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 June 30, 2024
Commission File Number 001-35754
Infosys Limited
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)
Electronics City, Hosur Road, Bengaluru - 560 100,
Karnataka, India. +91-80-2852-0261
(Address of principal executive offices)
Indicate by check mark whether the registrant files
or will file annual reports under cover Form 20-F or Form 40-F:
Form
20-F þ Form
40-F o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Indicate by check mark if the registrant is submitting
the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
TABLE OF CONTENTS
DISCLOSURE OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION
Infosys Limited (“we” or “the
Company”) hereby furnishes the United States Securities and Exchange Commission with copies of the following information concerning
our public disclosures regarding our results of operations and financial condition for the quarter ended June 30, 2024.
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 July 18, 2024, We announced our results of operations
for the quarter ended June 30, 2024. 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 July 18, 2024, we held a press conference
to announce our results, which was followed by a question and answer session. The transcript of this press conference is attached to this
Form 6-K as Exhibit 99.3.
We have also made available to the
public on our website, www.infosys.com, a fact sheet that provides details on our profit and loss account summary for the
quarter ended June 30, 2024 and 2023 (as per IFRS); revenue by client geography, business segment; information regarding our client
concentration; employee information and metrics; consolidated IT services information; and cash flow information. We have attached
this fact sheet to this Form 6-K as Exhibit 99.4.
On July 18, 2024, we also held a teleconference
with investors and analysts to discuss our results. The transcripts of the teleconference are attached to this Form 6-K as Exhibit 99.5.
We placed form of releases to stock exchanges
and advertisements in certain Indian newspapers concerning our results of operations for the quarter ended June 30, 2024, under Ind AS.
A copy of the release to the stock exchanges and the advertisement is attached to this Form 6-K as Exhibit 99.6.
We have made available to the public on our website,
www.infosys.com, the following: Audited Interim Condensed Financial Statements in compliance with IFRS in US dollars and the Auditors
Report; Audited Interim Condensed Financial Statements in compliance with IFRS in Indian Rupees and the Auditors Report; Audited Interim
Ind AS Condensed Standalone Financial Statements and the Auditors Report; Audited Interim Ind AS Condensed Consolidated Financial Statements
and the Auditors Report for the quarter ended June 30, 2024. 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.
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Infosys Limited
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/s/ Inderpreet Sawhney |
| |
|
|
Date: July 24, 2024 |
Inderpreet Sawhney
General Counsel and Chief Compliance Officer |
INDEX TO EXHIBITS
| Exhibit No. |
Description of Document |
| 99.1 |
IFRS USD press release |
| 99.2 |
IFRS INR press release |
| 99.3 |
Transcript of July 18, 2024 press conference |
| 99.4 |
Fact
Sheet regarding Registrant's Statement of Profit and Loss for the quarters ended June 30, 2024 and 2023 (as per IFRS); revenue by
Business Segment, Client Geography, information regarding Client Concentration; Employee Information and Metrics, Consolidated IT
Services Information and Cash Flow Information |
| 99.5 |
Transcript of July 18, 2024 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 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 ended June 30, 2024 in compliance with Indian Accounting
Standards (INDAS) and the Auditors Report thereon |
| 99.10 |
Audited
Interim Condensed Consolidated Financial Statements of Infosys Limited and its subsidiaries in compliance with INDAS for the quarter
ended June 30, 2024 and the Auditors Report thereon |
Exhibit 99.1
IFRS USD Press Release
Stellar
all round performance with 3.6% sequential revenue growth in cc, 1% operating margin expansion
Revenue guidance at 3%-4% and operating
margin guidance at 20%-22%
Highest Free Cash Flow at $1.1 billion;
Record number of large deals at 34 with $4.1 billion TCV
Bengaluru,
India – July 18, 2024: Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital
services and consulting, delivered $4,714 million in Q1 revenues with a sequential growth of 3.6% and year on year
growth of 2.5% in constant
currency. Operating margin was at 21.1%, a sequential expansion of 1%. Free cash flow was highest ever at $1,094
million, an increase
of 56.5% year over year. Number of large deal wins were highest ever at 34 with TCV of $4.1 billion, 57.6% being
net new.
“We
had an excellent start to FY25 with strong and broad-based growth, operating margin expansion, robust large deals, and highest ever
cash generation. This is a testimony to our differentiated service offerings, enormous client trust, and relentless execution”,
said Salil Parekh, CEO and MD. “With our focused approach for generative AI for enterprises working with their data sets
on a cloud foundation, we have strong traction with our clients. This is building on our Topaz and Cobalt capabilities” he added.
Guidance
for FY25:
|
·
|
Revenue growth of 3%-4% in constant
currency
|
|
·
|
Operating
margin of 20%-22%
|
|
For
the quarter ended June 30, 2024
|
|
·
Revenues in CC terms grew by 2.5% YoY and by 3.6% QoQ
·
Reported revenues at $4,714 million, growth of 2.1% YoY
·
Operating margin at 21.1%, growth of 0.3% YoY and 1.0% QoQ
·
Basic EPS at $0.18, increase of 5.4% YoY
·
FCF at $1,094 million, growth of 56.5% YoY; FCF conversion at 143.2% of net profit
|
“Our
relentless drive on cost optimization through Project Maximus, a comprehensive margin expansion program, is reflected in the all-round
improvement in key operating metrices leading to 1.0% growth in operating margin in Q1”, said Jayesh Sanghrajka, CFO.
“We had the highest ever FCF generation at $1.1 bn and ROE increased to 33.6% due to higher payouts to investors”, he added.
2. Update on in-tech
acquisition
Infosys has completed the
acquisition of in-tech,
a leading Engineering R&D services provider focused on German automotive industry. This follows the announcement
the company made
on April 18, 2024.
Headquartered in Germany,
in-tech, is one of
the fastest growing Engineering R&D services providers that shapes digitization in the automotive, rail
transport and smart industry
sectors. in-tech develops solutions in e-mobility, connected and autonomous driving, electric vehicles, off-road
vehicles and railroad.
in-tech brings to Infosys, marquee German original equipment manufacturers, deep client relationships, and an
extensive industry expertise
with a multidisciplinary team of 2,200 people across locations in Germany, Austria, China, UK, and nearshore
locations in Czech Republic,
Romania, Spain, and India.
The entire shareholding in
in-tech Group India Private Limited, a step-down subsidiary of in-tech Holding GmbH,
will be acquired by Infosys Limited. Infosys is delighted to welcome in-tech and its leadership team.
3. Client
wins & Testimonials
|
·
|
Infosys
announced a strategic multi-year collaboration with Telstra to accelerate its software engineering and IT transformation journey
and further enhance their customer experience. Kim Krogh Andersen, Group Executive, Product and Technology, Telstra, said,
“Consumers around the world have significantly increased their expectations when it comes to the seamless, digital delivery
of their products and services. As we approach the tipping point of Generative AI and an avalanche of digital adoption, strategic
partnerships with global leaders such as Infosys are critical to support our shared ambitions for digital leadership.” |
|
·
|
Infosys
launched Infosys AsterTM – a set of AI-amplified marketing services, solutions and platforms that deliver engaging brand
experiences, enhanced marketing efficiency, and accelerated effectiveness for business growth. Tom Portman, Group VP, Online
Transformation and Group Head of Digital Channels, ABB, said, “Infosys Aster™ is bringing expertise to help us
reimagine, engineer, and activate best-in-class omnichannel experiences for our customers, partners, and prospects enabling them
to quickly access the relevant and up to date information they need. We see the potential of AI to amplify these capabilities and
significantly raise the bar in the delivery of personalized content, ensuring predictability of engagement. We are elevating the
way we connect with our customers and how our customers connect with us.” |
|
·
|
Infosys
collaborated with La-Z-Boy to establish a Testing Center of Excellence. Infosys will provide comprehensive Quality Engineering
services by leveraging modern technologies and AI automation tools. Carol Lee, CIO, La-Z-Boy, said, “We chose Infosys
as our strategic partner due to their impressive track record of establishing strong testing center of excellence along with providing
comprehensive testing services by leveraging their QA methodologies, industry leading tools, transforming QA powered by Gen AI,
AI/ML led tools and accelerators.” |
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·
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Infosys
announced a strategic three-year partnership with the ABB FIA Formula E World Championship as its official Digital Innovation Partner.
Jeff Dodds, Chief Executive Officer, Formula E, said, “Infosys' expertise in cutting-edge technologies makes them
the ideal partner to help us drive the future of electric motorsport. We are excited to work with them to deliver exceptional experiences
for our global fan base and further strengthen Formula E's position as a leader in sustainable, digital-first sports. Infosys'
commitment to sustainability and innovation aligns perfectly with our vision, and we are confident that this collaboration will
unlock new avenues in our key focus areas." |
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·
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Infosys
announced a multi-year strategic collaboration with First Abu Dhabi Bank (FAB) to optimize and modernize FAB’s IT infrastructure
services. Suhail Bin Tarraf, Group Chief Operating Officer, First Abu Dhabi Bank (FAB), said, “At FAB, we are committed
to transforming our IT organization and delivering world-class services that drive tangible business outcomes. After a thorough
evaluation, we selected Infosys as our strategic partner due to their proven expertise, innovative solutions, and the strong trust
they built at all levels. Infosys’ outcome-oriented managed services model coupled with their automation-powered delivery
approach will help us significantly improve service quality, compliance, and operational efficiency.” |
|
·
|
Infosys
and Posti extended their strategic collaboration to help Posti enhance its customer experience and operational efficiency, leveraging
Infosys Topaz. Petteri Naulapää, CIO & SVP, ICT and Digitalization, Posti Group, said, “We are pleased
to announce the renewal of our collaboration with Infosys for another seven years. This decision is underpinned by a robust service
delivery coupled with a spirit of continuous innovation by leveraging enterprise AI capabilities through Infosys Topaz. Infosys'
continuous commitment to delivering customer satisfaction and a sharp focus on emerging technologies such as cloud, data, and AI
will help in catalysing Posti’s digital transformation journey in line with its larger corporate strategy of delivering on
an industry-leading operational efficiency.” |
|
·
|
Infosys
collaborated with Proximus to revamp their ServiceNow platform by leveraging Infosys Cobalt. Antonietta Mastroianni, Chief Digital
and IT Officer, Proximus, said, “Our collaboration with Infosys marks a transformative leap in reshaping the telecom
realm. Infosys' technical expertise in transforming legacy environments with the ServiceNow platform makes it an ideal choice for
collaboration. Together, we will continue to revolutionize service delivery and provide enhanced customer experience.” |
|
·
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Infosys
announced successful completion of the technology landscape separation program of Team Global Express. Danny Gravell, CIO of
Team Global Express, said, “Our partnership with Infosys enabled us to successfully set up an independent technology
capability and transform our foundation technology platforms. We value Infosys’ thought leadership, collaborative approach,
and experience in implementing infrastructure and cloud transformation programs as a true strategic partner. By using the ready-to-use
templates from Infosys Cobalt, we could complete the transformation at speed with maximum efficiency. This program has enabled
us to work towards providing the best possible experience for our customers." |
|
·
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Infosys
collaborated with Commerzbank to consolidate their trading ecosystem on a unified Murex platform to help the bank accelerate its
digital transformation journey. Sebastian Kauck, CIO Corporate Clients, Commerzbank, said, "The successful platform
consolidation is a major achievement after three years of hard work. Throughout this project, the collaboration of our internal
teams with Murex, Infosys and other external partners has always been an integral part to its success. The new setup enables Commerzbank
to significantly enhance process efficiency and simultaneously reduce costs. Additionally, it lays the foundation for future business
growth as adapting to market changes can be done more swiftly.” |
4. Recognitions & Awards
Brand
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·
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Rated as Top 100 most valuable brand in the world by Kantar BrandZ; Ranked among
the most-trusted brands
in India and the US |
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·
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Recognized as one of India’s Best Employers Among Nation-Builders 2024 by
the Great Place To Work®
Institute |
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·
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Recognized as one of India’s Best Companies to Work for 2024 by the Great
Place To Work® Institute |
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Infosys was recognized as one of the “Most Honored” companies,
receiving multiple awards at
the 2024 All-Asia Executive Team Rankings from Institutional Investor |
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Infosys’ Investor Relations (IR) function has been recognized one of the top
two IR Functions amongst
Indian companies in an annual survey conducted by FinanceAsia |
AI and Cloud Services
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Positioned as a leader in HFS Horizons: Industry Cloud Service Providers, 2024
|
|
·
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Recognized as a leader in Avasant’s Applied AI Services 2024 Radarview |
Key
Digital Services
|
·
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Rated as a leader in The Forrester Wave: Continuous Automation And Testing
Services, Q2 2024 |
|
·
|
Recognized as a leader in Capital Markets IT Services PEAK Matrix Assessment 2024
by Everest |
|
·
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Positioned as a leader in ISG’s SAP Ecosystem 2024 Provider Lens study in
US, Germany, and Global |
|
·
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Positioned as a leader in ISG Salesforce Ecosystem Partners 2024 Provider Lens
study in US |
|
·
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Recognized as a leader in Avasant’s Cybersecurity Services 2024 Radarview
|
|
·
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Recognized as a leader in Avasant’s Multisourcing Service Integration
2023–2024 Radarview |
|
·
|
Infosys-Fluido won ‘Best Salesforce Partner to Work For’ at the 2024
Digital Revolution Awards |
Industry & Solutions
|
·
|
Rated as a leader in Healthcare Industry Cloud Services PEAK Matrix Assessment
2024 by Everest |
|
·
|
Recognized as a leader in Wealth & Asset Management 2024 by NelsonHall |
|
·
|
Positioned as a leader in IDC MarketScape: Worldwide Distributed Energy Resource
Management Systems Service
Providers 2024 Vendor Assessment |
|
·
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Positioned as a leader in IDC MarketScape: Worldwide Consulting and Digital
Services Providers for the
Upstream Oil and Gas Industry 2024 Vendor Assessment |
|
·
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Positioned as a leader in IDC MarketScape: Worldwide Consulting and Digital
Services Providers for the
Downstream Oil and Gas Industry 2024 Vendor Assessment |
|
·
|
Recognized as a leader in Avasant’s Manufacturing Digital Services 2024
Radarview |
|
·
|
Infosys Finacle won the ‘Innovation in Offering Award with RCBC
DiskarTech’ and the ‘Customer
& Program Impact Award with IndusInd Bank’ at the IBSi Digital Banking Awards 2024 |
|
·
|
Infosys BPM recognised as a leader in 2024 Gartner Magic Quadrant for Finance and
Accounting Business
Process Outsourcing |
|
·
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Infosys BPM won the SS&C Blue Prism Partner Excellence Award 2024, under the
‘Intelligent Automation
Award’ category for the APAC Region |
|
·
|
Infosys BPM won two awards at ATD 2024: ‘Excellence in Practice Award
2024’ and ‘ATD
Best Award 2024’ |
|
·
|
Infosys BPM won the PeopleFirst HR Excellence Award 2024, in the ‘Learning
& Development’
category |
|
·
|
Infosys BPM won an award at the CII National Lean Competition 2024 |
About
Infosys
|
Infosys is a global leader in
next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential
and create the next opportunity for people, businesses and communities. We enable clients in more than 56
countries to navigate their digital transformation. With over four decades of experience in managing the
systems and workings of global enterprises, we expertly steer clients, as they navigate their digital
transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile
digital at scale and drive continuous improvement with always-on learning through the transfer of digital
skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a
well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive
workplace.
Visit
www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.
|
|
Safe
Harbor
Certain
statements in this release concerning our future growth prospects, our future financial or operating performance,
and the McCamish cybersecurity
incident review and notification process are forward-looking statements intended to qualify for the 'safe harbor'
under the Private Securities
Litigation Reform Act of 1995, which involve a number of risks and uncertainties that could cause actual results or
outcomes to differ
materially from those in such forward-looking statements. The risks and uncertainties relating to these statements
include, but are not
limited to, risks and uncertainties regarding the execution of our business strategy, increased competition for
talent, our ability to
attract and retain personnel, increase in wages, investments to reskill our employees, our ability to effectively
implement a hybrid
working model, economic uncertainties and geo-political situations, technological disruptions and innovations such
as Generative AI,
the complex and evolving regulatory landscape including immigration regulation changes, our ESG vision, our capital
allocation policy
and expectations concerning our market position, future operations, margins, profitability, liquidity, capital
resources, our corporate
actions including acquisitions, the findings of the review of the extent and nature of data subject to unauthorized
access and exfiltration
in relation to the McCamish cybersecurity incident and reaction to such findings, the timing of the notification
process, and the amount
of any additional costs, including indemnities or damages or claims, resulting directly or indirectly from the
incident. Important factors
that may cause actual results or outcomes to differ from those implied by the forward-looking statements are
discussed in more detail
in our US Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year
ended March 31, 2024.
These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral
forward-looking statements,
including statements contained in the Company's filings with the Securities and Exchange Commission and our reports
to shareholders.
The Company does not undertake to update any forward looking statements that may be made from time to time by or on
behalf of the Company
unless it is required by law.
.
Contact
|
Investor
Relations
|
Sandeep
Mahindroo
+91
80 3980 1018
Sandeep_Mahindroo@infosys.com
|
|
|
Media
Relations
|
Rishi
Basu
+91
80 4156 3998
Rajarshi.Basu@infosys.com
|
Harini
Babu
+1
469 996 3516
Harini_Babu@infosys.com
|
Infosys
Limited and subsidiaries
Extracted
from the Condensed Consolidated Balance Sheet under IFRS as at:
(Dollars
in millions)
|
|
June 30, 2024 |
March 31, 2024 |
|
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
1,971 |
1,773 |
|
Earmarked bank balance for dividend (4) |
1,394 |
- |
|
Current investments |
1,051 |
1,548 |
|
Trade receivables |
3,709 |
3,620 |
|
Unbilled revenue |
1,511 |
1,531 |
|
Other Current assets |
1,882 |
2,250 |
|
Total current assets |
11,518 |
10,722 |
|
Non-current assets |
|
|
|
Property, plant and equipment and Right-of-use assets |
2,285 |
2,323 |
|
Goodwill and other Intangible assets |
1,055 |
1,042 |
|
Non-current investments |
1,340 |
1,404 |
|
Unbilled revenue |
198 |
213 |
|
Other non-current assets |
874 |
819 |
|
Total non-current assets |
5,752 |
5,801 |
|
Total assets |
17,270 |
16,523 |
|
LIABILITIES AND EQUITY |
|
|
|
Current liabilities |
|
|
|
Trade payables |
443 |
474 |
|
Unearned revenue |
834 |
880 |
|
Employee benefit obligations |
336 |
314 |
|
Other current liabilities and provisions |
4,473 |
2,983 |
|
Total current liabilities |
6,086 |
4,651 |
|
Non-current liabilities |
|
|
|
Lease liabilities |
740 |
767 |
|
Other non-current liabilities |
441 |
500 |
|
Total non-current liabilities |
1,181 |
1,267 |
|
Total liabilities |
7,267 |
5,918 |
|
Total equity attributable to equity holders of the company |
9,956 |
10,559 |
|
Non-controlling interests |
47 |
46 |
|
Total equity |
10,003 |
10,605 |
|
Total liabilities and equity |
17,270 |
16,523 |
Extracted
from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(Dollars
in millions except per equity share data)
|
|
3 months ended June 30, 2024 |
3 months ended June 30, 2023 |
|
Revenues |
4,714 |
4,617 |
|
Cost of sales |
3,259 |
3,211 |
|
Gross profit |
1,455 |
1,406 |
|
Operating expenses: |
|
|
|
Selling and marketing expenses |
232 |
217 |
|
Administrative expenses |
229 |
228 |
|
Total operating expenses |
461 |
445 |
|
Operating profit |
994 |
961 |
|
Other income, net (3) |
88 |
57 |
|
Profit before income taxes |
1,082 |
1,018 |
|
Income tax expense |
318
|
294
|
|
Net profit (before minority interest) |
764 |
724 |
|
Net profit (after minority interest) |
763 |
724 |
|
Basic EPS ($) |
0.18
|
0.17
|
|
Diluted EPS ($) |
0.18 |
0.17 |
NOTES:
|
1.
|
|
The above information is extracted
from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter
ended June 30, 2024, which have been taken on record at the Board meeting held on July 18, 2024.
|
|
2.
|
|
A
Fact Sheet providing the operating metrics of the Company can be downloaded from
www.infosys.com.
|
|
3.
|
|
Other income is net of Finance
Cost.
|
|
4.
|
|
Represents bank balance earmarked
for final and special dividend. Payment date for dividend was July 1, 2024.
|
Exhibit 99.2
IFRS INR Press Release
Stellar all round performance with 3.6% sequential
revenue growth in cc, 1% operating margin expansion
Revenue guidance at 3%-4% and operating margin
guidance at 20%-22%
Highest Free Cash Flow at $1.1 billion; Record number of large deals at 34 with $4.1 billion TCV
Bengaluru, India – July 18, 2024:
Infosys (NSE, BSE, NYSE: INFY), a global leader in next-generation digital services and consulting, delivered $4,714 million in Q1 revenues
with a sequential growth of 3.6% and year on year growth of 2.5% in constant currency. Operating margin was at 21.1%, a sequential expansion
of 1%. Free cash flow was highest ever at $1,094 million, an increase of 56.5% year over year. Number of large deal wins were highest
ever at 34 with TCV of $4.1 billion, 57.6% being net new.
“We had an excellent start to FY25 with
strong and broad-based growth, operating margin expansion, robust large deals, and highest ever cash generation. This is a testimony
to our differentiated service offerings, enormous client trust, and relentless execution”, said Salil Parekh, CEO and MD.
“With our focused approach for generative AI for enterprises working with their data sets on a cloud foundation, we have strong
traction with our clients. This is building on our Topaz and Cobalt capabilities” he added.
Guidance for FY25:
| · | Revenue growth of 3%-4% in constant currency |
| · | Operating margin of 20%-22% |
1. Key highlights:
| For
the quarter ended June 30, 2023 |
·
Revenues in CC terms grew by 2.5% YoY and by 3.6% QoQ
·
Reported revenues at  39,315 crore, growth of 3.6% YoY
·
Operating margin at 21.1%, growth of 0.3% YoY and 1.0% QoQ
·
Basic EPS at 15.38, increase of 7.0% YoY
·
FCF at 9,155
crore, growth of 59.2% YoY; FCF conversion at 143.6% of net profit
|
“Our
relentless drive on cost optimization through Project Maximus, a comprehensive margin expansion program, is reflected in the all-round
improvement in key operating metrices leading to 1.0% growth in operating margin in Q1”, said Jayesh Sanghrajka, CFO.
“We had the highest ever FCF generation at $1.1 bn and ROE increased to 33.6% due to higher payouts to investors”, he added.
2. Update on in-tech
acquisition
Infosys has completed the
acquisition of in-tech,
a leading Engineering R&D services provider focused on German automotive industry. This follows the announcement
the company made
on April 18, 2024.
Headquartered in Germany,
in-tech, is one of
the fastest growing Engineering R&D services providers that shapes digitization in the automotive, rail
transport and smart industry
sectors. in-tech develops solutions in e-mobility, connected and autonomous driving, electric vehicles, off-road
vehicles and railroad.
in-tech brings to Infosys, marquee German original equipment manufacturers, deep client relationships, and an
extensive industry expertise
with a multidisciplinary team of 2,200 people across locations in Germany, Austria, China, UK, and nearshore
locations in Czech Republic,
Romania, Spain, and India.
The entire shareholding in
in-tech Group India Private Limited, a step-down subsidiary of in-tech Holding GmbH,
will be acquired by Infosys Limited. Infosys is delighted to welcome in-tech and its leadership team.
3. Client
wins & Testimonials
|
·
|
Infosys
announced a strategic multi-year collaboration with Telstra to accelerate its software engineering and IT transformation journey
and further enhance their customer experience. Kim Krogh Andersen, Group Executive, Product and Technology, Telstra, said,
“Consumers around the world have significantly increased their expectations when it comes to the seamless, digital delivery
of their products and services. As we approach the tipping point of Generative AI and an avalanche of digital adoption, strategic
partnerships with global leaders such as Infosys are critical to support our shared ambitions for digital leadership.” |
|
·
|
Infosys
launched Infosys AsterTM – a set of AI-amplified marketing services, solutions and platforms that deliver engaging brand
experiences, enhanced marketing efficiency, and accelerated effectiveness for business growth. Tom Portman, Group VP, Online
Transformation and Group Head of Digital Channels, ABB, said, “Infosys Aster™ is bringing expertise to help us
reimagine, engineer, and activate best-in-class omnichannel experiences for our customers, partners, and prospects enabling them
to quickly access the relevant and up to date information they need. We see the potential of AI to amplify these capabilities and
significantly raise the bar in the delivery of personalized content, ensuring predictability of engagement. We are elevating the
way we connect with our customers and how our customers connect with us.” |
|
·
|
Infosys
collaborated with La-Z-Boy to establish a Testing Center of Excellence. Infosys will provide comprehensive Quality Engineering
services by leveraging modern technologies and AI automation tools. Carol Lee, CIO, La-Z-Boy, said, “We chose Infosys
as our strategic partner due to their impressive track record of establishing strong testing center of excellence along with providing
comprehensive testing services by leveraging their QA methodologies, industry leading tools, transforming QA powered by Gen AI,
AI/ML led tools and accelerators.” |
|
·
|
Infosys
announced a strategic three-year partnership with the ABB FIA Formula E World Championship as its official Digital Innovation Partner.
Jeff Dodds, Chief Executive Officer, Formula E, said, “Infosys' expertise in cutting-edge technologies makes them
the ideal partner to help us drive the future of electric motorsport. We are excited to work with them to deliver exceptional experiences
for our global fan base and further strengthen Formula E's position as a leader in sustainable, digital-first sports. Infosys'
commitment to sustainability and innovation aligns perfectly with our vision, and we are confident that this collaboration will
unlock new avenues in our key focus areas." |
|
·
|
Infosys
announced a multi-year strategic collaboration with First Abu Dhabi Bank (FAB) to optimize and modernize FAB’s IT infrastructure
services. Suhail Bin Tarraf, Group Chief Operating Officer, First Abu Dhabi Bank (FAB), said, “At FAB, we are committed
to transforming our IT organization and delivering world-class services that drive tangible business outcomes. After a thorough
evaluation, we selected Infosys as our strategic partner due to their proven expertise, innovative solutions, and the strong trust
they built at all levels. Infosys’ outcome-oriented managed services model coupled with their automation-powered delivery
approach will help us significantly improve service quality, compliance, and operational efficiency.” |
|
·
|
Infosys
and Posti extended their strategic collaboration to help Posti enhance its customer experience and operational efficiency, leveraging
Infosys Topaz. Petteri Naulapää, CIO & SVP, ICT and Digitalization, Posti Group, said, “We are pleased
to announce the renewal of our collaboration with Infosys for another seven years. This decision is underpinned by a robust service
delivery coupled with a spirit of continuous innovation by leveraging enterprise AI capabilities through Infosys Topaz. Infosys'
continuous commitment to delivering customer satisfaction and a sharp focus on emerging technologies such as cloud, data, and AI
will help in catalysing Posti’s digital transformation journey in line with its larger corporate strategy of delivering on
an industry-leading operational efficiency.” |
|
·
|
Infosys
collaborated with Proximus to revamp their ServiceNow platform by leveraging Infosys Cobalt. Antonietta Mastroianni, Chief Digital
and IT Officer, Proximus, said, “Our collaboration with Infosys marks a transformative leap in reshaping the telecom
realm. Infosys' technical expertise in transforming legacy environments with the ServiceNow platform makes it an ideal choice for
collaboration. Together, we will continue to revolutionize service delivery and provide enhanced customer experience.” |
|
·
|
Infosys
announced successful completion of the technology landscape separation program of Team Global Express. Danny Gravell, CIO of
Team Global Express, said, “Our partnership with Infosys enabled us to successfully set up an independent technology
capability and transform our foundation technology platforms. We value Infosys’ thought leadership, collaborative approach,
and experience in implementing infrastructure and cloud transformation programs as a true strategic partner. By using the ready-to-use
templates from Infosys Cobalt, we could complete the transformation at speed with maximum efficiency. This program has enabled
us to work towards providing the best possible experience for our customers." |
|
·
|
Infosys
collaborated with Commerzbank to consolidate their trading ecosystem on a unified Murex platform to help the bank accelerate its
digital transformation journey. Sebastian Kauck, CIO Corporate Clients, Commerzbank, said, "The successful platform
consolidation is a major achievement after three years of hard work. Throughout this project, the collaboration of our internal
teams with Murex, Infosys and other external partners has always been an integral part to its success. The new setup enables Commerzbank
to significantly enhance process efficiency and simultaneously reduce costs. Additionally, it lays the foundation for future business
growth as adapting to market changes can be done more swiftly.” |
4. Recognitions & Awards
Brand
|
·
|
Rated as Top 100 most valuable brand in the world by Kantar BrandZ; Ranked among
the most-trusted brands
in India and the US |
|
·
|
Recognized as one of India’s Best Employers Among Nation-Builders 2024 by
the Great Place To Work®
Institute |
|
·
|
Recognized as one of India’s Best Companies to Work for 2024 by the Great
Place To Work® Institute |
|
·
|
Infosys was recognized as one of the “Most Honored” companies,
receiving multiple awards at
the 2024 All-Asia Executive Team Rankings from Institutional Investor |
|
·
|
Infosys’ Investor Relations (IR) function has been recognized one of the top
two IR Functions amongst
Indian companies in an annual survey conducted by FinanceAsia |
AI and Cloud Services
|
·
|
Positioned as a leader in HFS Horizons: Industry Cloud Service Providers, 2024
|
|
·
|
Recognized as a leader in Avasant’s Applied AI Services 2024 Radarview |
Key
Digital Services
|
·
|
Rated as a leader in The Forrester Wave: Continuous Automation And Testing
Services, Q2 2024 |
|
·
|
Recognized as a leader in Capital Markets IT Services PEAK Matrix Assessment 2024
by Everest |
|
·
|
Positioned as a leader in ISG’s SAP Ecosystem 2024 Provider Lens study in
US, Germany, and Global |
|
·
|
Positioned as a leader in ISG Salesforce Ecosystem Partners 2024 Provider Lens
study in US |
|
·
|
Recognized as a leader in Avasant’s Cybersecurity Services 2024 Radarview
|
|
·
|
Recognized as a leader in Avasant’s Multisourcing Service Integration
2023–2024 Radarview |
|
·
|
Infosys-Fluido won ‘Best Salesforce Partner to Work For’ at the 2024
Digital Revolution Awards |
Industry & Solutions
|
·
|
Rated as a leader in Healthcare Industry Cloud Services PEAK Matrix Assessment
2024 by Everest |
|
·
|
Recognized as a leader in Wealth & Asset Management 2024 by NelsonHall |
|
·
|
Positioned as a leader in IDC MarketScape: Worldwide Distributed Energy Resource
Management Systems Service
Providers 2024 Vendor Assessment |
|
·
|
Positioned as a leader in IDC MarketScape: Worldwide Consulting and Digital
Services Providers for the
Upstream Oil and Gas Industry 2024 Vendor Assessment |
|
·
|
Positioned as a leader in IDC MarketScape: Worldwide Consulting and Digital
Services Providers for the
Downstream Oil and Gas Industry 2024 Vendor Assessment |
|
·
|
Recognized as a leader in Avasant’s Manufacturing Digital Services 2024
Radarview |
|
·
|
Infosys Finacle won the ‘Innovation in Offering Award with RCBC
DiskarTech’ and the ‘Customer
& Program Impact Award with IndusInd Bank’ at the IBSi Digital Banking Awards 2024 |
|
·
|
Infosys BPM recognised as a leader in 2024 Gartner Magic Quadrant for Finance and
Accounting Business
Process Outsourcing |
|
·
|
Infosys BPM won the SS&C Blue Prism Partner Excellence Award 2024, under the
‘Intelligent Automation
Award’ category for the APAC Region |
|
·
|
Infosys BPM won two awards at ATD 2024: ‘Excellence in Practice Award
2024’ and ‘ATD
Best Award 2024’ |
|
·
|
Infosys BPM won the PeopleFirst HR Excellence Award 2024, in the ‘Learning
& Development’
category |
|
·
|
Infosys BPM won an award at the CII National Lean Competition 2024 |
About
Infosys
|
Infosys is a global leader in
next-generation digital services and consulting. Over 300,000 of our people work to amplify human potential
and create the next opportunity for people, businesses and communities. We enable clients in more than 56
countries to navigate their digital transformation. With over four decades of experience in managing the
systems and workings of global enterprises, we expertly steer clients, as they navigate their digital
transformation powered by the cloud. We enable them with an AI-powered core, empower the business with agile
digital at scale and drive continuous improvement with always-on learning through the transfer of digital
skills, expertise, and ideas from our innovation ecosystem. We are deeply committed to being a
well-governed, environmentally sustainable organization where diverse talent thrives in an inclusive
workplace.
