) 774 705 2,211 1,916
Basic EPS ($) 0.18 0.17 0.52 0.45
Diluted EPS ($) 0.18 0.17 0.52 0.45

 

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, 2021 which have been taken on record at the Board meeting held on January 12, 2022.
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.

  

 

 

 

 

 

 


 Exhibit 99.2
IFRS INR Press Release

 

 

Revenue guidance for FY22 revised upwards to 19.5%-20.0%, powered by sequential growth of 7.0% in Q3

 

Differentiated digital and cloud capabilities drive broad-based growth; healthy operating margins at 23.5%

 

Bengaluru, India – January 12, 2022: Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, delivered strong Q3 performance with sequential growth of 7.0% in a seasonally weak quarter and year-on-year growth of 21.5% in constant currency. Growth remained broad-based and deal momentum robust, with digital transformation rapidly scaling across verticals and regions. Large deal wins accelerated with TCV of $2.53 billion in Q3. Operating margin for the quarter was healthy at 23.5%, with Free Cash Flow conversion at 92.7%. Our talent strategy continued to be a key focus area marked by efforts to further strengthen employee skilling and well-being while nurturing our workforce to fulfil client requirements.

 

"Our strong performance and market share gains are a testament to the enormous confidence our clients have in us to help them in their digital transformation. This stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continued re-skilling of our people, and deep relationships of trust that our clients have with us. This is reflected in an upgrade in our revenue guidance to 19.5%-20.0% for FY22. We expect the healthy technology spend to continue with large enterprises progressing on their digital transformations”, said Salil Parekh, CEO and MD. “I am immensely proud of the relentless commitment of our employees during these challenging times and grateful for their extraordinary efforts in delivering success for our clients”, he added.

 

 

1.Key highlights:

 

For the quarter ended December 31, 2021

 

For nine months ended December 31, 2021

         
· Revenues in CC terms grew by 21.5% YoY and 7.0% QoQ   ·

Revenues in CC terms grew by 19.3% YoY

         
·

Reported revenues at 31,867 crore, growth of 22.9% YoY

  ·

Reported revenues at 89,365 crore, growth of 20.5% YoY

         
·

Digital revenues at 58.5% of total revenues, YoY CC growth of 42.6%

  · Digital revenues at 56.3% of total revenues, YoY CC growth of 42.1%
         
·

Operating margin at 23.5%, decline of 1.9% YoY and 0.1% QoQ

  ·

Operating margin at 23.6%, decline of 1.0% YoY

         
·

Basic EPS at 13.86, growth of 13.1% YoY

  ·

Basic EPS at 38.96, growth of 15.8% YoY

         
·

FCF at 5,399 crore, YoY decline of 5.0%; FCF conversion at 92.7% of net profit

  ·

FCF at 17,034 crore, YoY growth of 5.2%; FCF conversion at 103.5% of net profit

 

“Despite the cost escalations driven primarily by supply side challenges, we delivered another quarter of healthy margins, with improved cost optimization, continued operating leverage and a stable pricing environment”, said Nilanjan Roy, Chief Financial Officer. “We continue to prioritize investments in talent acquisition and development and have further increased our global graduate hiring program to over 55,000 for FY22 to support our growth ambitions”, he added.

 

2.Client wins & Testimonials

 

·Infosys accelerated Daimler’s transition to sustainable mobility by transferring its High Performance Computing (HPC) workloads used to design vehicles and automated driving technologies to one of Europe’s greenest data centers, Lefdal Mine Datacenter, in Norway. Infosys provided ‘Green Data Center as a Service’, part of Infosys Cobalt, to facilitate Daimler’s journey to net zero. Jan Brecht, Chief Information Officer, Daimler and Mercedes-Benz, said, “A large proportion of our IT energy consumption comes from our data centers which require significant power for computing and cooling. That's why we're transforming our data centers with the support of our partner Infosys, bringing particularly the high-performance computing into one energy efficient solution at Lefdal Mine Datacenter. Not only will we benefit from natural cooling thanks to the cold weather, our operations will also be run on 100% green energy. This initiative marks another important milestone on our journey to becoming CO2 neutral.”
   
·Infosys integrated its flagship human-centric digital commerce platform, Infosys Equinox, with Packable IQ (Packable’s proprietary e-commerce platform) to help strengthen Packable’s ability to offer its brand partners an engaging, innovative, and agile Direct to Consumer platform (D2C): “D2C-in-a-box.” Andrew Vagenas, Chief Executive Officer, Packable, said, “We’re thrilled to partner with Infosys. This exciting partnership marks another milestone in the execution of Packable’s strategy of augmenting our D2C platform ecosystem to accelerate brand partners’ revenues and profitability across e-commerce channels. As we continue our journey to becoming a public company, we’re diligently looking for partnerships to help bring the highest-quality services to customers, and this agreement with Infosys Equinox allows us to do just that.”
   
·Infosys and bp agreed to develop and pilot an energy as a service (EaaS) solution, which will aim to help businesses improve the energy efficiency of infrastructure and help meet their decarbonization goals. Sashi Mukundan, President, bp India and Senior Vice President, bp Group, said, “At bp, we set out to provide solutions to enable cities and hard to abate industries decarbonize. Integrating advances in energy, mobility and digital technologies and services has huge potential to accelerate the progress towards a more sustainable and resilient future. By bringing together our complementary capabilities, products, and services from bp’s different joint ventures in India, bp and Infosys can help each other – and our customers – achieve energy and sustainability goals faster.”
   
·Infosys extended its strategic collaboration with Proximus, Belgium’s leading digital services and communications solutions provider, to digitally transform, develop, and maintain their IT applications with leading AI and automation solutions. Antonietta Mastroianni, Chief Digital & IT Officer, Proximus, said, “As we continue on this journey to elevate our digital initiatives, we were looking for a partner that could understand and provide strength to our digital vision. IT services companies play an imperative role during these times of transformation. Infosys continues to be our strategic partner to drive efficiency in our IT landscape and support us in our digital transformation journey. Having shared a bond with Infosys for over 24 years, its knowledge of the existing landscape and skilled resources will help ensure the success of our initiative. We are happy to extend this collaboration with Infosys and are looking forward to a successful journey together.”
   
·Infosys extended its digital innovation partnership with the Australian Open (AO) until the end of 2026. Craig Tiley, CEO of Tennis Australia and Australian Open Tournament Director said, “We are excited to extend our partnership with Infosys until 2026 as part of our ongoing journey of innovation. We look forward to working together to continue to change the way fans, players, coaches and audiences around the world engage with the Australian Open and our sport.”
   
·Infosys and ATP recently launched a suite of exciting match stats and analysis tools designed to bring fans, coaches, and media closer to the action of men’s professional tennis through digital innovation. Daniele Sano, ATP Chief Business Officer, said: “As an organisation we are constantly looking for new ways to make the experience of our sport more compelling. Tennis is incredibly data-rich, and Infosys has both technological expertise and passion for tennis to bring it to life in an intuitive way. We are excited for fans to interact with these new features and look forward to future digital innovation together with Infosys.”
   
·Infosys and Financial Times collaborated to enhance immersive journalism. Infosys will leverage digital innovation to support the latest creative and engaging data-led storytelling experiences for FT’s readers. James Lamont, Director of Strategic Partnerships, Financial Times, said: “Our readers expect the best from the FT, and we are experimenting with exciting digital ways to bring stories and features to a wider audience. With Infosys' help, we can use technology better and faster to deliver editorial features in more enterprising and eye-catching ways. The expertise Infosys provides to these newsroom projects will help foster a spirit of innovation and reader service that supports our mission to delight and inform the FT's audience.”
   
·Infosys recently became the official digital innovation partner of Madison Square Garden (MSG) Sports and MSG Entertainment “Madison Square Garden welcomes millions of people each year and one of our most important priorities is finding new ways to deliver a world-class experience to each and every one of them, down to the smallest detail – this Infosys partnerships helps us do just that,” said Andrew Lustgarten, president and CEO of MSG Sports and president of MSG Entertainment. “Infosys shares our vision for using data and analytics to improve the guest experience, and we couldn’t be more excited that they are joining us in such a significant and integrated partnership.”

 

3.Recognitions
·Infosys won Platinum Award at The Asset ESG Corporate Awards 2021, and won awards for Best Initiative in Diversity and Inclusion and for the Best Investor Relations Team
·Infosys recognized as a Top Employer in the 2021 India Workplace Equality Index (IWEI), won Silver for LGBT+ Inclusion
·Infosys recognized among Top 50 India’s Best Workplace for Women 2021 by Great Place To Work in the large companies’ category
·Infosys recognized as Exemplars of Inclusion in Working Mother & AVTAR Most Inclusive Companies Index 2021
·Infosys recognized among Top 10 Working Mother and AVTAR Best Company for Women in India in 2021
·Accredited as a Disability Confident Recruiter by the Australian Network on Disability (AND) for 2020-21
·Positioned as a leader in Everest – Insurance Platform IT Services PEAK Matrix®2022
·Positioned as a leader in Everest Group's Platform IT Services in BFS PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Group's Finastra IT Services PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Enterprise Blockchain Services PEAK Matrix® Assessment 2022
·Positioned as a leader in Everest Enterprise Quality Assurance (QA) Services PEAK Matrix® Assessment 2022
·Ranked as a leader in IDC MarketScape – Worldwide Managed Multicloud Services 2021 Vendor Assessment
·Ranked as a leader in IDC MarketScape – Asia/Pacific Microsoft Dynamics 365 Implementation Services 2021
·Ranked as a leader in IDC MarketScape – Worldwide Oil and Gas Upstream Asset Management Digital Services 2021
·Rated as a leader in HFS OneOffice™ Services Top 10: Data and Decision
·Rated as a leader in HFS OneOffice™ Services Top 10: Native Automation
·Rated as a leader in HFS Energy Services Top 10, 2021
·Rated as a leader in HFS Top 10 – Enterprise Blockchain Services, 2021
·Rated as a leader in HFS Top 10 – Pega Services 2021
·Positioned as a leader in NelsonHall – Digital Manufacturing NEAT
·Positioned as a leader in NelsonHall – Advanced Digital Workplace Services 2021
·Infosys positioned as a Leader in "Next-Gen Application Development and Maintenance Services 2021" ISG Provider Lens Study in U.S.
·Infosys positioned as a Leader in ‘Public Cloud – Services and Solutions 2021/ Analytics Services 2021 ISG Provider Lens Study 2021’ in ISG Provider Lens™ for U.S, U.K., Brazil and Germany Region.
·Infosys rated as a Leader in Avasant Intelligent IT Ops RadarView™
·Infosys rated as a Leader in Avasant’s Blockchain Services 2021-2022 RadarView report
·Infosys was the overall winner for delivery excellence for one of the largest external CSAT surveys sponsored by ISG - Star of Excellence Awards

 

About Infosys

Infosys is a global leader in next-generation digital services and consulting. We enable clients in more than 50 countries to navigate their digital transformation. With over four decades of experience in managing the systems and workings of global enterprises, we expertly steer our clients through their digital journey. We do it by enabling the enterprise with an AI-powered core that helps prioritize the execution of change. We also empower the business with agile digital at scale to deliver unprecedented levels of performance and customer delight. Our always-on learning agenda drives their continuous improvement through building and transferring digital skills, expertise, and ideas from our innovation ecosystem.

 

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, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. 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 46999 63516

Harini_Babu@infosys.com

 

Infosys Limited and subsidiaries

Extracted from the Condensed Consolidated Balance Sheet under IFRS as at:

(in crore)

  December 31, 2021 March 31, 2021
ASSETS    
Current assets    
Cash and cash equivalents 15,943 24,714
Current investments 4,147 2,342
Trade receivables 22,569 19,294
Unbilled revenue 9,853 7,527
Other Current assets 8,098 6,856
Total current assets 60,610 60,733
Non-current assets    
Property, plant and equipment and Right-of-use assets 18,077 18,417
Goodwill and other Intangible assets 7,899 8,151
Non-current investments 12,066 11,863
Unbilled revenue 940 594
Other non-current assets 9,485 8,628
Total non-current assets 48,467 47,653
Total assets 109,077 108,386
LIABILITIES AND EQUITY    
Current liabilities    
Trade payables 3,762 2,645
Unearned revenue 6,192 4,050
Employee benefit obligations 2,219 2,020
Other current liabilities and provisions 18,992 15,150
Total current liabilities 31,165 23,865
Non-current liabilities    
Lease liabilities 4,481 4,587
Other non-current liabilities 3,653 3,152
Total non-current liabilities 8,134 7,739
Total liabilities 39,299 31,604
Total equity attributable to equity holders of the company 69,401 76,351
Non-controlling interests 377 431
Total equity 69,778 76,782
Total liabilities and equity 109,077 108,386

 

Extracted from the Condensed Consolidated statement of Comprehensive Income under IFRS for:

 

(In crore except per equity share data)
  3 months ended December 31, 2021 3 months ended December 31, 2020 9 months ended December 31, 2021 9 months ended December 31, 2020
Revenues 31,867 25,927 89,365 74,161
Cost of sales 21,415 16,777 59,726 48,250
Gross profit 10,452 9,150 29,639 25,911
Operating expenses:        
 Selling and marketing expenses 1,325 1,145 3,809 3,427
 Administrative expenses 1,643 1,416 4,771 4,302
Total operating expenses 2,968 2,561 8,580 7,729
Operating profit 7,484 6,589 21,059 18,182
Other income, net (3) 459 562 1,508 1,512
Profit before income taxes 7,943 7,151 22,567 19,694
Income tax expense 2,121 1,936 6,116 5,349
Net profit (before minority interest) 5,822 5,215 16,451 14,345
Net profit (after minority interest) 5,809 5,197 16,425 14,275
Basic EPS () 13.86 12.25 38.96 33.65
Diluted EPS () 13.83 12.23 38.88 33.59

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, 2021 which have been taken on record at the Board meeting held on January 12, 2022.
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.

 

 

 

 

 

 

 


   Exhibit 99.3

Press Conference

 

   

Infosys-Press Call

January 12, 2022

 

CORPORATE PARTICIPANTS:

 

Salil Parekh

Chief Executive Officer & Managing Director

 

Nilanjan Roy

Chief Financial Officer

 

Rishi Basu (Emcee)

Corporate Communications

 

Journalists

 

Anisha Jain

ET Now

 

Reema Tendulkar

CNBC TV18

 

Sajeet Manghat

BloombergQuint

 

Kushal Gupta

Zee Business

 

Harshada Sawant

CNBC Awaaz

 

Sharad Dubey

ET Now Swadesh

 

Sankalp Phartiyal

Reuters

 

Saritha Rai

Bloomberg

 

Chandra Ranganathan

Moneycontrol

 

Shilpa Phadnis

The Times of India

 

Surabhi Agarwal

The Economic Times

 

Sai Ishwar

Informist

 

Uma Kannan

The New Indian Express

 

Rishi Basu

 

A very good evening, everyone and thank you for joining Infosys’ third quarter financial results. My name is Rishi and on behalf of Infosys, I would like to welcome you to our press conference. We decided to meet you virtually this quarter keeping in mind the alarming rise in COVID and the need to ensure necessary precautions. We hope you and your family are staying safe and keeping well. Before we commence, I want to take a moment to mention a few guidelines. Our friends from media, you will be on mute by default throughout this press conference. You will be prompted to unmute yourself when we announce your name. We request one question from each media house so that we can accommodate everyone over the next hour. In case you get disconnected, please rejoin using the same link. With that let me invite our Chief Executive Officer, Mr. Salil Parekh, for his opening remarks. Over to you, Salil.

 

 

Salil Parekh

 

Thanks Rishi. Good evening. Wish you all a Happy New Year. And trust you and your dear ones are well and safe. Thank you for making the time to join us today.

 

I am delighted to share with you that we had an extremely strong quarter with 7.0% sequential growth and 21.5% year-on-year growth in constant currency terms. Our year-on-year growth was the fastest we have had in 11 years. The growth was broad-based across industries, service lines and geographies, driven by our differentiated digital and cloud capability. This is a clear testament to the enormous confidence clients have in us to help them accelerate their business transformations. This outcome has been made possible by the relentless commitment from our employees to these challenging times. I am extremely proud as well as grateful for their extraordinary efforts in delivering success for our clients.

 

Our growth has been accompanied by resilient operating margins at 23.5%. We have delivered these margins while we kept in the forefront our focus on our employees with increased compensation and benefit. Our digital business grew by 42.6% and now is 58.5% of our overall revenues. Within digital, our cloud work is growing faster, and our Cobalt cloud capabilities are resonating tremendously with our clients.

 

The strong overall performance stems from four years of sustained strategic focus on areas of relevance for our clients in digital and cloud, continuing re-skilling of our people, and deep relationships of trust our clients have with us. With the strong momentum in the business and the robust pipeline that we see, we are increasing our annual revenue growth guidance which was previously 16.5% to 17.5%, we are increasing to 19.5% to 20% in constant currency terms. Our operating margin guidance remains at 22% to 24%.

 

With that, Rishi back to you and let’s have the questions from everyone on the call.

 

 

Rishi Basu

 

Thank you, Salil. We will now open the floor for questions. Joining Salil is Mr. Nilanjan Roy, Chief Financial Officer, Infosys. We will now open with the first question. The first question is from Anisha Jain from ET Now who joins us on video. Anisha, kindly unmute yourself and ask your question.

 

Anisha Jain

 

Hi gentlemen, thank you so much for the opportunity and hope you guys have a safe and happy 2022. Salil, first to you, I have two parts to this question. Obviously, the street will be very excited by the guidance upgrade that has come in terms of the revenue, but are you confident that the strong demand outlook will continue not only in the short term, but also in the medium term? What are you understanding in terms of the client spends and the budgets etc., and will this also reflect in the deal momentum going forward?

 

The question for Nilanjan is on the margin picture. I would want to understand that margins have been fairly resilient till now but with the increase in supply-side pressure, what is the outlook basically on margin going forward and also how confident are you of meeting the demand given the high attrition that we are seeing. So, what is happening on the employee attrition being higher than 25.5%? Thank you.

 

Salil Parekh

 

Thanks for your question. First, we have increased the guidance so there is tremendous confidence we are seeing with our clients. We had large deals of $2.5 bn, 25 deals in the quarter, our pipeline itself is very strong and we remain comfortable of the guidance for this financial year which ends in March. Overall demand environment looks strong. So, we are comfortable as we look out beyond March as well. The demand outlook is good, the digital transformation is strong, and our work in cloud and digital remains very good. We are also strong with our supply capabilities. So, we remain comfortable in delivering all the work for our clients. Let me pass it to Nilanjan for the second part.

 

Nilanjan Roy

 

Two questions you had and the first one on margins. We have been able to broadly hold our margins this quarter. We were 23.6% last quarter now we are 23.5% and a broad walk would be about 80-basis points have got invested back into our employees either through corrections or through promotions. 40-basis points we have actually lost because of lower utilization - which in a way of good news, as supply-side as you know pressure builds up, so our utilization coming down is a bit of good news. On the other hand, this has been made up by about 20-basis points of rupee and cross currency movement. We have also made up about 40-basis points from SG&A leverage and other one-offs and 50-basis points from a strong cost optimization program. So, all in all, that takes us to 23.5% and our guidance for the year as you know is 22% to 24% and we remain quite comfortable operating in that range.

 

Coming to the supply side like we said we have taken up our graduate hiring program to 55,000 looking at this demand and we are very keenly looking at the attrition figures. One is how do we bring this down and we see stability for us coming in this quarter, although our numbers are more on a LTM basis so you would see those numbers inching up. But quarterly we have seen some sort of stabilization, and we continue to focus on all of these employee interventions and at the same time we do not want to let go off any demand. Therefore, hiring program as well as lateral program continues unabated.

 

 

Rishi Basu

 

Thank you. Moving onto the next question, the next question is from the Reema Tendulkar from CNBC TV18. Reema joins us on video. Reema, kindly unmute yourself and ask your question.

 

Reema Tendulkar

 

Gentlemen, good evening, and congratulations on a very strong set of numbers. Salil, my first question is what changed in three months for you to give such a large upgrade to your guidance and secondly on deal wins. We have the large deal win number at $2.53 bn, but increasingly the anecdotal evidence suggests that we are seeing a lot of shorter deals, so could you give up some sense of the sub $50 mn deals, how much higher is it, today say compared to three months ago or a year ago and even if you could tell us the deal pipeline, how would it compare to say a year ago, how much higher will that number be?

 

Nilanjan, you indicated correctly right, the last 12-month attrition does not accurately capture the attrition numbers, so could you give us the sense of the quarterly annualized attrition, how do that number trend? Has it been flat quarter-on-quarter? Do you think attrition has peaked? Thank you.

 

Salil Parekh

 

Thanks for your question. I think first on the guidance we are really in a situation where all of the choices that we made over the last several years specifically building on digital, on cloud, on the new areas that our clients are looking for, what clients are buying, or where we see it resonates with clients, all of those digital transformation programs are very strong and we could see our execution remain good and that gave us, the ability to increase our guidance as we are in the fourth quarter here. We believe strongly that this is a sort of growth in the market, and we are fortunate with the trust of our clients to capture that. In terms of the pipeline, there were $2.5 bn large deals for us. Large deals are deals which we classify over $50 mn in size and so this is a very strong indicator to have when the business is evolving. We have 25 deals in that space, $2.5 bn. The overall pipeline today is larger than what we had at any time in our past. We remain comfortable with the pipeline and with where digital transformation programs are going. We remain aligned to what our clients are looking for. With that let me pass it to Nilanjan.

 

Nilanjan Roy

 

So, like I said we are very sharply focused on this figure, and of course, this is an industry issue and if I step back really, I think the volume growth for this industry has to come from freshers because churn at one level is just rotational, so as the freshers feed in across the industry just not in Infosys, I think, you will see this number inching down across all the players. We have seen in this quarter, while we do not declare the number, we have seen stabilization, and as we look ahead, we are seeing some drop-off of that, but we will have to wait and watch. But clearly, as we ramp up the freshers into the system, I think you should see some benefit across, so we are quite happy with where we are but agree that the numbers are high.

 

 

Rishi Basu

 

Thank you. Moving on to the next question, the next question is from Sajeet Manghat from BloombergQuint. Sajeet joins us on video. Sajeet, kindly unmute yourself and ask your question.

 

Sajeet Manghat

 

Good evening gentlemen and Happy New Year to both of you. My first question is basically on the growth which we have been seeing. You have guided for 20% growth for the full fiscal. Do you see the momentum of deals and the negotiations of which you are currently in to take you to FY23 with a similar growth rate expected or do you see some tapering happening as we go into the FY23? Secondly a bit of color on the kind of transformation deals that are happening. Is it just digital transformation or now companies are also looking at other processes as well which companies like you can undertake going forward? BFSI and industrial, how do you see growth coming in from them? Do you see some bit of sluggishness coming in especially Europe where you have seen COVID impact that has happened in that region there and for Nilanjan you have mentioned about SG&A and cost optimization of 40 bps which you were able to bring in, is it a temporary one or can you bring in subsequent quarters as well to maintain that margin?

 

Salil Parekh

 

Thanks, Sajeet. I think first on the growth, yes, the guidance increase is for this financial year, the demand outlook is very strong, the pipeline is larger. What we are working on today with clients on their transformation programs is still looking very good for us. Of course, we do not give guidance for the next financial year just now, but everything you see in the demand environment is positive. The types of work that we are seeing that these relate to all aspects of large enterprises whether it is relating to how they are engaging with their customers, how they are engaging with their employees, how they are engaging with the ecosystem, essentially everything is becoming more and more driven by, how do you make it digital. For example, we have a platform called Equinox, which is essentially a platform which anyone can use in consumer products, which will build completely new e-commerce ability and we are seeing tremendous traction of this platform with all our clients. We have similar platforms in different industries which we are seeing some benefits from.

 

In terms of growth, by region Europe is strong with 27% in the quarter. Our Financial Services also was strong for us at 15% in the quarter, so all of our markets are looking quite good in terms of growth. Of course, one of the strongest was manufacturing which was about 48% growth in the quarter. With that over to you, Nilanjan.

 

Nilanjan Roy

 

Sajeet, on your question on margins, I think over the last few years, we have a very robust cost optimization program which we run across the organization. We have a number of levers which we deploy across this you know the onsite mix, the offshore mix, the pyramid, both onsite, offshore, automation which remains a big part of our cost optimization and in fact, we have taken to the next level by using bots at an extremely large scale and of course the other measures like subcon, etc., so we deploy this over each quarter. Sometime some of them like this quarter the onsite-offshore worked negatively against us, but we were able to have other cost optimizations come into place, namely, automation. We have also started looking at pricing in this high-demand environment. It is important that we start pricing our talent correctly as well and therefore whether it’s discounts etc., we are able to have some conversations and of course, we realize this is a long haul, it does not happen overnight. There are existing commitments to clients, but at least in new deals slowly this will start getting priced; and not only by us but also by the entire market as these costs start hitting the industry. So, there are a number of things which we are continuously doing, and we remain quite confident about this program as we look ahead.

 

 

Rishi Basu

 

Thank you. Moving on to the next question. We have Kushal Gupta from Zee Business on video. Kushal, kindly unmute yourself and ask your question.

 

Kushal Gupta

 

Good evening gentlemen. The very first thing is for Salil, the question is that the way we are seeing the constant currency revenue growth of 7%, which is a very great growth that you have shown us, I would like to understand that that going forward in FY2023, how can we see the inorganic growth because the other companies are acquiring smaller IT companies likewise the demand for digital contracts that is getting increased. The second question is for Nilanjan like the way we are seeing the increased attrition rate, what is the set of strategies that you have planned to tackle this and when do you see that this is getting normalized?

 

Salil Parekh

 

We had a very spectacular growth at 7% constant currency for the quarter, and we see that momentum in good shape within the demand environment. What you mentioned about inorganic growth in terms of acquisition, our acquisition of course remains very focused. We have a good pipeline of potential candidates. Our focus has been on what can we acquire which will give us a boost as you were saying in the digital transformation area. These relate to, for example, cloud or cybersecurity or IoT or other areas which are supporting digital, and we look at different companies in that. Of course, it is a combination of how will it fit culturally, how will we be doing integration, and what is the valuation, but this is an ongoing process, and we have a good pipeline that we are evaluating in terms of acquisition opportunities. Nilanjan over to you for the next part.

 

Nilanjan Roy

 

Thank you. So Kushal, on the attrition question, I think we have a three-pronged strategy. I think the first is about careers is how do we show a more longer-term career to all our employees that include a cycle of promotions, progressions so that people have visibility on that. Secondly of course is rewards and compensation, so we competitively always benchmark. Like I said before that we have also rolled out special talent retention programs in this quarter as well and we will continue to do whatever is necessary going ahead. And thirdly is also reskilling that remains critical in this market as we have continuously upgraded our employee skills. So, we have this three-pronged strategy across these, and we are confident that we will be able to handle the attrition issue. For now, of course, there are a lot of market dynamics but over a longer period, we will see this coming down.

 

 

Rishi Basu

 

Thank you. Moving on to the next question. We have Harshada Sawant from CNBC Awaaz. Harshada, kindly unmute yourself and ask your question.

 

Harshada Sawant

 

Good evening gentlemen and greetings for the new year. It is a great quarter for you. Salil, I wanted to ask you that of course, deal wins have been strong, but you have these new deals that you have signed in the third quarter, are you seeing the pricing getting better from the previous quarter? Are the clients are ready to spend higher and are you able to command the pricing when you are signing these new deals? Secondly, more importantly, you said that most of the growth is coming from the manufacturing sectoral, can you give us some idea, what will be the situation for retail going forward? Nilanjan, one question for you, if you can give us a view on margins that margins going forward would be stable because this time, the cost for travel has not been incurred? Last quarter when we had the conversation with you where you have said that the costs for travel shall increase from Q4 onwards, with Omicron, has this been offset?

 

Salil Parekh

 

Thank you for that question. The pricing part which you are talking about, there what we are seeing is, we had a strong set of large deals, and we are seeing the pricing environment is quite stable. One of the things that Nilanjan mentioned earlier, which is there is real value to a lot of the digital work that we are doing, and we are putting that in place as we discuss large programs with clients and clients are receptive in this environment because they are seeing that we are a leading player for digital today in helping them in their transformation. So, we feel quite comfortable that while this quarter’s pricing was stable, we will see something going ahead as we see an improvement in the value that we are communicating. Now, what are the type of spends. There are two types of spends. One is companies are increasing their spends on what they want to do for digital transformation so just as a percentage of their revenue that the amount that they want to spend on technology is going up. The second is in many companies we are seeing that they are looking at this also from a CAPEX perspective from something they want to invest for the future, it is not just an OPEX spend. Today we are seeing good traction in that sense on spends that is available when companies decide to launch the digital transformation and we feel comfortable to be partnering with them on that journey, Nilanjan, over to you.

 

Nilanjan Roy

 

Thanks, Harshada, on your travel question, I think the industry entirely is in a way not traveling and therefore there is a benefit which we have seen versus the pre-COVID area, but even if you strip that out you have seen that improvement in our underlying margins. Of course, as the next year progresses, we will have to see where does the travel open up at what stage, but having said that we have also seen that we have been able to strike these billions of dollars of deals pretty much virtually and in that sense that good news that we are able to work remotely in this new environment quite well and hopefully as the world opens up, we do not need to go back to the same kind of mad rush that we used to have, but I think that is something we will continue to look at these headwinds whether it is travel or cost increases on our employees and like I have said earlier our cost optimization program continues to be really in top gear and we have to work continuously to offset that. So, we remain quite confident in our 22% to 24% range for this year.

 

 

Rishi Basu

 

Thank you. The next question is from Sharad Dubey from ET Now Swadesh. Sharad joins us on video. Sharad, please unmute and ask your question.

 

Sharad Dubey

 

Thank you and congratulations on your strong results. The first question is for Salil, the reason for strong deals, revenue guidance going up are due to the digital transformation program which is going on. I want to understand in which segment do you see getting long-term digital transformation projects and how is your negotiation power? Nilanjan, I have a question for you also, the question is related to issues with margins. There were issues related to Daimler's deal, however, despite this, there was a good performance on margin. What are the levers going forward and how will you manage margins for the next two quarters?

 

Salil Parekh

 

Thank you for your question. What we are seeing is there is a lot of different digital transformations going on in different sectors. So, one example was manufacturing, which is growing at 48%. We are also seeing for example in the retail sector, growth of 19.8%. We are seeing financial services which I mentioned earlier at 15.5%. Our communication segment is looking strong at over 22% growth. Life science is also looking very strong. What we see is across many industry companies are looking to launch their transformation and in doing that we see programs, which will go through a long duration. Many companies which have seen what has happened in the last 18 months with all of us working in a different way are starting to realize the benefit of driving digital. How do you get better connect with customers? How do you make sure your employee connect is better? How do you make sure your internal processes are more efficient because this is all allowing with customers buying their own growth, with employees to make sure there is a much more robust set of connections and that is helping us receive digital transformation being driven. Today really it is broad-based, the strongest being Manufacturing for us, Life Sciences, Communications and also Retail. Nilanjan, over to you.

 

Nilanjan Roy

 

Sharad as you see our portfolio if I look at the margin side, we have multiple number of deals. There are large deals which are entering the third, fourth, and fifth year where we are doing much more optimization. There may be new deals entering the portfolio, which are freshly minted and, in the sense, have initially higher costs and when we look at the overall margin structure that is all what we put together so the whole portfolio what is happening, deals are getting much more profitable on one side and one side and new deals are coming in. So, that is one part of the overall margin management equation. Secondly, like I said, we are putting in a lot of cost optimization. Automation is one. The other is of course the pyramid and the freshers like we have said. When we started the year, we had said that we will hire around 25000 freshers, and in the third quarter we have hired around 55000 and that is helping at the bottom of the pyramid as well. So, we have a number of levers, and we keep on deploying those which are more relevant for the business, and they are helping us to make sure that these margins remain flat from quarter to quarter.

 

 

Rishi Basu

 

Thank you. Moving on to the next question, we have Sankalp Phartiyal from Reuters News. Sankalp joins us on video. Sankalp please ask your question.

 

Sankalp Phartiyal

 

Good evening, everyone. Salil, I had two questions. One is that you said the pricing environment is very stable, but given the kind of uncertainty that the resurgence of COVID and the omicron wave has brought about could you give me a sense of what the demand environment, the pricing, and even the run side of business - the traditional business looks like in your biggest markets? The other thing I wanted to ask was that I was just attending Wipro’s press conference as well before coming here and they seem to say that attrition is going to be a problem for the next few quarters but perhaps would be moderate? You have outlined some plans, can you tell us what more are you doing to attract talent to your company and make them stay here because you are competing with startups that potentially offer more money and more ESOPs and incentives and also if there is any change in hiring plans whether you are stepping up freshers and laterals? Thank you.

 

Salil Parekh

 

Thanks for those questions. Nilanjan will come back on the attrition and the recruitment, which is very robust. On the pricing, what we discussed earlier, we are seeing a relatively stable environment in pricing if I look specifically at the deals, we have had in this previous quarter versus the quarter before that. So, we have not seen any big changes. What we have put in place that Nilanjan shared earlier are ways to communicate where we are creating tremendous value for our clients through the digital work and there, we would see over time that there will be some benefits through pricing. As we are seeing what we have done with compensation over the last 12 months with three different times, we have increased the compensation in a very significant focus on our employees. Those things will come, and we will be in a position overtime to get that sort of a pricing impact with our clients as well. So we feel quite comfortable today with a good demand environment, relatively stable pricing, and some initiatives, which are medium-term which will help us with more value with respect to the digital work we are doing. Nilanjan, over to you.

 

Nilanjan Roy

 

The attrition question like I mentioned of course we remain very focused. It is absolutely critical for us, and this just takes a lot of our time. Besides what Salil mentioned in terms of the compensation interventions, the whole career pathing of many of these employees as we communicate, are long-term value propositions with Infosys for many of them. I think that is something we are rolling out. We are also looking at differentiated talent this year in our campus hires, so digital specialists with different skill set coming into the company. And thirdly, reskilling which remains core to our fundamental business model and how do we digitally skill tag employees, give them incentives to get reskilled in new technologies. So, it’s a plethora of things which we are looking at consistently and consecutively like I said, today it is an industry issue, this is not a company specific issue and as more and more freshers enter overall across the ecosystem, I think you will see this attrition across the industry and with us coming down.

 

 

Rishi Basu

 

Thank you. Moving on to the next question, we have Shivani Shinde from Business Standard who has sent us her questions on text. Gentleman, I am going to read it out. For Salil, Shivani asks, what impact do you see of the recent COVID variant on business and operations, and what happens to back to office plans? Next, she asks what happens to the COO role? Will Infosys not have any COO? And Nilanjan, for you, Shivani asks what has been the impact of currency and what has been the impact of currency on margins, and what is the hiring target for FY2023?

 

Salil Parekh

 

Thanks for those questions from Shivani. I think first what we are seeing with the current Omicron wave is in many ways all the impact will probably be in this quarter. Now we have seen some of that start, of course, in Europe, we see that in the US, of course, in India we are seeing a big wave, in Australia as well. We have built some estimations based on what we think will be the way this will play out. In some ways, it seems to be a sharp up and then sharp down. In many ways maybe the impact of an individual may not be the same number of days and equally we have built very resilient processes where work from home has worked really well in the past and that’s been quickly put in place already. Having said all of that and factored that in this is how we build our guidance update. So, we are very comfortable today in what we are seeing, and how this will deliver work for our clients given what our estimate is as we look into the situation ahead from today. What we do with a return to the office discussions, we had started to see really good uptick on that in about a month or six weeks ago already, in India and other parts of the world. Of course, given what is happening today we are very focused on employee safety and wellbeing and right now it is much more remote working and work from home. But as we have learned if it follows what we have seen in some other countries this wave could be of shorter duration and then hopefully in back part of the quarter we will start to see more of the return to the office work but it is completely flexible today and very focused on what employees needs are, while we are making sure all the works planned is getting done. Nilanjan, over to you.