Visit
www.infosys.com to see how Infosys (NSE, BSE, NYSE: INFY) can help your enterprise navigate your next.
|
|
Safe
Harbor
Certain statements in this release concerning
our future growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident review and notification
process are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of
1995, which involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those in
such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and
uncertainties regarding the execution of our business strategy, increased competition for talent, our ability to attract and retain personnel,
increase in wages, investments to reskill our employees, our ability to effectively implement a hybrid working model, economic uncertainties
and geo-political situations, technological disruptions and innovations such as Generative AI, the complex and evolving regulatory landscape
including immigration regulation changes, our ESG vision, our capital allocation policy and expectations concerning our market position,
future operations, margins, profitability, liquidity, capital resources, our corporate actions including acquisitions, the findings of
the review of the extent and nature of data subject to unauthorized access and exfiltration in relation to the McCamish cybersecurity
incident and reaction to such findings, the timing of the notification process, and the amount of any additional costs, including indemnities
or damages or claims, resulting directly or indirectly from the incident. Important factors that may cause actual results or outcomes
to differ from those implied by the forward-looking statements are discussed in more detail in our US Securities and Exchange Commission
filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2024. These filings are available at www.sec.gov.
Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission and our reports to shareholders. The Company does not undertake to update any forward
looking statements that may be made from time to time by or on behalf of the Company unless it is required by law.
Contact
|
Investor
Relations
|
Sandeep
Mahindroo
+91
80 3980 1018
Sandeep_Mahindroo@infosys.com
|
|
|
Media
Relations
|
Rishi
Basu
+91
80 4156 3998
Rajarshi.Basu@infosys.com
|
Harini
Babu
+1
469 996 3516
Harini_Babu@infosys.com
|
Infosys
Limited and subsidiaries
Extracted
from the Condensed Consolidated Balance Sheet under IFRS as at:
(in crore)
| |
June 30, 2024 |
March 31, 2024 |
| ASSETS |
|
|
| Current assets |
|
|
| Cash and cash equivalents |
16,432 |
14,786 |
| Earmarked bank balance for dividend (4) |
11,625 |
- |
| Current investments |
8,762 |
12,915 |
| Trade receivables |
30,930 |
30,193 |
| Unbilled revenue |
12,601 |
12,768 |
| Other Current assets |
15,705 |
18,770 |
| Total current assets |
96,055 |
89,432 |
| Non-current assets |
|
|
| Property, plant and equipment and Right-of-use assets |
19,052 |
19,370 |
| Goodwill and other Intangible assets |
8,796 |
8,700 |
| Non-current investments |
11,174 |
11,708 |
| Unbilled revenue |
1,652 |
1,780 |
| Other non-current assets |
7,290 |
6,824 |
| Total non-current assets |
47,964 |
48,382 |
| Total assets |
144,019 |
137,814 |
| LIABILITIES AND EQUITY |
|
|
| Current liabilities |
|
|
| Trade payables |
3,693 |
3,956 |
| Unearned revenue |
6,956 |
7,341 |
| Employee benefit obligations |
2,805 |
2,622 |
| Other current liabilities and provisions |
37,297 |
24,875 |
| Total current liabilities |
50,751 |
38,794 |
| Non-current liabilities |
|
|
| Lease liabilities |
6,174 |
6,400 |
| Other non-current liabilities |
3,676 |
4,159 |
| Total non-current liabilities |
9,850 |
10,559 |
| Total liabilities |
60,601 |
49,353 |
| Total equity attributable to equity holders of the company |
83,069 |
88,116 |
| Non-controlling interests |
349 |
345 |
| Total equity |
83,418 |
88,461 |
| Total liabilities and equity |
144,019 |
137,814 |
Extracted
from the Condensed Consolidated statement of Comprehensive Income under IFRS for:
(in
crore except per equity share data)
| |
3 months ended June 30, 2024 |
3 months ended June 30, 2023 |
| Revenues |
39,315 |
37,933 |
| Cost of sales |
27,177 |
26,382 |
| Gross profit |
12,138 |
11,551 |
| Operating expenses: |
|
|
| Selling and marketing expenses |
1,937 |
1,783 |
| Administrative expenses |
1,913 |
1,877 |
| Total operating expenses |
3,850 |
3,660 |
| Operating profit |
8,288 |
7,891 |
| Other income, net (3) |
733 |
471 |
| Profit before income taxes |
9,021 |
8,362 |
| Income tax expense |
2,647 |
2,417 |
| Net profit (before minority interest) |
6,374 |
5,945 |
| Net profit (after minority interest) |
6,368 |
5,945 |
| Basic EPS () |
15.38 |
14.37 |
| Diluted EPS () |
15.35 |
14.35 |
NOTES:
|
1.
|
|
The above information is extracted
from the audited condensed consolidated Balance sheet and Statement of Comprehensive Income for the quarter
ended June 30, 2024, which have been taken on record at the Board meeting held on July 18, 2024.
|
|
2.
|
|
A
Fact Sheet providing the operating metrics of the Company can be downloaded from
www.infosys.com.
|
|
3.
|
|
Other income is net of Finance
Cost.
|
|
4.
|
|
Represents bank balance earmarked
for final and special dividend. Payment date for dividend was July 1, 2024.
|
Exhibit 99.3
Press Conference
Infosys Limited
Q1 FY25 Media Conference Call
July 18, 2024
CORPORATE PARTICIPANTS:
Salil Parekh
Chief Executive Officer & Managing Director
Jayesh Sanghrajka
Chief Financial Officer
Rishi Basu (Emcee)
Corporate Communications
JOURNALISTS
Ritu Singh
CNBC TV18
Haripriya Sureban
The Hindu BusinessLine
Veena Mani
Times of India
Chandra R. Srikanth
Moneycontrol
Sameer Bakshi
Economic Times
Beena Parmar
Economic Times
Padmini Dhruvaraj
The Financial Express
Haripriya Suresh
Reuters
Jas Bardia
The Mint
Sanjana B
The Hindu Business
Line
Sonal Choudhary
Deccan Herald
Rishi Basu
A very good
evening, everyone and thank you for joining Infosys' First Quarter Financial Results. My name is Rishi and on behalf of Infosys, I would
like to welcome all of you. As I always do, I request one question from each media house to accommodate everyone over the next hour.
And 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 afternoon and thank you all for being here with us today. We started the financial year with a strong performance in Q1 across multiple
dimensions, including broad-based revenue growth, expansion in operating margin, strong large deal wins and strong cash generation.
Our revenues
for the quarter grew 3.6% sequentially and 2.5% YoY in constant currency terms. I am particularly pleased with 7.9% growth in the financial
services segment, where we are seeing improvement in client spend in North America. All geographies and most industry groups grew sequentially.
Volume growth
turned positive after several quarters. We had another strong quarter of large deal wins with 34 large deals at a total contract value
of $4.1bn. Our clients see us as a preferred partner of choice in consolidation, cost takeout and efficiency opportunities. This is also
a reflection of our leadership strength.
With the
mobilization of our margin program, we see positive impact on operating metrics. This resulted in our margin expanding by 1 (percentage)
point sequentially. Free cash flow was highest ever at $1.1bn. We continue to see strong traction from our clients for Generative AI programs
delivered through Topaz. Enterprises are focused on their own datasets that can be used in Generative AI large language models that create
huge impact for them.
Along with
our overall robust performance in Q1 and strong opportunity pipeline, we are seeing early signs of improvement in financial services vertical
in the U.S. While discretionary spends continue to be under pressure, our highly differentiated offerings around driving efficiencies
at scale and the transformation capabilities around Generative AI have positioned us well in this market.
With respect
to our recent acquisition of in-tech, we have received the required approvals and have closed the acquisition transaction. Given our strong
performance in Q1 and our current outlook, we have revised our revenue growth guidance for the full financial year to 3% to 4% growth
in constant currency terms. Our operating margin guidance for the financial year remains at 20% to 22%.
With that,
let us go ahead with the questions. Thank you.
Rishi
Basu
Thank you,
Salil. We will now open the floor for questions. Joining Salil is Mr. Jayesh Sanghrajka, Chief Financial Officer, Infosys. With that,
the first question is from Ritu Singh from CNBC-TV18.
Ritu Singh
Hi. Ritu from
CNBC. Thank you for the question. A huge upgrade in the constant currency revenue guidance, 3% to 4%. So firstly, while you highlighted
in financial services in the U.S., you are seeing some signs of a pickup. Overall, what is your sense on discretionary spend coming back?
Where are the verticals, you continue to see weakness?
And was all of
this upgrade organic or have some of your past acquisitions that you have now completed had some role to play in this upgrade that we
are seeing? Also, your margins are up about 100 basis points over the previous quarter. I just wanted to understand, is there headroom
for further growth when you are expecting to take the wage hikes, etc.?
And just one more
question, if I may on your headcount. As we have been asking you for the past several quarters, its now six quarters, it is been coming
down. What are your hiring plans for the year, if you could just throw some light on that?
Salil Parekh
Thanks for your
question. Let me start with the first one. On the guidance, the way we see what is going on in the market and our guidance. First, we
had a strong performance in Q1 on volumes, as well as the point that we made on financial services in the U.S.
Second, we had
a very strong performance on large deals in Q1, which gives us more visibility into this financial year. And third, we completed the in-tech
acquisition, which also helps us in this guidance. And Jayesh will give some color on the specifics with in-tech as well. On the margins,
Jayesh, will you?
Jayesh Sanghrajka
Yes, so if you
look at this quarter's margins, we have already expanded our margins by 100 basis points. If you look at the put-and-takes of that, almost
100 basis points came from last quarter's normalization. Last quarter, we had one-off, which impacted our margins. We had 80 basis points
coming from Project Maximus, which is our margin expansion program, on the back of better pricing, which is value-based selling, better
benefits from our efficiency pyramid, which is utilization, etc., and 40 basis points came from one-off benefit that we got in this quarter
from one of the clients on revenue side. So those were the positives. On the headwinds, we had 1.2% coming from better variable pay and
higher leave and other costs, resulting in almost 1% margin expansion for the quarter. The Project Maximus as you know, we are working
on it for the last couple of quarters and it has started showing results. Our long-term – medium-term objective on that is to expand
margins from where we are. This year's guidance continues to remain 20% to 22%.
Coming back to
your last question on the headcount, as you know last multiple quarters, we have moved to the agile hiring base. That basically means
we hire freshers both from the campus and off the campus. This quarter we had a 2,000 person net decline, which is lower than the previous
quarters. Our utilization is already at 85%, so we have a little headroom now left. So, as we start seeing growth, we will look at hiring.
We are looking at hiring 15,000 to 20,000 freshers this year, depending on how we see the growth.
Ritu Singh
On the first question,
when you say the in-tech acquisition also played a role in you upping your guidance, could you give us a clear breakup, how much of it
is coming organically and how much inorganically?
Jayesh Sanghrajka
So, we do not
break up guidance, first of all, between acquisition and non-acquisition. But if you look at the disclosure that we made when we acquired
in-tech, the annual revenue of in-tech was around €170 mn. So you can in a way, back calculate. But we do not really break up how
much of guidance is between organic and inorganic.
Rishi Basu
Thanks, Ritu.
The next question is from Haripriya Sureban from NDTV Profit.
Haripriya Sureban
Sir, could you
give us a broader sense on the demand environment when it comes to other regions than America's? And what is happening on the pricing
bit? What has changed since the last quarter? What gives you the confidence in terms of like upping the guidance?
Salil Parekh
I will go with
the first point on the demand environment. In other regions what we see is we have continued to see good growth. First, sequential growth
was good across all the geographies. But we see good demand, in this sort of an environment, in the European market where we have had
good traction and we have also had some of our large deals ramping up in that environment equally in what we see in the U.S. or the North
American market as well. So, both of those we are seeing good traction on.
Jayesh will also
give a little bit more color on the industry later. And the second point – go ahead, Jayesh.
Jayesh Sanghrajka
Sorry, what was
the second point?
Salil Parekh
The second point
on the pricing.
Jayesh Sanghrajka
So, pricing environment
has pretty much remained stable, but if you look at again one of the pillars of Maximus is value-based selling where we have been able
to make an impact which has helped us improve our overall pricing, but overall environment has continued to remain stable.
Coming to the
sectors that Salil wanted me to talk about. If you look at financial services as Salil mentioned earlier, the U.S. financial services
we have started to see some recovery, especially in the cards payments, capital markets areas. Manufacturing continues to remain strong
as a sector. Our manufacturing growth, we expect this year to be lower than the last year because last year we had a very strong growth
in manufacturing. Retail and EURS remain similar to our commentary earlier and hi-tech continues to remain softer.
Rishi Basu
Thank you. The
next question is from Veena Mani from The Times of India.
Veena Mani
Hi, gentlemen.
I have a few questions. Some of your peers who had the same sort of numbers with some positive growth, could give us an outline only up
to the next quarter on what things look like. What do you think the next few quarters of this financial year would be? Would you be able
to tell us a little bit more about how the macro environment is going to be like and the deal environment is going to be like?
Secondly, I wanted
to ask you about how your internal fulfilment goes. IJP is a huge thing at Infosys. So would that be a focus going on or would you again
go back to the market and hire extensively, not just freshers, but even laterals? And the other thing is about McCamish. So you called
out in your annual reports that the cyber security is not as adequate as you would want it to be. So are you going to expand that coverage?
What is it like you are going to be doing on the cybersecurity front? And with the McCamish incident, does it make it even more pertinent
for you to add to your cybersecurity measures?
Salil Parekh
So let me start
with the first one, the macro. On the macro, I think the sense we have is the discretionary spend which is a function of macro as it impacts
our clients is still the same as what we were seeing in the past quarter with the exception that we saw a little bit better outcome for
financial services in the U.S., but otherwise it is the same. So it is a discretionary still low from where it was several quarters ago.
Now to see beyond, so the way we do this like at this time in the start of Q2 we will have an outlook of what we can see into the environment
over the next few months. We do not have a view which is, let us say, what will happen at the end of the financial year and so on. So
that is how we are seeing it today.
But as we see,
as we have done now, as we see any changes like what we saw in financial services, we then, at the end of the quarter, come back and update
things on that. On the second point, on IJP or the fulfilment, I think the view is we always look at fulfilment from what we have. As
Jayesh shared, our utilization is looking at a fairly good level.
We will still
have fulfilment internally, but we will also potentially, as we see the demand, have recruitment, both on campus and at other levels as
well. On McCamish, I think we issued a statement on April 18, 2024. In addition to that, the e-discovery process has been completed, and
McCamish is in the process of coordinating with its clients to ensure all the notifications are provided.
In addition, the
U.S. State Attorney Generals and Insurance Commissioners have also been notified, i.e., what we can share with respect to McCamish.
Rishi Basu
Thank you, Veena.
The next question is from Moneycontrol, Chandra.
Chandra R.
Srikanth
Hi, Salil. Hi,
Jayesh. Salil, in terms of business segments, with the exception of financial services, which is seen in uptake, all the other verticals
are more or less, flat sequentially. I think retail has declined by some basis points. So give us a sense of what you are seeing there.
You have already spoken about how financial services is looking up. And in terms of geography also, North America has declined sequentially.
Europe is flat. Rest of the world is flat. But India has seen an uptick. So what is driving the growth for you? Is there a specific project
that is helping you?
Also last month,
I think during your AGM, Nandan Nilekani mentioned that you have 225 Gen AI POCs -- projects. So if you can give us a sense of your pipeline,
are you going to be, giving us a sense of what the size is? Because TCS has called out 1.5 bn. I think Accenture has called out 2 bn.
Will you be quantifying that?
Jayesh, for you,
I think utilisation has helped, excluding trainees, it is gone up by 2 percentage points. You have also increased offshoring by, I think,
a few basis points, which has helped your margins. So will you be utilising these levers? I mean, can you spread these levers more in
the next quarter to keep up margins?
Salil finally,
do you have a view on the reservation bill that Karnataka mooted and now it is paused? But as one of the biggest companies operating in
Karnataka, what is your view on reserving jobs for locals? Thank you.
Salil Parekh
So there are a
few questions. Let me start first with Generative AI. Jayesh will talk a little bit about the industries and the geographies. On Generative
AI, we are making huge impact. And as Nandan shared, at the AGM, the sort of work we are doing is massive. We are not, at this stage,
disclosing and quantifying externally our revenue from it.
The work we are
doing is quite incredible. The focus is really on what enterprises are doing for Generative AI. And what are enterprises doing? They are
working on their own datasets within the confine of the enterprise and making sure that the benefit of that comes through for them. For
example, there is work that is massively going on in customer service. There is work that is going on in software development. There is
work that is going on across process optimization in knowledge.
So there are a
variety of areas in which Generative AI work that we are doing for clients is making a huge impact. And there are several examples, some
of which we also shared in our Annual Report, some of which without client names, where we are working on for projects for Generative
AI. Let me also -- let Jayesh talk about the industry, and then we can go to the other ones.
Jayesh Sanghrajka
Yes. So I think,
Chandra, the numbers that you are looking at are YoY numbers. If you look at the sequential numbers, financial services have grown 7.9%,
manufacturing has grown 3.6%. Almost all segments have grown, and all the geographies have grown this quarter. So that is what Salil was
referring to in terms of broad-based growth this quarter sequentially.
Coming to your
other question on margins, while utilization has pretty much reached the peak level in our mind, there are other levers, value-based selling,
more offshoring, near-shoring. All of those are still levers that we have that we will look at in terms of expanding margins from where
we are.
Chandra R.
Srikanth
The geography
split, Jayesh.
Jayesh Sanghrajka
The fact sheet.
You are referring to the fact sheet?
Chandra R.
Srikanth
Jayesh Sanghrajka
The fact sheet
is YoY numbers. They are YoY numbers.
Rishi Basu
I think the question
was on reservation, the last question.
Salil Parekh
The question --
first, we are planning to work with all the regulations that the state and central governments will work on. We support whatever regulations
and guidelines that will come. We will wait and see what they look like as time develops. But our approach in general is to make sure
we align to the new laws and regulations that come out.
Rishi Basu
Thank you, Chandra.
The next question is from Beena Parmar and Sameer Bakshi from the Economic Times.
Beena Parmar
Hi. First, we
want to know the guidance that you have revised. How much would be inorganic growth from that? And your India growth has also seen a large
jump. Could you give us some clarity or color, on where does it come from? Is it from one large deal or do you see this going forward?
Do you see this expanding?
And in terms of
fresher hiring, you mentioned that you would be going to campuses and also looking at it laterally. How much would be campus recruitments
from the number that you shared? And have the onboarding process of previous offers been done already?
Salil Parekh
So on the guidance,
what we are seeing today, we had a very strong Q1. With that performance, which focused on specifically volumes, on financial services
in the U.S. that gave us more confidence for the year. Then we saw the large deals in Q1 itself. That gave us more visibility for what
we are seeing for the full year.
And then we had
the acquisition with respect to in-tech. Those combined give us the support to increase our revenue growth guidance. As Jayesh said, we
do not split out the guidance between organic and inorganic. However, the revenue number for in-tech is something that we have shared,
Jayesh just shared that. And so from that basis, you can add it is a part of it.
There is a vast
majority of it is coming from what we see in the volume, financial services and large deals. In terms of recruitment, as Jayesh just shared,
we will be going to campus between the way we do campus, which is campus hires ongoing and at campus. And that is in the range of 15,000
to 20,000 for this financial year.
Beena Parmar
Is there a breakup
on how much would be from campuses and otherwise?
Jayesh Sanghrajka
We generally do
not break up that. It is a combination from the campus and off campus. As we see the demand environment growing, we will look at which
is the best source of.
Beena Parmar
Has the onboarding
of previous offers been done completely or is it still pending?
Jayesh Sanghrajka
It is -- a small
portion of that would be pending. The rest is pretty much done.
Beena Parmar
And Salil, on
the India growth, can you give us some color of where is it?
Salil Parekh
India growth,
so there – first, India is a small part of our business. So each quarter with different events, it can go up and down. In general,
India business is doing well for us in terms of growth. In this specific quarter, as Jayesh shared earlier, there was also one-off with
respect to the India business. But in general, it is in good shape. It is a small number and sometimes there is more movement because
of small numbers.
Beena Parmar
One more if I
can add. From your existing deals, what kind of percentage would be Gen AI projects if at all, at least a ballpark number?
Salil Parekh
So in Generative
AI, we are not sharing externally the value in terms of revenue or of the deals. What we are very clear about is if you look at industry
ratings, if you look at what others are saying about Infosys and our Generative AI approach, it is leading in the market. We are also
very careful. We are not combining Generative AI revenue with AI revenue. AI has been going on for a while. And really today, there is
much more interest with clients on what Generative AI can derive. And that is our focus. That is where we believe we have leadership.
And that is where there is a huge distinction between what large companies or enterprises are doing and what consumers are doing on Generative
AI. And our focus is very much with the enterprise Generative AI.
Rishi Basu
Thank you, Beena.
The next question is from Padmini Dhruvaraj from The Financial Express.
Padmini Dhruvaraj
Hi. So you said
that you finished acquisition of your ER&D company. So from when do you see it contributing to your revenues? And how many POCs of
your AI use cases are in production now? So this demand you said of BFS space in North America, is it also because the clients want to
adopt the new technologies? And is bundling AI services in your regular deals or are AI deals becoming separate from your transformation
deals?
Salil Parekh
Okay, so we will
go one by one. I think the first one was on what we are seeing with Generative AI – sorry, ER&D. So the acquisition is complete.
I think that was the question.
Padmini Dhruvaraj
From when you
see…?
Salil Parekh
When? It is complete
yesterday, so it will start from this quarter. And in fact, engineering services is one of those areas which is growing well for us. We
are seeing a lot of traction in the automotive space, in the medical devices space, broadly across all elements of engineering services
and we have had now two acquisitions that we have done on that.
Then the second
was a demand in FS if that also includes, is it because of AI or not? So there what we are seeing with the demand in FS which we are seeing
improvement in is across all of our capabilities. It is not only from AI or Generative AI. It is also for cost and efficiency, consolidation
plays. It is also sometimes very specialized like in the payments and cards areas where we have some specialized capabilities, we see
demand for those sort of activities, but it also includes AI in it.
On the percentage
of projects which have gone from POC to production, we do not share that externally but what we do – what we did say and would continue
to see is we are seeing a lot more work which is production projects. We are not seeing just POC work. It is real work in production with
clients. For example, we are doing some work on credit risk analysis. Now this is a project which is in production with a bank where with
Generative AI and AI we are able to improve the quality of the decision-making or help them improve the quality of decision-making and
also the time, make it better. So this is a huge real impact that the client is seeing in this area.
Rishi Basu
Thank you. The
next question is from Haripriya Suresh from Reuters.
Haripriya Suresh
Hi. Good evening.
I think most questions have been asked, but for the last few quarters we have been talking about the delay in TCV to revenue conversion.
Is that – does that timeline getting better or do you still – is there still as much caution and are you seeing any sort of
transformation deals or are you mainly in the cost efficiency and vendor consolidation these kind of a thing? Also your wage hike cycle
last year I know was delayed. Are you coming back to the old cycle? Has the cycle been delayed? What is that environment like? Also in
BFSI I know you called out growth areas as cards payments, but are you still seeing any softness that you would want to call out? Thank
you.
Salil Parekh
On the deals and
the conversion, so there was I think two or three quarters ago we had spoken about some specific deals which it was a slower start than
anticipated. Today, we are seeing our large deals converting in as per expectation. So we had already reset that expectation and it is
as per that expectation. There is no further slowing and there is no other change in that. The type of deals we are mainly seeing that
cost efficiency consolidation deals. There is still not the appetite to spend big on a transformation, technology transformation type
of program, on the wage hike and the other one.
Jayesh Sanghrajka
So on the wage
hike, as you would recall, we have done our last wage hike in November last year. At this point in time – and every time we do a
wage hike, we take multiple factors into account, right from what is inflation, when the last time we did the wage hike, what is the peer
practice, etc. And at this point in time we are evaluating all of that, but at the same time as I called out in my margin walk, we have
improved our variable pay this year versus the last quarter and last year.
Rishi Basu
Thank you. The
next question is from Jas Bardia from The Mint.
Jas Bardia
Good evening,
sir. So you started the year with a 3.6% sequential growth in constant currency. And you termed it excellent in your prepared remarks.
But you outline a full year growth between 3% and 4% in constant currency terms. So are you expecting business to decline in Q2 or the
second half of the year? What explains this stepped outlook despite a strong start? And sir, the second question, over the last four quarters,
the company has kind of underperformed. What explains the slowdown? Is it macroeconomic slowdown? Because Fortune 500 companies are doing
well. The U.S. economy is resilient. So is this a macroeconomic slowdown, if at all? Or is this because of company-specific issues?
Salil Parekh
So the first one,
in fact, my sense is we have done exceptionally well because of Infosys-specific reasons. 3.6% sequential growth is extremely strong in
any environment, but especially in this environment. The reasons we have, a very well-defined approach on large deals which has been working
well. We have a very clear approach on Generative AI, which is giving us good traction. We have, when the market looks at it, a very clear
approach on digital transformation, which helps clients. And in this environment, a strong focus on cloud, which is also doing very well
with the work we do in Cobalt.
The foundation
of Generative AI is all of the data and how that is coming together. And there we have huge strength. So that is giving us a tremendous
benefit. Then we have had the success on large deals in Q1. Then we have had a strong outcome on the operating margin because of the program
we put in place some quarters ago on improving every aspect of how the operations work. And then we have free cash flow, which is at the
highest level. So all of that combined give us a very strong start into this financial year.
For the guidance,
the 3.6% becomes 2.5% on a YoY basis. So the guidance is more on a YoY basis where we have said is between 3% and 4%. And so we see that
being supportive of the guidance we are driving for three reasons. A good Q1, which is because of volumes and a good FS outcome in U.S.,
very strong large deals. And the in-tech acquisition, which got closed in time. And so those are the reasons why the guidance has become
3% to 4%.
Now if you look
at what is going on with the macro, the macro environment, at least in the western markets with high interest rates, has curtailed most
companies from spending on big programs on digital transformation. And we had, as we transformed the company, moved to 65% of our work
into digital. And that is where we see the change. My sense is as and when the macro changes and companies are spending on large technology
programs, we are in the best position to start to get that benefit. And this quarter we start to see a little bit of that, not in the
digital programs but in financial services in the U.S., which is what we have not seen in the past. So all of that really gives us the
confidence for what we are seeing in this year.
Rishi Basu
Thank you. The
next question is from Sanjana from the Hindu Business Line.
Sanjana B
Hello, gentlemen.
So Infosys currently has 2.5 lakh employees that are trained in Gen AI. So what exactly does this mean? And what kind of investments or
initiatives are going into this? And if you could tell us if this reduces or increases hiring requirements because there has been a reduction
in headcount from last quarter. It is been around 1,900 employees?
Also, can you
talk about how many roles are being added or will be added because of development on the AI front? And if you are looking to – and
if you could give a breakup of how many people that you have currently hired for AI related roles? Thank you.
Salil Parekh
So on the training
for AI, we have a program that enables our employees to get trained on different elements of AI and Generative AI. So there is training,
which is more focused on awareness. There is training, which is more focused on developing and there is training, which is more focused
on deep immersion. And all of that combined gives the total that we share externally for AI training.
Our view is all
of our service lines are getting changed by deploying AI and Generative AI within each service line. So in any of our offerings, we are
deploying it to make sure that we get the full benefit of it, and which is what we are driving to become an AI-first company. So we had
a view when we became digital-first, cloud-first and now AI-first, so that positions us very differently with our clients.
In terms of recruitment,
we do not specify how many people are getting recruited for A or B different specific category. But overall numbers is what Jayesh has
shared in terms of people joining from college is between 15,000 and 20,000 for this financial year.
Rishi Basu
Thank you. The
next question is from Sonal Choudhary from the Deccan Herald.
Sonal Choudhary
Hello, gentlemen.
Congratulations on the stellar performance. You have already highlighted what has powered growth in this quarter, but if there is anything
to add to that? Secondly, whether this growth momentum will sustain? If yes, what is providing that confidence? What is boosting that
confidence?
Salil Parekh
So thank you for
that. We are extremely pleased with the performance, and we think is something very specific to what we have done within the company and
for our clients. The main elements of what is driving the growth is really focused on how we have set up, what we are driving within the
Generative AI ecosystem, what we are driving with large deals, the intensity with which we are working with our clients across all the
industries and then the benefits that we are seeing, for example, in Q1, from volumes, from financial services in the U.S., the overall
large deal and the in-tech acquisitions. As we look ahead, our view is what we see today is what we have translated into the growth guidance
as we see the year today.
We will see as
the year progresses; we believe we have a leading ability with 3.6% QoQ growth in the market. We will see as the year progresses what
other things we see in the environment with different industries like we have seen for financial services in the U.S., what other industries
at what time if they change and so on and that will give us more and more confidence into the year. The way I would say that is the guidance
is what we see today. So whatever we have seen in Q1, we have converted that to our guidance and that is what we see today in terms of
the outlook.
Rishi Basu
Thank you. With
that, we come to the end of this press conference. We thank our friends from media for being part of today's questions and answers. Thank
you Salil, and thank you, Jayesh. Before we conclude, please note the archive webcast of this press conference will be available on the
Infosys website and on our YouTube channel later today. Thank you, and please join us for some high tea outside.