 

Nilanjan Roy

 

So just to add to what Salil said today, 83% of our employees in India have got doubly vaccinated and another 10% have got the single dose so nearly 93% of our workforce in India is vaccinated so that is our metrics we have been tracking and increasing this period. Coming back to the hiring plans, of course, we have a very fluid plan both of freshers and laterals in the year. We have, like all other companies, gone out to campuses to hire but I think one of the big advantages is during this time we have been able to master both off campus fresher hiring program and a campus hiring program. So, we have the flexibility, both, to hire during the off campus period as well as demand changes, plus we have sort of a fixed demand which we will go out in campus. So that gives us a lot of flexibility as we look into the year ahead.

 

 

Rishi Basu

 

Thank you. Before we proceed, may I kindly request our friends from media to restrict to one question in the interest of time, we just have half an hour left for this press conference. The next question is from Saritha Rai from Bloomberg who joins us on video. Sarita, kindly unmute yourself and ask your question.

 

Saritha Rai

 

Thank you, Rishi. Hello Salil and hello Nilanjan, I wanted to ask you what signals you are reading from clients as they plan for the calendar year in terms of whether traditional outsourcing or consulting, and how do you see this balance skewing in favor of consulting as all of you want that balance to weigh heavier on the consulting side, I think Salil, you can take the question I would love to hear from Nilanjan as well.

 

Salil Parekh

 

Thanks, Saritha. I think what we are seeing for the calendar year from clients is a continuing of what they want to drive in terms of their change, their digital changes, their cloud changes, and all the programs we are driving. So, we do not see that something has changed either gone up or gone down, it remains at the same level of intensity and spends which has been high as you have seen for the last few quarters. In terms of consulting and technology, our experience with clients is really they are ready to build out the next phase of the technology environment. There is tremendous focus on modernization, there is a lot of focus on making sure that the digital infrastructure, the technology infrastructure is in place, the cloud infrastructure is in place, everything that is built is cloud-native, where we are looking to work with private cloud or public cloud in many ways leveraging what we are doing in Cobalt. So really the technology, digital transformation is the center of what we are seeing with clients and in that, we feel extremely well-positioned, because that is truly the strength of Infosys. Our delivery engine is extremely robust, and we have a portfolio capability of services which are focused on cloud and digital which are helping our clients to transform. Of course, consulting is a critical part, but consulting is a critical part as it helps to build the framework for these transformations, and the vast majority of what clients end up doing after the initial consulting is taking the technology spend in making all that work. Our own consulting business is growing extremely well in that so the joined-up way with consulting and technology.

 

 

Rishi Basu

 

Thank you. Moving to the next question, we have Chandra Ranganathan from Moneycontrol. Chandra joined us on video. Chandra, kindly unmute yourself and ask your question.

 

Chandra Ranganathan

 

Hi Salil, hi Nilanjan thank you for talking to us. Salil, a recent ISG report spoke about how a majority of the deals were actually small deals and how enterprises are breaking up transformative projects because they want to execute them really fast. So how do you see Infosys winning in such scenarios. Are you seeing more of these smaller deals in the market and Nilanjan a question on freshers’ salaries, is there a case for hiking fresher salaries considering it is pretty much stagnated, it has just seen a hike of 8% to 9% in the last decade, do you see a case for that? Final question Salil if you can give us an update on the income tax portal since the returns ended in December and for some cases, it has been extended to March if you can give us an update on that as well? Thank you.

 

Salil Parekh

 

Thanks, Chandra. I think in terms of what we are seeing, in terms of the deals, the overall environment for large transformation programs is very robust, we have seen 25 deals in this quarter which have each above $50 mn where we have a difference which we talked about before is what happened is what you called the mega-deals which are much more volatile or lumpy, we still see a good pipeline where clients are looking at but those are not predictable in the sense of whether they will come this quarter or next. Our own experience is the volume of deals is very strong and robust. In many cases there are transformation programs which clients have launched, there are new programs being launched by other clients and those programs need different kinds of capabilities be brought together where we are helping to bring multiple service lines to help on that and sometimes clients break that up into different phases. In many of these cases once one of these transformation programs starts and if things are going well, they continue on through different phases each of them being a significant outlay from a client’s perspective.

 

Let me address the income tax project and then Nilanjan can address the other part. On the income tax project, we are extremely proud that from December 31, we have as was reported 5.8 Crores return filed through that timeframe. On the day itself, over 46 lakhs returns were filed. The deadline at that day was maintained in the way when the Income tax department saw all these things working and really all of them using the system saw all of that working. We are extremely grateful that we could help and contribute to the vision for Digital India that this is enabling. Going forward we are working of course, very closely with the department on the next set of areas and that will become part of this system as the new modules are put together and we are extremely happy and proud with how the December 31, closing and the ending of that deadline went with the 5.8 Crores returns.

 

Nilanjan Roy

 

Chandra your question on the fresher salary, of course, we always continue to look at that, we need to be competitive always and looking at the overall demand and supply scenario. So, for instance, this year, digital specialist is something which we have looked at where the whole stack programmers we have been able to take up salaries for that set of new joinees. You are also aware of our strong program of training people in Mysore. Of course, now Mysore remains closed, but we continue to still have 4 months of virtual training before people are put on to production. So, all this goes into the overall value proposition which we are offering new joinees like I said we have had a target of about 55000 this year and we are quite confident of meeting that.

 

 

Rishi Basu

 

Thank you. Moving to the next question, we have Shilpa Phadnis from The Times of India on video. Shilpa, kindly unmute yourself and ask your question.

 

Shilpa Phadnis

 

Good evening gentlemen. IT companies are looking at a blended way to balance that pyramid it is a mix of skills and technology. If you can talk about the pricing environment because the pricing of some of the hot skills has gone up by 4% to 8%. On one hand, you have supplies side challenges and clients willing to pay the premium for these hot skills. How are you staffing these large deals that require these skills? My second question is on how the integrated infrastructure deals are breaking up. Companies are looking at a modular way as to how they can be backloaded for profitability. So, if you can help us understand whether is re-platforming coming into play here?

 

Salil Parekh

 

Thanks, Shilpa. I think on the pricing what we are seeing as you were pointing out is, there is a lot of value that is created through the digital transformation work. We are seeing, of course, through this last year increase in compensation costs, we have had three of those within our structure, we know that that the large enterprises are looking at the world around them and for the first time, in a very long time we are seeing inflation that is in the environment. With all those factors, we are now more and more comfortable that we are able to discuss with our clients the value through the digital programs, and that translating into some pricing improvements over time. In terms of the infrastructure work and platforms, we have very much seen that I think there is a large cloud transformation that is in play with clients. We have mentioned our digital business growing at over 40%, our cloud business which is a subset of that is growing faster still and we see that by building out the new cloud ecosystem of our clients whether they are going with public cloud, whether they are going with private cloud whether it’s in a SaaS partnership, whether it is building new platform which is fully cloud basis, cloud-first platform. So very critical as a large part of where we have seen the future growth coming from.

 

 

Rishi Basu

 

Thank you. Moving on, the next question is from Surabhi Agarwal from Economic Times. Surabhi joins us on audio. Surabhi could you kindly unmute yourself and ask your question?

 

Surabhi Agarwal

 

Thanks for taking my question. Hello Mr. Parekh. I just want to understand that you have raised your guidance by 3 points so what gives you the confidence at a time when Omicron is raging across the world. And does this fresh wave mean more opportunities for IT companies, of course, it is a healthcare crisis but putting that aside from a business point of view does that mean a fresh wave of opportunities for companies like Infosys?

 

Salil Parekh

 

Thanks for your question. I think in terms of raising the guidance with the Omicron situation is separate and I will come back to address it. It is obviously a very serious concern for the health and safety of our employees and everyone around the world. Our guidance really came from an extremely strong performance that we saw in the third quarter with 7% growth QoQ, over 21% growth YoY. And the pipeline that we have seen of deals that we are working on and the large deals that we converted in Q3 which is at $2.5 bn, 25 deals across all our sectors, so those are the factors that we have put in place. And then seeing that we are very comfortable in scaling up our capabilities and capacities in supplying what our clients need in providing the service that they need. All those factors came in to increase the guidance. I think Omicron is a very important and serious health situation where we are extremely focused on the safety and wellbeing of our employees. We have already moved very quickly as we have done in the last time on the work from home. Nilanjan shared the statistics on our vaccination. All around the world, we are supporting our employees and we have estimated what could be some of the impacts and how that work from home will be executed for our clients and then factoring that in then we have come up with the guidance, which we have increased for the full year.

 

 

Surabhi Agarwal

 

Another question I have is given the talent shortage in the industry how are you one, making sure that people who are there with you stay? Secondly, does the skilling programs change, like Mr. Roy mentioned that 55000 is the fresher hiring target for this year. So, are you training them in a way that they can sort of makeup for the shortage in lateral hiring due to the crunch?

 

Salil Parekh

 

Let me start and if Nilanjan has anything to add, he can do that later. The main focus for us was to make sure and is to make sure that everything we are doing with our employees is something that is supporting them, whether it is the engagement with them, looking after them, reskilling that is a big part of what Infosys has been doing all through the initial skilling, but we are all doing reskilling. The support through COVID where we did lots of different things, where we enabled medical and other support for our employees and then making sure that they are developing a long-term career with Infosys, building their skill and so on. This past quarter in Q3 we added over 12,400 people into the Infosys family. As Nilanjan shared earlier that our plan for this financial year is to recruit 55,000 college graduates and all of these things are making sure that we have ready people working on projects that our clients are looking to drive in their digital transformation and also helping to build a long-term career for all of the employees within Infosys.

 

 

Rishi Basu

 

Thank you. The next question is from Sai Ishwar from Informist. Sai Ishwar joins us on audio. Sai, please unmute yourself and ask your question.

 

Sai Ishwar

 

Thanks for the opportunity. Salil Sir I just want to know your comment on the FY23 budget, I mean the calendar year budget for FY2022 from clients, and since BFSI is your biggest bucket do you see the BFSI clients especially rising in for federal reserve’s interest rate hikes. And Nilanjan another question for you, just a straight question, can you also share color on the ballpark figure on FY2023 campus higher targets? Thank you.

 

Salil Parekh

 

So, first in terms of the calendar year which has just started, we do not give guidance beyond March, but the view that we have today is all of our discussions with our clients are giving us good confidence that digital transformation programs are continuing at the same pace and that they are moving forward across different industries with what they have planned. In terms of financial services as a point of fed increasing or indicating that they will increase the interest rates, today our Financial Services growth was strong in Q3. We continue to see a good pipeline for programs that we are working on, there also the digital transformation and the cloud work is going extremely fast. At this stage, we are not seeing that any of them have changed their spending or their technology focus with the fed interest rates. Of course, we will see how the year progresses and if that makes any changes on board.

 

Nilanjan Roy

 

The question of fresher hiring I think I just answered that. I think we are in the colleges as we speak, but also as I have said we have built in this flexibility of having both the campus hiring model plus off campus hiring model during the year which gives the flexibility as demand increases or decreases. So, I think that is something which we have sort of perfected during this COVID times, so we remain quite confident of meeting the overall demand requirement for the next year.

 

 

Rishi Basu

 

Thank you, the next question is from Jochelle Mendonca from ET Prime. Jochelle has sent a question on text, and I am going to read it out. Jochelle’s question is for you, Salil. On the revenue per employee, Jochelle asks, revenue per employee has risen from a year ago what is driving that and what is the breakup between net new and renewals in large deals?

 

Salil Parekh

 

The revenue per employee is a very good indicator which shows how our digital work is changing. We do not separate in any other parameter so this gives a good indication that the more digital we are doing, the more our revenue per employee will go up and with that now growing at 40% and sitting at a very high level is what is reflecting in some of the parameters. In terms of net new in the large deals our net new was 44% in the large deal and so again that gives us a good level of confidence that this continues revenue growth momentum as we look ahead in the future.

 

 

Rishi Basu

 

Thank you. The next question is from Veena Mani from Deccan Herald. And Veena also sent her question on text – I’ll read it out. How much are you going to invest on securing your systems as a lot of the work your employees are doing is sensitive and systems are prone to cyber attacks?

 

Salil Parekh

 

Thanks for that question. That is an extremely critical point. We have put in a tremendous amount of work within the company to ensure that what we are doing at cyber security is world class. We have a very dedicated team that focuses on the cyber security work across all our projects within the company and how we interact with entities outside the company, outside so to speak our firewall. We have an active board subcommittee on cyber security which also looks in this on a quarterly basis. In that sense we are doing a lot that is required to be done to make sure that all our work is going on as best as possible using the latest approaches on cyber security.

 

 

Rishi Basu

 

Thank you. Moving to the last question for this evening, the next question is from Uma Kannan from The New Indian Express. Uma joins on audio. Uma, kindly unmute yourself and ask your question.

 

Uma Kannan

 

Good evening. My question is, the future of work is hybrid. Like everybody is now talking about hybrid. So, what are the challenges you are facing in this model and is going to be two years now, what are the key enablers in adapting to this hybrid reality? Also, my second question is, you recently acquired Singtel’s Malaysia Delivery Centre. Can we expect more acquisition in this particular space – ‘Communications’ in future?

 

Salil Parekh

 

Thanks for your question. I think on hybrid we have seen a tremendous amount of evolution and maturity over the past year and half, two years as we have put this into place. The first, there is a huge amount of flexibility that is now being built into our system, which allows our employees to work remotely in any configuration. It was hugely supported by our clients and all the infrastructure that we had built ahead of when COVID started, held us in good stead as we were able to quickly drive. Today we are able to go back and forth. With this current wave we also move very quickly to remote working and work from home. What we will do over the next several quarters as we see the situation evolving is enable employees to work in a hybrid fashion and also open up the campuses as and when the medical safety allows us to do that. We want to make sure that we have tremendous flexibility for our employees and then also support our clients where we need to and where there are requirements where the teams work together for different parts where they need to move and re-engage in building the social capital. That is the approach that we put in place. We have been able to flex on this up and down as we see even in the last few weeks with the new wave coming in and we feel comfortable over time that we need to do more on that in the medium and long term.

 

In terms of the discussion on the telecommunication space our acquisition approach is something we are very focused on. It is really looking at what is going on within the digital ecosystem, the cloud ecosystem, whether it is in cyber security or the experience or IoT. These are the areas that we put in the most focus and effort and we are making sure that we look at the steady pipeline of situations in that. What we had recently was a very strong partnership with Singtel which is a longstanding client for us and someone who has a lot of trust with Infosys. In that situation we expanded some of the work that we did through the acquisition that you referenced, but we have in general an overall picture of driving acquisition in the digital space, and we will continue to do that across all of the sectors we work in.

 

Rishi Basu

 

Thank you. With that we come to an end of this Q&A. We thank our friends from media for being part of this press conference. Thank you Salil and thank you Nilanjan for being here.

 

Salil Parekh

 

Thanks Rishi. Thanks everyone for joining in and wish you all a happy new year.

 

 

Nilanjan Roy

 

Thank you everyone, stay safe.

 

 

Rishi Basu

 

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 once again for joining us and we hope to meet you in person next quarter. Stay safe and have a very good evening. Thank you.

 

 

 

 

 

 


Exhibit 99.4

Fact Sheet

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

     

 

 

 

  


   Exhibit 99.5

Earnings Call

 

  

Infosys Earnings Call Q3 FY22

January 12, 2022

 

CORPORATE PARTICIPANTS:

 

Salil Parekh

Chief Executive Officer & Managing Director

 

Nilanjan Roy

Chief Financial Officer

 

Sandeep Mahindroo

Financial Controller & Head Investor Relations

  

analysts / INVESTORS

 

Ankur Rudra

JP Morgan

 

Moshe Katri

Wedbush

 

Kumar Rakesh

BNP Paribas

 

Keith Bachman

BMO Capital Markets

 

Diviya Nagarajan

UBS

 

Ashwin Mehta

Ambit Capital

 

Sandip Agarwal

Edelweiss

 

Nitin Padmanabhan

Investec

 

Sandeep Shah

Equirus Securities

 

Manik Taneja

JM Financial

 

Rahul Jain

Dolat Capital

 

James Friedman

Susquehanna

 

Vimal Gohil

Union AMC

 

Moderator

 

Ladies and gentlemen, good day and welcome to the Infosys Earnings Conference Call. As a reminder, all participant lines will be in the 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 “*” then “0” 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

 

Thanks, Margreth. Hello everyone and welcome to Infosys Earnings Call to discuss Q3 FY22 results. I am Sandeep from the Investor Relations team in Bengaluru. Let me begin by wishing everyone a very happy New Year.

 

Joining us today on this earnings call, is CEO and MD, Mr. Salil Parekh; CFO, Mr. Nilanjan Roy along with other members of the senior management team.

 

We will start the call with some remarks on the performance of the company by Salil and Nilanjan, after that we will open the call for questions.

 

Please note that anything that we say, which refer to our outlook for the future is a forward-looking statement, which must be read in conjunction with the risk that the company faces. A full statement and 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 turn it over to Salil.

 

 

Salil Parekh

 

Good evening and good morning to everyone on the call. Wish you all a Happy New Year and trust you and your dear ones are well and safe. Thank you for making the time to join us today.

 

I am delighted to share with you that we had an extremely strong quarter with 7.0% sequential growth and 21.5% YoY growth in constant currency terms. Our YoY growth was the fastest we have had in 11 years.

 

The growth was broad-based across industries, service lines and geographies driven by our differentiated digital and cloud capabilities. A strong broad-based growth in a seasonally weak quarter is a clear testament to the enormous confidence clients have in us to help them accelerate their business transformation.

 

This has been made possible by the relentless commitment of our employees through these challenging times. I am extremely proud as well as grateful for their extraordinary efforts in delivering success for our clients.

 

Our growth has been accompanied by resilient operating margins at 23.5%. We delivered these margins while keeping in the forefront our focus on employees with increased compensation and benefits.

 

Our digital business grew by 42.6% and is now 58.5% of our overall revenues. Within digital, our cloud work is growing faster, and our Cobalt cloud capabilities are resonating tremendously with our clients.

 

Some of the highlights of our results are

 

1.Revenues at $4.25 bn, with a growth 21.5% YoY and 7.0% sequential in constant currency
2.Broad-based growth across all our industries, service lines and geographies. All our segments reported a strong double-digit growth,
3.Large deals at $2.5 bn,
4.Onsite mix at 23.8% and utilization at 88.5%,
5.Operating margins strong at 23.5%,
6.Free cash flow at $719 mn,
7.Attrition increased to 25.5%. Our quarterly annualized attrition was flattish on sequential basis.
8.We had a net headcount increase of 12,450, attracting leading talent from the market. We have increased our annual college recruiting target to 55,000, and Nilanjan will comment more on this. We remain comfortable with our ability to support our clients in their digital transformation journey.

 

Financial Services grew at 15.5% in constant currency with broad-based growth across geographies and steady deal wins. Various subsectors like lending, mortgage, cards, payments are seeing increasing demand and clients are driving cloud transformation initiatives to build resilient and scalable platforms.

 

Retail segment growth was 19.8% in constant currency. Across sub-verticals we see increased client spend on digital transformation including digital supply chain, omnichannel commerce and large-scale cost take out initiatives to improve business resilience. We signed six large deals in this segment during the quarter.

 

The communication segment grew at 22.2% on constant currency. Segment performance continued to improve with ramp up of recently won deals. Client budgets are focused on digital and customer experience programs, increasing networking infrastructure, cloud adoption and security with emphasis on 5G roll out and innovation spend.

 

Energy, utility, resources and services vertical continued its steady performance with 13.6% constant currency growth and 5 large deal wins. We are seeing gradual improvement across various businesses as consumer spending continues to increase and clients focus on increasing technology transformation around areas like customer experience, cybersecurity and workload migration to the cloud.

 

The manufacturing segment growth accelerated to 48.4% in constant currency with continued ramp up of the Daimler deal and steady momentum in new deal wins. We see across the broad improvement within various subsectors and geographies and expect client focus to continue in areas like smart manufacturing, IOT, digital supply chain and connected products.

 

High tech growth improved during the quarter to 18.9% in constant currency. Clients are seeing renewed momentum in terms of spending on digital transformation programs linked to customer, partner and employee engagement.

 

Life Sciences segment performance also improved further to 29.2% growth. Adoption of digital health, telehealth and patient access programs are resulting in significant uptake of cloud, IoT, patient facing applications, patient portals and next generation CRM work.

 

We had a very strong performance on our income tax program in India. Over 5.8 crores or 58 mn tax returns were filed using the new system, by the deadline of December 31, 2021. On the last day over 46 lakhs or 4.6 mn tax returns were filed and during the peak hour over 5 lakh or 500,000 tax returns were filed. We are proud to be supporting the digital strategy for India and for the government and working on this program for future modules that will be developed.

 

Across digital services in Q3 we have been ranked as a leader in 12 digital service-related capabilities from Artificial Intelligence and Automation, Cloud Services, IoT, Engineering, Modernization and Big Data and Analytics.

 

The strong overall performance stems from four years of sustained strategic focus in areas of relevance for our clients in digital and cloud, continuing reskilling of our people and deep relationships of trust our clients have with us.

 

With this strong momentum in the business and robust pipeline we are increasing our annual revenue growth guidance from 16.5% to 17.5% moving up to 19.5% to 20% in constant currency. Our operating margin guidance remains at 22% to 24%.

 

With that, let me hand it over to Nilanjan for his update.

 

 

Nilanjan Roy

 

Thanks, Salil. Hello everyone and thank you for joining the call. Let me start by wishing everyone a very happy and safe 2022.

 

Q3 was another successive quarter of continued acceleration in revenues at 7.0% constant currency QoQ growth and 21.5% constant currency YoY growth, the highest YoY growth in the last 11 years.

 

Despite the Q3 seasonality, we registered strong broad-based growth across geographies and verticals. Our largest geography North America grew at 21.4% while growth in Europe accelerated to an impressive 27.2% YoY in constant currency terms. Retail, Communication, Manufacturing and Life Sciences also saw 20% or higher YoY growth in constant currency.

 

We won 25 large deals, and large deals being those with over $50 mn TCV, totaling $2.5 bn of TCV - 6 in Retail, 5 each in Financial Services, Communications, and Energy Utilities Resources and Services, 2 in Manufacturing and 1 each in Hi-Tech and Life Sciences. Region wise, 16 were from the Americas, 7 were from Europe and 2 from RoW. The share of new deals increased in Q3 to 44% within the large deal numbers.

 

Client metrics improved further with $100+ mn client count increasing to 37, an increase of 8 YoY. We added 111 new clients in the last quarter.

 

Operating parameters remain robust. Utilization was 88.5% slightly lower than the previous quarter easing some of the supply side pressures. Onsite effort mix inched up marginally to 23.8%.

 

Q3 margins remained resilient at 23.5%, a marginal drop of 10 basis points versus previous quarter. The major components of the sequential margin movements were as below.

 

·         80 basis points impact due to comp hikes and promotions and other employee interventions.

·         40 basis points impact due to the utilization decline.

 

These were offset by

 

·         About 20 basis points benefit due to the rupee and other cross currency movements,

·         50 basis point benefit due to cost optimization, and

·         40 basis points benefit due to SG&A leverage other one-offs included therein.

 

Q3 EPS grew by 11.2% in dollar terms and 13.1% in rupee terms on a YoY basis.

 

Although DSO increased to 71 days due to higher seasonal billing, an increase of 5 days versus the last quarter, it is still a reduction of 2 days versus Q3 of prior year.

 

Free cash flow for the quarter was healthy at $719 mn. Free cash flow as a percentage of net profit was 93% for Q3 and 104% for the nine months till date.

 

Yield on cash balances improved to 5.29% compared to 5.13% in Q2.

 

Our balance sheet remains strong and debt free. Consolidated cash and investments at the end of the quarter stood at $4.28 bn after paying over $840 mn of interim dividend during the quarter.

 

Return on equity increased further to 30.4% an increase of 3% over Q3 of the prior year driven by robust performance and consistent capital returns through share buyback and increased dividend payout.

 

On the employee front, voluntary 12 months attrition increased to 25.5% and as Salil commented while LTM attrition continues to increase due to the tail effect, quarterly annualized attrition was flattish compared to Q2. We will continue to invest in all aspects of talent retention including compensation, promotion, skill incentives, learning and career progression.

 

We have also simultaneously increased the pace of hiring, talent reskilling and the usage of subcon to prevent any impact on client commitment. We have added 12,450 talented employees on a net basis in the last quarter, which is the highest ever. Our global college graduate hiring program for this fiscal has been increased to over 55,000 versus the previous quarter number of 45,000.

 

In India over 93% of Infoscions have received at least one dose of the vaccine. Over 97% of our employees globally are presently working in remote environment, due to the heightened precautions against the new variant.

 

Driven by robust demand environment and our continued market share gains, we are further increasing our revenue guidance for FY22 to 19.5% to 20% in constant currency terms from 16.5% to 17.5% earlier and the margin guidance remains unchanged at 22% to 24%.

 

With that we can open 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 Ankur Rudra from JP Morgan. Please go ahead.

 

Ankur Rudra

 

Thank you. Happy New Year to everybody. Excellent numbers for the quarter. Clearly a very strong growth for Q3. Could you start with elaborating on –where did the incremental surprise come from. The full year guidance has increased sharply given the performance of the quarter, so where did the surprise come from?

 

Salil Parekh

 

I think what we are seeing in the quarter and then all through the year, is the demand environment remains extremely strong and then more and more traction on the digital and the cloud programs. This is where we saw the most impact in the quarter in Q3 where we had really strong growth of 7% and therefore the overall guidance jumping up by 3%.

 

In terms of verticals, as I was sharing earlier, it is broad based. Of course, we have a very strong momentum in Manufacturing, that was something that we were looking forward to. There is also good momentum that we are seeing in Financial Services given it is our largest vertical, and in Life Sciences that I described before. Retail is starting to come back nicely as well. As Nilanjan mentioned, Europe again was a stand-out. Those are some of the elements that gave us a good outcome in Q3 and then the support for expanding the guidance for the full year.

 

 

Moderator

 

Thank you. The next question is from the line of Moshe Katri from Wedbush. Please go ahead.

 

Moshe Katri

 

Thanks. Happy New Year and congrats on very strong results. One, I know you just reported Q3 but are you ready to talk about the entire calendar year down the road, 2022. What has changed in terms of visibility, may be that is the biggest question if this is sustainable down the road. And what can you talk about in terms of color to give us that comfort. And then maybe you can talk a bit about some of the cushion in margins and what sort of levers that you have in the model, especially as some of the bench continues to benefit from the off campus recruiting that has been pretty robust?

 

Salil Parekh

 

I will start off with the first part and then Nilanjan will comment on the margin levers. Of course, as you referenced, we have guidance till March 31 of this year. The color for this calendar year, broadly we see the demand environment remaining strong, the client budgets are looking good. Our overall pipeline is the largest we have had in a very long time, the number of large deals that we were able to close, as Nilanjan shared- 25 large deals each over $50 mn for a total of $2.5 bn and 44% of these are net new. So, all of those things are giving us good confidence to what we see going ahead. Of course, we will have our guidance for our financial year in April. Nilanjan over to you please.

 

Nilanjan Roy

 

Moshe, on the margins, like I mentioned earlier they were quite resilient for the quarter. A couple of things I just want to call out – the cost levers whether it is onsite or offshore mix, the pyramid, whether it is automation – these are some of the things which we continuously look at deploying. Subcon costs for us have really ramped up and that is an area we will continue to look going ahead. The other thing is pricing and it is important to talk about that as the higher cost now starts feeding into our new deals, that should hopefully have benefits and as digital talents start getting priced in, we are able to show value to our clients in terms of the business transformation. This is something we have started recently. It will take time to pick up and we have talked about it in the last quarter as well. But really that is our focus - we can start getting into both our cost side and also make sure that we are not leaving any free cents and dollars on the table as part of our pricing negotiations.

 

 

Moderator

 

Thank you. The next question is from the line of Kumar Rakesh from BNP Paribas. Please go ahead.

 

Kumar Rakesh

 

Good evening, everyone and thank you for taking my question. Congratulations on great set of numbers. My first question Salil was, going into this calendar year, one of the largest peers has indicated a strong growth to continue through this year. So, looking at our portfolio of capabilities and offerings, do you see that we are well aligned to meet or beat their growth numbers or do you see that we need some intervention to build up our own capability to continue this strong growth going ahead?

 

Salil Parekh

 

Thanks for that question. I think in terms of our key capabilities set we have a strong portfolio across digital and cloud. Our Cobalt set of capabilities is resonating extremely well with our clients. We see the growth of digital being a reflection of the focus we have had on making these choices over the past four years and positioning the portfolio to where the clients are looking for work. We also see the cloud capability faster growing than our digital capability. So yes, we are well positioned to benefit from this. In addition to that, we have a strong set of capabilities in automation, in modernization. We have even seen our core services which is now stable this quarter in terms of growth, it is not shrinking. Our view is that our set of capabilities and portfolio is reflecting what our client expectation/demands are and we have the ability to meet all those from the capability perspective. We also have the capacity to expand and recruit at the college level and our ongoing recruiting ability to attract talent, which is helping us to deliver all our projects on a regular basis. So, we feel quite good on how we are positioned as we go ahead into the next year as well.

 

 

Kumar Rakesh

 

Thanks for that Salil. My next question is around margin guidance which we have around 22% to 24%. Currently we are trending to the upper end so how should we see that? Is it that you want to keep flexibility with yourself in anticipation of any large deals or any cost headwind potentially coming from that or is there an indication that you are looking at some major cost headwind which are going to come in, in the coming quarter and hence you are maintaining this margin guidance band?

 

Nilanjan Roy

 

The margin guidance for us is really a comfort range within which we operate so we really do not fine tune that as the year progresses. So, this is a band which we are happy to be in. It was 21% to 23% just before COVID. Now we are 22% to 24%. So that is more like a way for us rather than anything else. And looking ahead, we continue to focus on our cost headwinds potentially in terms of employees, etc., it could be travel into the next year, but like I said we have a very robust cost optimization and of course other levers, which we continue to deploy, so we are quite confident on this.

 

Kumar Rakesh

 

So more of a reflection of flexibility that you want to keep for yourself?

 

Nilanjan Roy

 

Correct.

 

Kumar Rakesh

 

Thanks a lot for those answers. I will fall back.

 

 

Moderator

 

Thank you. The next question is from the line of Keith Bachman from BMO Capital Markets. Please go ahead.

 

Keith Bachman

 

I want to pick up on the same line of questioning, if you could just talk about the puts and takes as you see margins over the course of the next three, four, five quarters, really calendar year 2022 and I wanted to see if you could address what you think the impact would be for a few things. For instance, one of the headwinds this quarter was utilization, how should we be thinking about utilization transform during calendar year 2022? Number two you said attrition was flat sequentially, how do you think about attrition trends over the course of calendar year 2022? Do you think that they can move lower or is the market such that demand is so strong that attrition will probably remain elevated? Number three would be you just brought up travel and any other issues that we should we be thinking about that may impact calendar year 2022 margins, and any other issues you want to bring up and that is it from me? Thank you.

 

Nilanjan Roy

 

I think that we do not give up the margin guidance for the next year. Now having said that looking at the headwinds, which we actually say pretty much every year are the compensation hikes, you have clients coming back for discounts on renewals, and some of that you offset with the cost optimization program which we run, and I mentioned that a bit earlier in terms of whether it is a pyramid, whether it is subcon, whether it is automation, new levers which we are looking at is pricing. So, that is something which we are continuously working on and remain quite confident. Travel is one thing which is quite unknown at this moment in terms of when does it come back, even if it comes back does it come back to pre COVID levels or in a slightly lower levels so we will have to watch out for that really.

 

In terms of attrition, I think it is a larger industry issue. It is not peculiar to us and fundamentally the volume increase for this industry has to come from freshers. Otherwise, it's a zero-sum game – somebody else's attrition is my lateral and my attrition is somebody else's lateral.

 

So as long as the fresher intake starts increasing because first they have to come into training, then they go into production after 3 or 4 months and that is something which will help with the attrition in the medium term; and like I said we have seen attrition flattening sequentially on a quarterly annualized basis and looking ahead we are seeing some positive signs, but it is too early to say whether it will dramatically come down. But like I said, as freshers feed into the system we should see the overall environment in terms of attrition in the market improving.

 

 

Keith Bachman

 

But any comments specifically on utilization? You think it will help, I heard it is neutral just broadly, and as part of that the offshore percent of labor increase YoY, is that also a trend that you think continues given the dynamics in front of you? And I will see the floor thereafter.

 

Nilanjan Roy

 

In terms of utilization, this is higher than what we would normally like to be. We would rather operate at 85% to 86%, but having said that even if we bring this down in the future it is largely at offshore locations because 75% of our effort is sitting there. Therefore, utilization does not directly link to the margins because of the way the offshore costs operate, so that is one factor.

 

The second question, in the long run - if you see, COVID, while it had a huge impact on demand, the entire ability for the supply side to deliver in a remote environment really will shine up, and that has opened up the eyes of many of our clients that every work does not have to be done onsite. It can be done in a near shore location, it can be done offshore and I think the beauty of that is secularly we believe this will help the industry in a much more larger offshoring at an overall level and of course part of that benefit will be shifting more work to offshore locations. So, I think this is a good sign. I think there can be short term impacts like we saw this quarter, 10 to 20 basis points here and there, but the secular trend - we think we will continue to see that the large global markets will open a lot more offshoring opportunities.

 

Keith Bachman

 

Many thanks. Congratulations.

 

 

Margaret – Moderator

 

Thank you. The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.

 

Diviya Nagarajan

 

Thanks for taking my question and congratulations on a very impressive quarter to the team. My question is on pricing, Salil we have seen now several quarters of strong demand and it looks like we are looking at another year, looking at the run rate that we are exiting the calendar with a pretty strong demand as well and you just discussed supply in the last few comments that you made. How do you see pricing really trend in the next 12-18 months, is there an opportunity for this to go up on a like to like basis?

 

Salil Parekh

 

Diviya thanks for that question, this is Salil. I think on pricing first we have seen some level of stability in what we saw in the specific deals that we closed in Q3 versus Q2. On the longer term, Nilanjan has shared in the past we have put in place a very focused effort on communicating the value that we are helping create with our clients through the digital programs. We are also seeing as we have shared wage increases, we have done three in the last 12 months and broadly we are seeing large enterprises for the first time in a very long time are seeing inflation in their daily environment and so are more open to having these discussions. With these factors in mind, we really see some more value that we can bring in through communicating and demonstrating our digital impact that we are creating through those programs. And that, while it will not be immediate, over the next several quarters, in my view will help us to build out more resilience in the margin profile.

 

 

Diviya Nagarajan – UBS

 

You earlier enumerated your skills and capabilities, but if you were to kind of think of any future investments that you are going to make, in which direction would you direct that investment through in terms of your skills and capabilities?

 

Salil Parekh

 

Today the biggest drive within our clients is really cloud, our Cobalt capabilities are very strong and we are constantly enhancing it. Whether we look at the public cloud partnerships, we have also a strong ecosystem of private cloud partnerships, we have a good ecosystem with the SaaS players, extremely strong cloud native cloud first development. Those would be really the first areas where we are already leading, but we will continue to grow.