Exhibit 99.4
Fact
Sheet
Revenue Growth - Q1
25
| |
Reported |
CC |
| QoQ growth (%) |
3.3% |
3.6% |
| YoY growth (%) |
2.1% |
2.5% |
Revenues by Business Segments
(in %)
| |
Quarter ended |
YoY Growth |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
Reported |
CC |
| Financial services |
27.5 |
26.4 |
28.1 |
(0.1) |
0.3 |
| Retail |
13.8 |
14.3 |
14.5 |
(3.0) |
(3.0) |
| Communication |
12.1 |
12.3 |
11.7 |
5.2 |
5.4 |
| Energy, Utilities, Resources & Services |
13.3 |
13.4 |
12.9 |
5.2 |
6.3 |
| Manufacturing |
14.7 |
14.7 |
14.1 |
6.4 |
6.0 |
| Hi-Tech |
8.0 |
8.7 |
8.1 |
1.5 |
2.1 |
| Life Sciences |
7.3 |
7.3 |
7.2 |
2.7 |
2.9 |
| Others |
3.3 |
2.9 |
3.4 |
1.7 |
4.5 |
| Total |
100.0 |
100.0 |
100.0 |
2.1 |
2.5 |
Revenues by Client Geography
(in %)
| |
Quarter ended |
YoY Growth |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
Reported |
CC |
| North America |
58.9 |
59.6 |
60.8 |
(1.2) |
(1.2) |
| Europe |
28.4 |
28.6 |
26.8 |
8.6 |
9.1 |
| Rest of the world |
9.6 |
9.6 |
9.7 |
0.6 |
2.3 |
| India |
3.1 |
2.2 |
2.7 |
18.4 |
19.9 |
| Total |
100.0 |
100.0 |
100.0 |
2.1 |
2.5 |
Client Data
| |
Quarter ended |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
| Number of Clients |
|
|
|
| Active |
1,867 |
1,882 |
1,883 |
| Added during the period (gross) |
87 |
98 |
99 |
| Number of Million dollar clients* |
|
|
|
| 1 Million dollar + |
987 |
959 |
940 |
| 10 Million dollar + |
309 |
315 |
312 |
| 50 Million dollar + |
84 |
83 |
79 |
| 100 Million dollar + |
40 |
40 |
38 |
| Client contribution to revenues |
|
|
|
| Top 5 clients |
13.5% |
13.6% |
13.4% |
| Top 10 clients |
20.9% |
20.4% |
20.4% |
| Top 25 clients |
34.9% |
34.3% |
34.6% |
| Days Sales Outstanding* |
72 |
71 |
63 |
| * | | LTM (Last twelve months)
Revenues |
Effort & Utilization –
Consolidated IT Services
(in %)
| |
Quarter ended |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
| Effort |
|
|
|
| Onsite |
23.9 |
24.2 |
24.7 |
| Offshore |
76.1 |
75.8 |
75.3 |
| Utilization |
|
|
|
| Including trainees |
83.9 |
82.0 |
78.9 |
| Excluding trainees |
85.3 |
83.5 |
81.1 |
Employee Metrics
(Nos.)
| |
Quarter ended |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
| Total employees |
315,332 |
317,240 |
336,294 |
| S/W professionals |
298,123 |
299,814 |
317,611 |
| Sales & Support |
17,209 |
17,426 |
18,683 |
| Voluntary Attrition % (LTM - IT Services) |
12.7% |
12.6% |
17.3% |
| % of Women Employees |
39.2% |
39.3% |
39.5% |
Cash Flow
In US $ million
| |
Quarter ended |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
| Free cash flow (1) |
1,094 |
848 |
699 |
| Consolidated cash and investments (2)(3) |
4,311 |
4,676 |
3,593 |
In crore
| |
Quarter ended |
| |
Jun 30, 2024 |
Mar 31, 2024 |
Jun 30, 2023 |
| Free cash flow (1) |
9,155 |
7,032 |
5,749 |
| Consolidated cash and investments (2)(3) |
35,943 |
39,005 |
29,469 |
| (1) | | Free cash flow is defined
as net cash provided by operating activities less capital expenditure as per the consolidated
statement of cash flows prepared under IFRS (Non-IFRS measure) |
| (2) | | Consolidated cash and
investments comprise of cash and cash equivalents, current and non-current investments excluding
investments in equity and preference shares and others (Non-IFRS measure) |
| (3) | | As on June 30, 2024
cash balances excludes earmarked bank balance for dividend $1,394 Mn (11,625 crore),
payment date for the dividend was July 1, 2024. As on June 30, 2023 cash balances excludes
earmarked bank balance for dividend $885 Mn (7,262 crore), payment date for the dividend
was July 3, 2023. |
Consolidated statement of
Comprehensive Income for three months ended,
(Extracted from IFRS Financial
Statement)
In US $ million, except per
equity share data
| Particulars |
Jun 30, 2024 |
Jun 30, 2023 |
Growth %
YoY |
Mar 31, 2024 |
Growth %
QoQ |
| Revenues |
4,714 |
4,617 |
2.1% |
4,564 |
3.3% |
| Cost of sales |
3,259 |
3,211 |
1.5% |
3,219 |
1.2% |
| Gross Profit |
1,455 |
1,406 |
3.5% |
1,345 |
8.2% |
| Operating Expenses: |
|
|
|
|
|
| Selling
and marketing expenses |
232 |
217 |
6.9% |
209 |
11.0% |
| Administrative
expenses |
229 |
228 |
0.4% |
219 |
4.6% |
| Total Operating Expenses |
461 |
445 |
3.6% |
428 |
7.7% |
| Operating Profit |
994 |
961 |
3.4% |
917 |
8.4% |
| Operating Margin % |
21.1 |
20.8 |
0.3% |
20.1 |
1.0% |
| Other Income, net(1)(2) |
88 |
57 |
54.4% |
315 |
-72.1% |
| Profit before income taxes |
1,082 |
1,018 |
6.3% |
1,232 |
-12.2% |
| Income tax expense(2) |
318 |
294 |
8.2% |
273 |
16.5% |
| Net Profit (before minority interest) |
764 |
724 |
5.6% |
959 |
-20.3% |
| Net Profit (after minority interest) |
763 |
724 |
5.5% |
958 |
-20.4% |
| Basic EPS ($)(2) |
0.18 |
0.17 |
5.4% |
0.23 |
-20.4% |
| Diluted EPS ($)(2) |
0.18 |
0.17 |
5.3% |
0.23 |
-20.4% |
| Dividend Per Share ($)(2)(3)(4) |
– |
– |
|
0.24 |
|
Consolidated statement of
Comprehensive Income for three months ended,
(Extracted from IFRS Financial
Statement)
In crore, except
per equity share data
| Particulars |
Jun 30, 2024 |
Jun 30, 2023 |
Growth %
YoY |
Mar 31, 2024 |
Growth %
QoQ |
| Revenues |
39,315 |
37,933 |
3.6% |
37,923 |
3.7% |
| Cost of sales |
27,177 |
26,382 |
3.0% |
26,748 |
1.6% |
| Gross Profit |
12,138 |
11,551 |
5.1% |
11,175 |
8.6% |
| Operating Expenses: |
|
|
|
|
|
| Selling and
marketing expenses |
1,937 |
1,783 |
8.6% |
1,735 |
11.6% |
| Administrative
expenses |
1,913 |
1,877 |
1.9% |
1,819 |
5.2% |
| Total Operating Expenses |
3,850 |
3,660 |
5.2% |
3,554 |
8.3% |
| Operating Profit |
8,288 |
7,891 |
5.0% |
7,621 |
8.8% |
| Operating Margin % |
21.1 |
20.8 |
0.3% |
20.1 |
1.0% |
| Other Income, net(1)(2) |
733 |
471 |
55.6% |
2,619 |
-72.0% |
| Profit before income taxes |
9,021 |
8,362 |
7.9% |
10,240 |
-11.9% |
| Income tax expense(2) |
2,647 |
2,417 |
9.5% |
2,265 |
16.9% |
| Net Profit (before minority interest) |
6,374 |
5,945 |
7.2% |
7,975 |
-20.1% |
| Net Profit (after minority interest) |
6,368 |
5,945 |
7.1% |
7,969 |
-20.1% |
| Basic EPS ()(2) |
15.38 |
14.37 |
7.0% |
19.25 |
-20.1% |
| Diluted EPS ()(2) |
15.35 |
14.35 |
7.0% |
19.22 |
-20.1% |
| Dividend Per Share ()(3) |
– |
– |
|
20.00 |
|
| (1) | | Other income is net
of Finance Cost |
| (2) | | Includes interest income
(pre-tax) of $232 Mn (1,933 crores) and reversal of net tax provisions amounting to
$5 Mn (38 crores) on account of orders received under sections 250 & 254 of the
Income Tax Act, 1961, from the Income Tax Authorities in India for certain assessment years.
This has resulted in a positive impact on the consolidated Basic and Diluted EPS by approximately
$0.06 (4.76) for the quarter ended March 31, 2024 |
| (3) | | Dividend excludes special
Dividend of $0.10 (8.00) per share for the quarter ended March 31, 2024 |
| (4) | | USD/INR exchange rate
of 83.41 considered for Q4’24 |
Exhibit 99.5
Earnings Conference Call
Infosys
Limited
Earnings Conference Call
July 18, 2024
CORPORATE
PARTICIPANTS
Salil Parekh
Chief Executive
Officer and Managing Director
Jayesh Sanghrajka
Chief Financial
Officer
Sandeep Mahindroo
Financial Controller
and Head of Investor Relations
analystS
Ankur Rudra
Keith Bachman
Bank of Montreal
Kumar Rakesh
BNP Paribas
Nitin Padmanabhan
Vibhor Singhal
Nuvama Equities
Gaurav Rateria
Morgan Stanley
Bryan Bergin
TD Cowen
James Friedman
Susquehanna International
Sumeet Jain
CLSA India
Kawaljeet Saluja
Kotak Securities
Jonathan Lee
Guggenheim Securities
Girish Pai
BOB Capital Markets
Moderator
Ladies and
gentlemen, good day and welcome to 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 this conference
call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded.
I now hand
the conference over to Mr. Sandeep Mahindroo. Thank you, and over to you, sir.
Sandeep
Mahindroo
Thanks,
Neerav. Hello, everyone, and welcome to Infosys Earnings Call for Q1 FY'25. Joining us on this call is CEO and MD, Mr. Salil Parekh; CFO,
Mr. Jayesh Sanghrajka; and other members of the leadership team. We will start the call with some remarks on the performance of the company,
subsequent to which the call will be opened up for questions.
Please note
that anything we say which refers 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 all these risks are available in our filings with the SEC, which
can be found on www.sec.gov.
I would
now like to pass on the call to Salil.
Salil
Parekh
Thanks,
Sandeep. Good evening and good morning to everyone on the call. We started the financial year with a strong performance in Q1 across multiple
dimensions, including broad-based revenue growth, expansion of operating margins, strong large deal wins and strong cash generation.
Our revenues
for the quarter grew 3.6% sequentially and 2.5% YoY in constant currency terms. I am particularly pleased with 7.9% growth in Financial
Services segment where we are seeing improvement in client spend in North America. All geographies and most industry groups grew sequentially.
Volume growth turned positive after several quarters. We also had an improvement in realization.
We had another
quarter of strong large deal wins with 34 large deals at a total contract value of $4.1 bn. Our clients see us as a preferred partner
of choice for consolidation, cost takeout and efficiency programs. This is also a reflection of our leadership strength.
With the
mobilization of our margin program, we see positive impact on our operating metrics and pricing. This resulted in our margin expanding
by 1percentage point sequentially. Jayesh will elaborate on margin puts and takes later on the call.
Free cash
flow was highest ever at $1.1 bn. Our employee attrition rate was at 12.7%. We continue to see strong traction from our clients for Generative
AI programs delivered through Topaz. Enterprises are focused on their own data sets that can be used in Generative AI large language models.
As an example,
we are partnering with a telecommunications leader to transform the product engineering practices with AI and to elevate both the customer
and employee experience. Another example is how we are optimizing and modernizing IT infrastructure services and transforming the IT operating
model with AI for a leading bank.
We are helping
several of our clients prepare for the AI transformation journey by building strong data foundations with robust cloud capabilities using
our Cobalt cloud services. Industry analysts acknowledge our leadership in the domain of enterprise Generative AI. We continue to invest
in strengthening our AI capabilities and building AI-first solutions for clients.
During the
quarter, we launched Aster, a marketing suite of AI amplified solutions for our clients to create brand experiences with enhanced marketing
efficiency and accelerated performance effectiveness. Our investment in nurturing our global workforce with AI-first skills and expertise
continues as over 270,000 of our employees are now well trained in building a wide range of AI-powered solutions for our clients.
We are today
uniquely positioned as a digital-first, cloud-first and AI-first brand in the market. And our continued differentiation has helped us
being recognized around the 100 most valuable brands in the world by Kantar BrandZ. We have also been ranked among the most trusted brands
across U.S. and India.
Along with
our overall robust performance in Q1 and strong opportunity pipeline, we are seeing early signs of improvement in Financial Services vertical
in the U.S. While discretionary spends continue to be under pressure, our highly differentiated offerings around driving efficiencies
at scale and transformation capabilities around Generative AI have positioned us well in the market.
With respect
to our recent acquisition of in-tech, we have received the required approvals and have closed the acquisition.
Given our
strong performance in Q1 and our current outlook, we have revised our revenue growth guidance for the full financial year to 3% to 4%
growth in constant currency. Our operating margin guidance for the financial year remains at 20% to 22%.
With that,
let me hand it over to Jayesh to share his update. Thank you.
Jayesh
Sanghrajka
Thank you,
Salil. Good morning and good evening, everyone, and thank you for joining the call today. We entered FY'25 focusing on key strategic priorities,
including market share gains to accelerate revenue growth and drive margin improvement through Project Maximus.
I am delighted
to highlight results that we have achieved across different business dimensions this quarter, including
| - | strong and broad-based revenue growth across all geos and most verticals YoY in constant currency terms, |
| - | sequentially positive volume growth after several quarters coupled with improvement in realisation |
| - | Financial Services returned to positive sequential growth after six quarters with 7.9% growth in constant
currency terms |
| - | 34 large deals signed during the quarter, which is a record number of deals in any quarter, large deal
TCV at $4.1 bn, including 58% net new.. |
| - | Deal pipeline continues to remain strong |
| - | 1% operating margin expansion sequentially |
| - | improvement in operating parameters including 1.8% increase in utilization and lowest on-site mix in 10
quarters |
| - | highest ever free cash flow generation in the quarter with free cash flows normalized for tax refunds
at 104% of net profit |
| - | fifth consecutive quarter of reduction in unbilled |
| - | attrition has remained stable and |
| - | increase in return on equity by 1.5% QoQ to 33.6% primarily resulting from higher payouts to investors |
With that,
let me now elaborate with details.
Revenue
for Q1 was $4.7 bn, up 3.6% sequentially and 2.5% year-on-year in constant currency terms. This included benefit from improved realization
from one-timers of 0.5%.
Operating
margin improved by 1% sequentially to 21.1% led by 1.4% improvement in gross margins on account of strong operating performance across
different dimensions. The major components of sequential margin walk are as follows:
Tailwinds
of 2.2% comprising of normalization of Q4 one-timers of 1%, 0.8% benefit from Project Maximus largely from higher utilization and value-based
selling, 0.4% from the improvement in realization mentioned above, partly offset by headwinds of 1.2% from higher variable pay, higher
leave costs, offset by currency and others.
We continue
to drive Project Maximus across the organization with strong intensity. Headcount at the end of the quarter stood at over 315,000 with
utilization further increasing to 85.3%. LTM attrition was stable at 12.7%.
Unbilled
revenues dropped for the fifth consecutive quarter to $1.7 bn. Free cash flows for the quarter was highest ever at $1,094 mn, a sequential
increase of 29%. DSO for the quarter was 72 days compared to 71 days in Q4.
Consolidated
cash and cash equivalents stood at $4.3 bn after factoring in payout of $1.4 bn towards dividend declared in Q4. Consequently, return
on equity increased sequentially to 33.6%. Yield on cash balances were at 7% in Q1.
ETR for
the quarter was 29.4%, which is in line with our expectation for the year. EPS grew by 7% in INR and by 5.4% in dollar terms on a YoY
basis.
We closed
34 large deals with TCV of $4.1 bn, 58% of this was net new. Vertical-wise, we signed 8 deals each in Retail and Communication, 6 in EURS,
5 in Financial Services, 4 in Manufacturing, 2 in Hi-Tech and 1 in Life Sciences. Region-wise, we signed 21 large deals in America, 12
in Europe and 1 in ROW.
Coming to
verticals,
BFSI returned
to positive growth after six quarters led by ramp-ups of large deals and absence of one-off of last quarter. In the U.S., we see some
recovery in areas like mortgage, capital markets and cards and payments. Overall, clients still remain cautious on spending and are focusing
to deliver maximum business value through deals combining transformation, technology and operations. Pipeline remains strong, and we are
working with the clients to accelerate their adoption of Gen AI for modernizing legacy platforms, fraud detection, credit process simplification,
etc.
In Manufacturing,
growth was broad-based across geographies and sub verticals like industrial, automotive and aerospace. While pressure on discretionary
spends persist, we see increased benefits of vendor consolidation, opportunities around resolving supply chain bottlenecks and rationalizing
infrastructure and applications. We see strong interest on Gen AI with deep client engagements. Our capability and pipeline in the engineering
space will be solidified by the acquisition of in-tech, which will help us accelerate the segment growth in FY'25.
Growth in
Communication was led by ramp-up of recent large deal wins. Overall environment, however, remains cautious with continued opex pressure
and delayed decision-making. Telcos, despite challenges, are navigating their way by focusing on rapid digitization and reprioritization
of spends.
Uncertainties
in Retail sector continued with clients focusing on cost take outs to fund their business transformation journey. There are opportunities
around areas like customer and employee experience, predictive analytics, digital marketing and landscape modernization. While the pipeline
remains healthy, decision cycles continue to stay elongated.
Environment
in EURS continues to be impacted by high interest rates and geopolitical conflicts, which are influencing the spend patterns. While pressure
on discretionary spends persist, our differentiation in areas like energy transition, integration business and human experience is helping
us build a strong pipeline.
Hi-tech
vertical continues to remain soft.
Driven by
a strong all-round performance in Q1, improvement in U.S. Financial Services, strong large deal closures and in-tech acquisition, we are
increasing the revenue guidance to 3% to 4% in constant currency terms. We are maintaining our operating margin guidance at 20% to 22%.
And with
that, we can open the call for the questions.
Thank you
very much. We will now begin the question-and-answer session. The first question is from the line of Ankur Rudra from JPMorgan. Please
go ahead.
Ankur
Rudra
Hi, thank
you, and good to see very good numbers after a while. Just wanted to get a sense of, Salil, what is the breakup of the very strong momentum
this quarter, if you could, between the large deals that you have won over the last year? Any kind of improvement in execution of short-cycle
business or discretionary business and potentially better execution? And also when you answer that, if you can talk about how client conversations
are changing, if there is anything turning a bit more positive, and any change in the momentum on the short-cycle deals, but large deals
you can see is going on very strongly? Thanks.
Salil
Parekh
Thanks,
Ankur. The view on discretionary or short cycle, what we are seeing is in Financial Services in the U.S., we have seen that shift that
we have highlighted, and we saw that during the quarter. Outside of that, the discretionary still remains similar to where we were, when
we started the year, which is still in a difficult situation. So that is the one that we have seen the change in.
The client
conversations, in general, there is a lot of talk and discussion with Generative AI, but the programs, even though they are not POCs,
the actual projects are not large revenue projects. And transformation is not so much what we are seeing. So even in a large deal, the
vast majority is still cost takeout, efficiency, consolidation, automation, that type of work.
And in some
instances, where there is the transformation – these are funded massively through cost takeout. So, it is not really large spends
there. So that is how we are seeing the discretionary work at this time.
Ankur
Rudra
Thank you.
And from here on, you have seen this change in Financial Services. In your client conversations, do you sense there is anything in particular,
clients, especially in maybe the hi-tech space or energy and utility where you have highlighted, problems still persist or even manufacturing,
which might change the client behaviour, maybe not this year, but into next year. What are the main things clients may be waiting for?
Salil
Parekh
So there,
first on energy, utilities, we have had a good outcome last year. We have seen similar discussions now, not a huge change. Manufacturing
again, good outcome last year, will be decent growth this year but just slower than last year. It is not like a big, big change there.
On hi-tech,
it is still difficult as you point out. I do not know what the trigger could be. Of course, on a macro level, there is, not with clients,
but generally speaking, a view that if U.S. inflation and interest rate and all of those discussions change, that will change something.
But we do not know what will that trigger be.
Ankur
Rudra
Okay. I
appreciate it. Maybe just one question for Jayesh. Jayesh, great performance on the margins. Could you maybe talk about how do you think
about the puts and takes from here on? Utilization, especially including trainees, seems to be high. I guess that indicates fewer trainees
in the system. What sort of headwind will we see from there?
Secondly,
I am guessing there will be wage hikes some point in the next couple of quarters. So how are you thinking about what will help you maintain,
if not improve, margins from here on and extend Project Maximus?
Jayesh
Sanghrajka
Yes. So
Ankur, thank you for that first. And if you look at the Project Maximus and we have talked about the five pillars of Project Maximus,
many of them are starting to show results. VBS, which is value-based selling, is one of them, efficient pyramid, utilization and other
factors are other part of it. Lean and automation is the third piece in that.
So, there
are many of these tracks which are showing results, and we still believe there is more meat there. Of course, if you look at the headwinds,
you will have a comp review at some point in time during the year that could be a headwind.
We have
– at this point in time have not decided the timing, etc., of that. So that would be a headwind. Some of the large deals that we
have signed, the transition and ramp-up of that would be a headwind. So, we will have to balance that as we go through the year. At this
point in time, we are very confident of our margin guidance.
Ankur
Rudra
Appreciate
it. Thank you and best of luck.
Thank you.
Next question is from the line of Keith from BMO. Please go ahead.
Keith
Bachman
Hi. Thank
you very much. First, I wanted to get some additional feedback on Financial Services. You indicated that you thought that business outcomes
or business energy had improved. I just wanted to hear a little bit more about that. It is certainly something we have not heard from
some of our software-related companies. But what do you think is the driver of the improvement in Financial Services in particular?
Jayesh
Sanghrajka
So, Keith,
there, if you look at our commentary on that, we are seeing some recovery in U.S. Financial Services, specifically in the areas like mortgages,
capital markets and cards payments and the larger clients there. So, we are seeing some volumes coming in and some recovery – some
early signs of recovery in those areas.
Keith
Bachman
Do you think
that is Infosys or do you think that – in other words, are you winning share in those accounts, or do you think that is a more broader
base in, say, North American banks that there is a general trend towards recovery in spend?
Jayesh
Sanghrajka
So, it is
a combination of various factors. There are instances where we are consolidating. There are instances where we have won new and larger
businesses. As I talked about, some of the large deals wins also in the Financial Service sector. So, I think there are multiple combination
of those factors in that.
Keith
Bachman
Okay. And
then just on the margin guide, in terms of puts and takes, you highlighted some on the previous question. But you closed the deal with
adding almost $200 mn in revenue on a run rate basis. How is that impacting margins and/or any other issues you want to call out, including
any comments on FX impact as you see it today in terms of margins? And that is it for me. Thank you very much.
Jayesh
Sanghrajka
So, Keith,
the acquisition that we have done, compared to the size of the company, is relatively smaller to have a material margin impact. And as
you have seen from our filings also, the in-tech is coming with healthy margins and there are opportunities, etc., in synergies.
Coming to
the forex, the forex has remained range bound for the last couple of quarters. So at this point in time, we do not really see an impact.
But as you will appreciate, forex is range bound. I mean, forex is unpredictable, and it can have the margin benefit or impact depending
on which way it goes. But at this point in time, it is remaining range bound.
Keith
Bachman
Okay. All
right. Perfect. Many thanks. Congratulations on solid results.
Jayesh
Sanghrajka
Thank you.
Next question
is from the line of Kumar Rakesh from BNP Paribas. Please go ahead.
Kumar
Rakesh
Hi. Good
evening. Thank you for taking my question. My first question was for Jayesh, just a clarification. So during the press briefing, you talked
about 40 bps of one-off impact in the margins. So, can you just help us understand the revenue and the margin impact coming out of that?
And I understand it is a recovery which you have made from one of the customers based in India, if that is correct? Thanks.
Jayesh
Sanghrajka
Yes. So
that is right. This is for a customer base in India. It is one-off in the revenue, and therefore, most of that has flown into margin directly.
So, 0.5% on revenue pretty much impacting 40 bps on margin.
Kumar
Rakesh
Got it.
Thanks for that. My second question was, Salil, for hyperscalers, we are seeing the growth is accelerating and also the AI demand especially
for some of the chip makers such as NVIDIA has been quite strong. So, it does not seem like the discretionary demand is entirely missing
in the market. So, is there a transformation in the underlying business mix which is happening where possibly discretionary demand for
now at least is moving towards platform and hardware makers and not coming to services companies?
Salil
Parekh
So, there
the view we have is what we saw, and we have highlighted so far. The shift in Financial Services in the U.S. shows that some of that type
of demand is coming now. We will wait and see across all the industries, whether it is what you are describing, or whether tech services
project discretionary work also comes back or whether there will be transformation programs in tech which will also come.
We are definitely
seeing more and more discussions in enterprises on Generative AI programs. Jayesh also shared a couple of examples. I shared a couple
of examples. And these are not POCs, these are actual projects where we are participating. So we do see that. My own sense is this U.S.
FS is one data point. We will wait and see what some of the other data points look like.
Kumar
Rakesh
So, Salil,
what I was trying to understand was that is there a decoupling of discretionary demand which is happening or is this a sequence in which
we will see first the hardware and platform makers getting the discretionary demand and eventually coming to services? So, is that a decoupling
or a sequence of event which eventually comes to services as well? What do you think would be the chain of events?
Salil
Parekh
That is
difficult to say. So again, it is just this year, one quarter, what we saw was that in Financial Services U.S. some of that discretionary
work is there. Whether it was decoupled or following on from something, difficult to say but we did see some evidence of that.
Kumar
Rakesh
Thanks a
lot for that.
Thank you.
Next question is from the line of Nitin Padmanabhan from Investec. Please go ahead.
Nitin
Padmanabhan
Yes, hi.
Good evening. Congrats on the quarter. I just wanted your thoughts on, one, the Financial Services space. You did mention that you saw
growth from mortgages, cards, payments and obviously capital markets. When you think of the sustainability of this recovery, how should
we think about it, because mortgages, for it to continue to give you a delta would require rates to come down meaningfully? And from a
cards perspective, it looks like delinquencies in the U.S. are rising. So it is like a mixed data point that we see on the outside, but
just wanted your thoughts on how are you thinking about the sustainability of the recovery on the Financial Services space? And then I
had one more quick question?
Jayesh
Sanghrajka
So, Nitin,
what we are seeing right now is early signs, as I said, of recovery. Of course, it is early signs, so we do not know how sustainable at
this point in time it is going to remain, but the fact that we saw volume growth after many quarters, we saw strong growth in our Financial
Services after again six-odd quarters. So I think those are the positives that we are taking. We are seeing large deals, both the ones
that we have signed and the ones there in the pipeline. So all of that put together gives us a little bit of confidence on that. But yes,
we have to see more data points to see how the year progress.
Nitin
Padmanabhan
So one of
your smaller peers characterized it as Financial Services who have sort of stalled multiple projects in the past and having not spent
for almost six quarters having to make those spend because that is causing problems and thereby that is seeing a pickup with short-cycle
projects on those deals. Would you characterize it similarly? Are you seeing something similar?
Jayesh
Sanghrajka
I would
not say that, Nitin, to be very honest. We are seeing this not specific to one-off clients. It could be limited to one-off clients for
that player, I cannot comment on that, but we are not seeing it concentrated on one client, etc.
Nitin
Padmanabhan
All right.
And lastly on the guidance, I think if we include the acquisition and normalize the earlier guidance for the acquisition, I think the
earlier guidance would have been in the 2% to 4% range. Now it looks like they have narrowed it to 3% to 4%, including the acquisition
on both cases despite the strong beat in the current quarter. So, is it just that you are being very watchful and careful about it or
is there something more to it that you specifically worry about?
Jayesh
Sanghrajka
So, Nitin,
there we do not really break up the guidance into what is organic and what is for a specific acquisition that we have done. Having said
that, if you look at our filings, the in-tech revenue for last year was €170 mn and we have just closed it. So we will only get part
of that revenue. So you can do a back of the envelope calculation and the rest of it is going to be all the factors that Salil talked
about, the Q1 performance including large deal wins, the volume and U.S. Financial Services while the discretionary still continues to
remain challenging.
Nitin
Padmanabhan
Perfect.
That is all from my end. Thank you and all the best.
Jayesh
Sanghrajka
Thank you.
Thank you.
Next question is from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.
Vibhor
Singhal
Hi. Good
evening. Thanks for taking my question and congrats on a very solid start to the financial year. Salil, two questions from my side. One
is we have seen that almost all verticals have done really well for us this quarter but for the Retail sector. I think Retail sector is
something which is like in the almost entire industry, of your peers also, have kind of spoken about it. What is the outlook on this sector?
I mean what do you think the clients are waiting for to restart their spends and where could those spends be coming in terms of the domains
that we are looking at? And then I have a follow-up question?
Jayesh
Sanghrajka
So, Vibhor,
There I think it is a sectoral challenge at this point in time. The whole sector is going through challenges, and it is not specific to
us. And as Salil was mentioning earlier, one of the factors could be U.S. interest rates recovering, etc., but it is hard to predict what
will lead to recovery in the sector at this point in time.
Vibhor
Singhal
I mean just
to dwell a little bit further on that, what exactly is – I mean so we know that because the macro-overhang is on most of the BFSI
companies and all. At this point of time any specific thing that you think would be a trigger apart from let us say – I mean of
course the interest rate that you mentioned that could possibly see these companies reverting their spend or difficult to call out that
again?
Jayesh
Sanghrajka
So Retail
typically has higher exposure to discretionary as well, right, and that is going to be linked to the macro environment largely, Vibhor.
So, I think that would be one of the key reasons. Otherwise outside of that we are winning deals. If you look at this quarter also, we
have won eight large deals in Retail as well, but the discretionary spending has to come back.
Vibhor
Singhal
Got it.
My second question is I think at the end of the last quarter, we had mentioned that we are expecting the first half to be better than
the second half. Any change in that outlook given the deal win in this quarter has been quite strong? So if those were to slightly ramp
up in the second half, would it be correct to say that maybe we can expect second half to be slightly better than what we were expecting
it three months ago?
Jayesh
Sanghrajka
So, Vibhor,
two parts there. We still continue to believe our first half is going to be better than the second half. And Q1 is just a testimony of
that. From that perspective, we have delivered from there. Of course, the fact that we have increased guidance is also a proof that we
are seeing the three quarters better than what we envisaged earlier.
Vibhor
Singhal
Got it. Great. Thank you
so much for taking my questions and wish you all the best.
Jayesh
Sanghrajka
Thank you, Vibhor.
Thank you.
Next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
.
Gaurav
Rateria
Salil, the
first question is for you. On revenue, it looks like it has surprised you positively which is why you have raised the guidance. So, is
it led by the ramp-up on the deals happening faster than you expected? Is it led by leakage in the discretionary improving compared to
the last few quarters that you have seen?
Salil
Parekh
So, the
way this quarter has gone, what we have seen is the volumes have been strong. We have then seen that change in the Financial Services
in the U.S. which has given us more positive outcome for the quarter. Then some of the work that we are doing in terms of working with
our clients on value and pricing has also translated overall into the mix for our revenue. And then the way we saw the outlook, as we
did some of the large deals in this quarter which was a good outcome, and that gives us a little bit more visibility into the year. So
all of those things led us to look at this as being a stronger outcome.
Gaurav
Rateria
Got it.
Any reason to believe that this momentum could decelerate in the near term, any data point to suggest that or as of now you would expect
the momentum to continue from a near-term perspective?
Salil
Parekh
So, what
we have done is we have taken what we have seen in this quarter across the different industries and service offerings and then put in,
as Jayesh shared, what is more typical which is our second half is usually lower than our first half. And with that we have created the
outlook for the year, but we did not take into account any other trigger beyond what I just shared.
Gaurav Rateria
Thank you.
Last question for Jayesh. What would be the incremental levers for margins from here on, utilization is near peak, subcon has already
stabilized. Just trying to understand what could be the additional levers over the coming quarters? Thank you.
Jayesh
Sanghrajka
Gaurav,
if you look across all the pillars of Maximus, there are multiple of them firing. Value-based selling we have seen -- as we talked earlier,
we have seen improvement in realization. So that is one lever we do have, we continue to have. We did talk about hiring some freshers
as we go through the year so that would help in getting some better role ratios or better role mixes, etc., nearshoring, lean automation.
So there are multiple levers we still have to improve or offset the headwinds. The headwinds that we see as today, as I said earlier,
again, is comp -- which decision we will take as we progress through the year and the ramp up of the deals won towards the end of last
year as well as this quarter.
Gaurav
Rateria
Thank you
very much.
Thank you.
Next question is from the line of Bryan Bergin from TD Cowen. Please go ahead.
Bryan
Bergin
Hi. Good
evening. Thank you. First question I had is on Generative AI. Can you provide some detail on how Gen AI may be impacting your delivery
productivity and whether it may be changing any nature of the contracting conversations with clients yet?
Salil
Parekh
Thanks for
the question. On delivery and Generative AI, so what we have done, we have taken all of our service lines and start to put in place the
impact of Generative AI and broadly AI into this. And that change is ongoing. A lot of it has happened. Where we are seeing some of the
benefits on delivery relate to areas, for example, software development or process optimization. There is also a large benefit on productivity
for more customer service type of areas that we have already demonstrated through. We do not have a lot of footprint on that within our
current mix, but we know for new work, that is something that is being discussed with clients.
In each
of these for the contracting, the way our clients are looking at it within their own enterprise on their own data set, when there is a
client where we see and where they have, let us say, for software development, a single uniform approach across the whole company, which
is not that frequent because of acquisitions and different decisions in different divisions and department, then the range of benefits
is potentially higher.
And the
contracting discussions are around what of those benefits will accrue with the client. So a lot of these discussions are in that spirit.
There is some benefits that accrue to us and some to the client. But there are very few clients within their own data sets, which have
large consistent tech landscape, which can give the full benefit of Generative AI right away.
Many clients
also need that data infrastructure to be put in place where sometimes that is not in place today between structured and unstructured data.
So, the work actually starts with building a data program when they are able to spend that on a data program and then to have the cloud
capability in place so that part of the data, part of the apps is on the cloud for the client.
So the discussion
is typically on here the roadmap for Generative AI in an enterprise, given the landscape of tech. And here are the first steps, data and
cloud. And then here is something that can actually deliver impact today, which could be more, let us say, a smaller area of the company.
But these are all discussions which are done which eventually relate to how contracting is done.
Bryan
Bergin
Okay. That
is helpful. Thank for the color. My follow-up's a clarification just on the 1Q onetime item. I think you cited 40 bps quarter-over-quarter
op margin benefit and a similar revenue impact. Was that expected in your prior guidance? Or was that a surprise or a new item that was
not expected before on the plan?
Jayesh
Sanghrajka
That was
not expected on prior guidance. That was a new item.
Bryan
Bergin
All right.
Thank you.
Thank you.
Next question is from the line of James Friedman from Susquehanna International. Please go ahead.
James
Friedman
Hi good
evening. Let me echo the congratulations. Salil, in terms of banking, is the improvement contemplated to continue?
Salil
Parekh
In terms
of what, sorry?
James sorry,
a little louder, please?
James
Friedman
I am sorry.