 

Then you have the areas which focus on cybersecurity, which focus on data and analytics, which focus on IoT. Those are the areas which are seeing incredible traction with our clients. We have a strong modernization and automation leveraging Artificial Intelligence and Machine Learning - we will continue to build that out. Our approach is going to be to drive all of these through our current margin profile. That is what we will drive through as opposed to any new place for investments.

 

 

Diviya Nagarajan

 

Fair enough. One last bookkeeping question, your ‘Other’ segment had a big swing this quarter, is there anything particular that we should be looking at here, any one off or if not, what drove that.

 

Nilanjan Roy

 

That is coming from India, where we have some seasonality with some of our clients towards the quarter end and you will see that in the geography sector of India.

 

Diviya Nagarajan – UBS

 

Got it, thank you and wish you all the best for 2022.

 

 

Margaret – Moderator

 

Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.

 

Ashwin Mehta

 

I had one question on the third party bought out items for service delivery. That item seems to have gone up by almost $71 mn this quarter almost 1.8% of revenues, so just wanted to check what does this pertain to and is it possibly related to the data center takeovers that we would have done in some of our large deals.

 

Nilanjan Roy

 

As we are looking at in many digital end-to-end transformation, whether IT as a service, full stack transformation, we have involved, infrastructure, SaaS, data, so it is a full stack transformation and in many cases, these involve infrastructure and software as well. These are bundled deals which are end-to-end transformation and we think they are important as well going ahead when we look at these digital transformations. So, I think as part of our overall deal profiles, we continue to see these deals giving us increased visibility into the organization IT infrastructure and allowing our future deals ahead once we are pretty much front and center in the IT landscape, so that’s what these are.

 

 

Ashwin Mehta

 

Just one last question, in terms of our margin outlook over the near term, do you think that with the attrition starting to on a quarterly annualized basis normalizing, the interventions that are required possibly go down in the near term so that we can possibly make a higher exit at the end of this year, so that we can maintain margins in the next year as well?

 

Nilanjan Roy

 

As I said we have not seen a decline as yet, these are flattening and probably will start inching off, so we will continue to do what it takes to invest behind our employees because we know this is more under comfort range which we would be happy in. So, I think it is premature to say when this will really come off, but as of now we are focused in doing all these interventions. This quarter itself like we mentioned 80 basis points of our margin was behind these employee interventions.

 

Ashwin Mehta

 

Thanks a lot, congrats again and all the best.

 

 

Moderator

 

Thank you. The next question is from the line of Sandip Agarwal from Edelweiss. Please go ahead.

 

Sandip Agarwal

 

Good evening to the management team, happy New Year and thanks for taking my question. First, congratulations on a very good set of numbers. Salil, I have a very simple question, you see now you know, our core which is 41% to 42% of the business is stabilizing on a YoY basis, it is probably little growth is there, but digital continues to be at 40% plus growth, so if this trend continues next year, may be our core may become 32% to 33% of the overall pie, so what is your sense from a long term perspective, where do you see this core stabilizing or do you think it will be unfair to see them separately and in the next two to three years you think everything will converge together. So, any idea, anything which you can say on that front will be very helpful.

 

Salil Parekh

 

Thanks for that question. First as you pointed out, the digital growth is strong at over 40% or 42% and that shows resilience, the demand profile and our portfolio which is overlapping. The key for the core, instead of looking at the percentage of the business, the key for us is really the core is now stable with a very small growth, so we did not see the decline that we had for some quarters and this makes it extremely strong for us. We have probably the best capability in automation and modernization across the industry and with this while everyone else’s core is still shrinking, ours will be stable or possibly even have a small uptick and that means we will be the most competitive in this area. So, I am looking at this as a very positive step. We of course have to maintain this, and we have to keep building out our automation capabilities. So, if we succeed in that, I think that is a very good outlook for us in the quarters ahead.

 

Sandip Agarwal

 

Thanks that is very helpful and best of luck for the current quarter.

 

 

Moderator

 

Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.

 

Nitin Padmanabhan

 

Good evening, everyone and thanks for the opportunity. I had two questions. The first is on the employee side. If you look at the employee cost under cost of revenue, it has consistently been down as a percentage of revenue, it has actually below what it used to be pre-COVID and a lot of growth has actually been added on the subcon side and even if you look at the numbers, it looks like most of the additions are all freshers. So, keeping this dynamic in mind, just wanted to understand as we go forward and may be attrition normalizes, how do you see this subcon evolving from an operational perspective, do you think you will have to hire these subcontractors directly on to your rolls and would that involve slightly higher cost, so how should one think of this dynamic overall was the first question?

 

The second question was around the digital proportion of the business has meaningfully gone up and if you look into the next year and I am sure it will be even higher. From that perspective does that mean that our ability to sort of garner price increases will be far higher going into next year than what you see today? Thank you.

 

Nilanjan Roy

 

I will take the first question on subcon. As Salil said the demand environment is so strong that we do not want to leave anything on the table and therefore whether it is through subcon or through lateral or freshers, we will first intend to fulfill that demand and of course over a period of time we will optimize that entire structure. So, whether it is programmed to rehire some of the subcon, some of them we will of course lapse and then we will get the lateral hires, some will be promoted, so within that the dynamics will play itself out over the next year. But at the moment it is critical that we do not leave any demand in the table and of course this will remain a optimization lever for us. We were one of the lowest in the industry at about 6.9%, pre-COVID and we are above 11% now but this is the lever, we will have over the medium-term to optimize.

 

Salil Parekh

 

On the pricing, as the digital work will increase what we have been putting in place which is demonstrating to our clients the value creation through digital will give us a larger opportunity for that because the revenue will be larger. So, I think your assumption is absolutely valid, you will have an additional ability to do that as long as we execute in that value.

 

 

Nitin Padmanabhan

 

Thanks for that. Just a clarification on the first answer, so on the first point considering fresher addition are so strong this year and subcon is so strong does it mean that next year our ability to add as many freshers will be little more inhibited, in the sense that we will need to focus a little more on laterals next year, is that a way to think about it?

 

Nilanjan Roy

 

No. I do not think so. I think we will continue to have a very robust fresher program - it has always been there. We have a strong internal rotation program so people based on the skills, we take them through our reskilling program and we then move them to new project, promotions etc. So, in that sense we think it will be a combination of both laterals and freshers, and I do not think we see a change in that.

 

Nitin Padmanabhan - Investec

 

Fair enough. Thank you so much and all the very best.

 

 

Margaret – Moderator

 

Thank you. The next question is from the line of Sandeep Shah from Equirus Securities. Please go ahead.

 

Sandeep Shah

 

Thanks for the opportunity and congratulations on a solid execution both on revenue and margins. The first question is CY2021 or FY2022 had a benefit of mega deal wins especially from Vanguard as well as Daimler as well as some amount of pent-up demand for you as well as the industry. So, the question is entering into next year do you believe that these elements one has to take care in terms of tapering off any growth in the next year or you do believe the digital adoption or the cloud adoption journey has a low penetration which does not make us upset in looking in the next year in terms of the growth momentum?

 

 

Salil Parekh

 

Thanks for your question. First, the guidance increase, as I am sure you are seeing this for the year ending March of this year. We are not yet commenting in terms of quantitative guidance for next year. What is clear nonetheless is the demand environment remains strong and our portfolio of services and capabilities, especially on cloud and digital are resonating well with clients so we see a good pipeline for that. Our large deals in this quarter also very strong. We continue to see a good large deal pipeline. We have seen a steady expansion of our clients over $50, $100, $200 mn and so on. We have seen that expansion within clients is working very well and also our new client wins and new accounts are working well. So overall we have the various elements of continuing this demand environment strongly but we do not have a specific guidance yet for year starting in April 1, 2022.

 

 

Sandeep Shah

 

Fair enough and just last two bookkeeping questions. The way I look at is Daimler deal has two legs to ramp up one being the rebadging and employee related ramp up and second being the pass-through data center related ramp up. Is it fair to say that most of these two legs ramp up is largely behind or may continue in Q4 as well as 1Q of next financial year and second in terms of FY2022 wage hike, is it largely over or something is due in the fourth quarter as well?

 

Salil Parekh

 

On the Daimler, we do not have any more specifics. I can understand what you are looking for, but we have not gone into that specifics now with Q3 and Q4. The overall guidance for increase of the revenue covers all of that including Daimler and many other clients and especially with Q4 and the seasonality of that quarter.

 

In terms of salary and compensation increases, we have done three of them for this year. There is nothing specific that is planned for Q4. We will start to look at what we will do in the next financial year but nothing specific is being planned in Q4.

 

Sandeep Shah

 

Thanks, and all the best Sir.

 

 

Moderator

 

Thank you. The next question is from the line of Manik Taneja from JM Financial. Please go ahead.

 

 

Manik Taneja

 

Thank you for the opportunity. Just wanted to understand we have seen a significant increase in offshore mix of revenues over the last 18 months and this quarter saw a slight aberration. What caused that and how do you see this going forward? Thank you.

 

Salil Parekh

 

The mix has changed over the last 18 months with a lot of the remote working that was put in place and work from home allowing the work to be delivered from a different location with tremendous yields and efficiency. What we saw in the last quarter was, some things have opened up in terms of travel and we are also being extremely optimal in what we have done in the previous quarters and this is something that has given us more ability to drive connects with clients and growth. We see in the medium-term, tremendous opportunity for an efficient mix because clients have also seen that once the work is done remotely or work from home that more opportunity exists, there are work to be done from a location further away. So, in general as a medium-term trend we see that as a positive trend, we will have of course each quarter some movements up and down but as a longer-term trend we see that as a positive trend.

 

 

Manik Taneja

 

Thank you Salil. I had one more additional question. Just wanted to get your thoughts around what we are seeing from a revenue productivity metrics standpoint, for revenue per person standpoint and while there is significant amount of offshore shift over the last 18 months, we have seen utilization go up. So, what is causing the increase in revenue productivity despite a significant offshore shift that we have seen over the last 18 months. If you could talk about some of the factors that are driving it? Thank you.

Salil Parekh

On the revenue productivity there are a number of things that are going on. We see some of the mix of our work which is also changing more to digital and there we see much more revenue productivity coming in. As you pointed out utilization has also gone up. We will also see some of our work, for example on the consulting side, data and analytics side growing well and that is giving us some level of boost. There is also some impact which we have not quantified externally on leveraging some amount of automation and platforms that gives us this benefit. So, there are several factors at work despite the onshore offshore mix changes.

 

Manik Taneja

 

Sure, thank you and all the best for future.

 

 

Moderator

 

Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.

 

 

Rahul Jain

 

Thanks for the opportunity and congratulations. I have a question regarding the core revenue which has seen stabilization this year, I think you have addressed this point partly but wanted to understand what could be the prospect for this side of the revenue in the coming years especially when we talk about so much shift to digitalization?

 

Salil Parekh

 

There we have no individual guidance for digital or for the core in that sense, even for Q4 or for the next financial year. But structurally what is clear is we have been successful in driving automation and modernization while we make sure that we are probably the most competitive large player in the market, working with large clients. This certainly enhances the strong confidence and if we can continue to execute on that, it will have its own benefits in the medium term.

 

 

Rahul Jain

 

One more thing on the taxation part our tax rate you know steadily has been upwards of 27% on an average, this looks little higher given the country where most of our earnings belongs to so any flavor you can share in terms of what should be the ideal tax rate on a sustainable basis and in near-term?

 

Nilanjan Roy

 

Our tax rate has always hovered around this 27%, 28% range and I do not think you will see much movement going against the range. Because in any case, as you know, this is India rate plus other countries. 25% is India-only rate. So I think, in the long run, you will be around this range itself.

 

 

Rahul Jain

 

So which regions tax rate are much higher than the 25% rate also for taking this number higher than the average?

 

Nilanjan Roy

 

Yes, so see we cannot give that individually, but there are some jurisdictions and also in some jurisdiction where those taxes cannot be set off here as well, so it is a combination of both.

 

Rahul Jain

 

Okay so if we are not able to set that off those results in double taxation. That is also a reason okay got it thank you so much.

 

 

Moderator

 

Thank you. The next question is from the line of James Friedman from Susquehanna. Please go ahead.

 

 

James Friedman

 

Let me echo the congratulations for this fiscal year. I just had one simple question across for Nilanjan, can you remind us what the capital allocation strategy is. I remember you had put it out during the analyst day in November 2020 but where is share repurchase in the prioritization. Thank you.

 

Nilanjan Roy

 

What we had announced in FY20 basically, was that we have taken capital allocation to 85%, prior to this it was 70% and we said that we will take that over the period of 5 years through a combination of progressive growth-oriented dividend policy plus either share buyback or one off special dividends. And in the first two years, as we have announced, we have actually paid back 82% through higher increased normal dividends and also through share buyback which we announced last year. We have already paid back 82% and we remain quite committed to overall 85% over 5 years.

 

James Friedman

 

Got it. Thank you so much.

 

 

Moderator

 

Thank you. The next question is from the line of Vimal Gohil from Union AMC. Please go ahead.

 

Vimal Gohil

 

Thank you for the opportunity and congratulations on a great quarter. My question is on your employee cost which partially has been addressed but how should we think about the core employee cost growth which comes under the cost of revenue which has seen around 4% CQGR increase over Q1 of FY2021 versus the 6% revenue growth and this has been in light of a very sharp increase in attrition and of course further supply challenges and etc. So, if you can just highlight, are our wage hikes in line with the industry or have they been much higher than the industry? How should we think about this historically and if you could give some kind of an outlook over there as well? Thanks.

 

Nilanjan Roy

 

Yes, so you have to see both employee cost and subcon together as the cost of people as a combination, you cannot see one in isolation that is number one. Number two, just from an overall cost perspective, we of course are very focused on the attrition and being competitive in the markets as well as being employer of choice for many of our employee. Going ahead when we look at intervention on the compensation side like Salil said, we did across, in January, we did across the board, in July we have done across the board, in Q3 as well we have done very segmented and for targeted talent and we will continue doing that into Q4 etc., looking at high points of attrition and doing it much more tactically to see where we are seeing demand being high in the markets for those skills and target those employees really. So, I think it is very nuanced like I said and we will continue doing that.

 

 

Vimal Gohil

 

Sir, so basically if we were to look at your guidance, it implies 0% to 2% sort of a revenue growth in Q4. Considering the fact that there were some furloughs in Q3, your revenue growth could be higher than what you have reported in Q3. So, is your guidance conservative at this point in time how should we think about that?

 

Salil Parekh

 

In terms of the guidance, it was very strong. It is 19.5% to 20%. There is no further color in saying whether it is conservative, aggressive, or stable. We see a very good demand outlook; we see good large deals and good portfolio and the guidance is a very big move up from where we were in the last quarter.

 

Vimal Gohil – Union AMC

 

Fair enough Sir. Thank you so much and all the very best.

 

 

Moderator

 

Thank you. Ladies and gentlemen that was the last question for today. I now hand the conference over the management for closing comments.

 

Salil Parekh

 

Thank you everyone. This is Salil. Just to close from our side. First, thank you all for making your time. We feel extremely good about the quarter, 7% growth QoQ, 21.5% in YoY, very strong digital 42.6%, very good on large deals $2.5 bn. So overall we see excellent market demand and we are seeing market share gains which is a very good sign for us, primarily which are coming from a well positioned portfolio and a good execution from all our teams. Our revenue guidance of course has gone up from 19.5% to 20%, operating margins remains at a good level at 23.5% and we have good strong trust and confidence of our clients. Overall, a strong outlook and positive about what we see in the future for our digital and cloud transformation programs.

 

With that thank you all wish you a Happy New Year and look forward to catching up in April.

 

 

Sandeep Mahindroo

 

Thanks Salil for closing comments and thanks again for joining us on this call. Look forward to talking to you again during the year. Thank you.

 

 

Moderator

 

Thank you, members of the management. Ladies and gentlemen on behalf of Infosys that concludes this conference call. 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, 2021, (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 entities 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, 2021.

 

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 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 Consolidated Financial Results

 

This Statement, which is the responsibility of the Company’s Management and approved by the Company’s Board of Directors, has been compiled from the audited interim condensed consolidated financial statements for the quarter and nine months ended December 31, 2021. The Company’s Board of Directors is responsible for the preparation and presentation of these consolidated financial results 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 of the companies 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 of the companies 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 intends to liquidate their respective entities or to cease operations, or have no realistic alternative but to do so.

 

The respective Boards of Directors of the companies 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 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.
·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.