In terms of the banking vertical, the BFSI vertical, is the growth contemplated to continue?
Salil
Parekh
So, what
we see today is this change in the U.S. Financial Services. The way we have constructed our outlook is we are assuming that that will
be the way it will progress. So we have not assumed that it will change. We have not also assumed that it will become much larger.
We have
also not assumed that this will move to some other geography in Financial Services. So we do not know, but that is what the assumption
is into our guidance. All the client discussions seem to indicate that U.S. Financial Services, we will have this sort of a traction,
but that is the way we built our outlook.
James
Friedman
Got it.
Thank you. And then in terms of Europe, it has been an important source of growth for the company this cycle. Could you unpack some of
the trends that you are seeing in Europe?
Jayesh
Sanghrajka
On Europe,
so what we are seeing is different things in different places. So for example, in the Nordic countries, we have had good traction over
the last few quarters and even a little bit before in how we have engaged with clients. And we have seen some good expansion of our large
deal programs.
We have
seen some of that in Continental Europe broadly. If you look at some of the large deals across Telco, we have seen that a different type
of a positive traction in Germany where we are seeing some of our local Europe competitors are having more constraints and where we are
benefiting from those constraints as we are expanding. So it is different in different geographies and our focus or even industry, our
focus has been to be a little bit more fine tuned into that market and then try to get the benefit of it.
James
Friedman
Got it.
Thank you Salil. I will just get back into the queue.
Thank you.
Next question is from the line of Sumeet Jain from CLSA India. Please go ahead.
Sumeet
Jain
Hi, thanks
for the opportunity. So firstly, I wanted to check in your previous guidance of 1% to 3% you gave in April, was in-tech acquisition part
of the guidance?
Jayesh
Sanghrajka
So Sumeet,
this is Jayesh here. We had clearly called out at that point in time that in-tech acquisition is not part of it because it was pending
approval from various regulatory authorities.
Sumeet
Jain
Right. So
maybe in-tech acquisition now being closed and the 50-basis point impact on revenue in India business, can one assume these are the two
primary factors for your revision in the guidance?
Jayesh
Sanghrajka
Not necessarily.
Again, as I said we do not break out our guidance between the in-tech and non-in-tech from that perspective. But if you look at the numbers
that we printed, when we announced the acquisition of in-tech, revenue was around €170 mn.
And it is
only going to be part of the year considering we just concluded or closed the transaction. And there are other factors, our Q1 performance,
volume, Financial Services growth, offset by the continuing softness in the discretionary part of the business.
Sumeet
Jain
Got it.
That is helpful. And secondly, I wanted to check your cost line item, the third-party items you bought for service delivery is significantly
down this quarter, almost 1 percentage point of your revenue and are also down on an absolute level. So can you just give us a sense as
to from the book keeping perspective, how to look at this line expense item going forward?
Jayesh
Sanghrajka
So there
Sumeet, as we have said earlier as well, the third-party hardware/software cost is an integral part of many of the large deals where we
take over turnkey projects from the clients, including technology landscape out there. And that is, therefore, dependent on the kind of
deals and how the ramp up or ramp down of deals happen across the quarter. So, it is going to be, to that extent, dependent on which deals
and how it ramps up and down.
Sumeet
Jain
Got it.
And lastly just on the India business, can you give us a sense what kind of project it was because it is a pretty sharp jump we have seen
this quarter. So any large deal ramp-up we are seeing there or some government contract, what exactly the nature of this onetime impact?
Jayesh
Sanghrajka
So Sumeet
there first of all, the India business is relatively much smaller. So anything that happens in that business shows up in percentage, comes
much larger. But having said that, it was a onetime impact on one of our India clients and it is one-off. So, I think we should just take
it as one-off.
Sumeet
Jain
Got it.
Thanks for the opportunity and all the best.
Thank you.
Next question is from the line of Kawaljeet Saluja from Kotak Securities. Please go ahead.
Kawaljeet
Saluja
Hi,
thank you everyone. Great to see well-rounded performance congratulations. Just a couple of questions. First is for Jayesh. That
40 bps recovery that you see, does it show up in either ECL or provision for post-sales client support? It is just basically a direct
flow-through from revenue?
Jayesh
Sanghrajka
It is 50
bps on revenue, Kawal, which is impacting 40 bps on margins.
Kawaljeet
Saluja
And basically,
does it time with provision for post-sales client support? That something which is separate?
Jayesh
Sanghrajka
No, it is
separate.
Kawaljeet
Saluja
Yes. Second
thing is wage revision. I guess the cycle of wage revision was changed last year. Do we get back into wage revision cycle, which is a
lot more normalized, which is, let us say, starting second quarter or is that something on which you have not taken a call yet?
Jayesh
Sanghrajka
So if you
recall, Kawal, last year, we did our wage revisions effective November. So at this point in time, we have not really decided. We are evaluating,
considering all the factors that we always consider including the inflation, including when was the last wage revision taken, the environment,
the macro environment as well as the peer practice.
And we will
take a call considering all of these factors. Having said that, as I called out in our margin walk also, we have increased our variable
pay during the quarter versus last year as well as last quarter.
Kawaljeet
Saluja
That is
very helpful. A final question is, Jayesh, for you and Salil. Both of you have articulated the fact that you want the profitability to
improve in the medium term. And then there are a number of structural levers that will be utilized to drive that expansion. What kind
of an environment and what kind of levers does one need to see to gain that directional comfort of profitability improvement from here
on as such?
Jayesh
Sanghrajka
So Kawal,
if you look at our margin walks across the last three, four quarters since we launched the Project Maximus, you would see consistently
the contribution from the Project Maximus across various pillars from L&A, Lean and Automation, from value-based selling, on the pyramid,
etc. things like that.
So you have
seen that, and our endeavor is to continuously focus on all of that. At this point in time, they are offsetting the headwinds to a large
extent. The endeavor is to more than offset the headwinds in the mid-term.
Kawaljeet
Saluja
Okay. Thanks.
Thank you.
Next question is from the line of Jonathan Lee from Guggenheim Securities. Please go ahead.
Jonathan
Lee
Great evening,
and thanks for taking our questions. A lot of moving parts here...
Jonathan,
sorry to interrupt you. May I request you to speak a little louder, please?
Jonathan
Lee
Great.
A lot of moving parts here on the margin side. Can you remind us how we should be thinking about seasonality through the year,
especially as you think about the impact from Project Maximus and large deal ramps?
Jayesh
Sanghrajka
So, Jonathan,
on margin one of the headwinds would be comp decision as and when we take. There are seasonality in our business model, which is furloughs
that impact us in Q3 and Q4. That also impacts both pricing to some extent and margin, therefore. But those are the large seasonality
that we have in our model. Outside of that, our margins are going to be dependent on our acceleration on Project Maximus as well as the
revenue and volume growth, which helps us flattening our pyramid and therefore, benefit from the pyramid.
Jonathan
Lee
I appreciate
that color. And second, can you help us think through what is contemplated in your outlook, both at the low and at the high end as it
relates to vertical performance based on expected large deal ramps or what is in your pipeline?
Sandeep
Mahindroo
Jonathan,
sorry, your question did not come in quite as clearly. Would you repeat that, please?
Jonathan
Lee
Can you
help us think through what is contemplated in your outlook as it relates to vertical performance based on expected large deal ramps and
what is in your pipeline, both at the low end and at the high end of the range?
Jayesh
Sanghrajka
So there,
Jonathan, it is very difficult to call out which vertical performance will end up to low end and high end of our range. I think we have
done various models internally to get to the margin band. Some of them get us to the lower end of the band, and some of the assumptions
will get us to the higher end of the band. I do not think there is any secular segment that is going to drive either way.
Jonathan
Lee
Appreciate
the color. Thank you.
Thank you.
Next question is from the line of Girish Pai from BOB Capital Markets. Please go ahead.
Girish
Pai
Thanks for
the opportunity. The 3% to 4% guidance, if I do my math, comes to about 1% to 1.5% CQGR from here on. It seems way too conservative because
that also includes the in-tech acquisition. So, are you assuming that the 2H FY'25 is going to be pretty bad?
Jayesh
Sanghrajka
So, Girish,
there, let me give a little more color on the math. If you look at the first quarter, our YoY growth has been 2.5%. And 50 bps, as I said,
of that is one-off. So that is the first point. We have always maintained that our H1 is going to be better than the H2 and that the guidance
bakes in on that. And then there is in-tech. So all of that put together makes up for a guidance of 3% to 4%.
Girish
Pai
The next
question is on U.S. Financial Services. Do you think this is more Infosys-specific situation? Do you think this is much more broad-based
that the other vendors who have U.S. Financial Services exposure would also be doing well? This is something very specific to you?
Salil
Parekh
So, this
is Salil. So difficult for us to say like for the other companies. We can see that some of that benefit on Financial Services, in cards,
in payments. We see some of the benefits which came through with some of our clients. I am not able to tell if it is just Infosys or not.
We do feel we have a very strong set of capabilities from digital, cloud, Generative AI, cost and efficiency. So, we do see much more
connect with clients, but it is difficult to say for the others.
Girish
Pai
If I may
squeeze in one last question. Salil, you mentioned that interest rates are one factor which would probably be driving demand. So, are
the customers looking at the start of a cutting cycle? Are they looking at a certain level of Fed funds rate before they kind of start
spending in a much bigger fashion?
Salil
Parekh
So there,
I think my point in the prior comment was more on what is the macro environment. So first, we do not know if that is a trigger or is not
a trigger. We are typically seeing the large digital program. The last program even now with Generative AI, clients are still not ready
to launch on them. So, the more specific point you make, difficult for us to take a view on that.
Girish
Pai
Okay. Thank
you very much.
Thank you
very much. Ladies and gentlemen, we will take that as the last question. I will now hand the conference over to the management for closing
comments.
Salil
Parekh
So thank
you, everyone, for joining us. It is really wonderful to get all the questions. We are delighted with the strong first quarter growth,
margin, cash, large deals, volume. So very good to see that outcome for our business. We have a good outlook. So, the change in guidance
gives a sense of what we see in the outlook, 3% to 4% growth. We hold the margin 20% to 22%. Good to see Financial Services in the U.S.
have that change.
We feel
extremely strong in what we are building in Generative AI. And we can see the traction to that in the projects and programs we are doing.
And we believe we are well positioned really as a company, where we are benefiting from a variety of areas, whether it is in digital,
whether it is in cloud, whether it is in technology transformation or cost efficiency.
All of these
are something that we can support our clients with, and we remain well positioned to do that through this year and into the future. So,
thank you again for joining us and catch up at the next quarter call.
Thank you
very much. Ladies and gentlemen, on behalf of Infosys, that concludes this conference. Thank you for joining us and you may now disconnect
your lines. Thank you.
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 ended June 30,
2024, (the “Statement”) being submitted by the Company pursuant to the requirements of Regulation 33 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, as amended (the “Listing Regulations”).
In our opinion and to the best of our
information and according to the explanations given to us, the Statement:
| i. | includes
the results of the subsidiaries as given in the Annexure to this report; |
| ii. | is presented
in accordance with the requirements of Regulation 33 of the Listing Regulations; and |
| iii. | gives a
true and fair view in conformity with the recognition and measurement principles laid down in the Indian Accounting Standard 34 “Interim
Financial Reporting” (“Ind AS 34”) prescribed under section 133 of the Companies Act, 2013 (the “Act”) read
with relevant rules issued thereunder and other accounting principles generally accepted in India of the consolidated net profit and consolidated
total comprehensive income and other financial information of the Group for the quarter ended June 30, 2024. |
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 includes Consolidated
financial results is the responsibility of the Company’s Board of Directors and has been approved by them for the issuance. The
Statement has been compiled from the related audited interim condensed consolidated financial statements as at and for the quarter ended
June 30, 2024. This responsibility includes 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/Trustees of the entities included in the Group are responsible for maintenance
of the adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing
and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates
that are reasonable and prudent; and the design, implementation and maintenance of adequate internal financial controls, that were operating
effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the
respective financial results that give a true and fair view and are free from material misstatement, whether due to fraud or error, which
have been used for the purpose of preparation of the consolidated financial results by the Directors of the Company, as aforesaid.
In preparing the consolidated financial
results, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing the ability of
the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities or to cease
operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees
of the entities included in the Group are responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities
for Audit of the Consolidated Financial Results
Our objectives are to obtain reasonable
assurance about whether the consolidated financial results as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from
fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial results.
As part of an audit in accordance with
SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify
and assess the risks of material misstatement of the consolidated financial results, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. |
| · |
Obtain an understanding of internal
financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of such controls. |
| · | Evaluate
the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
| · |
Evaluate the appropriateness and reasonableness
of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing Regulations. |
| · |
Conclude on the appropriateness of the
Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If
we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures
in the consolidated financial results or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern. |
| · |
Evaluate the overall presentation, structure
and content of the consolidated financial results, including the disclosures, and whether the consolidated financial results represent
the underlying transactions and events in a manner that achieves fair presentation. |
| · |
Perform procedures in accordance with
the circular issued by the SEBI under Regulation 33(8) of the Listing Regulations to the extent applicable. |
| · | Obtain
sufficient appropriate audit evidence regarding the Financial Information of the entities within the Group to express an opinion on the
consolidated financial results. We are responsible for the direction, supervision and performance of the audit of financial information
of such entities included in the consolidated financial results of which we are the independent auditors. |
Materiality is the magnitude of misstatements
in the consolidated financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably
knowledgeable user of the consolidated financial results may be influenced. We consider quantitative materiality and qualitative factors
in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified
misstatements in the consolidated financial results.
We communicate with those charged with
governance of the Company and such other entities included in the consolidated financial results of which we are the independent auditors
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance
with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
| |
For DELOITTE HASKINS & SELLS LLP |
| |
Chartered Accountants |
| |
(Firm’s Registration No. 117366W/W-100018)
|
| |
Vikas Bagaria |
| |
Partner |
| Place: Bengaluru |
(Membership No.060408) |
| Date: July 18, 2024 |
UDIN: 24060408BKFSMC4244 |
Annexure to Auditor’s Report
List of Entities:
| 1. | Infosys
Technologies (China) Co. Limited |
| 2. | Infosys
Technologies S. de R. L. de C. V. |
| 3. | Infosys
Technologies (Sweden) AB |
| 4. | Infosys
Technologies (Shanghai) Company Limited |
| 5. | Infosys
Nova Holdings LLC. |
| 6. | EdgeVerve
Systems Limited |
| 8. | Skava Systems
Private Limited (under liquidation) |
| 10. | Infosys
Arabia Limited (under liquidation) |
| 11. | Infosys
Consulting Ltda. |
| 12. | Infosys
Luxembourg S.a.r.l |
| 13. | Infosys
Americas Inc. (liquidated effective July 14, 2023) |
| 14. | Infosys
Public Services, Inc. USA |
| 16. | Infosys
(Czech Republic) Limited s.r.o. |
| 17. | Infosys
Poland Sp z.o.o |
| 18. | Infosys
McCamish Systems LLC |
| 19. | Portland
Group Pty Ltd |
| 20. | Infosys
BPO Americas LLC. |
| 21. | Infosys
Consulting Holding AG |
| 22. | Infosys
Management Consulting Pty Limited |
| 24. | Infosys
Consulting GmbH |
| 25. | Infosys
Consulting S.R.L (Romania) |
| 26. | Infosys
Consulting SAS |
| 27. | Infy Consulting Company Ltd. |
| 29. | Infosys
Consulting S.R.L (Argentina) |
| 30. | Infosys
Consulting (Belgium) NV |
| 32. | Infosys
Financial Services GmbH |
| 34. | Brilliant
Basics Holdings Limited (under liquidation) |
| 35. | Brilliant
Basics Limited (under liquidation) |
| 36. | Infosys Singapore Pte. Ltd. |
| 37. | Infosys
Middle East FZ LLC |
| 43. | Infosys
Compaz Pte. Ltd. |
| 44. | Infosys
South Africa (Pty) Ltd |
| 51. | Stater
Participations B.V. (wholly owned subsidiary of Stater N.V. merged with Stater N.V. with effect from November 24, 2023) |
| 52. | Stater
Belgium N.V./S.A. (formerly a wholly owned subsidiary of Stater Participations B.V., became the wholly owned subsidiary of Stater N.V.
with effect from November 24, 2023) |
| 53. | Outbox
systems Inc. dba Simplus (US) |
| 55. | Simplus
Australia Pty Ltd |
| 56. | Simplus
Philippines, Inc. |
| 57. | Infosys
Fluido UK, Ltd. |
| 58. | Infosys
Fluido Ireland, Ltd. |
| 59. | Infosys
Limited Bulgaria EOOD |
| 60. | Infosys
BPM UK Limited |
| 62. | Kaleidoscope
Animations, Inc. |
| 63. | Kaleidoscope
Prototyping LLC (liquidated effective November 1, 2023) |
| 65. | GuideVision
Deutschland GmbH |
| 67. | GuideVision
Magyarorszag Kft |
| 68. | GuideVision
Polska Sp. z.o.o |
| 69. | Infosys
Business Solutions LLC |
| 71. | GuideVision
UK Ltd (under liquidation) |
| 72. | Infosys
Turkey Bilgi Teknolojileri Limited Sirketi |
| 73. | Infosys
Germany Holding Gmbh |
| 74. | Infosys
Automotive and Mobility GmbH & Co. KG |
| 77. | Infosys (Malaysia) SDN. BHD.
|
| 78. | oddity space GmbH, merged into
WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 79. | oddity jungle GmbH merged into
WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 80. | oddity waves GmbH merged into
WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 81. | oddity group Services GmbH merged
into WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 82. | oddity code GmbH merged into
WongDoody GmbH (formerly known as oddity GmbH) with effect from September 29, 2023 |
| 83. | WongDoody d.o.o. (formerly known
as oddity code d.o.o) which was formerly a subsidiary of oddity Code GmbH has become a subsidiary of Wongdoody Gmbh (formerly known as
oddity GmbH) with effect from September 29, 2023 |
| 84. | WongDoody GmbH (formerly known
as Oddity GmbH) |
| 85. | WongDoody (Shanghai) Co. Limited
(formerly known as oddity (Shanghai) Co. Ltd.) |
| 86. | WongDoody Limited (Taipei) (formerly
known as oddity Limited (Taipei) |
| 87. | Infosys Public Services Canada
Inc. |
| 90. | BASE life science GmbH |
| 91. | BASE life science Ltd. |
| 92. | BASE life science S.A.S |
| 93. | BASE life science S.r.l. |
| 95. | BASE life science Inc. |
| 96. | BASE life science S.L. |
| 99. | Infosys BPM Canada Inc. (Wholly-owned
subsidiary of Infosys BPM Limited) which was incorporated on August 11, 2023 has been dissolved on March 15, 2024 |
| 100. | Danske IT and Support Services
India Private Limited acquired by Infosys Limited on September 1, 2023 (Renamed as Idunn
Information Technology Private Limited with effect from April 1, 2024) |
| 101. | InSemi Technology Services Pvt.
Ltd. acquired by Infosys limited on May 10, 2024 |
| 102. | Elbrus Labs Private Limited (a
wholly owned subsidiary of InSemi Technology Services Pvt. Ltd.) acquired by Infosys limited on May 10, 2024 |
| 103. | Infosys Employees Welfare Trust |
| 104. | Infosys Employee Benefits Trust |
| 105. | Infosys Science Foundation |
| 106. | 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 ended June 30, 2024, (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 ended June 30, 2024. |
Basis for Opinion
We conducted our audit of the Statement in accordance
with the Standards on Auditing (“SA”s) specified under Section 143(10) of the Act. Our responsibilities under those Standards
are further described in Auditor’s Responsibilities for the Audit of the Standalone Financial Results section of our report. We
are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (“ICAI”)
together with the ethical requirements that are relevant to our audit of the Standalone Financial Results for the quarter ended June 30,
2024 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 includes the Standalone financial
results is the responsibility of the Company’s Board of Directors, and has been approved by them for the issuance. The Statement
has been compiled from the related audited interim condensed standalone financial statements as at and for the quarter ended June 30,
2024. This responsibility includes the preparation and presentation of the standalone financial results for the quarter ended June 30,
2024 that give a true and fair view of the net profit and other comprehensive income and other financial information in accordance with
the recognition and measurement principles laid down in Ind AS 34, prescribed under Section 133 of the Act, read with relevant rules issued
thereunder and other accounting principles generally accepted in India and in compliance with Regulation 33 of the Listing Regulations.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding
the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and the design, implementation and maintenance of adequate internal
financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the
preparation and presentation of the standalone financial results that give a true and fair view and is free from material misstatement,
whether due to fraud or error.
In preparing the standalone financial results,
the Board of Directors is responsible for assessing the Company’s ability, to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the Board of Directors either intends to liquidate
the Company or to cease operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for
overseeing the financial reporting process of the Company.
Auditor’s Responsibilities for the
Audit of the Standalone Financial Results
Our objectives are to obtain reasonable assurance
about whether the standalone financial results as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these standalone financial results.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| • | Identify and assess the risks
of material misstatement of the standalone financial results, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting
a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control. |
| • | Obtain an understanding of internal
financial control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of such controls. |
| • | Evaluate the appropriateness
of accounting policies used and the reasonableness of accounting estimates made by the Board of Directors. |
| • | Evaluate the appropriateness
and reasonableness of disclosures made by the Board of Directors in terms of the requirements specified under Regulation 33 of the Listing
Regulations. |
| • | Conclude on the appropriateness
of the Board of Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Company to continue as a going
concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related
disclosures in the Statement or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence
obtained up to the date of our auditor’s report. However, future events or conditions may cause the Company to cease to continue
as a going concern. |
| • | Evaluate the overall presentation,
structure and content of the standalone financial results, including the disclosures, and whether the standalone financial results represent
the underlying transactions and events in a manner that achieves fair presentation. |
| • | Obtain sufficient appropriate
audit evidence regarding the standalone financial results of the Company to express an opinion on the standalone financial results. |
Materiality is the magnitude of misstatements in
the standalone financial results that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable
user of the standalone financial results may be influenced. We consider quantitative materiality and qualitative factors in (i) planning
the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements
in the standalone financial results.
We communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
| |
For DELOITTE HASKINS & SELLS LLP |
| |
Chartered Accountants |
| |
Firm’s Registration No. 117366W/W-100018)
|
| |
Vikas Bagaria |
| |
Partner |
| Place: Bengaluru |
(Membership No.060408) |
| Date: July 18, 2024 |
UDIN: 24060408BKFSME9083 |
 |
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 ended June 30, 2024 prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore, except per equity share
data)
| Particulars |
Quarter
ended
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| |
Audited |
Audited |
Audited |
Audited |
| Revenue from operations |
39,315 |
37,923 |
37,933 |
153,670 |
| Other income, net |
838 |
2,729 |
561 |
4,711 |
| Total Income |
40,153 |
40,652 |
38,494 |
158,381 |
| Expenses |
|
|
|
|
| Employee benefit expenses |
20,934 |
20,393 |
20,781 |
82,620 |
| Cost of technical sub-contractors |
3,169 |
2,967 |
3,124 |
12,232 |
| Travel expenses |
478 |
471 |
462 |
1,759 |
| Cost of software packages and others |
3,455 |
3,687 |
2,720 |
13,515 |
| Communication expenses |
147 |
147 |
182 |
677 |
| Consultancy and professional charges |
445 |
489 |
346 |
1,726 |
| Depreciation and amortisation expenses |
1,149 |
1,163 |
1,173 |
4,678 |
| Finance cost |
105 |
110 |
90 |
470 |
| Other expenses |
1,250 |
985 |
1,254 |
4,716 |
| Total expenses |
31,132 |
30,412 |
30,132 |
122,393 |
| Profit before tax |
9,021 |
10,240 |
8,362 |
35,988 |
| Tax expense: |
|
|
|
|
| Current tax |
2,998 |
1,173 |
2,307 |
8,390 |
| Deferred tax |
(351) |
1,092 |
110 |
1,350 |
| Profit for the period |
6,374 |
7,975 |
5,945 |
26,248 |
| |
|
|
|
|
| Other comprehensive income |
|
|
|
|
| |
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
20 |
26 |
87 |
120 |
| Equity instruments through other comprehensive income, net |
14 |
(12) |
1 |
19 |
| |
|
|
|
|
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedges, net |
(3) |
28 |
6 |
11 |
| Exchange differences on translation of foreign operations |
(104) |
(231) |
15 |
226 |
| Fair value changes on investments, net |
40 |
37 |
75 |
144 |
| Total other comprehensive income/(loss), net of tax |
(33) |
(152) |
184 |
520 |
| |
|
|
|
|
| Total comprehensive income for the period |
6,341 |
7,823 |
6,129 |
26,768 |
| |
|
|
|
|
| Profit attributable to: |
|
|
|
|
| Owners of the company |
6,368 |
7,969 |
5,945 |
26,233 |
| Non-controlling interests |
6 |
6 |
- |
15 |
| |
6,374 |
7,975 |
5,945 |
26,248 |
| |
|
|
|
|
| Total comprehensive income attributable to: |
|
|
|
|
| Owners of the company |
6,337 |
7,821 |
6,132 |
26,754 |
| Non-controlling interests |
4 |
2 |
(3) |
14 |
| |
6,341 |
7,823 |
6,129 |
26,768 |
| |
|
|
|
|
| Paid up share capital (par value 5/- each, fully paid) |
2,072 |
2,071 |
2,070 |
2,071 |
| Other equity *# |
86,045 |
86,045 |
73,338 |
86,045 |
| |
|
|
|
|
| Earnings per equity share (par value 5/- each)** |
|
|
|
|
| Basic (in per share) |
15.38 |
19.25 |
14.37 |
63.39 |
| Diluted (in per share) |
15.35 |
19.22 |
14.35 |
63.29 |
| * | | Balances for the quarter ended June 30, 2024 and June 30, 2023 represent balances as per
the audited Balance Sheet for the year ended March 31, 2024 and March 31, 2023, respectively as required by SEBI (Listing and Other Disclosure
Requirements) Regulations, 2015 |
| ** | | EPS is not annualized for the quarter ended June 30, 2024, quarter ended March 31, 2024
and quarter ended June 30, 2023 |
| # | | Excludes non-controlling interest |
1. Notes pertaining to the current quarter
a) The audited interim condensed consolidated financial
statements for the quarter ended June 30, 2024 have been taken on record by the Board of Directors at its meeting held on July 18, 2024.
The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented
above is extracted from the audited interim condensed consolidated financial statements. Those 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) Update on employee stock grants
The Board, on July 18, 2024, based on the recommendations of the
Nomination and Remuneration Committee, approved the grant of 32,850 RSUs to six eligible employees under the 2015 plan w.e.f August 1,
2024. These RSUs will vest equally over a period of three to four years.
c) Update on acquisitions
i) InSemi Technology Services Private Limited
On May 10, 2024, Infosys Ltd acquired 100% voting interests in
InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India for a consideration including
earn-outs, and management incentive and retention bonuses totalling up to 280 crore.
ii) in-tech Holding GmbH
On April 18, 2024, Infosys Germany GmBH wholly owned step down
subsidiary of Infosys Limited entered into a definitive agreement to acquire 100% of the equity share capital in in-tech Holding GmbH,
leading provider of Engineering R&D services headquartered in Germany, for a consideration including earn-outs amounting up to EUR
450 million (approximately 4,045 crore), subject to customary closing adjustments. Subsequently as on the date of these results,
Infosys Germany GmBH has completed its acquisition of 100% of the equity share capital of in-tech Holding GmbH.
2. Information on dividends for the quarter ended June 30,
2024
For financial year 2024, the Board recommended a final dividend
of 20/- (par value of 5/- each) per equity share and additionally a special dividend of 8/- (par value of 5/-
each) per equity share. The same was approved by the shareholders in the Annual General Meeting (AGM) of the Company held on June 26,
2024 and paid on July 1, 2024.
(in )
| Particulars |
Quarter
ended
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| Dividend per share (par value 5/– each) |
|
|
|
|
| Interim dividend |
– |
– |
– |
18.00 |
| Final dividend |
– |
20.00 |
– |
20.00 |
| Special dividend |
– |
8.00 |
– |
8.00 |
3. Segment reporting (Consolidated - Audited)
(in crore)
| Particulars |
Quarter
ended
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| Revenue by business segment |
|
|
|
|
| Financial Services (1) |
10,816 |
10,010 |
10,661 |
42,158 |
| Retail (2) |
5,428 |
5,429 |
5,513 |
22,504 |
| Communication (3) |
4,744 |
4,666 |
4,441 |
17,991 |
| Energy, Utilities, Resources and Services |
5,220 |
5,068 |
4,889 |
20,035 |
| Manufacturing |
5,778 |
5,589 |
5,350 |
22,298 |
| Hi-Tech |
3,147 |
3,316 |
3,056 |
12,411 |
| Life Sciences (4) |
2,866 |
2,762 |
2,749 |
11,515 |
| All other segments (5) |
1,316 |
1,083 |
1,274 |
4,758 |
| Total |
39,315 |
37,923 |
37,933 |
153,670 |
| Less: Inter-segment revenue |
– |
– |
– |
– |
| Net revenue from operations |
39,315 |
37,923 |
37,933 |
153,670 |
| Segment profit before tax, depreciation and non-controlling interests: |
|
|
|
|
| Financial Services (1) |
2,612 |
1,941 |
2,545 |
9,324 |
| Retail (2) |
1,751 |
1,864 |
1,629 |
6,882 |
| Communication (3) |
796 |
810 |
984 |
3,688 |
| Energy, Utilities , Resources and Services |
1,557 |
1,431 |
1,290 |
5,523 |
| Manufacturing |
1,006 |
1,081 |
972 |
4,197 |
| Hi-Tech |
814 |
803 |
802 |
3,153 |
| Life Sciences (4) |
611 |
632 |
702 |
2,898 |
| All other segments (5) |
290 |
222 |
140 |
760 |
| Total |
9,437 |
8,784 |
9,064 |
36,425 |
| Less: Other Unallocable expenditure |
1,149 |
1,163 |
1,173 |
4,678 |
| Add: Unallocable other income |
838 |
2,729 |
561 |
4,711 |
| Less: Finance cost |
105 |
110 |
90 |
470 |
| Profit before tax and non-controlling interests |
9,021 |
10,240 |
8,362 |
35,988 |
| (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 required by 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 currently 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
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| Revenue from operations |
33,283 |
32,001 |
31,811 |
128,933 |
| Profit before tax |
8,128 |
10,414 |
8,146 |
35,953 |
| Profit for the period |
5,768 |
8,480 |
5,956 |
27,234 |
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 financial statements as stated.
| |
By order of the Board
for Infosys Limited |
| |
|
| Bengaluru, India |
Salil Parekh |
| July 18, 2024 |
Chief Executive Officer and Managing Director |
The Board has also taken on record the consolidated results
of Infosys Limited and its subsidiaries for the quarter ended June 30, 2024, prepared as per International Financial Reporting Standards
(IFRS) and reported in US dollars. A summary of the financial statements is as follows:
(in US$ million, except per equity share
data)
| Particulars |
Quarter
ended
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| |
Audited |
Audited |
Audited |
Audited |
| Revenues |
4,714 |
4,564 |
4,617 |
18,562 |
| Cost of sales |
3,259 |
3,219 |
3,211 |
12,975 |
| Gross profit |
1,455 |
1,345 |
1,406 |
5,587 |
| Operating expenses |
461 |
428 |
445 |
1,753 |
| Operating profit |
994 |
917 |
961 |
3,834 |
| Other income, net |
101 |
328 |
68 |
568 |
| Finance cost |
13 |
13 |
11 |
56 |
| Profit before income taxes |
1,082 |
1,232 |
1,018 |
4,346 |
| Income tax expense |
318 |
273 |
294 |
1,177 |
| Net profit |
764 |
959 |
724 |
3,169 |
| Earnings per equity share * |
|
|
|
|
| Basic |
0.18 |
0.23 |
0.17 |
0.77 |
| Diluted |
0.18 |
0.23 |
0.17 |
0.76 |
| Total assets |
17,270 |
16,523 |
16,007 |
16,523 |
| Cash and cash equivalents and current investments |
3,022 |
3,321 |
2,176 |
3,321 |
| * | | EPS is not annualized for the quarter ended June 30, 2024, quarter ended March 31, 2024
and quarter ended June 30, 2023. |
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident review and notification process
are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which
involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking
statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding
the execution of our business strategy, increased competition for talent, our ability to attract and retain personnel, increase in wages,
investments to reskill our employees, our ability to effectively implement a hybrid working model, economic uncertainties and geo-political
situations, technological disruptions and innovations such as Generative AI, the complex and evolving regulatory landscape including immigration
regulation changes, our ESG vision, our capital allocation policy and expectations concerning our market position, future operations,
margins, profitability, liquidity, capital resources, our corporate actions including acquisitions, the findings of the review of the
extent and nature of data subject to unauthorized access and exfiltration in relation to the McCamish cybersecurity incident and reaction
to such findings, the timing of the notification process, and the amount of any additional costs, including indemnities or damages or
claims, resulting directly or indirectly from the incident. Important factors that may cause actual results or outcomes to differ from
those implied by the forward-looking statements are discussed in more detail in our US Securities and Exchange Commission filings including
our Annual Report on Form 20-F for the fiscal year ended March 31, 2024. 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 forwardlooking 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
ended June 30, 2024 prepared in compliance with the Indian Accounting Standards (Ind-AS)
(in crore, except per equity share data)
| Particulars |
Quarter
ended
June 30, |
Quarter
ended
March 31, |
Quarter
ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| |
Audited |
Audited |
Audited |
Audited |
| Revenue from operations |
33,283 |
32,001 |
31,811 |
128,933 |
| Other income, net |
721 |
3,483 |
1,001 |
7,417 |
| Total income |
34,004 |
35,484 |
32,812 |
136,350 |
| Expenses |
|
|
|
|
| Employee benefit expenses |
16,495 |
16,047 |
16,353 |
65,139 |
| Cost of technical sub-contractors |
4,831 |
4,648 |
4,676 |
18,638 |
| Travel expenses |
371 |
371 |
359 |
1,372 |
| Cost of software packages and others |
2,117 |
2,098 |
1,174 |
6,891 |
| Communication expenses |
105 |
109 |
129 |
489 |
| Consultancy and professional charges |
266 |
287 |
215 |
1,059 |
| Depreciation and amortisation expense |
698 |
722 |
746 |
2,944 |
| Finance cost |
59 |
62 |
43 |
277 |
| Other expenses |
934 |
726 |
971 |
3,588 |
| Total expenses |
25,876 |
25,070 |
24,666 |
100,397 |
| Profit before tax |
8,128 |
10,414 |
8,146 |
35,953 |
| Tax expense: |
|
|
|
|
| Current tax |
2,686 |
830 |
2,065 |
7,306 |
| Deferred tax |
(326) |
1,104 |
125 |
1,413 |
| Profit for the period |
5,768 |
8,480 |
5,956 |
27,234 |
| Other comprehensive income |
|
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
|
| Remeasurement of the net defined benefit liability / asset, net |
19 |
36 |
87 |
128 |
| Equity instruments through other comprehensive income, net |
14 |
(12) |
1 |
19 |
| |
|
|
|
|
| Items that will be reclassified subsequently to profit or loss |
|
|
|
|
| Fair value changes on derivatives designated as cash flow hedges, net |
(3) |
28 |
6 |
11 |
| Fair value changes on investments, net |
36 |
34 |
68 |
129 |
| |
|
|
|
|
| Total other comprehensive income/ (loss), net of tax |
66 |
86 |
162 |
287 |
| |
|
|
|
|
| Total comprehensive income for the period |
5,834 |
8,566 |
6,118 |
27,521 |
| |
|
|
|
|
| Paid-up share capital (par value 5/- each fully paid) |
2,076 |
2,075 |
2,075 |
2,075 |
| Other Equity* |
79,101 |
79,101 |
65,671 |
79,101 |
| Earnings per equity share ( par value 5 /- each)** |
|
|
|
|
| Basic (in per share) |
13.90 |
20.43 |
14.36 |
65.62 |
| Diluted (in per share) |
13.87 |
20.41 |
14.34 |
65.56 |
* Balances for the quarter ended June 30, 2024 and
June 30, 2023 represent balances as per the audited Balance Sheet for the year ended March 31, 2024 and March 31, 2023, respectively as
required by SEBI (Listing and Other Disclosure Requirements) Regulations, 2015
** EPS is not annualized for the quarter ended June
30, 2024, quarter ended March 31, 2024 and quarter ended June 30, 2023.
1. Notes pertaining to the current quarter
a) The audited interim condensed standalone financial
statements for the quarter ended June 30, 2024 have been taken on record by the Board of Directors at its meeting held on July 18, 2024.
The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented
above is extracted from the audited interim condensed standalone financial statements. Those 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) Update on employee stock grants
The Board, on July 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of 32,850 RSUs to six eligible employees under the 2015 plan w.e.f August
1, 2024. These RSUs will vest equally over a period of three to four years.
c) Update on acquisition
On May 10, 2024, Infosys Ltd acquired 100% voting interests
in InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India for a consideration including
earn-outs, and management incentive and retention bonuses totalling up to 280 crore.
2. Information on dividends for the quarter ended
June 30, 2024
For financial year 2024, the Board recommended a final
dividend of 20/- (par value of 5/- each) per equity share and additionally a special dividend of 8/- (par value of
5/- each) per equity share. The same was approved by the shareholders in the Annual General Meeting (AGM) of the Company held on
June 26, 2024 and paid on July 1, 2024.
(in )
| Particulars |
Quarter ended
June 30, |
Quarter ended
March 31, |
Quarter ended
June 30, |
Year ended
March 31, |
| |
2024 |
2024 |
2023 |
2024 |
| Dividend per share (par value 5/- each) |
|
|
|
|
| Interim dividend |
– |
– |
– |
18.00 |
| Final dividend |
– |
20.00 |
– |
20.00 |
| Special dividend |
– |
8.00 |
– |
8.00 |
3. Segment Reporting
The Company publishes standalone financial statements
along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment
information in the audited interim consolidated financial statements. Accordingly, the segment information is given in the audited consolidated
financial results of Infosys Limited and its subsidiaries for the quarter ended June 30, 2024.
| |
By order of the Board for Infosys Limited |
| |
|
|
Bengaluru, India
July 18, 2024 |
Salil Parekh
Chief Executive Officer and Managing Director |
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident review and notification process
are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which
involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking
statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding
the execution of our business strategy, increased competition for talent, our ability to attract and retain personnel, increase in wages,
investments to reskill our employees, our ability to effectively implement a hybrid working model, economic uncertainties and geo-political
situations, technological disruptions and innovations such as Generative AI, the complex and evolving regulatory landscape including immigration
regulation changes, our ESG vision, our capital allocation policy and expectations concerning our market position, future operations,
margins, profitability, liquidity, capital resources, our corporate actions including acquisitions, the findings of the review of the
extent and nature of data subject to unauthorized access and exfiltration in relation to the McCamish cybersecurity incident and reaction
to such findings, the timing of the notification process, and the amount of any additional costs, including indemnities or damages or
claims, resulting directly or indirectly from the incident. Important factors that may cause actual results or outcomes to differ from
those implied by the forward-looking statements are discussed in more detail in our US Securities and Exchange Commission filings including
our Annual Report on Form 20-F for the fiscal year ended March 31, 2024. 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 forwardlooking statements
that may be made from time to time by or on behalf of the Company unless it is required by law.
Extract of Consolidated Audited Financial Results of Infosys Limited and its subsidiaries for the quarter ended June 30, 2024 prepared in compliance with the Indian Accounting Standards (Ind-AS)
( in crore, except per equity share data)
| Particulars |
Quarter
ended
June 30, |
Year
ended
March 31, |
Quarter
ended
June 30, |
| |
2024 |
2024 |
2023 |
| Revenue from operations |
39,315 |
153,670 |
37,933 |
| Profit before tax |
9,021 |
35,988 |
8,362 |
| Profit for the period |
6,374 |
26,248 |
5,945 |
| Total comprehensive income for the period (comprising profit for the period after tax and other comprehensive income after tax) |
6,341 |
26,768 |
6,129 |
| |
|
|
|
| Profit attributable to: |
|
|
|
| Owners of the company |
6,368 |
26,233 |
5,945 |
| Non-controlling interests |
6 |
15 |
– |
| |
6,374 |
26,248 |
5,945 |
| |
|
|
|
| Total comprehensive income attributable to: |
|
|
|
| Owners of the company |
6,337 |
26,754 |
6,132 |
| Non-controlling interest |
4 |
14 |
(3) |
| |
6,341 |
26,768 |
6,129 |
| |
|
|
|
| Paid-up share capital (par value 5/- each fully paid) |
2,072 |
2,071 |
2,070 |
| Other equity *# |
86,045 |
86,045 |
73,338 |
| Earnings per share (par value 5/- each)** |
|
|
|
| Basic (in per share) |
15.38 |
63.39 |
14.37 |
| Diluted (in per share) |
15.35 |
63.29 |
14.35 |
| * | | Balances for the quarter ended June 30, 2024 and June 30, 2023 represent balances as per
the audited Balance Sheet for the year ended March 31, 2024 and March 31, 2023, respectively as required by SEBI (Listing and Other Disclosure
Requirements) Regulations, 2015 |
| ** | | EPS is not annualized for the quarter ended June 30, 2024 and quarter ended June 30, 2023 |
| # | | Excludes non-controlling interest |
1. Notes pertaining to the current quarter
a) The audited interim condensed consolidated financial
statements for the quarter ended June 30, 2024 have been taken on record by the Board of Directors at its meeting held on July 18, 2024.
The statutory auditors, Deloitte Haskins & Sells LLP have expressed an unmodified audit opinion. The information presented
above is extracted from the audited interim condensed consolidated financial statements. Those 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) Update on employee stock grants
The Board, on July 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved the grant of 32,850 RSUs to six eligible employees under the 2015 plan w.e.f August
1, 2024. These RSUs will vest equally over a period of three to four years.
c) Update on acquisitions
i) InSemi Technology Services Private Limited
On May 10, 2024, Infosys Ltd acquired 100% voting interests
in InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India for a consideration including
earn-outs, and management incentive and retention bonuses totalling up to 280 crore.
ii) in-tech Holding GmbH
On April 18, 2024, Infosys Germany GmBH wholly owned
step down subsidiary of Infosys Limited entered into a definitive agreement to acquire 100% of the equity share capital in in-tech Holding
GmbH, leading provider of Engineering R&D services headquartered in Germany, for a consideration including earn-outs amounting up
to EUR 450 million (approximately 4,045 crore), subject to customary closing adjustments. Subsequently as on the date of these
results, Infosys Germany GmBH has completed its acquisition of 100% of the equity share capital of in-tech Holding GmbH.
2. Information on dividends for the quarter ended
June 30, 2024
For financial year 2024, the Board recommended a final
dividend of 20/- (par value of 5/- each) per equity share and additionally a special dividend of 8/- (par value of
5/- each) per equity share. The same was approved by the shareholders in the Annual General Meeting (AGM) of the Company held on
June 26, 2024 and paid on July 1, 2024.
(in )
| Particulars |
Quarter
ended
June 30, |
Year ended
March 31, |
Quarter
ended
June 30, |
| |
2024 |
2024 |
2023 |
| Dividend per share (par value 5/- each) |
|
|
|
| Interim dividend |
– |
18.00 |
– |
| Final dividend |
– |
20.00 |
– |
| Special dividend |
– |
8.00 |
– |
3. Audited financial results of Infosys Limited (Standalone information)
(in crore)
| Particulars |
Quarter
ended
June 30, |
Year
ended
March 31, |
Quarter
ended
June 30, |
| |
2024 |
2024 |
2023 |
| Revenue from operations |
33,283 |
128,933 |
31,811 |
| Profit before tax |
8,128 |
35,953 |
8,146 |
| Profit for the period |
5,768 |
27,234 |
5,956 |
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.
| |
By order of the Board |
| |
for Infosys Limited |
| |
|
| Bengaluru, India |
Salil Parekh |
| July 18, 2024 |
Chief Executive Officer and Managing Director |
Certain statements in this release concerning our future
growth prospects, our future financial or operating performance, and the McCamish cybersecurity incident review and notification process
are forward-looking statements intended to qualify for the 'safe harbor' under the Private Securities Litigation Reform Act of 1995, which
involve a number of risks and uncertainties that could cause actual results or outcomes to differ materially from those in such forward-looking
statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding
the execution of our business strategy, increased competition for talent, our ability to attract and retain personnel, increase in wages,
investments to reskill our employees, our ability to effectively implement a hybrid working model, economic uncertainties and geo-political
situations, technological disruptions and innovations such as Generative AI, the complex and evolving regulatory landscape including immigration
regulation changes, our ESG vision, our capital allocation policy and expectations concerning our market position, future operations,
margins, profitability, liquidity, capital resources, our corporate actions including acquisitions, the findings of the review of the
extent and nature of data subject to unauthorized access and exfiltration in relation to the McCamish cybersecurity incident and reaction
to such findings, the timing of the notification process, and the amount of any additional costs, including indemnities or damages or
claims, resulting directly or indirectly from the incident. Important factors that may cause actual results or outcomes to differ from
those implied by the forward-looking statements are discussed in more detail in our US Securities and Exchange Commission filings including
our Annual Report on Form 20-F for the fiscal year ended March 31, 2024. 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 forwardlooking statements
that may be made from time to time by or on behalf of the Company unless it is required by law.
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 June 30, 2024, the Condensed
Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated
Statement of Cash Flows for the three months ended on that date, and notes to the financial statements, including a summary of material
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 June 30,
2024, its consolidated profit and its consolidated total comprehensive income, its consolidated changes in equity and its consolidated
cash flows for the three 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 (“SAs”) issued by the Institute of Chartered
Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities
for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance
with the Code of Ethics issued by the ICAI, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Interim
Condensed Consolidated Financial Statements.
Responsibilities of Management and Those Charged
with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these Interim Condensed Consolidated Financial Statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with IAS 34 as issued by the IASB. The respective Boards of Directors/Trustees
of the entities included in the Group are responsible for maintenance of the adequate accounting records for safeguarding assets of the
Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation
and presentation of the respective interim financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error which have been used for the purpose of preparation of the Interim Condensed Consolidated Financial Statements
by the Directors of the Company, as aforesaid.
In preparing the Interim Condensed Consolidated
Financial Statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing
the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities
or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees of
the entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the Interim Condensed Consolidated Financial Statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these Interim Condensed Consolidated Financial Statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the Interim Condensed Consolidated Financial
Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the Interim Condensed Consolidated Financial Statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the Interim Condensed Consolidated Financial
Statements, including the disclosures, and whether the Interim Condensed Consolidated Financial Statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within
the Group to express an opinion on the Interim Condensed Consolidated Financial Statements. We are responsible for the direction, supervision
and performance of the audit of financial statements of such entities included in the Interim Condensed Consolidated Financial Statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements in
the Interim Condensed Consolidated Financial Statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the Interim Condensed Consolidated Financial Statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the Interim Condensed Consolidated Financial Statements.
We communicate with those charged with governance
of the Company and such other entities included in the Interim Condensed Consolidated Financial Statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal financial controls that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: July 18, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Vikas Bagaria
Partner
(Membership No.060408)
UDIN: 24060408BKFSMI8567 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements
under International Financial Reporting Standards (IFRS) in US Dollars for the three months ended June 30,
2024
| Index |
| |
| Condensed Consolidated Balance Sheet |
| Condensed Consolidated Statement of Comprehensive Income |
| Condensed Consolidated Statement of Changes in Equity |
| Condensed Consolidated Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Consolidated Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Basis of consolidation |
| 1.4 Use of estimates and judgments |
| 1.5 Critical accounting estimates and judgments |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Cash and cash equivalents |
| 2.2 Earmarked bank balance for dividend |
| 2.3 Investments |
| 2.4 Financial instruments |
| 2.5 Prepayments and other assets |
| 2.6 Other liabilities |
| 2.7 Provisions and other contingencies |
| 2.8 Property, plant and equipment |
| 2.9 Leases |
| 2.10 Goodwill and Intangible assets |
| 2.11 Business combinations |
| 2.12 Employees' Stock Option Plans (ESOP) |
| 2.13 Income Taxes |
| 2.14 Basic and diluted shares used in computing earnings per equity share |
| 2.15 Related party transactions |
| 2.16 Segment reporting |
| 2.17 Revenue from Operations |
| 2.18 Unbilled Revenue |
| 2.19 Equity |
| 2.20 Break-up of expenses and other income, net |
Infosys Limited and subsidiaries
(Dollars in millions except equity share data)
| Condensed Consolidated Balance Sheet as at |
Note |
June 30, 2024 |
March 31, 2024 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
2.1 |
1,971 |
1,773 |
| Earmarked bank balance for dividend |
2.2 |
1,394 |
– |
| Current investments |
2.3 |
1,051 |
1,548 |
| Trade receivables |
|
3,709 |
3,620 |
| Unbilled revenue |
2.18 |
1,511 |
1,531 |
| Prepayments and other current assets |
2.5 |
1,509 |
1,473 |
| Income tax assets |
2.13 |
363 |
767 |
| Derivative financial instruments |
2.4 |
10 |
10 |
| Total current assets |
|
11,518 |
10,722 |
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.8 |
1,504 |
1,537 |
| Right-of-use assets |
2.9 |
781 |
786 |
| Goodwill |
2.10 |
888 |
875 |
| Intangible assets |
|
167 |
167 |
| Non-current investments |
2.3 |
1,340 |
1,404 |
| Unbilled revenue |
2.18 |
198 |
213 |
| Deferred income tax assets |
2.13 |
56 |
55 |
| Income tax assets |
2.13 |
418 |
365 |
| Other non-current assets |
2.5 |
400 |
399 |
| Total Non-current assets |
|
5,752 |
5,801 |
| Total assets |
|
17,270 |
16,523 |
| LIABILITIES AND EQUITY |
|
|
|
| Current liabilities |
|
|
|
| Trade payables |
|
443 |
474 |
| Lease liabilities |
2.9 |
262 |
235 |
| Derivative financial instruments |
2.4 |
3 |
4 |
| Current income tax liabilities |
2.13 |
539 |
430 |
| Unearned revenue |
|
834 |
880 |
| Employee benefit obligations |
|
336 |
314 |
| Provisions |
2.7 |
181 |
215 |
| Other current liabilities |
2.6 |
3,488 |
2,099 |
| Total current liabilities |
|
6,086 |
4,651 |
| Non-current liabilities |
|
|
|
| Lease liabilities |
2.9 |
740 |
767 |
| Deferred income tax liabilities |
2.13 |
177 |
216 |
| Employee benefit obligations |
|
11 |
11 |
| Other non-current liabilities |
2.6 |
253 |
273 |
| Total Non-current liabilities |
|
1,181 |
1,267 |
| Total liabilities |
|
7,267 |
5,918 |
| Equity |
|
|
|
| Share capital - 5 ($0.16) par value 4,800,000,000 (4,800,000,000) equity shares authorized, issued and outstanding 4,141,781,963 (4,139,950,635) equity shares fully paid up, net of 10,246,512 (10,916,829) treasury shares as at June 30, 2024 (March 31, 2024) |
2.19 |
325 |
325 |
| Share premium |
|
448 |
425 |
| Retained earnings |
|
11,975 |
12,557 |
| Cash flow hedge reserves |
|
1 |
1 |
| Other reserves |
|
1,581 |
1,623 |
| Capital redemption reserve |
|
24 |
24 |
| Other components of equity |
|
(4,398) |
(4,396) |
| Total equity attributable to equity holders of the Company |
|
9,956 |
10,559 |
| Non-controlling interests |
|
47 |
46 |
| Total equity |
|
10,003 |
10,605 |
| Total liabilities and equity |
|
17,270 |
16,523 |
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
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director
|
Bobby Parikh
Director |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
|
Bengaluru
July 18, 2024 |
|
|
|
(Dollars in millions except equity share and per
equity share data)
| Condensed Consolidated Statement of Comprehensive Income for the |
Note |
Three months ended |
| |
|
June 30, 2024 |
June 30, 2023 |
| Revenues |
2.17 |
4,714 |
4,617 |
| Cost of sales |
2.20 |
3,259 |
3,211 |
| Gross profit |
|
1,455 |
1,406 |
| Operating expenses |
|
|
|
| Selling and marketing expenses |
2.20 |
232 |
217 |
| Administrative expenses |
2.20 |
229 |
228 |
| Total operating expenses |
|
461 |
445 |
| Operating profit |
|
994 |
961 |
| Other income, net |
2.20 |
101 |
68 |
| Finance cost |
|
13 |
11 |
| Profit before income taxes |
|
1,082 |
1,018 |
| Income tax expense |
2.13 |
318 |
294 |
| Net profit |
|
764 |
724 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
2 |
10 |
| Equity instruments through other comprehensive income, net |
|
2 |
– |
| |
|
4 |
10 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on investments, net |
|
5 |
9 |
| Fair value changes on derivatives designated as cash flow hedge, net |
|
– |
1 |
| Exchange differences on translation of foreign operations |
|
(11) |
17 |
| |
|
(6) |
27 |
| Total other comprehensive income/(loss), net of tax |
|
(2) |
37 |
| Total comprehensive income |
|
762 |
761 |
| Profit attributable to |
|
|
|
| Owners of the Company |
|
763 |
724 |
| Non-controlling interests |
|
1 |
- |
| |
|
764 |
724 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
761 |
761 |
| Non-controlling interests |
|
1 |
- |
| |
|
762 |
761 |
| Earnings per equity share |
|
|
|
| Basic ($) |
|
0.18 |
0.17 |
| Diluted ($) |
|
0.18 |
0.17 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
| Basic (in shares) |
2.14 |
4,140,272,627 |
4,137,234,750 |
| Diluted (in shares) |
2.14 |
4,148,077,672 |
4,142,207,951 |
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
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director
|
Bobby Parikh
Director |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
|
Bengaluru
July 18, 2024 |
|
|
|
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, 2023 |
4,136,387,925 |
325 |
366 |
11,401 |
1,370 |
24 |
– |
(4,314) |
9,172 |
52 |
9,224 |
| Changes in equity for the three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
724 |
– |
– |
– |
– |
724 |
– |
724 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
10 |
10 |
– |
10 |
| Fair value changes on derivatives designated as Cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
1 |
– |
1 |
– |
1 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
17 |
17 |
– |
17 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
9 |
9 |
– |
9 |
| Total comprehensive income for the period |
– |
– |
– |
724 |
– |
– |
1 |
36 |
761 |
– |
761 |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
2,066,083 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
18 |
– |
– |
– |
– |
– |
18 |
– |
18 |
| Transfer on account of options not exercised |
– |
– |
(1) |
1 |
– |
– |
– |
– |
– |
– |
– |
| Transferred to other reserves |
– |
– |
– |
(93) |
93 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
24 |
(24) |
– |
– |
– |
– |
– |
– |
| Dividends# |
– |
– |
– |
(882) |
– |
– |
– |
– |
(882) |
– |
(882) |
| Balance as at June 30, 2023 |
4,138,454,008 |
325 |
383 |
11,175 |
1,439 |
24 |
1 |
(4,278) |
9,069 |
52 |
9,121 |
| Balance as at April 1, 2024 |
4,139,950,635 |
325 |
425 |
12,557 |
1,623 |
24 |
1 |
(4,396) |
10,559 |
46 |
10,605 |
| Changes in equity for the three months ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
763 |
– |
– |
– |
– |
763 |
1 |
764 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
2 |
2 |
– |
2 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
2 |
2 |
– |
2 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
(11) |
(11) |
– |
(11) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
5 |
5 |
– |
5 |
| Total comprehensive income for the period |
– |
– |
– |
763 |
– |
– |
– |
(2) |
761 |
1 |
762 |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
1,831,328 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
(2) |
2 |
– |
– |
– |
– |
– |
– |
– |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
25 |
– |
– |
– |
– |
– |
25 |
– |
25 |
| Transferred from other reserves on utilization |
– |
– |
– |
12 |
(12) |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves to retained earnings |
– |
– |
– |
30 |
(30) |
– |
– |
– |
– |
– |
– |
| Dividends# |
– |
– |
– |
(1,389) |
– |
– |
– |
– |
(1,389) |
– |
(1,389) |
| Balance as at June 30, 2024 |
4,141,781,963 |
325 |
448 |
11,975 |
1,581 |
24 |
1 |
(4,398) |
9,956 |
47 |
10,003 |
| (1) | | excludes treasury shares of 10,246,512 as at June 30, 2024, 10,916,829 as at April 1,
2024, 11,738,357 as at June 30, 2023 and 12,172,119 as at April 1, 2023 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
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director
|
Bobby Parikh
Director |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
|
Bengaluru
July 18, 2024 |
|
|
|
Condensed Consolidated Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
(Dollars in millions)
| Particulars |
Note |
Three months ended |
| |
|
June 30, 2024 |
June 30, 2023 |
| Operating activities |
|
|
|
| Net Profit |
|
764 |
724 |
| Adjustments to reconcile net profit to net cash provided by operating activities |
|
|
|
| Depreciation and amortization |
|
138 |
143 |
| Interest and dividend income |
|
(44) |
(35) |
| Finance cost |
|
13 |
11 |
| Income tax expense |
2.13 |
318 |
294 |
| Exchange differences on translation of assets and liabilities, net |
|
3 |
(1) |
| Impairment loss recognized/(reversed) under expected credit loss model |
|
– |
11 |
| Stock compensation expense |
|
25 |
18 |
| Provision for post sale client support |
|
(13) |
6 |
| Other adjustments |
|
5 |
61 |
| Changes in working capital |
|
|
|
| Trade receivables and unbilled revenue |
|
(60) |
(13) |
| Prepayments and other assets |
|
(20) |
(19) |
| Trade payables |
|
(33) |
(13) |
| Unearned revenue |
|
(46) |
20 |
| Other liabilities and provisions |
|
– |
(241) |
| Cash generated from operations |
|
1,050 |
966 |
| Income taxes (paid)/received |
|
100 |
(168) |
| Net cash generated by operating activities |
|
1,150 |
798 |
| Investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(56) |
(99) |
| Deposits placed with Corporation |
|
(40) |
(54) |
| Redemption of deposits placed with Corporation |
|
14 |
31 |
| Interest and dividend received |
|
36 |
33 |
| Payment for acquisition of business, net of cash acquired |
2.11 |
(15) |
– |
| Payments to acquire Investments |
|
|
|
| Liquid mutual funds units |
|
(2,036) |
(2,152) |
| Certificates of deposit |
|
(172) |
(156) |
| Quoted debt securities |
|
(126) |
(13) |
| Commercial paper |
|
(267) |
(190) |
| Other investments |
|
(1) |
– |
| Proceeds on sale of investments |
|
|
|
| Quoted debt securities |
|
83 |
74 |
| Certificates of deposit |
|
338 |
484 |
| Commercial paper |
|
856 |
100 |
| Liquid mutual funds units |
|
1,915 |
2,106 |
| Other receipts |
|
- |
15 |
| Net cash used in investing activities |
|
529 |
179 |
| Financing activities |
|
|
|
| Payment of lease liabilities |
|
(69) |
(54) |
| Other payments |
|
(14) |
(25) |
| Net cash used in financing activities |
|
(83) |
(79) |
| Net increase/(decrease) in cash and cash equivalents |
|
1,596 |
898 |
| Effect of exchange rate changes on cash and cash equivalents |
|
(4) |
7 |
| Cash and cash equivalents at the beginning of the period |
2.1 |
1,773 |
1,481 |
| Cash and cash equivalents at the end of the period |
2.1 |
3,365 |
2,386 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.1 |
48 |
47 |
| Closing cash and cash equivalents as per consolidated statement of cash flows |
|
3,365 |
2,386 |
| Less: Earmarked bank balance for dividend |
2.2 |
(1,394) |
(885) |
| Closing cash and cash equivalents as per Consolidated Balance Sheet |
2.1 |
1,971 |
1,501 |
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
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director
|
Bobby Parikh
Director |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
|
Bengaluru
July 18, 2024 |
|
|
|
Overview and Notes to the Interim Condensed Consolidated
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is herein after referred to as the "Group".
The company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics city, Hosur Road, Bengaluru 560100, Karnataka, India. The company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the company's Board of Directors on July 18, 2024.
1.2 Basis of preparation of financial statements
The interim condensed consolidated financial statements
have been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board, 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, 2024. Accounting
policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing
accounting standard requires a change in the accounting policy hitherto in use.
The material accounting policy information used in
preparation of the audited interim condensed consolidated interim financial statements have been discussed in the respective notes.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls.
The interim condensed consolidated financial statements comprise the financial statements of the company, its controlled trusts and its
subsidiaries. Control exists when the parent has power over the entity, is exposed, or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing
rights that give the ability to direct relevant activities, those which significantly affect the entity's returns. Subsidiaries are consolidated
from the date control commences until the date control ceases.
The financial statements of the Group companies are
consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions
are eliminated upon consolidation. The financial statements are prepared by applying uniform accounting policies in use at the Group.
Non-controlling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly,
owned or controlled by the company, are excluded.
1.4 Use of estimates and judgments
The preparation of the Interim condensed consolidated
financial statements in conformity with IFRS requires Management to make estimates, judgments and assumptions. These estimates, judgments
and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues and expenses
during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective
judgments and the use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates could change
from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes
aware of changes in circumstances surrounding the estimates. Changes in estimates and judgements are reflected in the financial statements
in the period in which changes are made and, if material, their effects are disclosed in the notes to the interim condensed consolidated
financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to
perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and Group’s costs to fulfil the contract is not even through the period of the contract because
the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires judgment
and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, though the company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the
provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax
assets, Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and
tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, Management believes that the group will realize the benefits
of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the
near term if estimates of future taxable income during the carry forward period are reduced (Refer to note 2.13)
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS
3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain
the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted by external
valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements
and intangible assets. These measurements are based on information available at the acquisition date and are based on expectations and
assumptions that have been deemed reasonable by Management. (Refer to note 2.11 and 2.10.2)
d. Property, plant and equipment
Property, plant and equipment represent a significant
proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate of
an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of
Group's assets are determined by Management at the time the asset is acquired and reviewed periodically, including at each financial year
end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their
life, such as changes in technology (Refer to note 2.8)
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.
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not
yet effective:
| Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates |
Lack of Exchangeability |
| IFRS 18 Presentation and Disclosures in Financial Statements |
Presentation and Disclosures in Financial Statements |
| Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures |
Amendments to the Classification and Measurement of Financial Instruments |
Amendments to IAS 21
On August 15, 2023, IASB has issued amendments
to IAS 21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require companies to provide more useful
information in their financial statements when a currency cannot be exchanged into another currency. These amendments specify when a currency
is exchangeable into another currency and when it is not and specify how an entity determines the exchange rate to apply when a currency
is not exchangeable.
The effective date for adoption of this amendment
is annual periods beginning on or after January 1, 2025, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
IFRS 18 – Presentation and Disclosures
in Financial Statements
On April 9, 2024, IASB has issued IFRS 18
– Presentation and Disclosures in Financial Statements that will replace IAS 1 Presentation of Financial Statements from its effective
date. IFRS 18 introduces new requirements for information presented in the primary financial statements and disclosed in the notes. The
new requirements are focused on the statement of profit or loss. IFRS 18 introduces three categories for income and expenses, that is,
operating, investing and financing to improve the structure of the income statement. IFRS 18 is effective for annual reporting periods
beginning on or after 1 January 2027, although early adoption is permitted. The Group is yet to evaluate the impact of the amendment.
Amendments to IFRS 9 Financial Instruments
and IFRS 7 Financial Instruments: Disclosures
On May 30, 2024, IASB has issued amendments
to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures, which clarifies the classification of financial assets
with environmental, social and corporate governance (ESG) and similar features, derecognition of financial liability settled through electronic
payment systems and also introduces additional disclosure requirements to enhance transparency for investors regarding investments in
equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features.
The effective date for adoption of this amendment
is annual reporting periods beginning on or after January 1, 2026, although early adoption is permitted. The Group is yet to evaluate
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 |
| |
June 30, 2024 |
March 31, 2024 |
| Cash and bank deposits |
1,971 |
1,773 |
| Total Cash and cash equivalents |
1,971 |
1,773 |
Cash and cash equivalents as at June 30, 2024 and March
31, 2024 include restricted cash and bank balances of $48 million and $42 million, respectively. The restrictions are primarily on account
of bank balances held by irrevocable trusts controlled by the company.
The deposits maintained by the Group with banks and
financial institutions comprise of time deposits, which can be withdrawn by the Group at any point without prior notice or penalty on
the principal.
2.2 Earmarked bank balance for dividend
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Earmarked bank balance for dividend |
1,394 |
- |
| Total |
1,394 |
- |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share (approximately $0.24 per equity share) for the financial year ended
March 31, 2024 and a special dividend of 8/- per equity share (approximately $0.10 per equity share). The same was approved by
the shareholders at the Annual General Meeting (AGM) of the Company held on June 26, 2024. Payment date for the dividend is July 01, 2024.
Earmarked bank balance for dividend represents cash which is deposited in a designated bank account only for payment of final dividend
and special dividend for financial year ended March 31, 2024.