 

 

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm’s Registration No. 117366W/W-100018)

   
   
   

Place: Mumbai

Date: January 12, 2022

Sanjiv V. Pilgaonkar

Partner

(Membership No.039826)

UDIN: 22039826AAAAAB4307

 

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
7.Infosys Austria GmbH
8.Skava Systems Private Limited (under liquidation)
9.Kallidus Inc. (liquidated effective March 9, 2021)
10.Infosys Chile SpA
11.Infosys Arabia Limited
12.Infosys Consulting Ltda.
13.Infosys CIS LLC (liquidated effective January 28, 2021)
14.Infosys Luxembourg S.a.r.l
15.Infosys Americas Inc.
16.Infosys Public Services, Inc.
17.Infosys Canada Public Services Inc. (liquidated effective November 23, 2021)
18.Infosys BPM Limited
19.Infosys (Czech Republic) Limited s.r.o.
20.Infosys Poland Sp Z.o.o
21.Infosys McCamish Systems LLC
22.Portland Group Pty Ltd
23.Infosys BPO Americas LLC.
24.Infosys Consulting Holding AG
25.Infosys Management Consulting Pty Limited
26.Infosys Consulting AG
27.Infosys Consulting GmbH
28.Infosys Consulting S.R.L (Romania)
29.Infosys Consulting SAS
30.Infosys Consulting s.r.o. (liquidated effective December 16, 2021)
31.Infosys Consulting (Shanghai) Co., Ltd. (liquidated effective September 01, 2021)
32.Infy Consulting Company Limited
33.Infy Consulting B.V.
34.Infosys Consulting Sp. Z.o.o (merged with Infosys Poland Sp Z.o.o effective October 21, 2020)
35.Lodestone Management Consultants Portugal, Unipessoal, Lda. (liquidated effective November 19, 2020)
36.Infosys Consulting S.R.L (Argentina)
37.Infosys Consulting (Belgium) NV
38.Panaya Inc.
39.Panaya GmbH
40.Panaya Limited.
41.Brilliant Basics Holdings Limited
42.Brilliant Basics Limited
43.Brilliant Basics (MENA) DMCC (liquidated effective July 17, 2020)
44.Infosys Consulting Pte Ltd.
45.Infosys Middle East FZ LLC
46.Fluido Oy
47.Fluido Sweden AB (Extero)
48.Fluido Norway A/S
49.Fluido Denmark A/S
50.Fluido Slovakia s.r.o
51.Fluido Newco AB (merged with Fluido Sweden AB effective December 18, 2020)
52.Infosys Compaz PTE. Ltd
53.Infosys South Africa (Pty) Ltd
54.WongDoody Holding Company Inc. (merged with WongDoody, Inc effective December 31, 2021)
55.WDW Communications, Inc. (merged with WongDoody, Inc effective December 31, 2021)
56.WongDoody, Inc
57.HIPUS Co., Ltd.
58.Stater N.V.
59.Stater Nederland B.V.
60.Stater Duitsland B.V. (merged with Stater N.V effective December 23, 2020)
61.Stater XXL B.V.
62.HypoCasso B.V.
63.Stater Participations B.V.
64.Stater Deutschland Verwaltungs-GmbH (merged with Stater Duitsland B.V. effective December 18, 2020)
65.Stater Deutschland GmbH & Co. KG (merged with Stater Duitsland B.V. effective December 18, 2020)
66.Stater Belgium N.V./S.A.
67.Outbox systems Inc. dba Simplus (US)
68.Simplus North America Inc. (liquidated effective April 27, 2021)
69.Simplus ANZ Pty Ltd.
70.Simplus Australia Pty Ltd
71.Sqware Peg Digital Pty Ltd (liquidated effective September 02, 2021)
72.Simplus Philippines, Inc.
73.Simplus Europe, Ltd. (liquidated effective July 20, 2021)
74.Infosys Fluido UK, Ltd. (formerly Simplus U.K, Ltd)
75.Infosys Fluido Ireland, Ltd. (formerly Simplus Ireland, Ltd)
76.Infosys Limited Bulgaria EOOD (incorporated effective September 11, 2020)
77.Infosys BPM UK Limited (incorporated effective December 09, 2020)
78.Blue Acorn LLC (acquired on October 27, 2020)
79.Beringer Commerce Inc renamed as Blue Acorn iCi Inc. (acquired on October 27, 2020)
80.Beringer Capital Digital Group Inc (acquired on October 27, 2020)
81.Mediotype LLC (acquired on October 27, 2020)
82.Beringer Commerce Holdings LLC (acquired on October 27, 2020)
83.SureSource LLC (acquired on October 27, 2020)
84.Simply Commerce LLC (acquired on October 27, 2020)
85.iCiDIGITAL LLC (acquired on October 27, 2020)
86.Kaleidoscope Animations, Inc; (acquired on October 09, 2020)
87.Kaleidoscope Prototyping LLC; (acquired on October 09, 2020)
88.GuideVision s.r.o (acquired on October 01, 2020)
89.GuideVision Deutschland GmbH (acquired on October 01, 2020)
90.GuideVision Suomi Oy (acquired on October 01, 2020)
91.GuideVision Magyarorszag Kft (acquired on October 01, 2020)
92.GuideVision Polska SP Z.O.O (acquired on October 01, 2020)
93.GuideVision UK Ltd (acquired on October 01, 2020)
94.Infosys Turkey Bilgi Teknolojikeri Sirketi (incorporated effective December 30, 2020)
95.Infosys Germany Holding Gmbh (incorporated on March 23, 2021)
96.Infosys Automotive and Mobility GmbH & Co. KG, a partnership firm (formed on March 28, 2021).
97.Stater GmbH (incorporated on August 4, 2021)
98.Infosys Green Forum (incorporated on August 31, 2021)
99.Global Enterprise International (Malaysia) Sdn. Bhd. (acquired on December 14, 2021)
100.Infosys Employees Welfare Trust
101.Infosys Employee Benefits Trust
102.Infosys Science Foundation
103.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, 2021, (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, 2021.

 

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 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

 

This Statement, which is the responsibility of the Company’s Management and approved by the Board of Directors, has been compiled from the related audited interim condensed standalone financial statements for the quarter and nine months ended December 31, 2021. The Company’s Board of Directors is responsible for the preparation and presentation of the standalone financial results 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 is 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 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 the Company’s internal control.
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.

 

 

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm’s Registration No. 117366W/W-100018)

   
   
   

Place: Mumbai

Date: January 12, 2022

Sanjiv V. Pilgaonkar

Partner

(Membership No.039826)

UDIN: 22039826AAAAAD1301

 

 

 

 

 

   

 

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, 2021 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,
  2021 2021 2020 2021 2020 2021
  Audited Audited Audited Audited Audited Audited
Revenue from operations  31,867  29,602  25,927  89,365  74,161 1,00,472
Other income, net  512  524  611  1,658  1,657 2,201
Total Income  32,379  30,126  26,538  91,023  75,818 1,02,673
Expenses            
Employee benefit expenses  16,355  15,743  14,097  47,328  41,101 55,541
Cost of technical sub-contractors  3,511  3,054  1,839  9,019  5,099 7,084
Travel expenses  221  163  126  518  393 554
Cost of software packages and others  1,861  1,393  1,150  4,543  3,151 4,223
Communication expenses  147  146  163  441  488 634
Consultancy and professional charges  520  449  319  1,364  866 1,261
Depreciation and amortisation expenses  899  859  826  2,586  2,436 3,267
Finance cost  53  48  49  150  145 195
Other expenses  869  823  818  2,507  2,445 3,286
Total expenses  24,436  22,678  19,387  68,456  56,124 76,045
Profit before tax  7,943  7,448  7,151  22,567  19,694 26,628
Tax expense:            
Current tax  2,063  1,987  1,927  5,986  5,011 6,672
Deferred tax  58  33  9  130  338 533
Profit for the period  5,822  5,428  5,215  16,451  14,345 19,423
Other comprehensive income            
Items that will not be reclassified subsequently to profit or loss            
Remeasurement of the net defined benefit liability/asset, net  (53)  14  126  (72)  280 134
Equity instruments through other comprehensive income, net  40  116  41  110 119
Items that will be reclassified subsequently to profit or loss            
Fair value changes on derivatives designated as cash flow hedges, net  (7)  6  (22)  4  (1) 25
Exchange differences on translation of foreign operations  (33)  (166)  211  91  396 130
Fair value changes on investments, net  (77)  55  26  16  35 (102)
Total other comprehensive income/(loss), net of tax  (170)  (51)  457  80  820 306
Total comprehensive income for the period  5,652  5,377  5,672  16,531  15,165 19,729
Profit attributable to:            
Owners of the company  5,809  5,421  5,197  16,425  14,275 19,351
Non-controlling interest  13  7  18  26  70 72
   5,822  5,428  5,215  16,451  14,345 19,423
Total comprehensive income attributable to:            
Owners of the company  5,640  5,375  5,647  16,506  15,081 19,651
Non-controlling interest  12  2  25  25  84 78
   5,652  5,377  5,672  16,531  15,165 19,729
Paid up share capital (par value 5/- each, fully paid)  2,097  2,097  2,123  2,097  2,123 2,124
Other equity *#  74,227  74,227  63,328  74,227  63,328 74,227
Earnings per equity share (par value 5/- each)**            
Basic ()  13.86  12.88  12.25  38.96  33.65 45.61
Diluted ()  13.83  12.85  12.23  38.88  33.59 45.52

 

*Balances for the quarter and nine months ended December 31, 2021 and quarter ended September 30, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter and nine months ended December 31, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015
**EPS is not annualized for the quarter and nine months ended December 31, 2021, quarter ended September 30, 2021 and quarter and nine months ended December 31, 2020.
#Excludes non-controlling interest

 

a)The audited interim condensed consolidated financial statements for the quarter and nine months ended December 31, 2021 have been taken on record by the Board of Directors at its meeting held on January 12, 2022. 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)Retirement of Whole- time Director
   
  

Mr.U.B.Pravin Rao, Chief Operating Officer and Whole-time Director retired from the Board and services of the Company effective December 12, 2021. The Board expressed its deep sense of appreciation for Pravin’s leadership over his 35 years of service with the Company and acknowledges his immense efforts and contributions towards global delivery and business enablement.

 

c)Estimation of uncertainties relating to the global health pandemic from COVID-19 ( COVID-19):
   
  

The Group has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.

 

d)Employee stock grants
   
  The Board, on January 12, 2022, based on the recommendations of the Nomination and Remuneration Committee, approved :
   
 i) The annual time-based stock incentives in the form of Restricted Stock Units (RSUs) to Salil Parekh, CEO & MD having a market value of 3.25 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.
   
 ii) The annual time-based RSU to a KMP having a market value of 1.75 crore as on date of grant under 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.
   
 iii) The grant of performance-based stock incentives in the form of Restricted Stock Units (RSU's) to certain eligible employees covering Company’s equity shares having a market value of $531,000 (approximately 4 crore) as on the date of the grant under the Infosys Expanded Stock Ownership Program-2019 (2019 Plan) .. The RSUs will be granted w.e.f February 1, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The RSUs would vest equally over a period of three years subject to the Company’s achievement of certain performance criteria as laid out in the 2019 Plan. The exercise price of RSUs will be equal to the par value of the share.

 

e)Acquisition of Global Enterprise International (Malaysia) Sdn.Bhd
   
  

On December 14, 2021, Infosys Consulting Pte Ltd (a wholly owned subsidiary of Infosys Limited) acquired 100% of voting interest in Global Enterprise International (Malaysia) Sdn.Bhd for a total consideration of up to SGD 6 million (approximately 33 crore).  This acquisition is expected to bolster Infosys’ presence in Malaysia, a strategic delivery and sales hub in South East Asia for global clients.

 

2. Information on dividends for the quarter and nine months ended December 31, 2021

 

The Board of Directors (in the meeting held on October 13, 2021) declared an interim dividend of 15 /- (par value 5/- each) per equity share. The record date for payment was October 27, 2021 and the same was paid on November 10, 2021. The interim dividend declared in the previous year was 12/- 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,
  2021 2021 2020 2021 2020 2021
Dividend per share (par value 5/- each)            
 Interim dividend  15.00  15.00  12.00 12.00
 Final dividend 15.00

 

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,
  2021 2021 2020 2021 2020 2021
Revenue by business segment            
Financial Services (1)  10,023  9,566  8,578  28,805  23,905 32,583
Retail (2)  4,612  4,330  3,801  13,118  10,844 14,745
Communication (3)  3,979  3,668  3,215  11,050  9,472 12,628
Energy, Utilities, Resources and Services  3,740  3,501  3,251  10,611  9,306 12,539
Manufacturing  3,598  3,219  2,416  9,520  6,913 9,447
Hi-Tech  2,567  2,511  2,130  7,388  6,436 8,560
Life Sciences (4)  2,383  2,103  1,827  6,377  5,074 6,870
All other segments (5)  965  704  709  2,496  2,211 3,100
Total  31,867  29,602  25,927  89,365  74,161 1,00,472
Less: Inter-segment revenue
Net revenue from operations  31,867  29,602  25,927  89,365  74,161 1,00,472
Segment profit before tax, depreciation and non-controlling interests:            
Financial Services (1)  2,734  2,644  2,346  7,736 6,706 8,946
Retail (2)  1,630  1,503  1,384  4,615 3,733 5,117
Communication (3)  963  816  803  2,486 2,085 2,795
Energy, Utilities , Resources and Services  1,075  1,017  943  3,113 2,620 3,552
Manufacturing  633  724  696  1,982 1,856 2,563
Hi-Tech  636  619  629  1,823 1,896 2,454
Life Sciences (4)  640  588  568  1,799 1,609 2,156
All other segments (5)  72  (80)  46  91 113 306
Total  8,383  7,831  7,415  23,645  20,618 27,889
Less: Other Unallocable expenditure  899  859  826  2,586 2,436 3,267
Add: Unallocable other income  512  524  611  1,658 1,657 2,201
Less: Finance cost  53  48  49  150  145 195
Profit before tax and non-controlling interests  7,943  7,448  7,151  22,567  19,694 26,628

 

 

(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

 

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,
  2021 2021 2020 2021 2020 2021
Revenue from operations  27,337  25,462  22,043  76,514  63,415 85,912
Profit before tax  7,789  7,303  6,894  21,585  18,436 24,477
Profit for the period  5,870  5,463  5,083  16,056  13,588 18,048

 

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
January 12, 2022
Salil Parekh
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, 2021, prepared as per International Financial Reporting Standards (IFRS) and reported in US dollars. A summary of the financial statements is as follows:

 

(in $ million) 

Particulars Quarter ended December 31, Quarter ended September 30, Quarter ended  December 31, Nine months ended December 31, Year ended March 31,
  2021 2021 2020 2021 2020 2021
  Audited Audited Audited Audited Audited Audited
Revenues 4,250 3,998 3,516 12,031 9,948 13,561
Cost of sales  2,856  2,675  2,275  8,041  6,471 8,828
Gross profit  1,394  1,323  1,241  3,990  3,477 4,733
Operating expenses  396  382  348  1,155  1,036 1,408
Operating profit  998  941  893  2,835  2,441 3,325
Other income, net  68  71  83  223  222 297
Finance cost  7  6  6  20  19 26
Profit before income taxes  1,059  1,006  970  3,038  2,644 3,596
Income tax expense  283  272  263  823  718 973
Net profit  776  734  707  2,215  1,926 2,623
Earnings per equity share *            
 Basic  0.18  0.17  0.17  0.52  0.45 0.62
 Diluted  0.18  0.17  0.17  0.52  0.45 0.61
Total assets  14,673  14,295  13,869  14,673  13,869 14,825
Cash and cash equivalents and current investments  2,703  3,103  3,476  2,703  3,476 3,700
*EPS is not annualized for the quarter and nine months ended December 31, 2021, quarter ended September 30, 2021 and quarter and nine months ended December 31, 2020.

 

Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. 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, 2021 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,
  2021 2021 2020 2021 2020 2021
  Audited Audited Audited Audited Audited Audited
Revenue from operations               27,337              25,462              22,043                76,514                63,415 85,912
Other income, net                 1,013               1,052                  903                 2,634                 1,963 2,467
Total income               28,350              26,514              22,946                79,148                65,378 88,379
Expenses            
Employee benefit expenses               13,275              12,734              11,371                38,199                33,647 45,179
Cost of technical sub-contractors                 4,406               3,934                2,516                11,658                 6,736 9,528
Travel expenses                   195                  143                  113                    453                    341 484
Cost of software packages and others                   856                  736                  479                 2,120                 1,508 2,058
Communication expenses                   102                  107                  123                    312                    358 464
Consultancy and professional charges                   412                  365                  243                 1,087                    661 999
Depreciation and amortisation expense                   631                  601                  589                 1,809                 1,743 2,321
Finance cost                     33                    32                    32                      97                      93 126
Other expenses                   651                  559                  586                 1,828                 1,855 2,743
Total expenses               20,561              19,211              16,052                57,563                46,942 63,902
Profit before tax                 7,789               7,303                6,894                21,585                18,436 24,477
Tax expense:            
Current tax                 1,852               1,805                1,750                 5,354                 4,502 6,013
Deferred tax                     67                    35                    61                    175                    346 416
Profit for the period                 5,870               5,463                5,083                16,056                13,588 18,048
Other comprehensive income            
Items that will not be reclassified subsequently to profit or loss            
Remeasurement of the net defined benefit liability / asset, net                    (52)                    10                  130                     (74)                    292 148
Equity instruments through other comprehensive income, net                     –                    39                  117                      41                    112 120
Items that will be reclassified subsequently to profit or loss            
Fair value changes on derivatives designated as cash flow hedges, net                      (7)                      6                   (22)                        4                       (1) 25
Fair value changes on investments, net                    (67)                    52                    28                      23                      32 (102)
Total other comprehensive income/ (loss), net of tax                  (126)                  107                  253                       (6)                    435 191
Total comprehensive income for the period                 5,744               5,570                5,336                16,050                14,023 18,239
Paid-up share capital (par value 5/- each fully paid)                 2,102               2,102                2,129                 2,102                 2,129 2,130
Other Equity*               69,401              69,401              60,105                69,401                60,105 69,401
Earnings per equity share ( par value 5 /- each)**            
   Basic () 13.96 12.93 11.93 37.96 31.90 42.37
   Diluted () 13.94 12.92 11.93 37.91 31.88 42.33

 

*Balances for the quarter and nine months ended December 31, 2021 and quarter ended September 30, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter and nine months ended December 31, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015
**EPS is not annualized for the quarter and nine months ended December 31, 2021, quarter ended September 30, 2021 and quarter and nine months ended December 31, 2020.

 

1.Notes pertaining to the current quarter

 

a)The audited interim condensed standalone financial statements for the quarter and nine months ended December 31, 2021 have been taken on record by the Board of Directors at its meeting held on January 12, 2022. The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented above is extracted from the audited interim condensed standalone financial statements. These interim condensed standalone 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)Retirement of Whole- time Director
   
  

Mr.U.B.Pravin Rao, Chief Operating Officer and Whole-time Director retired from the Board and services of the Company effective December 12, 2021. The Board expressed its deep sense of appreciation for Pravin’s leadership over his 35 years of service with the Company and acknowledges his immense efforts and contributions towards global delivery and business enablement.

 

c)Estimation of uncertainties relating to the global health pandemic from COVID-19 ( COVID-19):
   
  

The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed standalone financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Company's financial statements may differ from that estimated as at the date of approval of these interim condensed standalone financial statements.