2.3 Investments
The carrying value of the investments are as follows:
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| (i) Current Investments |
|
|
| Fair Value through other comprehensive income |
|
|
| Quoted Debt Securities |
398 |
291 |
| Certificates of deposits |
206 |
365 |
| Commercial Paper |
– |
579 |
| Fair Value through profit or loss |
|
|
| Liquid mutual fund units |
447 |
313 |
| Total current investments |
1,051 |
1,548 |
| (ii) Non-current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
211 |
211 |
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
1,026 |
1,093 |
| Quoted equity securities |
15 |
14 |
| Unquoted equity and preference securities |
11 |
11 |
| Fair Value through profit or loss |
|
|
| Target maturity fund units |
52 |
51 |
| Others(1) |
25 |
24 |
| Total Non-current investments |
1,340 |
1,404 |
| |
|
|
| Total investments |
2,391 |
2,952 |
| Investments carried at amortized cost |
211 |
211 |
| Investments carried at fair value through other comprehensive income |
1,656 |
2,353 |
| Investments carried at fair value through profit or loss |
524 |
388 |
| (1) | | Uncalled capital commitments outstanding as on June 30, 2024 and March 31, 2024 was $9
million and $9 million, respectively. |
Refer to note 2.4 for accounting policies on financial
instruments.
Method of fair valuation:
(Dollars in millions)
| Class of investment |
Method |
Fair value |
| |
|
June 30, 2024 |
March 31, 2024 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
447 |
313 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
52 |
51 |
| Quoted debt securities- carried at amortized cost |
Quoted price and market observable inputs |
236 |
236 |
| Quoted debt securities- carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
1,424 |
1,384 |
| Commercial Paper - carried at fair value through other comprehensive income |
Market observable inputs |
– |
579 |
| Certificates of Deposit - carried at fair value through other comprehensive income |
Market observable inputs |
206 |
365 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
11 |
11 |
| Quoted equity securities - carried at fair value through other comprehensive income |
Quoted price |
15 |
14 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
25 |
24 |
|
Total
|
|
2,416 |
2,977 |
Note: Certain quoted investments are classified as Level
2 in the absence of active market for such investments.
2.4 Financial instruments
Accounting Policy
2.4.1 Initial recognition
The group recognizes financial assets and financial
liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value
through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted
for at trade date.
2.4.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss (FVTPL)
A financial asset which is not classified in any of
the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration and financial liability under option arrangements recognized
in a business combination which is subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
The group holds derivative financial instruments such
as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities, carried
at fair value through profit or loss
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under IFRS 9, Financial Instruments. Any derivative
that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, is categorized as a financial asset or financial
liability carried at fair value through profit or loss.
Derivatives not designated as hedges are recognized
initially at fair value and attributable transaction costs are recognized in net profit in the statement of comprehensive income when
incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange
gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities
if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.
(ii) Cash flow hedge
The group designates certain foreign exchange forward
and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transaction.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in
the net profit in the statement of comprehensive income. If the hedging instrument no longer meets the criteria for hedge accounting,
then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative
gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash
flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging
reserve is transferred to the net profit in the statement of comprehensive income upon the occurrence of the related forecasted transaction.
If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified
to net profit in the interim condensed consolidated statement of comprehensive income.
2.4.3 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.
2.4.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, option pricing model, market multiples, available quoted market
prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
Refer to table ‘Financial instruments by category’
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to
the short maturity of these instruments.
2.4.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For
all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
The Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in interim condensed consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at June 30, 2024 were as follows:
(Dollars in millions)
| Particulars |
Amortized cost |
Financial assets / liabilities at fair value through profit or loss |
Financial assets / liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
1,971 |
– |
– |
– |
– |
1,971 |
1,971 |
| Earmarked bank balance for dividend (Refer to note 2.2) |
1,394 |
– |
– |
– |
– |
1,394 |
1,394 |
| Investments (Refer to note 2.3) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
447 |
– |
– |
447 |
447 |
| Target maturity fund units |
– |
– |
52 |
– |
– |
52 |
52 |
| Quoted debt securities |
211 |
– |
– |
– |
1,424 |
1,635 |
1,660(1) |
| Certificates of deposit |
– |
– |
– |
– |
206 |
206 |
206 |
| Quoted equity securities |
– |
– |
– |
15 |
– |
15 |
15 |
| Unquoted equity and preference securities |
– |
– |
– |
11 |
– |
11 |
11 |
| Unquoted investment others |
– |
– |
25 |
– |
– |
25 |
25 |
| Trade receivables |
3,709 |
– |
– |
– |
– |
3,709 |
3,709 |
| Unbilled revenues (Refer to note 2.18)(3) |
1,119 |
– |
– |
– |
– |
1,119 |
1,119 |
| Prepayments and other assets (Refer to note 2.5) |
714 |
– |
– |
– |
– |
714 |
703(2) |
| Derivative financial instruments |
– |
– |
8 |
– |
2 |
10 |
10 |
| Total |
9,118 |
– |
532 |
26 |
1,632 |
11,308 |
11,322 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
443 |
– |
– |
– |
– |
443 |
443 |
| Lease liabilities (Refer to note 2.9) |
1,002 |
– |
– |
– |
– |
1,002 |
1,002 |
| Derivative financial instruments |
– |
– |
3 |
– |
– |
3 |
3 |
| Financial liability under option arrangements (Refer to note 2.6) |
– |
– |
71 |
– |
– |
71 |
71 |
Other liabilities including contingent consideration
(Refer to note 2.6) |
3,080 |
– |
4 |
– |
– |
3,084 |
3,084 |
| Total |
4,525 |
– |
78 |
– |
– |
4,603 |
4,603 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of $11 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, 2024 were as follows:
(Dollars in millions)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
1,773 |
– |
– |
– |
– |
1,773 |
1,773 |
| Investments (Refer to note 2.3) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
313 |
– |
– |
313 |
313 |
| Target maturity fund units |
– |
– |
51 |
– |
– |
51 |
51 |
| Quoted debt securities |
211 |
– |
– |
– |
1,384 |
1,595 |
1,620(1) |
| Certificates of deposit |
– |
– |
– |
– |
365 |
365 |
365 |
| Commercial Papers |
– |
– |
– |
– |
579 |
579 |
579 |
| Quoted equity securities |
– |
– |
– |
14 |
– |
14 |
14 |
| Unquoted equity and preference securities |
– |
– |
– |
11 |
– |
11 |
11 |
| Unquoted investments others |
– |
– |
24 |
– |
– |
24 |
24 |
| Trade receivables |
3,620 |
– |
– |
– |
– |
3,620 |
3,620 |
| Unbilled revenues(Refer to note 2.18)(3) |
1,151 |
– |
– |
– |
– |
1,151 |
1,151 |
| Prepayments and other assets (Refer to note 2.5) |
694 |
– |
– |
– |
– |
694 |
684(2) |
| Derivative financial instruments |
– |
– |
7 |
– |
3 |
10 |
10 |
| Total |
7,449 |
– |
395 |
25 |
2,331 |
10,200 |
10,215 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
474 |
– |
– |
– |
– |
474 |
474 |
| Lease liabilities (Refer to note 2.9) |
1,002 |
– |
– |
– |
– |
1,002 |
1,002 |
| Derivative financial instruments |
– |
– |
4 |
– |
– |
4 |
4 |
Financial liability under option arrangements
(Refer to note 2.6) |
– |
– |
72 |
– |
– |
72 |
72 |
| Other liabilities including contingent consideration (Refer to note 2.6) |
1,887 |
– |
– |
– |
– |
1,887 |
1,887 |
| Total |
3,363 |
– |
76 |
– |
– |
3,439 |
3,439 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of $10 million |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
For trade receivables 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 fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at June 30, 2024 is as follows:
(Dollars in millions)
| Particulars |
As at June 30, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.3) |
|
|
|
|
| Investments in liquid mutual fund units |
447 |
447 |
– |
– |
| Investments in target maturity fund units |
52 |
52 |
– |
– |
| Investments in quoted debt securities |
1,660 |
1,557 |
103 |
– |
| Investments in certificates of deposit |
206 |
– |
206 |
– |
| Investments in unquoted equity and preference securities |
11 |
– |
– |
11 |
| Investments in quoted equity securities |
15 |
15 |
– |
– |
| Investments in unquoted investments others |
25 |
– |
– |
25 |
| Others |
|
|
|
|
| Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts |
10 |
– |
10 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts |
3 |
– |
3 |
– |
| Financial liability under option arrangements (Refer to note 2.6)(1) |
71 |
– |
– |
71 |
| Liability towards contingent consideration (Refer to note 2.6)(2) |
4 |
– |
– |
4 |
| (1) | | Discount rate ranges from 9% to 15% |
During the three months ended June 30, 2024, quoted
debt securities of $9 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 $73 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2024 is as follows:
(Dollars in millions)
| Particulars |
As at March 31, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.3) |
|
|
|
|
| Investments in liquid mutual fund units |
313 |
313 |
– |
– |
| Investments in target maturity fund units |
51 |
51 |
– |
– |
| Investments in quoted debt securities |
1,620 |
1,580 |
40 |
– |
| Investments in unquoted equity and preference securities |
11 |
– |
– |
11 |
| Investments in certificates of deposit |
365 |
– |
365 |
– |
| Investments in commercial paper |
579 |
– |
579 |
– |
| Investments in quoted equity securities |
14 |
14 |
– |
– |
| Investments in unquoted investments others |
24 |
– |
– |
24 |
| Others |
|
|
|
|
| Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts |
10 |
– |
10 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts |
4 |
– |
4 |
– |
| Financial liability under option arrangements (Refer to note 2.6)(1) |
72 |
– |
– |
72 |
| (1) | | Discount rate ranges from 9% to 15% |
During the year ended March 31, 2024, quoted debt
securities of $257 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 $9 million were transferred from Level 1 to Level 2 of fair value hierarchy, since these were
valued based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
quoted debt securities, certificates of deposit, commercial paper, quoted bonds issued by government and quasi-government organizations.
The Group invests after considering counterparty risks based on multiple criteria including Tier I Capital, Capital Adequacy Ratio, Credit
Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per Group’s
risk management program.
2.5 Prepayments and other assets
Prepayments and other assets consist of the following:
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Security deposits(1) |
8 |
9 |
| Loans to employees(1) |
30 |
30 |
| Prepaid expenses(2) |
420 |
399 |
| Interest accrued and not due(1) |
34 |
64 |
| Withholding taxes and others(2) |
399 |
424 |
| Advance payments to vendors for supply of goods(2) |
58 |
43 |
| Deposit with corporations(1)(3) |
328 |
304 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract(2) |
30 |
24 |
| Cost of fulfillment(2) |
49 |
43 |
| Other non financial assets (2) |
25 |
21 |
| Other financial assets(1)(4) |
128 |
112 |
| Total Current prepayment and other assets |
1,509 |
1,473 |
| Non-current |
|
|
| Loans to employees(1) |
4 |
4 |
| Security deposits(1) |
32 |
31 |
| Deposit with corporations(1)(3) |
7 |
6 |
| Defined benefit plan assets(2) |
4 |
4 |
| Prepaid expenses(2) |
38 |
41 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract (2) |
13 |
16 |
| Cost of fulfillment(2) |
78 |
82 |
| Withholding taxes and others(2) |
81 |
81 |
| Other financial assets(1)(4) |
143 |
134 |
| Total Non- current prepayment and other assets |
400 |
399 |
| Total prepayment and other assets |
1,909 |
1,872 |
| (1) Financial assets carried at amortized cost |
714 |
694 |
| (3) | | Deposit with corporation represents amounts deposited to settle certain employee-related
obligations as and when they arise during the normal course of business. |
| (4) | | Primarily includes net investment in lease arising on assets that are leased to customers
for a contract term normally ranging between 3 to 4 years, with lease payments generally due in monthly installments. |
Withholding taxes and others primarily consist of input
tax credits and Cenvat recoverable from Government of India.
2.6 Other liabilities
Other liabilities comprise the following:
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Accrued compensation to employees(1) |
456 |
534 |
| Accrued expenses(1) |
1007 |
986 |
| Accrued defined benefit liability(3) |
1 |
1 |
| Withholding taxes and others(3) |
555 |
382 |
| Liabilities of controlled trusts(1) |
25 |
25 |
| Liability towards contingent consideration(2) |
2 |
– |
| Capital Creditors(1) |
27 |
37 |
| Final dividend payable to shareholders(1)(5) |
1,254 |
– |
| Financial liability under option arrangements(2)(4) |
59 |
60 |
| Other non-financial liabilities(3) |
1 |
1 |
| Other financial liabilities(1)(6) |
101 |
73 |
| Total current other liabilities |
3,488 |
2,099 |
| Non-current |
|
|
| Accrued compensation to employees(1) |
1 |
1 |
| Accrued expenses(1) |
203 |
213 |
| Accrued defined benefit liability (3) |
20 |
19 |
| Liability towards contingent consideration(2) |
2 |
– |
| Financial liability under option arrangements(2)(4) |
12 |
12 |
| Other non-financial liabilities(3) |
9 |
10 |
| Other financial liabilities(1)(6) |
6 |
18 |
| Total non-current other liabilities |
253 |
273 |
| Total other liabilities |
3,741 |
2,372 |
| (1) Financial liability carried at amortized cost |
3,080 |
1,887 |
| (2) Financial liability carried at fair value through profit or loss |
75 |
72 |
| (3) | | Non financial liabilities |
| (4) | | Represents liability related to options issued by the Group over the non-controlling interests
in its subsidiaries. |
| (5) | | Pertains to final dividend and special dividend for fiscal 2024 declared by the Company and
approved by the shareholders on June 26, 2024. Payment date for dividend is July 01, 2024. (Refer to note 2.19.5) |
| (6) | | The Group entered into financing arrangements with a third party towards technology assets
taken over by the Group from a customer as a part of transformation project which was not considered as distinct goods or services as
the control related to those assets was not transferred to the Group in accordance with Ind AS 115 - Revenue from contract with customers.
As at June 30, 2024 and March 31, 2024, the financial liability pertaining to such arrangements amounts to $32 million and $45 million,
respectively. |
Accrued expenses primarily relate to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office
maintenance and cost of third party software and hardware.
2.7 Provisions and other contingencies
Accounting Policy
2.7.1 Provisions
A provision is recognized if, as a result of a past
event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support for its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time
related revenues are recorded and included in cost of sales. The Group estimates such costs based on historical experience and estimates
are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when
the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations
under the contract. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete the contract. The provision is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established
the Group recognizes any impairment loss on the assets associated with that contract.
Provision for post sales client support and other
provisions
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Post sales client support and other provisions |
181 |
215 |
| Total provisions |
181 |
215 |
Provision for post sales client support and other provisions
majorly represents costs associated with providing post sales support services which are accrued at the time of recognition of revenues
and are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the interim condensed consolidated statement of comprehensive income.
As at June 30, 2024 and March 31, 2024, claims against
the Group, not acknowledged as debts, (excluding demands from income tax authorities- Refer to Note 2.13) amounted to $99 million (822
crore) and $95 million (789 crore), respectively.
2.7.2 McCamish Cybersecurity incident
In November 2023, certain systems of Infosys McCamish
Systems LLC (“McCamish”), a subsidiary of Infosys BPM Limited (a wholly owned subsidiary of Infosys Limited), were encrypted
by ransomware, resulting in the nonavailability of certain applications and systems. McCamish initiated its incident response and engaged
cybersecurity and other specialists to assist in its investigation of and response to the incident and remediation and restoration of
impacted applications and systems. By December 31, 2023, McCamish, with external specialists’ assistance, substantially remediated
and restored the affected applications and systems.
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. McCamish also engaged a third-party eDiscovery vendor in assessing the extent and
nature of such data. McCamish in coordination with its third-party eDiscovery vendor has identified corporate customers and individuals
whose information was subject to unauthorized access and exfiltration. McCamish processes personal data on behalf of its corporate customers.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time. See the section titled
“Legal proceedings” below for information on certain legal proceedings related to the McCamish cybersecurity incident.
2.7.3 Legal proceedings
On March 6, 2024, a class action complaint was filed
in the U.S. District Court for the Northern District of Georgia against McCamish. The complaint arises out of the cybersecurity incident
at McCamish initially disclosed on November 3, 2023. The complaint was purportedly filed on behalf of all individuals within the United
States whose personally identifiable information was exposed to unauthorized third parties as a result of the incident. On May 6, 2024,
McCamish filed a motion to dismiss the complaint.
On May 15, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of some or all individuals
whose personally identifiable information was compromised in the incident.
On June 3, 2024, the plaintiffs in the two class actions
filed a motion to consolidate the two cases. On June 4, 2024, the Court consolidated the two class actions and closed the class action
that was filed on May 15, 2024.
On July 8, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of all individuals
residing in the United States whose private information was accessed and/or acquired by an unauthorized party as a result of the incident.
Apart from the foregoing actions, the Group is subject
to legal proceedings and claims which have arisen in the ordinary course of business. The Group’s management reasonably expects
that such ordinary course 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.
2.8 Property, plant and equipment
Accounting Policy
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant
and equipment are ready for use, as intended by Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The group depreciates property,
plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
| Building |
22-25 years |
| Plant and machinery(1) |
5 years |
| Computer equipment |
3-5 years |
| Furniture and fixtures |
5 years |
| Vehicles |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Includes solar plant with a useful life of 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful lives are based on historical experience with similar assets
as well as anticipation of future events, which may impact their life, such as changes in technology.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet date and the cost of assets not ready to use before such date are disclosed under
‘Capital work-in-progress’. Subsequent expenditures relating to property, plant and equipment is capitalized only when it
is probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset.
Impairment
Property, plant and equipment are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in net profit in the statement of comprehensive income is measured by the amount by which the carrying value of the assets
exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in net profit in the statement of comprehensive
income if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased
to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2024 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2024 |
171 |
1,411 |
637 |
1,032 |
406 |
6 |
3,663 |
| Additions |
– |
2 |
5 |
22 |
3 |
– |
32 |
| Deletions* |
– |
(5) |
(3) |
(19) |
(7) |
– |
(34) |
| Translation difference |
– |
– |
– |
(1) |
(1) |
– |
(2) |
| Gross carrying value as at June 30, 2024 |
171 |
1,408 |
639 |
1,034 |
401 |
6 |
3,659 |
| Accumulated depreciation as at April 1, 2024 |
– |
(590) |
(498) |
(765) |
(322) |
(5) |
(2,180) |
| Depreciation |
– |
(13) |
(12) |
(40) |
(10) |
– |
(75) |
| Accumulated depreciation on deletions* |
– |
1 |
3 |
19 |
7 |
– |
30 |
| Translation difference |
– |
– |
– |
1 |
– |
– |
1 |
| Accumulated depreciation as at June 30, 2024 |
– |
(602) |
(507) |
(785) |
(325) |
(5) |
(2,224) |
| Capital work-in progress as at April 1, 2024 |
|
|
|
|
|
|
54 |
| Carrying value as at April 1, 2024 |
171 |
821 |
139 |
267 |
84 |
1 |
1,537 |
| Capital work-in progress as at June 30, 2024 |
|
|
|
|
|
|
69 |
| Carrying value as at June 30, 2024 |
171 |
806 |
132 |
249 |
76 |
1 |
1,504 |
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2023 are as follows:
(Dollars in millions)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
174 |
1,407 |
625 |
1,037 |
409 |
6 |
3,658 |
| Additions |
– |
1 |
7 |
27 |
5 |
– |
40 |
| Deletions* |
– |
– |
(6) |
(32) |
(4) |
– |
(42) |
| Translation difference |
– |
(5) |
1 |
1 |
1 |
(1) |
(3) |
| Gross carrying value as at June 30, 2023 |
174 |
1,403 |
627 |
1,033 |
411 |
5 |
3,653 |
| Accumulated depreciation as at April 1, 2023 |
– |
(552) |
(468) |
(709) |
(300) |
(5) |
(2,034) |
| Depreciation |
– |
(13) |
(14) |
(44) |
(12) |
– |
(83) |
| Accumulated depreciation on deletions* |
– |
– |
6 |
32 |
3 |
– |
41 |
| Translation difference |
– |
1 |
(1) |
(1) |
1 |
– |
– |
| Accumulated depreciation as at June 30, 2023 |
– |
(564) |
(477) |
(722) |
(308) |
(5) |
(2,076) |
| Capital work-in progress as at April 1, 2023 |
|
|
|
|
|
|
55 |
| Carrying value as at April 1, 2023 |
174 |
855 |
157 |
328 |
109 |
1 |
1,679 |
| Capital work-in progress as at June 30, 2023 |
|
|
|
|
|
|
61 |
| Carrying value as at June 30, 2023 |
174 |
839 |
150 |
311 |
103 |
– |
1,638 |
| * | | During the three months ended June 30, 2024, certain assets which were old and not in use
having gross book value of $15 million (net book value: Nil) were retired. During the three months ended June 30, 2023, certain assets
which were old and not in use having gross book value of $39 million (net book value: Nil) were retired. |
The aggregate depreciation expense is included in cost
of sales in the interim condensed consolidated statement of comprehensive income.
Repairs and maintenance costs are recognized in the
statement of comprehensive income when incurred.
Consequent to the Companies (Corporate Social Responsibility
Policy) Amendment Rules, 2021 (“the Rules”), the Company was required to transfer its CSR capital assets installed prior to
January 2021. Towards this the Company had incorporated a subsidiary ‘Infosys Green Forum’ (IGF) under Section 8 of the Companies
Act, 2013. During the year ended March 31, 2022 the Company had completed the transfer of assets upon obtaining the required approvals
from regulatory authorities, as applicable. During March 31, 2024, the application filed by IGF for registration u/s.12AB of the Income
Tax Act was rejected and registration cancelled. During the quarter ending June 30, 2024 IGF has filed an appeal against this order before
Income Tax Appellate Tribunal.
The Group had contractual commitments for capital expenditure
primarily comprising of commitments for infrastructure facilities and computer equipments aggregating to $116 million and $94 million
as at June 30, 2024 and March 31, 2024, respectively.
2.9 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist
of leases for land, buildings and computers. The group assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether:
(1) the contract involves the use of an identified asset (2) the group has substantially all of the economic benefits from use of the
asset through the period of the lease and (3) the group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight-line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2024
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2024 |
72 |
396 |
2 |
316 |
786 |
| Additions* |
– |
33 |
– |
34 |
67 |
| Deletions |
– |
– |
– |
(18) |
(18) |
| Depreciation |
– |
(22) |
– |
(30) |
(52) |
| Translation difference |
– |
(1) |
– |
(1) |
(2) |
| Balance as of June 30, 2024 |
72 |
406 |
2 |
301 |
781 |
| * | | Net of adjustments on account of modifications |
Following are the changes in the carrying value of right-of-use
assets for the three months ended June 30, 2023
(Dollars in millions)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2023 |
76 |
474 |
2 |
285 |
837 |
| Additions* |
– |
30 |
– |
68 |
98 |
| Deletions |
– |
(1) |
– |
(28) |
(29) |
| Depreciation |
– |
(22) |
– |
(23) |
(45) |
| Translation difference |
(1) |
– |
– |
(1) |
(2) |
| Balance as of June 30, 2023 |
75 |
481 |
2 |
301 |
859 |
| * | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included in cost of sales in the interim condensed consolidated statement of comprehensive income.
The following is the break-up of current and non-current
lease liabilities as of June 30, 2024 and March 31, 2024
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current lease liabilities |
262 |
235 |
| Non-current lease liabilities |
740 |
767 |
| Total |
1,002 |
1,002 |
2.10 Goodwill and Intangible assets
2.10.1 Goodwill
Accounting Policy
Goodwill represents purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the purchase consideration, the
fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement
of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition and
which represents the lowest level at which goodwill is monitored for internal management purposes. A CGU is the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment
occurs when the carrying amount of a CGU including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable
amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of future cash
flows expected to be derived from the CGU. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Carrying value at the beginning |
875 |
882 |
| Goodwill on acquisitions (Refer to note 2.11) |
12 |
– |
| Translation differences |
1 |
(7) |
| Carrying value at the end |
888 |
875 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition.
2.10.2 Intangible assets
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to prepare
the asset for its intended use.
Impairment
Intangible assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the net profit in the statement of comprehensive income is measured by the amount by which the carrying value of the
assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the net profit in the statement of comprehensive
income if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased
to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated amortization) had no impairment loss been recognized for the asset in prior years.
2.11 Business combinations
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the interim condensed Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under common
control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and
liabilities assumed.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized.
Acquisitions during the three months ended June
30, 2024
On May 10, 2024, Infosys Ltd acquired 100% voting interests
in InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India. This acquisition is expected
to strengthen our expertise in semiconductor ecosystem and Engineering R&D services.
The purchase price is allocated to assets acquired
and liabilities assumed based upon determination of fair values at the date of acquisition as follows:
(Dollars in million)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price allocated |
| Net Assets(1) |
5 |
– |
5 |
| Intangible assets: |
|
|
|
| Customer contracts and relationships# |
– |
7 |
7 |
| Brand# |
– |
2 |
2 |
| Deferred tax liabilities on intangible assets |
– |
(2) |
(2) |
| Total |
5 |
7 |
12 |
| Goodwill |
|
|
12 |
| Total purchase price |
|
|
24 |
| (1) | | Includes cash and cash equivalents acquired of $5 million. |
| # | | The estimated useful life is around 1 year to 5 years |
The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill. The primary items that generated this goodwill are the value of the
acquired assembled workforce and estimated synergies, neither of which qualify as an intangible asset.
Goodwill is not tax-deductible.
The purchase consideration of $24 million includes
cash of $20 million and contingent consideration with an estimated fair value of $4 million as on the date of acquisition.
At the acquisition date, the key inputs used in determination
of the fair value of contingent consideration are the probabilities assigned towards achievement of financial targets and discount rate
of 5.9%. The undiscounted value of contingent consideration as of June 30, 2024 was $4 million.
Additionally, this acquisition has retention bonus
and management incentive payable to the employees of the acquiree over three years, subject to their continuous employment with the Group
and achievement of financial targets for the respective years. Bonus and incentives are recognized in employee benefit expenses in the
Statement of Comprehensive Income over the period of service.
Fair value of trade receivables acquired is $4 million
as of acquisition date and as of June 30, 2024 the amounts are substantially collected.
Transaction costs that the Group incurs in connection
with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are
expensed as incurred. The transaction costs of less than a million related to the acquisition have been included under administrative
expenses in the Consolidated Statement of Comprehensive Income for the three months ended June 30, 2024.
Proposed acquisition
On April 18, 2024, Infosys Germany GmBH wholly owned
step down subsidiary of Infosys Limited entered into a definitive agreement to acquire 100% of the equity share capital in in-tech Holding
GmbH, leading provider of Engineering R&D services headquartered in Germany, for a consideration including earn-outs amounting up
to EUR 450 million (approximately $485 million), subject to customary closing adjustments. Subsequently in July 2024 as on the date these
financial statements were authorized for issuance, Infosys Germany GmBH completed its acquisition of in-tech Holding GmbH. Given the recent
timing of the acquisition and pending completion of the valuations for identifiable net assets acquired and liabilities assumed, at the
time these financial statements were authorized for issuance, the initial accounting for the business combination is incomplete. Accordingly,
all the required disclosures for the business combination have not been made.
2.12 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in net profit in the interim condensed consolidated statement of comprehensive income on a straight-line basis
over the requisite service period for each separately vesting portion of the award as if the award was in-substance, multiple awards with
a corresponding increase to share premium.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan)
On June 22, 2019 pursuant to approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000
equity shares. To implement the 2019 Plan, up to 45,000,000 equity shares may be issued by way of secondary acquisition of shares by Infosys
Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined
annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters will
be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan):
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Plan. The maximum number of shares under the 2015 plan shall not exceed 24,038,883
equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as at March 31, 2016). These instruments
will generally vest over a period of 4 years The plan numbers mentioned above are further adjusted with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options
would be the market price as on the date of grant.
Controlled trust holds 10,246,512 and 10,916,829 shares
as at June 30, 2024 and March 31, 2024, respectively under the 2015 plan. Out of these shares, 2,00,000 equity shares each have been earmarked
for welfare activities of the employees as at June 30, 2024 and March 31, 2024.
The following is the summary of grants during three
months ended June 30, 2024 and June 30, 2023:
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended June 30, |
Three months ended June 30, |
| |
2024 |
2023 |
2024 |
2023 |
| Equity settled RSUs |
|
|
|
|
| Key Management Personnel (KMP) |
70,699 |
78,281 |
295,168 |
333,596 |
| Employees other than KMP |
6,848 |
- |
96,490 |
4,500 |
| Total Grants |
77,547 |
78,281 |
391,658 |
338,096 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee approved the following grants for fiscal 2025. In accordance with such approval the following
grants were made effective May 2, 2024.
- 245,679 performance-based RSUs (Annual performance
equity grant) of fair value of 34.75 crore. These RSUs will vest in line with the employment agreement based on achievement of
certain performance targets.
- 14,140 performance-based grant of RSUs (Annual performance
equity ESG grant) of fair value of 2 crore. These RSUs will vest in line with the employment agreement based on achievement of
certain environment, social and governance milestones as determined by the Board.
- 35,349 performance-based grant of RSUs (Annual performance
Equity TSR grant) of fair value of 5 crore . These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of June 30, 2024, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with IFRS 2, Share
based payments. The grant date for this purpose in accordance with IFRS 2, Share based payments is July 1, 2022.
Under the 2019 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2025 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 70,699 performance based RSU’s
were granted effective May 2, 2024.
The break-up of employee stock compensation expense
is as follows:
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Granted to: |
|
|
| KMP |
2 |
2 |
| Employees other than KMP |
23 |
16 |
| Total (1) |
25 |
18 |
| (1) | | Cash settled stock compensation expense included in the above |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options is based on historical volatility of the observed market prices of the Company's publicly traded
equity shares during a period equivalent to the expected term of the options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2025-
Equity Shares-RSU |
Fiscal 2025-
ADS-RSU |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,414 |
16.87 |
1,588 |
19.19 |
| Exercise price ()/ ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-26 |
23-28 |
23-31 |
25-33 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
5 |
7 |
4-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,298 |
15.45 |
1,317 |
16.27 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.13 Income Taxes
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the consolidated statement of comprehensive income except to the extent that it
relates to items recognized directly in equity, in which case it is recognized in equity or other comprehensive income. Current income
tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the
tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred income tax assets and liabilities
are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the
financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred income tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on
deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive
enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed
earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the
foreseeable future.
The Group offsets current tax assets and current tax
liabilities; deferred tax assets and deferred tax liabilities, where it has a legally enforceable right to set off the recognized amounts
and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the interim condensed consolidated
statement of comprehensive income comprises:
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Current taxes |
|
|
| Domestic taxes |
277 |
208 |
| Foreign taxes |
83 |
73 |
| |
360 |
281 |
| Deferred taxes |
|
|
| Domestic taxes |
(28) |
23 |
| Foreign taxes |
(14) |
(10) |
| |
(42) |
13 |
| Income tax expense |
318 |
294 |
Income tax expense for the three months ended June
30, 2024 and June 30, 2023 includes provisions (net of reversals) of $7 million and reversals (net of provisions) of $2 million, respectively.
These provisions and reversals pertaining to prior periods are primarily on account of adjudication of certain disputed matters, upon
filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months ended June
30, 2024 and June 30, 2023 substantially relates to origination and reversal of temporary differences
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at June 30, 2024, claims against the Group not acknowledged
as debts from the Income tax authorities amounted to $342 million (2,854 crore). As at March 31, 2024, claims against the Group
not acknowledged as debts from the Income tax authorities amounted to $335 million (2,794 crore).
Amount paid to statutory authorities against the tax
claims amounted to $734 million (6,122 crore) and $1,048 million (8,743 crore) as at June 30, 2024 and March 31, 2024 respectively.
The claims against the Group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of issues of disallowance
of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding
of taxes, among others. These matters are pending before various Income Tax Authorities and the Management including its tax advisors
expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial
position and results of operations.
2.14 Basic and diluted shares used in computing
earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group by the weighted average number of equity shares outstanding during the
period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group by the
weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number
of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares
are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares). Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes
effected prior to the approval of the financial statements by the Board of Directors.
2.15 Related party transactions
Refer Note 2.20 "Related party transactions"
in the Company’s 2024 Annual Report on Form 20-F for the full names and other details of the Company's subsidiaries and controlled
trusts.