 

d)Employee stock grants
   
  

The Board, on January 12, 2022, based on the recommendations of the Nomination and Remuneration Committee, approved :

   
 i)

The annual time-based stock incentives in the form of Restricted Stock Units (RSUs) to Salil Parekh, CEO & MD having a market value of 3.25 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.

   
 ii)

The annual time-based RSU to a KMP having a market value of 1.75 crore as on date of grant under 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.

   
 iii)

The grant of performance-based stock incentives in the form of Restricted Stock Units (RSU's) to certain eligible employees covering Company’s equity shares having a market value of $531,000 (approximately 4 crore) as on the date of the grant under the Infosys Expanded Stock Ownership Program-2019 (2019 Plan) .. The RSUs will be granted w.e.f February 1, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The RSUs would vest equally over a period of three years subject to the Company’s achievement of certain performance criteria as laid out in the 2019 Plan. The exercise price of RSUs will be equal to the par value of the share.

  

2. Notes pertaining to the previous quarter

 

Proposed transfer of Corporate Social Responsibility (CSR ) Asset

 

Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (“the Rules”), the Company is required to transfer its CSR capital assets created prior to January 2021. Towards this the Company had incorporated a controlled subsidiary ‘Infosys Green Forum’ under Section 8 of the Companies Act, 2013 and the transfer will be completed upon obtaining the required approvals from regulatory authorities, as applicable.

 

The carrying amount of the capital asset amounting to 283 crore has been impaired and included as CSR expense in the standalone financial statements during the year ended March 31, 2021 because the Company will not be able to recover the carrying amount of the asset from its Subsidiary on account of prohibition on payment of dividend by this Subsidiary.

 

3. Information on dividends for the quarter and nine months ended December 31, 2021

 

The Board of Directors (in the meeting held on October 13, 2021) declared an interim dividend of 15 /- (par value 5/- each) per equity share. The record date for payment was October 27, 2021 and the same was paid on November 10, 2021. The interim dividend declared in the previous year was 12/- 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,
  2021 2021 2020 2021 2020 2021
Dividend per share (par value 5/- each)            
    Interim dividend                     –               15.00                     –                 15.00                 12.00 12.00
    Final dividend 15.00

 

4. 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, 2021.

 

  By order of the Board
for Infosys Limited
   
Bengaluru, India
January 12, 2022
Salil Parekh
Chief Executive Officer and
 Managing Director

 

Certain statements in this release concerning our future growth prospects, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. 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, 2021 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,
  2021 2021 2020
Revenue from operations                31,867               89,365 25,927
Profit before tax                 7,943               22,567 7,151
Profit for the period                 5,822               16,451 5,215
Total comprehensive income for the period (comprising profit for the period after tax and other comprehensive income after tax)                 5,652               16,531 5,672
Profit attributable to:      
Owners of the company                 5,809               16,425 5,197
Non-controlling interest                      13                     26 18
                  5,822               16,451 5,215
Total comprehensive income attributable to:      
Owners of the company                 5,640               16,506 5,647
Non-controlling interest                      12                     25 25
                  5,652               16,531 5,672
Paid-up share capital (par value 5/- each fully paid)                 2,097                 2,097 2,123
Other equity *#                74,227               74,227 63,328
Earnings per equity share (par value 5/- each)**      
   Basic ()                 13.86                 38.96 12.25
   Diluted ()                 13.83                 38.88 12.23

 

*Balances for the quarter and nine months ended December 31, 2021 represents balances as per the audited Balance Sheet for the year ended March 31, 2021 and balances for the quarter ended December 31, 2020 represents balances as per the audited Balance Sheet for the year ended March 31, 2020 as required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015
**EPS is not annualized for the quarter and nine months ended December 31, 2021 and quarter ended December 31, 2020.
#Excludes non-controlling interest

 

a)The audited interim condensed consolidated financial statements for the quarter and nine months ended December 31, 2021 have been taken on record by the Board of Directors at its meeting held on January 12, 2022. 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)Retirement of Whole- time Director
   
  

Mr.U.B.Pravin Rao, Chief Operating Officer and Whole-time Director retired from the Board and services of the Company effective December 12, 2021. The Board expressed its deep sense of appreciation for Pravin’s leadership over his 35 years of service with the Company and acknowledges his immense efforts and contributions towards global delivery and business enablement.

 

c)Estimation of uncertainties relating to the global health pandemic from COVID-19 ( COVID-19):
   
  

The Group has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of this pandemic, the Group has, at the date of approval of these condensed financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of COVID-19 on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.

  

d)Employee stock grants
   
  

The Board, on January 12, 2022, based on the recommendations of the Nomination and Remuneration Committee, approved :

   
 i)

The annual time-based stock incentives in the form of Restricted Stock Units (RSUs) to Salil Parekh, CEO & MD having a market value of 3.25 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.

   
 ii)

The annual time-based RSU to a KMP having a market value of 1.75 crore as on date of grant under 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, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The exercise price of RSUs will be equal to the par value of the share.

   
 iii)

The grant of performance-based stock incentives in the form of Restricted Stock Units (RSU's) to certain eligible employees covering Company’s equity shares having a market value of $531,000 (approximately 4 crore) as on the date of the grant under the Infosys Expanded Stock Ownership Program-2019 (2019 Plan) .. The RSUs will be granted w.e.f February 1, 2022 and the number of RSUs will be calculated based on the market price at the close of trading on February 1, 2022. The RSUs would vest equally over a period of three years subject to the Company’s achievement of certain performance criteria as laid out in the 2019 Plan. The exercise price of RSUs will be equal to the par value of the share.

  

e) Acquisition of Global Enterprise International (Malaysia) Sdn.Bhd

 

On December 14, 2021, Infosys Consulting Pte Ltd (a wholly owned subsidiary of Infosys Limited) acquired 100% of voting interest in Global Enterprise International (Malaysia) Sdn.Bhd for a total consideration of up to SGD 6 million (approximately 33 crore).  This acquisition is expected to bolster Infosys’ presence in Malaysia, a strategic delivery and sales hub in South East Asia for global clients.

 

2. Information on dividends for the quarter and nine months ended December 31, 2021

 

The Board of Directors (in the meeting held on October 13, 2021) declared an interim dividend of 15 /- (par value 5/- each) per equity share. The record date for payment was October 27, 2021 and the same was paid on November 10, 2021. The interim dividend declared in the previous year was 12/- per equity share.

(in )

Particulars  Quarter ended December 31, Nine months December 31,  Quarter ended December 31,
  2021 2021 2020
Dividend per share (par value 5/- each)      
    Interim dividend                 15.00
    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,
  2021 2021 2020
Revenue from operations 27,337 76,514 22,043
Profit before tax 7,789 21,585 6,894
Profit for the period 5,870 16,056 5,083

 

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, financial expectations and plans for navigating the COVID-19 impact on our employees, clients and stakeholders 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 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 COVID-19 and the effects of government and other measures seeking to contain its spread, risks related to an economic downturn or recession in India, the United States and other countries around the world, changes in political, business, and economic conditions, fluctuations in earnings, fluctuations in foreign exchange rates, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, industry segment concentration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks or system failures, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal or expiration of governmental fiscal incentives, political instability and regional conflicts, legal restrictions on raising capital or acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry and the outcome of pending litigation and government investigation. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2021. 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
January 12, 2022
Salil Parekh
Chief Executive Officer and
 Managing Director

 

 

 

 

 

 

 

 

 

 

 

 


  Exhibit 99.7

IFRS USD 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, 2021, 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, 2021, the consolidated profit and consolidated total comprehensive income for the three months and nine months ended on that date, 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 we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed consolidated financial statements.

 

Management’s Responsibilities 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 of the companies included in the Group are responsible for maintenance of 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 of the companies included in the Group are responsible for assessing 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 has no realistic alternative but to do so.

 

The respective Boards of Directors of the companies included in the Group are 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 the Company’s internal financial 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 the 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.

 

 

 

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm’s Registration No. 117366W/W-100018)

 

 

 

 

Place: Mumbai

Date: January 12, 2022 

Sanjiv V. Pilgaonkar

Partner

(Membership No.039826)

UDIN: 22039826AAAAAG4110

 

 

 

 

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, 2021

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 judgements

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 combination

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 Break-up of expenses and other income, net

2.19 Equity

 

Infosys Limited and Subsidiaries 

(Dollars in millions except equity share data)

Condensed Consolidated Balance Sheet as at Note December 31, 2021 March 31, 2021
ASSETS      
Current assets      
Cash and cash equivalents 2.1  2,145 3,380
Current investments 2.2  558 320
Trade receivables    3,036 2,639
Unbilled revenue 2.17  1,325 1,030
Prepayments and other current assets 2.4  1,060 912
Derivative financial instruments 2.3  29 26
Total current assets    8,153 8,307
Non-current assets      
Property, plant and equipment 2.7  1,796 1,863
Right-of-use assets 2.8  637 656
Goodwill 2.9  823 832
Intangible assets    239 283
Non-current investments 2.2  1,623 1,623
Unbilled revenue 2.17  126 81
Deferred income tax assets 2.12  124 150
Income tax assets 2.12  808 795
Other non-current assets 2.4  344 235
Total Non-current assets    6,520 6,518
Total assets    14,673 14,825
LIABILITIES AND EQUITY      
Current liabilities      
Trade payables    506 362
Lease Liabilities 2.8  112 101
Derivative financial instruments 2.3  6 8
Current income tax liabilities 2.12  341 294
Unearned revenue    833 554
Employee benefit obligations    298 276
Provisions 2.6  134 97
Other current liabilities 2.5  1,962 1,572
Total current liabilities    4,192 3,264
Non-current liabilities      
Lease liabilities 2.8  603 627
Deferred income tax liabilities 2.12  113 120
Employee benefit obligations    12 13
Other non-current liabilities 2.5  366 299
Total liabilities    5,286 4,323
Equity      
Share capital - rupee symbol5 ($0.16) par value 4,800,000,000 (4,800,000,000) equity shares authorized, issued and outstanding 4,191,163,238 (4,245,146,114) equity shares fully paid up, net of 14,454,720 (15,514,732) treasury shares as at December 31, 2021 and March 31, 2021 2.19  328 332
Share premium    316 359
Retained earnings    10,965 12,087
Cash flow hedge reserve    2 2
Other reserves    1,125 908
Capital redemption reserve    21 17
Other components of equity    (3,422) (3,263)
Total equity attributable to equity holders of the company    9,335 10,442
Non-controlling interests    52 60
Total equity    9,387 10,502
Total liabilities and equity    14,673 14,825

 

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
D. Sundaram
Director
       
  Nilanjan Roy
Chief Financial Officer
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer
A.G.S. Manikantha
Company Secretary
       
Mumbai
January 12, 2022
Bengaluru
January 12, 2022
   

 

  

Infosys Limited and Subsidiaries

(Dollars in millions except equity share and per equity share data)

Condensed Consolidated Statement of Comprehensive Income Note Three months ended Nine months ended
    December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020
Revenues 2.16  4,250  3,516  12,031 9,948
Cost of sales 2.18  2,856  2,275  8,041 6,471
Gross profit    1,394  1,241  3,990 3,477
Operating expenses:          
 Selling and marketing expenses 2.18  177  156  513 459
 Administrative expenses 2.18  219  192  642 577
Total operating expenses    396  348  1,155 1,036
Operating profit    998  893  2,835 2,441
Other income, net 2.18  68  83  223 222
Finance cost    7  6  20 19
Profit before income taxes    1,059  970  3,038 2,644
Income tax expense 2.12  283  263  823 718
Net profit    776  707  2,215 1,926
Other comprehensive income          
Items that will not be reclassified subsequently to profit or loss:          
Re-measurements of the net defined benefit liability/asset, net    (7)  17  (9) 37
Equity instrument through other comprehensive income, net      16  5 15
     (7)  33  (4) 52
Items that will be reclassified subsequently to profit or loss:          
Fair valuation of investments, net    (10)  4  2 5
Fair value changes on derivatives designated as cash flow hedge, net    (1)  (3)    
Foreign currency translation    (18)  121  (157) 377
     (29)  122  (155) 382
Total other comprehensive income/(loss), net of tax    (36)  155  (159) 434
Total comprehensive income    740  862  2,056 2,360
Profit attributable to:          
Owners of the company    774  705  2,211 1,916
Non-controlling interests    2  2  4 10
     776  707  2,215 1,926
Total comprehensive income attributable to:          
Owners of the company    738  860  2,052 2,348
Non-controlling interests    2  2  4 12
     740  862  2,056 2,360
Earnings per equity share          
Basic ($)    0.18  0.17  0.52 0.45
Diluted ($)    0.18  0.17  0.52 0.45
Weighted average equity shares used in computing earnings per equity share 2.13        
Basic    4,190,865,711  4,242,867,494  4,215,373,286 4,241,962,125
Diluted    4,198,923,902  4,250,606,654  4,224,009,404 4,249,697,808

 

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
D. Sundaram
Director
       
  Nilanjan Roy
Chief Financial Officer
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer
A.G.S. Manikantha
Company Secretary
       
Mumbai
January 12, 2022
Bengaluru
January 12, 2022
   

 

 

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, 2020  4,240,753,210  332  305  11,014  594  17  (2)  (3,614)  8,646  55 8,701
Changes in equity for nine months ended December 31, 2020                      
Net profit        1,916          1,916  10 1,926
Remeasurement of the net defined benefit liability/asset, net*                37  37   37
Equity instruments through other comprehensive income, net*                15  15   15
Fair value changes on investments, net*                5  5   5
Fair value changes on derivatives designated as cash flow hedge, net*                      
Foreign currency translation                375  375  2 377
Total comprehensive income for the period        1,916        432  2,348  12 2,360
Shares issued on exercise of employee stock options (Refer note 2.11)  2,538,219    2            2   2
Effect of modification of share based payments awards      1            1   1
Transfer to other reserves        (326)  326            
Transfer from other reserves on utilization        91  (91)            
Employee stock compensation expense (Refer note 2.11)      27            27   27
Income tax benefit arising on exercise of stock options      2            2   2
Payments towards acquisition of minority interest        (4)          (4)  (3) (7)
Dividends paid to non-controlling interest of subsidiary                    (3) (3)
Dividends (including dividend distribution tax)#        (1,222)          (1,222)   (1,222)
Balance as at December 31, 2020  4,243,291,429  332  337  11,469  829  17  (2)  (3,182)  9,800  61 9,861

 

 

 

(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, 2021  4,245,146,114  332  359  12,087  908  17  2  (3,263)  10,442  60 10,502
Changes in equity for nine months ended December 31, 2021                      
Net profit        2,211          2,211  4 2,215
Remeasurement of the net defined benefit liability/asset, net*                (9)  (9)   (9)
Equity instruments through other comprehensive income, net*                5  5   5
Fair value changes on investments, net*                2  2   2
Fair value changes on derivatives designated as cash flow hedge, net*                      
Foreign currency translation                (157)  (157)   (157)
Total comprehensive income for the period        2,211        (159)  2,052  4 2,056
Shares issued on exercise of employee stock options (Refer to note 2.11)  1,824,461    2            2   2
Buyback of equity shares (Refer to note 2.19)**  (55,807,337)  (4)  (86)  (1,409)          (1,499)   (1,499)
Transaction cost relating to buyback *        (4)          (4)   (4)
Amount transferred to capital redemption reserve upon buyback        (4)    4          
Transfer from other reserves on utilization        85  (85)            
Transfer to other reserves        (302)  302            
Employee stock compensation expense (Refer to note 2.11)      38            38   38
Income tax benefit arising on exercise of stock options      3            3   3
Dividends paid to non-controlling interest of subsidiary                    (12) (12)
Dividends#        (1,699)          (1,699)   (1,699)
Balance as at December 31, 2021  4,191,163,238  328  316  10,965  1,125  21  2  (3,422)  9,335  52 9,387

 

*net of tax
**including tax on buyback of $256 million
#net of treasury shares
(1)excludes treasury shares of 14,454,720 as at December 31, 2021, 15,514,732 as at April 1, 2021, 16,296,404 as at December 31, 2020 and 18,239,356 as at April 1, 2020, 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
D. Sundaram
Director
       
  Nilanjan Roy
Chief Financial Officer
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer
A.G.S. Manikantha
Company Secretary
       
Mumbai
January 12, 2022
Bengaluru
January 12, 2022
   

  

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.

 

(Dollars in millions)

Particulars Note Nine months ended
    December 31, 2021 December 31, 2020
Operating activities:      
Net Profit    2,215 1,926
Adjustments to reconcile net profit to net cash provided by operating activities:      
Depreciation and amortization 2.18  348 327
Interest and dividend income    (77) (54)
Finance Cost    20 19
Income tax expense 2.12  823 718
Effect of exchange rate changes on assets and liabilities, net    5 2
Impairment loss under expected credit loss model    19 24
Stock compensation expense 2.11  41 35
Other adjustments    19 (9)
Changes in working capital      
Trade receivables and unbilled revenue    (817) (176)
Prepayments and other assets    (159) 4
Trade payables    150 (55)
Unearned revenue    282 127
Other liabilities and provisions    408 190
Cash generated from operations    3,277 3,078
Income taxes paid    (777) (673)
Net cash generated by operating activities    2,500 2,405
Investing activities:      
Expenditure on property, plant and equipment and intangibles    (206) (231)
Deposits placed with corporation    (106) (76)
Redemption of deposits placed with corporations    85 58
Interest and dividend received    84 58
Payment towards acquisition of business, net of cash acquired     (164)
Payment of contingent consideration pertaining to acquisition of business    (7) (21)
Escrow and other deposits pertaining to Buyback    (57)  
Redemption of escrow and other deposits pertaining to Buyback    57  
Payments to acquire Investments      
Liquid mutual funds and fixed maturity plan securities    (5,356) (3,168)
Certificate of deposits    (198)  
Quoted debt securities    (473) (945)
Other Investments    (3) (1)
Proceeds on sale of Investments      
Quoted debt securities    474 477
Equity and preference securities     8
Certificate of deposits    67 154
Liquid mutual funds and fixed maturity plan securities    5,236 3,172
Other Investments    1 3
Other payments    (3) (5)
Other receipts    7 5
Net cash (used)/generated in investing activities    (398) (676)
Financing activities:      
Payment of Lease Liabilities 2.8  (86) (72)
Payment of dividends    (1,703) (1,226)
Payment of dividend to non controlling interests of subsidiary    (11) (3)
Shares issued on exercise of employee stock options    2 2
Payment towards purchase of minority interest     (7)
Other payments    (3)  
Other receipts    28 11
Buy back of equity shares including transaction costs and tax on buyback 2.19.1  (1,503)  
Net cash used in financing activities    (3,276) (1,295)
Effect of exchange rate changes on cash and cash equivalents    (61) 123
Net increase / (decrease) in cash and cash equivalents    (1,174) 434
Cash and cash equivalents at the beginning of the period 2.1  3,380 2,465
Cash and cash equivalents at the end of the period 2.1  2,145 3,022
Supplementary information:      
Restricted cash balance 2.1  66 60

 

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
D. Sundaram
Director
       
  Nilanjan Roy
Chief Financial Officer
Jayesh Sanghrajka
Executive Vice President and
Deputy Chief Financial Officer
A.G.S. Manikantha
Company Secretary
       
Mumbai
January 12, 2022
Bengaluru
January 12, 2022
   

 

 

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 Bengaluru, Karnataka, India. The company has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited in India. 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 authorized for issue by the company's Board of Directors on January 12, 2022.