Changes in Subsidiaries
During the three months ended June 30, 2024, the following
are the changes in the subsidiaries:
| . | | Danske IT and Support Services India Private Limited renamed as IDUNN Information Technology
Private Limited |
| . | | On May 10, 2024 Infosys Ltd. acquired 100% of voting interests in InSemi Technology Services
Private Limited along with its subsidiary Elbrus Labs Private Limited |
Change in key management personnel
The following are the changes in the key management
personnel:
Executive Officers:
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transactions with key management personnel
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Salaries and other short term employee benefits to whole-time directors and executive officers(1)(2) |
3 |
4 |
| Commission and other benefits to non-executive/ independent directors |
1 |
– |
| Total |
4 |
4 |
| (1) | | Total employee stock compensation expense for the three months ended June 30, 2024 and
June 30, 2023 includes a charge of $2 million each , towards key management personnel. (Refer note 2.12). |
| (2) | | Does not include post-employment benefits and other long-term benefits, based on actuarial
valuation as these are done for the Company as a whole. |
2.16 Segment reporting
IFRS 8 Operating Segments establishes standards for
the way that public business enterprises report information about operating segments and related disclosures about products and services,
geographic areas, and major customers. The Group's operations predominantly relate to providing end-to-end business solutions to enable
clients to enhance business performance.
The Chief Operating Decision Maker (CODM) evaluates
the Group's performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly,
information has been presented along business segments. The accounting principles used in the preparation of the financial statements
are consistently applied to record revenue and expenditure in individual segments, and are as set out in the accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
Revenue and identifiable operating expenses in relation
to segments are categorized based on items that are individually identifiable to that segment. Revenue for 'all other segments' represents
revenue generated by Infosys Public Services and revenue generated from customers located in India, Japan and China and other enterprises
in public service. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centres and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The Management believes that it is not practical to provide segment disclosures
relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted
against the total income of the Group.
Assets and liabilities used in the Group's business
are not identified to any of the reportable segments, as these are used interchangeably between segments. The Management believes that
it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation
of the available data is onerous.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.17 Revenue from operations
2.16.1 Business segments
For the three months ended June 30, 2024 and June
30, 2023
(Dollars in millions)
| Particulars |
Financial Services(1) |
Retail(2) |
Communication(3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other segments(5) |
Total |
| Revenue |
1,297 |
651 |
569 |
626 |
693 |
377 |
343 |
158 |
4,714 |
| |
1,298 |
671 |
540 |
595 |
651 |
372 |
335 |
155 |
4,617 |
| Identifiable operating expenses |
730 |
324 |
373 |
325 |
454 |
214 |
210 |
90 |
2,720 |
| |
748 |
349 |
321 |
327 |
429 |
212 |
194 |
100 |
2,680 |
| Allocated expenses |
254 |
117 |
100 |
114 |
118 |
66 |
60 |
33 |
862 |
| |
240 |
124 |
99 |
111 |
104 |
62 |
55 |
38 |
833 |
| Segment Profit |
313 |
210 |
96 |
187 |
121 |
97 |
73 |
35 |
1,132 |
| |
310 |
198 |
120 |
157 |
118 |
98 |
86 |
17 |
1,104 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
138 |
| |
|
|
|
|
|
|
|
|
143 |
| Operating profit |
|
|
|
|
|
|
|
|
994 |
| |
|
|
|
|
|
|
|
|
961 |
| Other income, net (Refer to note 2.20) |
|
|
|
|
|
|
|
|
101 |
| |
|
|
|
|
|
|
|
|
68 |
| Finance Cost |
|
|
|
|
|
|
|
|
13 |
| |
|
|
|
|
|
|
|
|
11 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
1,082 |
| |
|
|
|
|
|
|
|
|
1,018 |
| Income tax expense |
|
|
|
|
|
|
|
|
318 |
| |
|
|
|
|
|
|
|
|
294 |
| Net profit |
|
|
|
|
|
|
|
|
764 |
| |
|
|
|
|
|
|
|
|
724 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
138 |
| |
|
|
|
|
|
|
|
|
143 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
2.16.2 Significant clients
No client individually accounted for more than 10%
of the revenues for the three months ended June 30, 2024 and June 30, 2023 respectively.
2.17 Revenue from Operations
Accounting Policy:
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-timeframe basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing, by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products
generally have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are
provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct
separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the
contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Group
uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be
substantially customized as part of the implementation service the entire arrangement fee for license and implementation is
considered to be a single performance obligation and the revenue is recognized using the percentage-of-completion method as the
implementation is performed. Revenue from client training, support and other services arising due to the sale of software products
is recognized as the performance obligations are satisfied. ATS revenue is recognized ratably on a straight-line basis over the
period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
A contract modification is a change in the scope or
price or both of a contract that is approved by the parties to the contract. A contract modification that results in the addition of distinct
performance obligations are accounted for either as a separate contract if the additional services are priced at the standalone selling
price or as a termination of the existing contract and creation of a new contract if they are not priced at the standalone selling price.
If the modification does not result in a distinct performance obligation, it is accounted for as part of the existing contract on a cumulative
catch-up basis.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on
a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored
regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient
to recover the carrying amount of the capitalized costs
The Group presents revenues net of indirect taxes in
its Consolidated Statement of Comprehensive Income.
Revenues for the three months ended June 30, 2024 and
June 30, 2023 is as follows
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenue from software services |
4,496 |
4,349 |
| Revenue from products and platforms |
218 |
268 |
| Total revenue from operations |
4,714 |
4,617 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms like Finacle – core banking solution, Edge Suite of products, Panaya platform, Stater digital platform and Infosys
McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer note 2.16). The table below presents disaggregated revenues from contracts with customers by geography
and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues
and cash flows are affected by industry, market and other economic factors.
For the three months ended June 30, 2024 and June
30, 2023
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenues by Geography* |
|
|
| North America |
2,775 |
2,809 |
| Europe |
1,341 |
1,235 |
| India |
147 |
125 |
| Rest of the world |
451 |
448 |
| Total |
4,714 |
4,617 |
| * | | Geographical revenue is based on the domicile of customer |
The percentage of revenue from fixed-price contracts
for the three months ended June 30, 2024 and June 30, 2023 is 54% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore, unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset
because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivable and unbilled revenues are presented
net of impairment in the consolidated statement of balance sheet.
2.18 Unbilled Revenue
(Dollars in millions)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Unbilled financial asset (1) |
1,119 |
1,151 |
| Unbilled non financial asset (2) |
590 |
593 |
| Total |
1,709 |
1,744 |
| (1) | | Right to consideration is unconditional and is due only after a passage of time. |
| (2) | | Right to consideration is dependent on completion of contractual milestones. |
2.19 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity,
net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/ from Share premium.
Share capital and share premium
The amount received in excess of the par value has
been classified as share premium. Additionally, share-based compensation recognized in net profit in the interim condensed consolidated
statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback from share
premium account.
The Company has only one class of shares referred to
as equity shares having a par value of 5/-.
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Other Reserves
The Special Economic Zone Re-investment reserve has
been created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA (1)(ii) of Income Tax Act, 1961. The reserve
should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the provisions of
the Sec 10AA (2) of the Income Tax Act, 1961.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Cash flow hedge reserve
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the net profit in the interim condensed consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
Other components of equity
Other components of equity include currency translation,
re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive
income, changes on fair valuation of investments, net of taxes.
2.19.1 Voting
Each holder of equity shares is entitled to one vote
per share. The equity shares represented by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other
equity shares. Each ADS represents one underlying equity share.
2.19.2 Liquidation
In the event of liquidation of the company, the holders
of shares shall be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However,
no such preferential amounts exist currently, other than the amounts held by irrevocable controlled trusts. The amount distributed will
be in proportion to the number of equity shares held by the shareholders. For irrevocable controlled trusts, the corpus would be settled
in favor of the beneficiaries.
2.19.3 Share options
There are no voting, dividend or liquidation rights
to the holders of options issued under the company's share option plans.
2.19.4 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 10,246,512 shares and 10,916,829 shares were held by controlled trust, as at June
30, 2024 and March 31, 2024, respectively.
2.19.5 Capital allocation policy
Effective fiscal 2025, the Company expects to continue
its policy of returning approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual
dividends and/or share buyback/ special dividends subject to applicable laws and requisite approvals, if any. Under this policy, the Company
expects to progressively increase its annual dividend per share (excluding special dividend if any).
Free cash flow is defined as net cash provided by operating
activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback include
applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of June 30, 2024, the Company has only one class of equity shares and
has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
Dividend
The final dividend on shares is recorded as a liability
on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company's
Board of Directors. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders is as follows:
| Particulars |
Three months ended June 30, 2024 |
Three months ended June 30, 2023 |
| |
in |
in US Dollars |
in |
in US Dollars |
| Final dividend for fiscal 2023 |
– |
– |
17.50 |
0.21 |
| Special dividend for fiscal 2024 |
8.00 |
0.10 |
– |
– |
| Final dividend for fiscal 2024 |
20.00 |
0.24 |
– |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share (approximately $0.24 per equity share) for the financial year ended
March 31, 2024 and a special dividend of 8/- per equity share (approximately $0.10 per equity share). The same was approved by
the shareholders at the Annual General Meeting (AGM) of the Company held on June 26, 2024 which will result in a net cash outflow of $1,389
million, excluding dividend paid on treasury shares. Payment date for the dividend is July 01, 2024.
2.20 Break-up of expenses and other income, net
Accounting policy
2.20.1 Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly of Infosys and its Indian subsidiaries. The Gratuity Plan provides
a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Group. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM Employees' Gratuity Fund
Trust and EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts
and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement or for a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method.
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
The Group recognizes the net obligation of a defined
benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset)
are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the
portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation
is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profits in the interim condensed consolidated
statement of comprehensive income.
2.20.2 Superannuation
Certain employees of Infosys, Infosys BPM and EdgeVerve
are participants in a defined contribution plan. The Group has no further obligations to the Plan beyond its monthly contributions which
are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
2.20.3 Provident fund
Eligible employees of Infosys receive benefits from
a provident fund, which is a defined benefit plan. Both the eligible employee and the company make monthly contributions to the provident
fund plan equal to a specified percentage of the covered employee's salary. The company contributes a portion of the contributions to
the Infosys Limited Employees' Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law.
The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to
the beneficiaries by the trust is being administered by the Government of India. The company has an obligation to make good the shortfall,
if any, between the return from the investments of the Trust and the notified interest rate.
In respect of Indian subsidiaries, eligible employees
receive benefits from a provident fund, which is a defined contribution plan. Both the eligible employee and the respective companies
make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected
under the provident fund plan are deposited in a government administered provident fund. The companies have no further obligation to the
plan beyond its monthly contributions.
2.20.4 Compensated absences
The Group has a policy on compensated absences which
are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial
valuation performed by an external actuary at each balance sheet date using projected unit credit method on the additional amount expected
to be paid/availed as a result of the unused entitlement that has accumulated at the balance sheet date. Expense on non-accumulating compensated
absences is recognized in the period in which the absences occur.
2.20.5 Other income, net
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
2.20.6 Foreign Currency
Functional currency and presentation currency
The functional currency of Infosys, its Indian subsidiaries
and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are their respective local currencies. These
financial statements are presented in U.S. dollars (rounded off to the nearest million) to facilitate the investors’ ability to
evaluate Infosys’ performance and financial position in comparison to similar companies domiciled in other geographic locations.
Transactions and translations
Foreign-currency denominated monetary assets and liabilities
are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting
from such translations are recognized in the interim condensed Consolidated Statement of Comprehensive Income and reported within exchange
gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow
hedges. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at
the exchange rate prevalent at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated
in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. The related
revenue and expense are recognized using the same exchange rate.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense
and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the Statement of Comprehensive Income. However, when a change in the parent's
ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate in effect
at the Balance Sheet date.
2.20.7 Government grants
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income on a systematic
and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the
statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
2.20.8 Operating Profits
Operating profit of the Group is computed considering
the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
The table below provides details of break-up of expenses:
Cost of sales
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
2,257 |
2,280 |
| Depreciation and amortization |
138 |
143 |
| Travelling costs |
39 |
39 |
| Cost of technical sub-contractors |
380 |
380 |
| Cost of software packages for own use |
67 |
57 |
| Third party items bought for service delivery to clients |
344 |
271 |
| Consultancy and professional charges |
13 |
4 |
| Communication costs |
8 |
11 |
| Repairs and maintenance |
15 |
14 |
| Provision for post-sales client support |
(13) |
6 |
| Others |
11 |
6 |
| Total |
3,259 |
3,211 |
Selling and marketing expenses
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
170 |
168 |
| Travelling costs |
12 |
11 |
| Branding and marketing |
42 |
32 |
| Consultancy and professional charges |
4 |
4 |
| Others |
4 |
2 |
| Total |
232 |
217 |
Administrative expenses
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
83 |
81 |
| Consultancy and professional charges |
36 |
35 |
| Repairs and maintenance |
31 |
30 |
| Power and fuel |
8 |
6 |
| Communication costs |
9 |
11 |
| Travelling costs |
6 |
7 |
| Rates and taxes |
14 |
11 |
| Insurance charges |
9 |
6 |
| Commission to non-whole time directors |
1 |
– |
| Impairment loss recognized/(reversed) under expected credit loss model |
– |
11 |
| Contribution towards Corporate Social Responsibility |
20 |
9 |
| Others |
12 |
21 |
| Total |
229 |
228 |
Other income for the three months June 30, 2024 and
June 30, 2023 is as follows:
(Dollars in millions)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Interest income on financial assets carried at amortized cost |
41 |
33 |
| Interest income on financial assets carried at fair value through other comprehensive income |
39 |
30 |
| Gain/(loss) on investments carried at fair value through profit or loss |
13 |
6 |
| Exchange gains / (losses) on forward and options contracts |
4 |
16 |
| Exchange gains / (losses) on translation of other assets and liabilities |
– |
(17) |
| Others |
4 |
– |
| Total |
101 |
68 |
for and on behalf of the Board of Directors of Infosys Limited
|
|
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director
|
Bobby Parikh
Director |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
|
|
| Bengaluru |
|
|
| July 18, 2024 |
|
|
Exhibit 99.8
IFRS INR Earning Release
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed
consolidated financial statements of INFOSYS LIMITED (the “Company”), and its subsidiaries (the Company and its subsidiaries
together referred to as the “Group”), which comprise the Condensed Consolidated Balance Sheet as at June 30, 2024, the Condensed
Consolidated Statement of Comprehensive Income, the Condensed Consolidated Statement of Changes in Equity and the Condensed Consolidated
Statement of Cash Flows for the three months ended on that date, and notes to the financial statements, including a summary of material
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 June 30,
2024, its consolidated profit and its consolidated total comprehensive income, its consolidated changes in equity and its consolidated
cash flows for the three 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 (“SAs”) issued by the Institute of Chartered
Accountants of India (“ICAI”). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities
for the Audit of the Interim Condensed Consolidated Financial Statements section of our report. We are independent of the Group in accordance
with the Code of Ethics issued by the ICAI, and we have fulfilled our other ethical responsibilities in accordance with the Code of Ethics.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the Interim
Condensed Consolidated Financial Statements.
Responsibilities of Management and Those
Charged with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these Interim Condensed Consolidated Financial Statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with IAS 34 as issued by the IASB. The respective Boards of Directors/Trustees
of the entities included in the Group are responsible for maintenance of the adequate accounting records for safeguarding assets of the
Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies;
making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial
controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation
and presentation of the respective interim financial statements that give a true and fair view and are free from material misstatement,
whether due to fraud or error which have been used for the purpose of preparation of the Interim Condensed Consolidated Financial Statements
by the Directors of the Company, as aforesaid.
In preparing the Interim Condensed Consolidated
Financial Statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing
the ability of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the respective Boards of Directors either intend to liquidate their respective entities
or to cease operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees
of the entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s
Responsibilities for the Audit of the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance
about whether the Interim Condensed Consolidated Financial Statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these Interim Condensed Consolidated Financial Statements.
As part of
an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the Interim Condensed Consolidated Financial
Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the Interim Condensed Consolidated Financial Statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the Interim Condensed Consolidated Financial
Statements, including the disclosures, and whether the Interim Condensed Consolidated Financial Statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within
the Group to express an opinion on the Interim Condensed Consolidated Financial Statements. We are responsible for the direction, supervision
and performance of the audit of financial statements of such entities included in the Interim Condensed Consolidated Financial Statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements
in the Interim Condensed Consolidated Financial Statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the Interim Condensed Consolidated Financial Statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the Interim Condensed Consolidated Financial Statements.
We communicate with those charged with governance
of the Company and such other entities included in the Interim Condensed Consolidated Financial Statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal financial controls that we identify during our audit.
We also provide those charged with governance
with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: July 18, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
Vikas Bagaria
Partner
(Membership No.060408)
UDIN: 24060408BKFSMG8848 |
INFOSYS LIMITED AND SUBSIDIARIES
Condensed Consolidated Financial Statements under
International Financial Reporting Standards (IFRS) in Indian Rupee for the three months ended June 30, 2024
| 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 Earmarked bank balance for dividend |
| 2.3 Investments |
| 2.4 Financial instruments |
| 2.5 Prepayments and other assets |
| 2.6 Other liabilities |
| 2.7 Provisions and other contingencies |
| 2.8 Property, plant and equipment |
| 2.9 Leases |
| 2.10 Goodwill and Intangible Assets |
| 2.11 Business combinations |
| 2.12 Employees' Stock Option Plans (ESOP) |
| 2.13 Income Taxes |
| 2.14 Reconciliation of basic and diluted shares used in computing earnings per equity share |
| 2.15 Related party transactions |
| 2.16 Segment reporting |
| 2.17 Revenue from Operations |
| 2.18 Unbilled Revenue |
| 2.19 Equity |
| 2.20 Break-up of expenses and other income, net |
Infosys Limited and subsidiaries
(In crore except equity share data)
| Condensed Consolidated Balance Sheet as at |
Note |
June 30, 2024 |
March 31, 2024 |
| ASSETS |
|
|
|
| Current assets |
|
|
|
| Cash and cash equivalents |
2.1 |
16,432 |
14,786 |
| Earmarked bank balance for dividend |
2.2 |
11,625 |
- |
| Current investments |
2.3 |
8,762 |
12,915 |
| Trade receivables |
|
30,930 |
30,193 |
| Unbilled revenue |
2.18 |
12,601 |
12,768 |
| Prepayments and other current assets |
2.5 |
12,587 |
12,289 |
| Income tax assets |
2.13 |
3,032 |
6,397 |
| Derivative financial instruments |
2.4 |
86 |
84 |
| Total current assets |
|
96,055 |
89,432 |
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.8 |
12,540 |
12,818 |
| Right-of-use assets |
2.9 |
6,512 |
6,552 |
| Goodwill |
2.10 |
7,405 |
7,303 |
| Intangible assets |
|
1,391 |
1,397 |
| Non-current investments |
2.3 |
11,174 |
11,708 |
| Unbilled revenue |
2.18 |
1,652 |
1,780 |
| Deferred income tax assets |
2.13 |
469 |
454 |
| Income tax assets |
2.13 |
3,487 |
3,045 |
| Other non-current assets |
2.5 |
3,334 |
3,325 |
| Total non-current assets |
|
47,964 |
48,382 |
| Total assets |
|
144,019 |
137,814 |
| LIABILITIES AND EQUITY |
|
|
|
| Current liabilities |
|
|
|
| Trade payables |
|
3,693 |
3,956 |
| Lease liabilities |
2.9 |
2,187 |
1,959 |
| Derivative financial instruments |
2.4 |
28 |
31 |
| Current income tax liabilities |
2.13 |
4,494 |
3,585 |
| Unearned revenue |
|
6,956 |
7,341 |
| Employee benefit obligations |
|
2,805 |
2,622 |
| Provisions |
2.7 |
1,504 |
1,796 |
| Other current liabilities |
2.6 |
29,084 |
17,504 |
| Total current liabilities |
|
50,751 |
38,794 |
| Non-current liabilities |
|
|
|
| Lease liabilities |
2.9 |
6,174 |
6,400 |
| Deferred income tax liabilities |
2.13 |
1,474 |
1,794 |
| Employee benefit obligations |
|
93 |
89 |
| Other non-current liabilities |
2.6 |
2,109 |
2,276 |
| Total non-current liabilities |
|
9,850 |
10,559 |
| Total liabilities |
|
60,601 |
49,353 |
| Equity |
|
|
|
| Share capital - 5 par value 4,800,000,000 (4,800,000,000) equity shares authorized, issued and outstanding 4,141,781,963 (4,139,950,635) equity shares fully paid up, net of 10,246,512 (10,916,829) treasury shares as at June 30, 2024 (March 31, 2024) |
2.19 |
2,072 |
2,071 |
| Share premium |
|
1,744 |
1,550 |
| Retained earnings |
|
64,814 |
69,674 |
| Cash flow hedge reserves |
|
3 |
6 |
| Other reserves |
|
11,753 |
12,104 |
| Capital redemption reserve |
|
169 |
169 |
| Other components of equity |
|
2,514 |
2,542 |
| Total equity attributable to equity holders of the Company |
|
83,069 |
88,116 |
| Non-controlling interests |
|
349 |
345 |
| Total equity |
|
83,418 |
88,461 |
| Total liabilities and equity |
|
144,019 |
137,814 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
Infosys Limited and subsidiaries
(In crore except equity share and per equity
share data)
| Condensed Consolidated Statement of Comprehensive Income for the |
Note |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Revenues |
2.17 |
39,315 |
37,933 |
| Cost of sales |
2.20 |
27,177 |
26,382 |
| Gross profit |
|
12,138 |
11,551 |
| Operating expenses |
|
|
|
| Selling and marketing expenses |
2.20 |
1,937 |
1,783 |
| Administrative expenses |
2.20 |
1,913 |
1,877 |
| Total operating expenses |
|
3,850 |
3,660 |
| Operating profit |
|
8,288 |
7,891 |
| Other income, net |
2.20 |
838 |
561 |
| Finance cost |
|
105 |
90 |
| Profit before income taxes |
|
9,021 |
8,362 |
| Income tax expense |
2.13 |
2,647 |
2,417 |
| Net profit |
|
6,374 |
5,945 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
20 |
87 |
| Equity instruments through other comprehensive income, net |
2.3 |
14 |
1 |
| |
|
34 |
88 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(3) |
6 |
| Exchange differences on translation of foreign operations |
|
(104) |
15 |
| Fair value changes on investments, net |
2.3 |
40 |
75 |
| |
|
(67) |
96 |
| Total other comprehensive income/(loss), net of tax |
|
(33) |
184 |
| Total comprehensive income |
|
6,341 |
6,129 |
| Profit attributable to: |
|
|
|
| Owners of the Company |
|
6,368 |
5,945 |
| Non-controlling interests |
|
6 |
- |
| |
|
6,374 |
5,945 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
6,337 |
6,132 |
| Non-controlling interests |
|
4 |
(3) |
| |
|
6,341 |
6,129 |
| Earnings per equity share |
|
|
|
| Equity shares of par value 5/- each |
|
|
|
| Basic () |
|
15.38 |
14.37 |
| Diluted () |
|
15.35 |
14.35 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
| Basic (in shares) |
2.14 |
4,140,272,627 |
4,137,234,750 |
| Diluted (in shares) |
2.14 |
4,148,077,672 |
4,142,207,951 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
Infosys Limited and subsidiaries
(In crore except equity share data)
|
Condensed Consolidated Statement of Changes in Equity
|
Number
of Shares(1) |
Share
Capital |
Share
premium |
Retained
earnings |
Other
reserves(2) |
Capital
redemption
reserve |
Other
components
of equity |
Cash flow
hedge reserve |
Total equity
attributable to equity
holders of the Company |
Non-controlling
interest |
Total equity |
| Balance as at April 1, 2023 |
4,136,387,925 |
2,069 |
1,065 |
60,063 |
10,014 |
169 |
2,032 |
(5) |
75,407 |
388 |
75,795 |
| Changes in equity for three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
– |
– |
– |
5,945 |
– |
– |
– |
– |
5,945 |
– |
5,945 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
87 |
– |
87 |
– |
87 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
1 |
– |
1 |
– |
1 |
| Fair value changes on derivatives designated as Cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
6 |
6 |
– |
6 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
18 |
– |
18 |
(3) |
15 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
75 |
– |
75 |
– |
75 |
| Total comprehensive income for the period |
– |
– |
– |
5,945 |
– |
– |
181 |
6 |
6,132 |
(3) |
6,129 |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
2,066,083 |
1 |
1 |
– |
– |
– |
– |
– |
2 |
– |
2 |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
144 |
– |
– |
– |
– |
– |
144 |
– |
144 |
| Transfer on account of options not exercised |
– |
– |
(6) |
6 |
– |
– |
– |
– |
– |
– |
– |
| Transferred to other reserves |
– |
– |
– |
(760) |
760 |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
202 |
(202) |
– |
– |
– |
– |
– |
– |
|
Dividends#
|
– |
– |
– |
(7,242) |
– |
– |
– |
– |
(7,242) |
– |
(7,242) |
|
Balance as at June 30, 2023
|
4,138,454,008 |
2,070 |
1,204 |
58,214 |
10,572 |
169 |
2,213 |
1 |
74,443 |
385 |
74,828 |
|
Balance as at April 1, 2024
|
4,139,950,635 |
2,071 |
1,550 |
69,674 |
12,104 |
169 |
2,542 |
6 |
88,116 |
345 |
88,461 |
| Changes in equity for three months ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
| Net profit |
|
– |
– |
– |
6,368 |
– |
– |
– |
– |
6,368 |
6 |
6,374 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
20 |
– |
20 |
– |
20 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
14 |
– |
14 |
– |
14 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
(3) |
(3) |
– |
(3) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
(102) |
– |
(102) |
(2) |
(104) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
40 |
– |
40 |
– |
40 |
| Total comprehensive income for the period |
– |
– |
– |
6,368 |
– |
– |
(28) |
(3) |
6,337 |
4 |
6,341 |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
1,831,328 |
1 |
2 |
– |
– |
– |
– |
– |
3 |
– |
3 |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
208 |
– |
– |
– |
– |
– |
208 |
– |
208 |
| Income tax benefit arising on exercise of stock options (Refer to note 2.13) |
– |
– |
2 |
– |
– |
– |
– |
– |
2 |
– |
2 |
| Transferred on account of options not exercised |
– |
– |
(18) |
18 |
– |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves on utilization |
– |
– |
– |
104 |
(104) |
– |
– |
– |
– |
– |
– |
| Transferred from other reserves to retained earnings |
– |
– |
– |
247 |
(247) |
– |
– |
– |
– |
– |
– |
| Dividends# |
– |
– |
– |
(11,597) |
– |
– |
– |
– |
(11,597) |
– |
(11,597) |
| Balance as at June 30, 2024 |
4,141,781,963 |
2,072 |
1,744 |
64,814 |
11,753 |
169 |
2,514 |
3 |
83,069 |
349 |
83,418 |
| (1) | | excludes treasury shares of 10,246,512 as at June 30, 2024, 10,916,829 as at April 1,
2024, 11,738,357 as at June 30, 2023 and 12,172,119 as at April 1, 2023 held by consolidated trust. |
| (2) | | Represents the Special Economic Zone Re-investment reserve created out of the profit of
the eligible SEZ unit in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act,1961. The reserve should be utilized by the Group
for acquiring new plant and machinery for the purpose of its business in terms of the provisions of the Sec 10AA(2) of the Income Tax
Act, 1961. |
The accompanying notes form an integral part of the
interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
Infosys Limited and subsidiaries
Condensed Consolidated Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
Note |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Operating activities |
|
|
|
| Net Profit |
|
6,374 |
5,945 |
| Adjustments to reconcile net profit to net cash provided by operating activities |
|
|
|
| Depreciation and amortization |
|
1,149 |
1,173 |
| Income tax expense |
2.13 |
2,647 |
2,417 |
| Finance cost |
|
106 |
90 |
| Interest and dividend income |
|
(359) |
(278) |
| Exchange differences on translation of assets and liabilities, net |
|
23 |
(20) |
| Impairment loss recognized/(reversed) under expected credit loss model |
|
(3) |
91 |
| Stock compensation expense |
|
211 |
146 |
| Provision for post sale client support |
|
(108) |
50 |
| Other adjustments |
|
55 |
508 |
| Changes in working capital |
|
|
|
| Trade receivables and unbilled revenue |
|
(499) |
(101) |
| Prepayments and other assets |
|
(167) |
(158) |
| Trade payables |
|
(271) |
(106) |
| Unearned revenue |
|
(385) |
167 |
| Other liabilities and provisions |
|
(4) |
(1,989) |
| Cash generated from operations |
|
8,769 |
7,935 |
| Income taxes (paid)/received |
|
841 |
(1,379) |
| Net cash generated by operating activities |
|
9,610 |
6,556 |
| Investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(455) |
(807) |
| Deposits placed with corporation |
|
(335) |
(444) |
| Redemption of deposits placed with corporation |
|
120 |
252 |
| Interest and dividend received |
|
299 |
275 |
| Payment for acquisition of business, net of cash acquired |
2.10 |
(124) |
– |
| Payments to acquire Investments |
|
|
|
| - Quoted debt securities |
|
(1,051) |
(104) |
| - Liquid mutual fund units |
|
(16,989) |
(17,680) |
| - Certificates of deposit |
|
(1,440) |
(1,285) |
| - Commercial paper |
|
(2,226) |
(1,558) |
| - Other investments |
|
(6) |
(3) |
| Proceeds on sale of investments |
|
|
|
| - Quoted debt securities |
|
690 |
601 |
| - Liquid mutual fund units |
|
15,975 |
17,304 |
| - Certificates of deposit |
|
2,820 |
3,974 |
| - Commercial paper |
|
7,135 |
824 |
| Other receipts |
|
1 |
126 |
| Net cash (used)/generated in investing activities |
|
4,414 |
1,475 |
| Financing activities |
|
|
|
| Payment of lease liabilities |
|
(576) |
(439) |
| Payment of dividends |
|
– |
(1) |
| Other payments |
|
(118) |
(209) |
| Shares issued on exercise of employee stock options |
|
3 |
2 |
| Net cash used in financing activities |
|
(691) |
(647) |
| Net increase/(decrease) in cash and cash equivalents |
|
13,333 |
7,384 |
| Effect of exchange rate changes on cash and cash equivalents |
|
(62) |
15 |
| Cash and cash equivalents at the beginning of the period |
2.1 |
14,786 |
12,173 |
| Cash and cash equivalents at the end of the period |
2.1 |
28,057 |
19,572 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.1 |
398 |
381 |
| Closing cash and cash equivalents as per consolidated statement of cash flows |
|
28,057 |
19,572 |
| Less: Earmarked bank balance for dividend |
|
11,625 |
7,262 |
| Closing cash and cash equivalents as per Consolidated Balance Sheet |
|
16,432 |
12,310 |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
INFOSYS LIMITED AND SUBSIDIARIES
Overview and Notes to the Interim condensed Consolidated
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is herein after referred to as the "Group".
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics City, Hosur Road, Bengaluru -560100, Karnataka, India. The Company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the Company's Board of Directors on July 18, 2024.
1.2 Basis of preparation of financial statements
The interim condensed consolidated financial statements
have been prepared in compliance with IAS 34, Interim Financial Reporting as issued by International Accounting Standards Board, 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, 2024. Accounting
policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing
accounting standard requires a change in the accounting policy hitherto in use.
The material accounting policy information used in
preparation of the audited interim condensed consolidated financial statements have been discussed in the respective notes.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls.
The interim condensed consolidated financial statements comprise the financial statements of the Company, its controlled trusts and its
subsidiaries. Control exists when the parent has power over the entity, is exposed, or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing
rights that give the ability to direct relevant activities, those which significantly affect the entity's returns. Subsidiaries are consolidated
from the date control commences until the date control ceases.
The financial statements of the Group Companies are
consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions
are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group.
Non-controlling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly,
owned or controlled by the Company, are excluded.
1.4 Use of estimates and judgments
The preparation of the interim condensed consolidated
financial statements in conformity with 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 judgments are reflected in the financial statements in the
period in which changes are made and, if material, their effects are disclosed in the notes to the interim condensed consolidated financial
statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to the contract are committed
to perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from a fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the
provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax
assets, the Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and
tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, the Management believes that the group will realize the
benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced
in the near term if estimates of future taxable income during the carry forward period are reduced. (Refer to Note 2.13)
c. Business combinations and intangible assets
Business combinations are accounted for using IFRS
3 (Revised), Business Combinations. IFRS 3 requires us to fair value identifiable intangible assets and contingent consideration to ascertain
the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are conducted by external
valuation experts. Estimates are required to be made in determining the value of contingent consideration, value of option arrangements
and intangible assets. These measurements are based on information available at the acquisition date and are based on expectations and
assumptions that have been deemed reasonable by Management. (Refer to Note 2.11 and 2.10.2).
d. Property, plant and equipment
Property, plant and equipment represent a significant
proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate of
an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of
Group's assets are determined by Management at the time the asset is acquired and reviewed periodically, including at each financial year
end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their
life, such as changes in technology. (Refer to Note 2.8).
e. Impairment of Goodwill
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGUs) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based
on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current
economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins.