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, 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, 2021. Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

 

As the quarter and year to date figures are taken from the source and rounded to the nearest digits, the quarter figures in this statement added up to the figures reported for the previous quarters might not always add up to the year to date figures reported in this statement.

 

1.3 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 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. 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 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.

 

Estimation of uncertainties relating to the global health pandemic from COVID-19 (COVID-19):

 

The Group has considered the possible effects that may result from the COVID-19 pandemic in the preparation of these interim condensed consolidated financial statements including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to the possible future uncertainties in the global economic conditions because of the COVID-19 pandemic, the Group has, at the date of approval of these interim condensed consolidated financial statements, used internal and external sources of information including credit reports and related information and economic forecasts and expects that the carrying amount of these assets will be recovered. The impact of the COVID-19 pandemic on the Group's financial statements may differ from that estimated as at the date of approval of these interim condensed consolidated financial statements.

  

1.5 Critical accounting estimates and judgements 

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 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.

 

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 U.S., though the company also files tax returns in other overseas jurisdictions.

 

Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.

 

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. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements and intangible assets. These valuations are conducted by external valuation experts. 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)

 

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).

 

f. Leases

 

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 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. After considering current and future economic conditions, the Group has concluded that no material changes are required to lease period relating to the existing lease contracts (Refer to note 2.8).

 

g. Allowance for credit losses on receivables and unbilled revenue

 

The Group determines the allowance for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The group considered current and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates. In calculating expected credit loss, the Group has also considered credit reports and other related credit information for its customers to estimate the probability of default in future and has taken into account estimates of possible effect from the pandemic relating to COVID-19.

 

1.6 Recent accounting pronouncements

 

New and revised IFRS Standards in issue but not yet effective:

 

Amendments to IAS 16 Property, Plant and Equipment Proceeds before Intended Use
Amendments to IAS 37 Onerous Contracts Cost of Fulfilling a Contract
Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors

Definition of Accounting Estimates

Amendments to IAS 1, Presentation of Financial Statements Disclosure of Accounting Policies
Amendments to IAS12, Income taxes Deferred Tax related to Assets and Liabilities arising from a Single Transaction

 

Amendments to IAS 16

 

On May 14, 2020 International Accounting Standards Board (IASB) has issued amendment to IAS 16 Property, Plant and Equipment — Proceeds before Intended Use (Amendments to IAS 16) which amends the standard to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.

 

The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.

 

Amendments to IAS 37

 

On May 14, 2020 International Accounting Standards Board (IASB) has issued Onerous Contracts — Cost of Fulfilling a Contract (Amendments to IAS 37) which specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling the contract).

 

The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2022, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.

 

Amendments to IAS 8

 

On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 8 Accounting Policies, Changes in Accounting estimates and Errors which introduced a definition of ‘accounting estimates’ and included amendments to IAS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates.

 

The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group has evaluated the amendment and there is no impact on its condensed consolidated financial statements.

 

Amendments to IAS 1

 

On February 12, 2021 International Accounting Standards Board (IASB) has issued amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality Judgements which requires the entities to disclose their material accounting policies rather than their significant accounting policies.

 

The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, although early adoption is permitted. The Group is in the process of evaluating the impact of the amendment.

 

Amendments to IAS 12

 

On May 7,2021, International Accounting Standards Board (IASB) has issued amendment to IAS 12 Income Taxes which narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences.

 

The effective date for adoption of this amendment is annual periods beginning on or after January 1, 2023, 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, 2021 March 31, 2021
Cash and bank deposits  1,659 2,745
Deposits with financial institutions  486 635
Total Cash and cash equivalents  2,145 3,380

 

Cash and cash equivalents as at December 31, 2021 and March 31, 2021 include restricted cash and bank balances of $66 million and $69 million, respectively. The restrictions are primarily on account of bank balances held by irrevocable trusts controlled by the company and bank balances held as margin money deposits against guarantees.

 

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:

(Dollars in millions)

Particulars As at
  December 31, 2021 March 31, 2021
(i) Current    
Amortized cost    
Quoted debt securities  3  
Fair value through profit or loss    
Liquid Mutual funds  335 205
Fair Value through Other comprehensive income    
Quoted debt securities  89 115
Certificate of deposits  131  
Total current investments  558 320
     
(ii) Non-current    
Amortized cost    
Quoted debt securities  286 294
Fair value through Other comprehensive income    
Quoted debt securities  1,291 1,293
Unquoted equity and preference securities  30 23
Fair value through profit or loss    
Unquoted Preference securities  3 2
Unquoted Compulsorily convertible debentures  1 1
Others(1)  12 10
Total Non-current investments  1,623 1,623
Total investments  2,181 1,943
Investment carried at amortized cost  289 294
Investments carried at fair value through other comprehensive income  1,541 1,431
Investments carried at fair value through profit or loss  351 218

 

(1)Uncalled capital commitments outstanding as on December 31, 2021 and March 31, 2021 was $4 million and $6 million, respectively.

 

Refer note 2.3 for accounting policies on financial instruments.

 

Method of fair valuation:

 

(Dollars in millions)

Class of investment Method Fair value
    As at December 31, 2021 As at March 31, 2021
Liquid mutual fund units Quoted price  335 205
Quoted debt securities- carried at amortized cost Quoted price and market observable inputs  335 347
Quoted debt securities- carried at Fair value through other comprehensive income Quoted price and market observable inputs  1,380 1,408
Certificate of deposits Market observable inputs  131
Unquoted equity and preference securities carried at fair value through other comprehensive income Discounted cash flows method, Market multiples method, Option pricing model  30 23
Unquoted equity and preference securities - carried at fair value through profit or loss Discounted cash flows method, Market multiples method, Option pricing model  3 2
Unquoted compulsorily convertible debentures - carried at fair value through profit or loss Discounted cash flows method  1 1
Others Discounted cash flows method, Market multiples method, Option pricing model  12 10
     2,227 1,996

 

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. For trade and other payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments.

 

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 these 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 condensed 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 amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment gain or loss in condensed consolidated statement of comprehensive income.

 

Financial instruments by category

 

The carrying value and fair value of financial instruments by categories as at December 31, 2021 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 note 2.1)  2,145          2,145 2,145
Investments (Refer to Note 2.2)              
Liquid mutual fund units      335      335 335
Quoted debt securities  289        1,380  1,669 1,715(1)
Certificate of deposits          131  131 131
Unquoted equity and preference
securities
     3  30    33 33
Unquoted Compulsorily convertible debentures      1      1 1
Unquoted investment others      12      12 12
Trade receivables  3,036        3,036 3,036
Unbilled revenues (Refer note 2.17)(3)  736          736 736
Prepayments and other assets (Refer to Note 2.4)  540        540 531(2)
Derivative financial instruments      24    5  29 29
Total  6,746    375  30  1,516  8,667 8,704
Liabilities:              
Trade payables  506          506 506
Lease liabilities 715          715 715
Derivative financial instruments      6      6 6
Financial liability under option arrangements (Refer to note 2.5)      91      91 91
Other liabilities including contingent consideration (Refer to note 2.5)  1,756    16      1,772 1,772
Total  2,977    113      3,090 3,090

 

(1)On account of fair value changes including interest accrued
(2)Excludes interest accrued on quoted debt securities carried at amortized cost of $9 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, 2021 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)  3,380        3,380 3,380
Investments (Refer note 2.2)              
Liquid mutual fund units      205      205 205
Quoted debt securities  294        1,408  1,702 1,755(1)
Certificate of deposits              
Unquoted Compulsorily convertible
debentures
     1      1 1
Unquoted equity and preference
securities
     2  23    25 25
Unquoted investment others      10      10 10
Trade receivables  2,639          2,639 2,639
Unbilled revenues(Refer note 2.17)(3)  489          489 489
Prepayments and other assets (Refer to Note 2.4)  544          544 531(2)
Derivative financial instruments    23    3  26 26
Total  7,346    241  23  1,411  9,021 9,061
Liabilities:              
Trade payables  362          362 362
Lease liabilities  728          728 728
Derivative financial instruments    8      8 8
Financial liability under option arrangements (Refer to note 2.5)    95      95 95
Other liabilities including contingent consideration (Refer to note 2.5)  1,351    22      1,373 1,373
Total  2,441    125      2,566 2,566

 

(1)On account of fair value changes including interest accrued
(2)Excludes interest accrued on quoted debt securities carried at amortized cost of $13 million.
(3)Excludes unbilled revenue for contracts where the right to consideration is dependent on completion of contractual milestones

 

For trade receivables and 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 following table presents fair value hierarchy of assets and liabilities as at December 31, 2021

 

(Dollars in millions)

Particulars As at December 31, 2021 Fair value measurement at end of the reporting period using
    Level 1 Level 2 Level 3
Assets        
Investments in liquid mutual fund units (Refer to Note 2.2)  335  335    
Investments in quoted debt securities (Refer to Note 2.2)  1,715  1,489  226  
Investments in certificate of deposit (Refer to Note 2.2)  131    131  
Investments in unquoted equity and preference securities (Refer to Note 2.2)  33     33
Investments in unquoted compulsorily convertible debentures (Refer to Note 2.2)  1     1
Investments in unquoted investments others (Refer to Note 2.2)  12     12
Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts  29    29  
Liabilities        
Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts  6  6
Financial liability under option arrangements  91     91
Liability towards contingent consideration (Refer to note 2.5)*  16 16

 

*Discount rate pertaining to contingent consideration ranges from 8% to 14.5 %

 

During the nine months ended December 31, 2021, quoted debt securities of $131 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 $158 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.

 

The following table presents fair value hierarchy of assets and liabilities as at March 31, 2021

 

(Dollars in millions)

Particulars As at March 31, 2021 Fair value measurement at end of the reporting period using
    Level 1 Level 2 Level 3
Assets        
Investments in liquid mutual fund units (Refer to Note 2.2)  205  205    
Investments in quoted debt securities (Refer to Note 2.2)  1,755  1,556  199  
Investments in unquoted equity and preference securities (Refer to Note 2.2)  25     25
Investments in unquoted investments others (Refer to Note 2.2)  10     10
Investments in unquoted compulsorily convertible debentures (Refer to Note 2.2)  1     1
Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts  26    26  
Liabilities        
Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts  8    8  
Financial liability under option arrangements (Refer to Note 2.5)  95     95
Liability towards contingent consideration (Refer to Note 2.5)*  22     22

 

*Discount rate pertaining to contingent consideration ranges from 8% to 14.5%

 

During the year ended March 31, 2021 quoted debt securities of $14 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 $161 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, fixed maturity plan securities, certificates of deposit, commercial papers, 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 its 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, 2021 March 31, 2021
Current    
Rental deposits  8 4
Security deposits  1 1
Loans to employees  28 22
Prepaid expenses(1)  223 159
Interest accrued and not due  42 85
Withholding taxes and others(1)  304 286
Advance payments to vendors for supply of goods(1)  15 19
Deposit with corporations*  293 276
Deferred contract cost(1)(#)  72 9
Net investment in sublease of right of use asset  6 5
Other non financial assets(1)  3
Other financial assets  65 46
Total Current prepayment and other assets  1,060 912
Non-current    
Loans to employees  5 4
Security deposits  6 7
Deposit with corporations *  5 6
Defined benefit plan assets(1)  4 3
Prepaid expenses(1)  15 11
Deferred contract cost(1)(#)  137 20
Withholding taxes and others(1)   91 96
Net investment in sublease of right of use asset  44 48
Rental Deposits  25 30
Other financial assets  12 10
Total Non- current prepayment and other assets  344 235
Total prepayment and other assets  1,404 1,147
Financial assets in prepayments and other assets  540 544
(1)Non financial assets

  

Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from Government of India.

 

*Deposit with corporation represents amounts deposited to settle certain employee-related obligations as and when they arise during the normal course of business.

 

#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 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. Further, as at December 31, 2021 the Company has entered into a financing arrangement with a third party for these assets for $129 million which has been considered as financial liability. This includes $108 million settled directly by the third party to the customer on behalf of the Company and accordingly considered as non-cash transaction (Refer to note 2.5)

  

2.5 Other liabilities

 

Other liabilities comprise the following: 

(Dollars in millions)

Particulars As at
  December 31, 2021 March 31, 2021
Current    
Accrued compensation to employees  460 550
Accrued defined benefit plan liability(1)  1 1
Accrued expenses  901 612
Withholding taxes and others (1)   396 297
Retention money  1 2
Liabilities of controlled trusts  28 27
Deferred income - government grants(1)  2
Liability towards contingent consideration  9 10
Capital creditors  31 51
Other non financial liabilities(1)   1
Other financial liabilities#  133 21
Total Current other liabilities  1,962 1,572
Non-Current    
Liability towards contingent consideration  7 12
Accrued compensation to employees  1  
Accrued expenses  111 78
Accrued defined benefit plan liability(1)  55 44
Deferred income - government grants(1)  9 8
Deferred income (1)  2 2
Financial liability under option arrangements  91 95
Withholding taxes and others(1)   50
Other financial liabilities#  90 10
Total Non-current other liabilities  366 299
Total other liabilities  2,328 1,871
Financial liabilities included in other liabilities  1,863 1,468
Financial liability towards contingent consideration on an undiscounted basis  18 25

 

(1)Non financial liabilities

 

#Deferred contract cost in note 2.4 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 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. Further , as at December 31, 2021 the Company has entered into a financing arrangement with a third party for these assets for $129 million which has been considered as financial liability. This includes $108 million settled directly by the third party to the customer on behalf of the Company and accordingly considered as non-cash transaction.

 

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.

 

2.6 Provisions and other contingencies

 

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.

 

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.

 

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.

 

Onerous contracts

 

Provisions for onerous contracts are recognized when the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established the Group recognizes any impairment loss on the assets associated with that contract.

 

Provisions comprise the following:

(Dollars in millions)

Particulars As at
  December 31, 2021 March 31, 2021
Provision for post sales client support and other provisions  134 97
   134 97

 

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 condensed consolidated statement of comprehensive income.

 

As at December 31, 2021 and March 31, 2021, claims against the Group, not acknowledged as debts, (excluding demands from income tax authorities- Refer to Note 2.12) amounted to $84 million (rupee symbol621 crore) and $82 million (rupee symbol599 crore), respectively.

 

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 based on currently available information 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 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 20 years

 

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.

 

Advances paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of assets not 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. Repairs and maintenance costs are recognized in the statement of comprehensive income when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in net profit in the consolidated statement of comprehensive income.

 

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.

 

Following are the changes in the carrying value of property, plant and equipment for three months ended December 31, 2021:

(Dollars in millions)

Particulars Land Buildings Plant and machinery Computer equipment Furniture and fixtures Vehicles Total
Gross carrying value as at October 1, 2021  190  1,488  693  1,055  425  6 3,857
Additions  2  8  11  45  4   70
Deletions*      (8)  (18)  (4)   (30)
Translation difference      (1)  (1)     (2)
Gross carrying value as at December 31, 2021  192  1,496  695  1,081  425  6 3,895
Accumulated depreciation as at October 1, 2021    (523)  (510)  (767)  (312)  (5) (2,117)
Depreciation    (14)  (15)  (36)  (10)  (1) (76)
Accumulated depreciation on deletions*      5  18  3   26
Translation difference        1  (1)  (1) 1
Accumulated depreciation as at December 31, 2021    (537)  (520)  (784)  (320)  (5) (2,166)
Capital work-in progress as at December 31, 2021             67
Carrying value as at December 31, 2021  192  959  175  297  105  1 1,796
Capital work-in progress as at October 1, 2021             69
Carrying value as at October 1, 2021  190  965  183  288  113  1 1,809

 

Following are the changes in the carrying value of property, plant and equipment for three months ended December 31, 2020:

(Dollars in millions)

Particulars Land Buildings Plant and machinery Computer equipment Furniture and fixtures Vehicles Total
Gross carrying value as at October 1, 2020  188  1,367  648  989  402  6 3,600
Additions  1  30  8  24  5   68
Additions-Business Combinations (Refer Note 2.10)        1     1
Deletions      (1)  (13)  (1)   (15)
Translation difference  1  17  6  10  3   37
Gross carrying value as at December 31, 2020  190  1,414  661  1,011  409  6 3,691
Accumulated depreciation as at October 1, 2020    (472)  (459)  (720)  (274)  (4) (1,929)
Depreciation    (13)  (16)  (33)  (12)  (1) (75)
Accumulated depreciation on deletions      1  12  1   14
Translation difference    (5)  (5)  (7)