1.6 Recent accounting pronouncements
New and revised IFRS Standards in issue but not yet
effective:
| Amendments to IAS 21 The Effects of Changes in Foreign
Exchange Rates |
Lack of Exchangeability |
| IFRS 18 Presentation and Disclosures in Financial Statements |
Presentation and Disclosures in Financial Statements |
| Amendments to IFRS 9 Financial Instruments and IFRS 7
Financial Instruments: Disclosures |
Amendments to the Classification and Measurement of Financial Instruments |
Amendments to IAS 21
On August 15, 2023, IASB has issued amendments to IAS
21 The Effects of Changes in Foreign Exchange Rates, Lack of Exchangeability that will require companies to provide more useful information
in their financial statements when a currency cannot be exchanged into another currency. These amendments specify when a currency is exchangeable
into another currency and when it is not and specify how an entity determines the exchange rate to apply when a currency is not exchangeable.
The effective date for adoption of this amendment is
annual periods beginning on or after January 1, 2025, although early adoption is permitted. The Group is in the process of evaluating
the impact of the amendment.
IFRS 18 – Presentation and Disclosures in
Financial Statements
On April 9, 2024, IASB has issued IFRS 18 – Presentation
and Disclosures in Financial Statements that will replace IAS 1 Presentation of Financial Statements from its effective date. IFRS 18
introduces new requirements for information presented in the primary financial statements and disclosed in the notes. The new requirements
are focused on the statement of profit or loss. IFRS 18 introduces three categories for income and expenses, that is, operating, investing
and financing to improve the structure of the income statement. IFRS 18 is effective for annual reporting periods beginning on or after
1 January 2027, although early adoption is permitted. The Group is yet to evaluate the impact of the amendment.
Amendments to IFRS 9 Financial Instruments and IFRS
7 Financial Instruments: Disclosures
On May 30, 2024, IASB has issued amendments to IFRS
9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures, which clarifies the classification of financial assets with environmental,
social and corporate governance (ESG) and similar features, derecognition of financial liability settled through electronic payment systems
and also introduces additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments
designated at fair value through other comprehensive income and financial instruments with contingent features.
The effective date for adoption of this amendment is
annual reporting periods beginning on or after January 1, 2026, although early adoption is permitted. The Group is yet to evaluate the
impact of the amendment.
2. Notes to the Interim condensed Consolidated Financial
Statements
2.1 Cash and cash equivalents
Cash and cash equivalents consist of the following:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Cash and bank deposits |
16,432 |
14,786 |
| Total Cash and cash equivalents |
16,432 |
14,786 |
Cash and cash equivalents as at June 30, 2024 and March
31, 2024 include restricted cash and bank balances of 398 crore and 348 crore, respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the Company.
The deposits maintained by the Group with banks and financial
institutions comprise of time deposits, which can be withdrawn by the Group at any point without prior notice or penalty on the principal.
2.2 Earmarked bank balance for dividend
(In crore)
| Particulars |
As at |
|
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Earmarked bank balance for dividend |
11,625 |
– |
| Total |
11,625 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June
26, 2024. Payment date for the dividend is July 01, 2024. Earmarked bank balance for dividend represents cash which is deposited in a
designated bank account only for payment of final dividend and special dividend for financial year ended March 31, 2024.
2.3 Investments
The carrying value of the investments are as follows:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| (i) Current Investments |
|
|
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
3,315 |
2,427 |
| Commercial papers |
- |
4,830 |
| Certificate of deposit |
1,718 |
3,043 |
| Fair Value through profit or loss |
|
|
| Liquid mutual fund units |
3,729 |
2,615 |
| Total current investments |
8,762 |
12,915 |
| (ii) Non-current Investments |
|
|
| Amortized Cost |
|
|
| Quoted debt securities |
1,756 |
1,759 |
| Fair Value through other comprehensive income |
|
|
| Quoted debt securities |
8,554 |
9,114 |
| Quoted equity securities |
129 |
113 |
| Unquoted equity and preference securities |
93 |
93 |
| Fair Value through profit or loss |
|
|
| Target maturity fund units |
439 |
431 |
| Others(1) |
203 |
198 |
| Total non-current investments |
11,174 |
11,708 |
| |
|
|
| Total investments |
19,936 |
24,623 |
| Investments carried at amortized cost |
1,756 |
1,759 |
| Investments carried at fair value through other comprehensive income |
13,809 |
19,620 |
| Investments carried at fair value through profit or loss |
4,371 |
3,244 |
| (1) | | Uncalled capital commitments outstanding as at June 30, 2024 and March 31, 2024 was 72
crore and 79 crore, respectively. |
Refer to note 2.4 for accounting policies on financial
instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
June 30, 2024 |
March 31, 2024 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
3,729 |
2,615 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
439 |
431 |
| Quoted debt securities- carried at amortized cost |
Quoted price and market observable inputs |
1,968 |
1,973 |
| Quoted debt securities- carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
11,869 |
11,541 |
| Commercial papers- carried at fair value through other comprehensive income |
Market observable inputs |
- |
4,830 |
| Certificates of deposit- carried at fair value through other comprehensive income |
Market observable inputs |
1,718 |
3,043 |
| Quoted equity securities carried at fair value through other comprehensive income |
Quoted price |
129 |
113 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, option pricing model |
93 |
93 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, option pricing model |
203 |
198 |
| Total |
|
20,148 |
24,837 |
Note: Certain quoted investments are classified
as Level 2 in the absence of active market for such investments.
2.4 Financial instruments
Accounting Policy
2.4.1 Initial recognition
The Group recognizes financial assets and financial
liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial liabilities which are not at fair value through
profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for
at trade date.
2.4.2 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 are subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
The Group holds derivative financial instruments such
as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities, carried
at fair value through profit or loss
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the Group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under IFRS 9, Financial Instruments. Any derivative
that is either not designated as hedge, or is so designated but is ineffective as per IFRS 9, is categorized as a financial asset or financial
liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized
initially at fair value and attributable transaction costs are recognized in net profit in the consolidated statement of comprehensive
income when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting
exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities
if they are either held for trading or are expected to be realized within 12 months after the Balance Sheet date.
(ii) Cash flow hedge
The Group designates certain foreign exchange forward
and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in
the net profit in the interim consolidated statement of comprehensive income. If the hedging instrument no longer meets the criteria for
hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised,
the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective
remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the
cash flow hedging reserve is transferred to the net profit in the consolidated statement of comprehensive income upon the occurrence of
the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash
flow hedging reserve is reclassified to net profit in the consolidated statement of comprehensive income.
2.4.3 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.
2.4.4 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,
option pricing model, market multiples, 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.
2.4.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For
all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in which case those are measured at lifetime ECL.
The Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in the consolidated statement of comprehensive income.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at June 30, 2024 are as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets / liabilities at fair value through profit or loss |
Financial assets / liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
16,432 |
– |
– |
– |
– |
16,432 |
16,432 |
| Earmarked bank balance for dividend (Refer to note 2.2) |
11,625 |
– |
– |
– |
– |
11,625 |
11,625 |
| Investments (Refer to note 2.3) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
3,729 |
– |
– |
3,729 |
3,729 |
| Target maturity fund units |
– |
– |
439 |
– |
– |
439 |
439 |
| Quoted debt securities |
1,756 |
– |
– |
– |
11,869 |
13,625 |
13,837 (1) |
| Certificates of deposit |
– |
– |
– |
– |
1,718 |
1,718 |
1,718 |
| Quoted equity securities |
– |
– |
– |
129 |
– |
129 |
129 |
| Unquoted equity and preference securities |
– |
– |
– |
93 |
– |
93 |
93 |
| Unquoted investment others |
– |
– |
203 |
– |
– |
203 |
203 |
| Trade receivables |
30,930 |
– |
– |
– |
– |
30,930 |
30,930 |
| Unbilled revenues (Refer to note 2.18)(3) |
9,329 |
– |
– |
– |
– |
9,329 |
9,329 |
| Prepayments and other assets (Refer to note 2.5) |
5,945 |
– |
– |
– |
– |
5,945 |
5,856 (2) |
| Derivative financial instruments |
– |
– |
68 |
– |
18 |
86 |
86 |
| Total |
76,017 |
– |
4,439 |
222 |
13,605 |
94,283 |
94,406 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,693 |
– |
– |
– |
– |
3,693 |
3,693 |
| Lease liabilities (Refer to note 2.9) |
8,361 |
– |
– |
– |
– |
8,361 |
8,361 |
| Derivative financial instruments |
– |
– |
25 |
– |
3 |
28 |
28 |
Financial liability under option arrangements
(Refer to note 2.6) |
– |
– |
590 |
– |
– |
590 |
590 |
| Other liabilities including contingent consideration (Refer to note 2.6) |
25,686 |
– |
30 |
– |
– |
25,716 |
25,716 |
| Total |
37,740 |
– |
645 |
– |
3 |
38,388 |
38,388 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of 89
crore. |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2024 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.1) |
14,786 |
– |
– |
– |
– |
14,786 |
14,786 |
| Investments (Refer to note 2.3) |
|
|
|
|
|
|
|
| Liquid mutual fund units |
– |
– |
2,615 |
– |
– |
2,615 |
2,615 |
| Target maturity fund units |
– |
– |
431 |
– |
– |
431 |
431 |
| Quoted debt securities |
1,759 |
– |
– |
– |
11,541 |
13,300 |
13,514 (1) |
| Commercial papers |
– |
– |
– |
– |
4,830 |
4,830 |
4,830 |
| Certificates of deposit |
– |
– |
– |
– |
3,043 |
3,043 |
3,043 |
| Quoted equity securities |
– |
– |
– |
113 |
– |
113 |
113 |
| Unquoted equity and preference securities |
– |
– |
– |
93 |
– |
93 |
93 |
| Unquoted investments others |
– |
– |
198 |
– |
– |
198 |
198 |
| Trade receivables |
30,193 |
– |
– |
– |
– |
30,193 |
30,193 |
| Unbilled revenue (Refer to note 2.18)(3) |
9,600 |
– |
– |
– |
– |
9,600 |
9,600 |
| Prepayments and other assets (Refer to note 2.5) |
5,788 |
– |
– |
– |
– |
5,788 |
5,704 (2) |
| Derivative financial instruments |
– |
– |
61 |
– |
23 |
84 |
84 |
| Total |
62,126 |
– |
3,305 |
206 |
19,437 |
85,074 |
85,204 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,956 |
– |
– |
– |
– |
3,956 |
3,956 |
| Lease liabilities (Refer to note 2.9) |
8,359 |
– |
– |
– |
– |
8,359 |
8,359 |
| Derivative financial instruments |
– |
– |
30 |
– |
1 |
31 |
31 |
| Financial liability under option arrangements (Refer to note 2.6) |
– |
– |
597 |
– |
– |
597 |
597 |
| Other liabilities including contingent consideration (Refer to note 2.6) |
15,750 |
– |
– |
– |
– |
15,750 |
15,750 |
| Total |
28,065 |
– |
627 |
– |
1 |
28,693 |
28,693 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on quoted debt securities carried at amortized cost of 84
crore. |
| (3) | | Excludes unbilled revenue for contracts where the right to consideration is dependent
on completion of contractual milestones |
For trade receivables, trade payables and other assets
and payables maturing within one year from the balance sheet date, the carrying amounts approximate fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at June 30, 2024 is as follows:
(In crore)
| Particulars |
As at
June 30, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.3) |
|
|
|
|
| Investments in liquid mutual fund units |
3,729 |
3,729 |
– |
– |
| Investments in target maturity fund units |
439 |
439 |
– |
– |
| Investments in quoted debt securities |
13,837 |
12,984 |
853 |
– |
| Investments in certificates of deposit |
1,718 |
– |
1,718 |
– |
| Investments in quoted equity securities |
129 |
129 |
– |
– |
| Investments in unquoted equity and preference securities |
93 |
– |
– |
93 |
| Investments in unquoted investments others |
203 |
– |
– |
203 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts |
86 |
– |
86 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts |
28 |
– |
28 |
– |
| Financial liability under option arrangements (Refer to note 2.6)(1) |
590 |
– |
– |
590 |
| Liability towards contingent consideration (Refer to note 2.6)(2) |
30 |
– |
– |
30 |
| (1) | | Discount rate ranges from 9% to 15% |
During the three month ended June 30, 2024, quoted
debt securities of 72 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on
quoted price and quoted debt securities of 606 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these
were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2024 was as follows:
(In crore)
| Particulars |
As at
March 31, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.3) |
|
|
|
|
| Investments in liquid mutual fund units |
2,615 |
2,615 |
– |
– |
| Investments in target maturity fund units |
431 |
431 |
– |
– |
| Investments in quoted debt securities |
13,514 |
13,184 |
330 |
– |
| Investments in unquoted equity and preference securities |
93 |
– |
– |
93 |
| Investments in quoted equity securities |
113 |
113 |
– |
– |
| Investments in certificates of deposit |
3,043 |
– |
3,043 |
– |
| Investments in commercial papers |
4,830 |
– |
4,830 |
– |
| Investments in unquoted investments others |
198 |
– |
– |
198 |
| Others |
|
|
|
|
| Derivative financial instruments- gain on outstanding foreign exchange forward and option contracts |
84 |
– |
84 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments- loss on outstanding foreign exchange forward and option contracts |
31 |
– |
31 |
– |
| Financial liability under option arrangements (Refer to note 2.6)(1) |
597 |
– |
– |
597 |
| (1) | | Discount rate ranges from 9% to 15% |
During the year ended March 31, 2024, quoted debt securities
of 2,143 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price
and quoted debt securities of 73 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
quoted debt securities, certificates of deposit, commercial paper, quoted bonds issued by government and quasi-government organizations.
The Group invests after considering counterparty risks based on multiple criteria including Tier I Capital, Capital Adequacy Ratio, Credit
Rating, Profitability, NPA levels and Deposit base of banks and financial institutions. These risks are monitored regularly as per Group’s
risk management program.
2.5 Prepayments and other assets
Prepayments and other assets consist of the following:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Security deposits(1) |
66 |
75 |
| Loans to employees(1) |
251 |
248 |
| Prepaid expenses(2) |
3,502 |
3,329 |
| Interest accrued and not due(1) |
286 |
537 |
| Withholding taxes and others(2) |
3,326 |
3,540 |
| Advance payments to vendors for supply of goods(2) |
480 |
356 |
| Deposit with corporations(1)(3) |
2,739 |
2,535 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract (2) |
254 |
200 |
| Cost of fulfillment (2) |
409 |
358 |
| Other non financial assets (2) |
212 |
180 |
| Other financial assets(1)(4) |
1,062 |
931 |
| Total Current prepayment and other assets |
12,587 |
12,289 |
| Non-current |
|
|
| Security deposits(1) |
267 |
259 |
| Loans to employees(1) |
29 |
34 |
| Prepaid expenses(2) |
319 |
343 |
| Withholding taxes and others(2) |
678 |
673 |
| Deposit with corporations(1)(3) |
58 |
47 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract (2) |
111 |
129 |
| Cost of fulfillment (2) |
651 |
687 |
| Defined benefit plan assets(2) |
34 |
31 |
| Other financial assets(1)(4) |
1,187 |
1,122 |
| Total Non- current prepayment and other assets |
3,334 |
3,325 |
| Total prepayment and other assets |
15,921 |
15,614 |
| (1) Financial assets carried at amortized cost |
5,945 |
5,788 |
Withholding taxes and others primarily consist of input
tax credits and Cenvat/VAT recoverable from Government of India.
| (3) | | Deposit with corporation represents amounts deposited to settle certain employee-related
obligations as and when they arise during the normal course of business. |
| (4) | | Primarily includes net investment in lease arising on assets that are leased to customers
for a contract term normally ranging between 3 to 4 years, with lease payments generally due in monthly installments. |
2.6 Other liabilities
Other liabilities comprise the following:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Accrued compensation to employees(1) |
3,807 |
4,454 |
| Accrued defined benefit liability (3) |
9 |
5 |
| Accrued expenses(1) |
8,396 |
8,224 |
| Withholding taxes and others(3) |
4,625 |
3,185 |
| Liabilities of controlled trusts(1) |
211 |
211 |
| Liability towards contingent consideration(2) |
12 |
– |
| Final dividend payable to shareholders(1)(5) |
10,452 |
– |
| Capital Creditors(1) |
227 |
310 |
| Financial liability under option arrangements(2)(4) |
492 |
499 |
| Other non-financial liabilities (3) |
10 |
8 |
| Other financial liabilities(1)(6) |
843 |
608 |
| Total current other liabilities |
29,084 |
17,504 |
| Non-current |
|
|
| Accrued expenses(1) |
1,690 |
1,779 |
| Accrued defined benefit liability (3) |
168 |
159 |
| Accrued compensation to employees(1) |
11 |
7 |
| Liability towards contingent consideration(2) |
18 |
– |
| Financial liability under option arrangements(2)(4) |
98 |
98 |
| Other financial liabilities(1)(6) |
49 |
157 |
| Other non-financial liabilities(3) |
75 |
76 |
| Total non-current other liabilities |
2,109 |
2,276 |
| Total other liabilities |
31,193 |
19,780 |
| (1) Financial liability carried at amortized cost |
25,686 |
15,750 |
| (2) Financial liability carried at fair value through profit or loss |
620 |
597 |
| (3) | | Non financial liabilities |
| (4) | | Represents liability related to options issued by the Group over the non-controlling interests
in its subsidiaries |
| (5) | | Pertains to final dividend and special dividend declared by the Company for fiscal 2024 and
approved by the shareholders on June 26, 2024. Payment date for dividend is July 01, 2024 (refer to note 2.19.5) |
| (6) | | The Group entered into financing arrangements with a third party towards technology assets
taken over by the Group from a customer as a part of transformation project which was not considered as distinct goods or services as
the control related to those assets was not transferred to the Group in accordance with Ind AS 115 - Revenue from contract with customers.
As at June 30, 2024 and March 31, 2024, the financial liability pertaining to such arrangements amounts to 263 crore and 372
crore, respectively. |
Accrued expenses primarily relates to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses and office
maintenance and cost of third party software and hardware.
2.7 Provisions and other contingencies
Accounting Policy
2.7.1 Provisions
A provision is recognized if, as a result of a past
event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time
related revenues are recorded and included in cost of sales. The Group estimates such costs based on historical experience and estimates
are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when
the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations
under the contract. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete the contract. The provision is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established
the Group recognizes any impairment loss on the assets associated with that contract.
Provision for post sales client support and other
provisions
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Post sales client support and other provisions |
1,504 |
1,796 |
| Total provisions |
1,504 |
1,796 |
Provision for post sales client support and other provisions
majorly represents cost associated with providing post sales support services which are accrued at the time of recognition of revenues
and are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the interim condensed consolidated statement of comprehensive income.
As at June 30, 2024 and March 31, 2024 claims against
the Group, not acknowledged as debts, (excluding demands from income tax authorities - Refer to note 2.13) amounted to 822 crore
and 789 crore respectively.
2.7.2 McCamish Cybersecurity incident
In November 2023, certain systems of Infosys McCamish
Systems LLC (“McCamish”), a subsidiary of Infosys BPM Limited (a wholly owned subsidiary of Infosys Limited), were encrypted
by ransomware, resulting in the nonavailability of certain applications and systems. McCamish initiated its incident response and engaged
cybersecurity and other specialists to assist in its investigation of and response to the incident and remediation and restoration of
impacted applications and systems. By December 31, 2023, McCamish, with external specialists’ assistance, substantially remediated
and restored the affected applications and systems.
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. McCamish also engaged a third-party eDiscovery vendor in assessing the extent and
nature of such data. McCamish in coordination with its third-party eDiscovery vendor has identified corporate customers and individuals
whose information was subject to unauthorized access and exfiltration. McCamish processes personal data on behalf of its corporate customers.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time. See the section titled
“Legal proceedings” below for information on certain legal proceedings related to the McCamish cybersecurity incident.
2.7.3 Legal proceedings
On March 6, 2024, a class action complaint was filed
in the U.S. District Court for the Northern District of Georgia against McCamish. The complaint arises out of the cybersecurity incident
at McCamish initially disclosed on November 3, 2023. The complaint was purportedly filed on behalf of all individuals within the United
States whose personally identifiable information was exposed to unauthorized third parties as a result of the incident. On May 6, 2024,
McCamish filed a motion to dismiss the complaint.
On May 15, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of some or all individuals
whose personally identifiable information was compromised in the incident.
On June 3, 2024, the plaintiffs in the two class actions
filed a motion to consolidate the two cases. On June 4, 2024, the Court consolidated the two class actions and closed the class action
that was filed on May 15, 2024.
On July 8, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of all individuals
residing in the United States whose private information was accessed and/or acquired by an unauthorized party as a result of the incident.
Apart from the foregoing actions, the Group is subject
to legal proceedings and claims which have arisen in the ordinary course of business. The Group’s management reasonably expects
that such ordinary course 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.
2.8 Property, plant and equipment
Accounting Policy
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant
and equipment are ready for use, as intended by the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The Group depreciates property,
plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
| Building |
22-25 years |
| Plant and machinery(1) |
5 years |
| Computer equipment |
3-5 years |
| Furniture and fixtures |
5 years |
| Vehicles |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Includes solar plant with a useful life of 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful lives are based on historical experience with similar assets
as well as anticipation of future events, which may impact their life, such as changes in technology.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each balance sheet date and the cost of assets not ready to use before such date are disclosed under
‘Capital work-in-progress’. Subsequent expenditures relating to property, plant and equipment is capitalized only when it
is probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably.
The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset.
Impairment
Property, plant and equipment are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in net profit in the interim condensed consolidated statement of comprehensive income is measured by the amount by which
the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in net profit in
the consolidated statement of comprehensive income if there has been a change in the estimates used to determine the recoverable amount.
The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying
amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior
years.
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2024 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2024 |
1,430 |
11,770 |
5,341 |
8,611 |
3,390 |
45 |
30,587 |
| Additions |
– |
15 |
43 |
178 |
21 |
1 |
258 |
| Additions on Business Combinations |
– |
– |
– |
1 |
– |
– |
1 |
| Deletions* |
– |
(38) |
(22) |
(164) |
(61) |
(1) |
(286) |
| Translation difference |
– |
(4) |
(1) |
(9) |
(4) |
– |
(18) |
| Gross carrying value as at June 30, 2024 |
1,430 |
11,743 |
5,361 |
8,617 |
3,346 |
45 |
30,542 |
| Accumulated depreciation as at April 1, 2024 |
– |
(4,921) |
(4,182) |
(6,380) |
(2,692) |
(42) |
(18,217) |
| Depreciation |
– |
(111) |
(100) |
(327) |
(82) |
(1) |
(621) |
| Accumulated depreciation on deletions* |
– |
5 |
22 |
163 |
60 |
1 |
251 |
| Translation difference |
– |
1 |
1 |
6 |
4 |
– |
12 |
| Accumulated depreciation as at June 30, 2024 |
– |
(5,026) |
(4,259) |
(6,538) |
(2,710) |
(42) |
(18,575) |
| Capital work-in progress as at April 1, 2024 |
|
|
|
|
|
|
448 |
| Carrying value as at April 1, 2024 |
1,430 |
6,849 |
1,159 |
2,231 |
698 |
3 |
12,818 |
| Capital work-in progress as at June 30, 2024 |
|
|
|
|
|
|
573 |
| Carrying value as at June 30, 2024 |
1,430 |
6,717 |
1,102 |
2,079 |
636 |
3 |
12,540 |
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2023 are as follows:
(In crore)
| Particulars |
Land |
Buildings |
Plant and machinery |
Computer equipment |
Furniture and fixtures |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,429 |
11,562 |
5,169 |
8,519 |
3,365 |
45 |
30,089 |
| Additions |
– |
5 |
58 |
219 |
45 |
– |
327 |
| Deletions* |
– |
– |
(51) |
(266) |
(29) |
– |
(346) |
| Translation difference |
– |
(53) |
(6) |
(1) |
(8) |
– |
(68) |
| Gross carrying value as at June 30, 2023 |
1,429 |
11,514 |
5,170 |
8,471 |
3,373 |
45 |
30,002 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,535) |
(3,877) |
(5,826) |
(2,465) |
(40) |
(16,743) |
| Depreciation |
– |
(109) |
(117) |
(362) |
(100) |
(1) |
(689) |
| Accumulated depreciation on deletions* |
– |
– |
50 |
265 |
28 |
– |
343 |
| Translation difference |
– |
13 |
5 |
1 |
7 |
– |
26 |
| Accumulated depreciation as at June 30, 2023 |
– |
(4,631) |
(3,939) |
(5,922) |
(2,530) |
(41) |
(17,063) |
| Capital work-in progress as at April 1, 2023 |
|
|
|
|
|
|
447 |
| Carrying value as at April 1, 2023 |
1,429 |
7,027 |
1,292 |
2,693 |
900 |
5 |
13,793 |
| Capital work-in progress as at June 30, 2023 |
|
|
|
|
|
|
499 |
| Carrying value as at June 30, 2023 |
1,429 |
6,883 |
1,231 |
2,549 |
843 |
4 |
13,438 |
| * | | During the three months ended June 30, 2024, certain assets which were not in use having
gross book value of 126 crore (net book value: Nil) were retired. During the three months ended June 30, 2023, certain assets
which were not in use having gross book value of 320 crore (net book value: Nil) were retired. |
The aggregate depreciation expense is included in cost
of sales in the interim condensed consolidated statement of comprehensive income.
Repairs and maintenance costs are recognized in the
interim condensed consolidated statement of comprehensive income when incurred.
Consequent to the Companies (Corporate Social Responsibility
Policy) Amendment Rules, 2021 (“the Rules”), the Company was required to transfer its CSR capital assets installed prior to
January 2021. Towards this the Company had incorporated a subsidiary ‘Infosys Green Forum’ (IGF) under Section 8 of the Companies
Act, 2013. During the year ended March 31, 2022 the Company had completed the transfer of assets upon obtaining the required approvals
from regulatory authorities, as applicable. During March 31, 2024, the application filed by IGF for registration u/s.12AB of the Income
Tax Act was rejected and registration cancelled. During the quarter ending June 30, 2024 IGF has filed an appeal against this order before
Income Tax Appellate Tribunal.
The Group had contractual commitments for capital expenditure
primarily comprising of commitments for infrastructure facilities and computer equipment aggregating to 968 crore and 780
crore as at June 30, 2024 and March 31, 2024, respectively.
2.9 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist
of leases for land, buildings and computers. The Group assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
(1) the contract involves the use of an identified asset (2) the Group has substantially all of the economic benefits from use of the
asset through the period of the lease and (3) the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the group changes its assessment of whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2024:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2024 |
605 |
3,298 |
17 |
2,632 |
6,552 |
| Additions(1) |
– |
273 |
3 |
284 |
560 |
| Deletions |
– |
– |
– |
(149) |
(149) |
| Depreciation |
(2) |
(181) |
(2) |
(248) |
(433) |
| Translation difference |
– |
(3) |
(1) |
(14) |
(18) |
| Balance as of June 30, 2024 |
603 |
3,387 |
17 |
2,505 |
6,512 |
| (1) | | Net of adjustments on account of modifications |
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
| Additions(1) |
– |
244 |
2 |
557 |
803 |
| Deletions |
– |
(8) |
– |
(233) |
(241) |
| Depreciation |
(2) |
(184) |
(2) |
(192) |
(380) |
| Translation difference |
(4) |
(1) |
– |
(10) |
(15) |
| Balance as of June 30, 2023 |
617 |
3,947 |
15 |
2,470 |
7,049 |
| (1) | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included in cost of sales in the interim condensed consolidated statement of comprehensive income
The following is the break-up of current and non-current
lease liabilities as of June 30, 2024 and March 31, 2024:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current lease liabilities |
2,187 |
1,959 |
| Non-current lease liabilities |
6,174 |
6,400 |
| Total |
8,361 |
8,359 |
2.10 Goodwill and Intangible assets
2.10.1 Goodwill
Accounting Policy
Goodwill represents the purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the purchase consideration, the
fair value of net assets acquired is reassessed and the bargain purchase gain is recognized immediately in the net profit in the Statement
of Comprehensive Income. Goodwill is measured at cost less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGU’s which benefit from the synergies of the acquisition and
which represents the lowest level at which goodwill is monitored for internal management purposes. A CGU is the smallest identifiable
group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment
occurs when the carrying amount of a CGU including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable
amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of future cash
flows expected to be derived from the CGU. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Carrying value at the beginning |
7,303 |
7,248 |
| Goodwill on acquisitions (Refer to note 2.11) |
103 |
– |
| Translation differences |
(1) |
55 |
| Carrying value at the end |
7,405 |
7,303 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGUs or groups of CGUs, which are benefited from the synergies of the acquisition.
2.10.2 Intangible assets
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to prepare
the asset for its intended use.
Impairment
Intangible assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in net profit in the statement of comprehensive income is measured by the amount by which the carrying value of the assets
exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in net profit in the statement of comprehensive
income if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased
to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net
of any accumulated amortization) had no impairment loss been recognized for the asset in prior years.
2.11 Business combinations
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of IFRS 3 (Revised), Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the interim condensed Consolidated Statement of Comprehensive Income.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under common
control is outside the scope of IFRS 3 (Revised), Business Combinations and is accounted for at carrying value of assets acquired and
liabilities assumed.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized.
Acquisition during the three months ended June 30,
2024
On May 10, 2024, Infosys Ltd acquired 100% voting interests
in InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India. This acquisition is expected
to strengthen our expertise in semiconductor ecosystem and Engineering R&D services.
The purchase price is allocated to assets acquired
and liabilities assumed based upon determination of fair values at the date of acquisition as follows:
(In crore)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price allocated |
| Net Assets(1) |
40 |
– |
40 |
| Intangible assets : |
|
|
|
| Customer contracts and relationships# |
– |
60 |
60 |
| Brand# |
– |
13 |
13 |
| Deferred tax liabilities on intangible assets |
– |
(18) |
(18) |
| Total |
40 |
55 |
95 |
| Goodwill |
|
|
103 |
| Total purchase price |
|
|
198 |
| (1) | | Includes cash and cash equivalents acquired of
41 crore. |
| # | | The estimated useful life is around 1 year to 5 years |
The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill. The primary items that generated this goodwill are the value of the
acquired assembled workforce and estimated synergies, neither of which qualify as an intangible asset.
Goodwill is not tax-deductible.
The purchase consideration of 198 crore includes
cash of 168 crore and contingent consideration with an estimated fair value of 30 crore as on the date of acquisition.
At the acquisition date, the key inputs used in determination
of the fair value of contingent consideration are the probabilities assigned towards achievement of financial targets and discount rate
of 5.9%. The undiscounted value of contingent consideration as of June 30, 2024 was 33 crore.
Additionally, this acquisition has retention bonus
and management incentive payable to the employees of the acquiree over three years, subject to their continuous employment with the Group
and achievement of financial targets for the respective years. Bonus and incentives are recognized in employee benefit expenses in the
Statement of Comprehensive Income over the period of service.
Fair value of trade receivables acquired is 32
crore as of acquisition date and as of June 30, 2024 the amounts are substantially collected.
Transaction costs that the Group incurs in
connection with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and
consulting fees are expensed as incurred. The transaction costs of 2 crore related to the acquisition have been included
under administrative expenses in the Consolidated Statement of Comprehensive Income for the three months ended June 30, 2024.
Proposed acquisition
On April 18, 2024, Infosys Germany GmBH wholly owned
step down subsidiary of Infosys Limited entered into a definitive agreement to acquire 100% of the equity share capital in in-tech Holding
GmbH, leading provider of Engineering R&D services headquartered in Germany, for a consideration including earn-outs amounting up
to EUR 450 million (approximately $485 million), subject to customary closing adjustments. Subsequently in July 2024 as on the date these
financial statements were authorized for issuance, Infosys Germany GmBH completed its acquisition of in-tech Holding GmbH. Given the
recent timing of the acquisition and pending completion of the valuations for identifiable net assets acquired and liabilities assumed,
at the time these financial statements were authorized for issuance, the initial accounting for the business combination is incomplete.
Accordingly, all the required disclosures for the business combination have not been made.
2.12 Employees' Stock Option Plans (ESOP)
Accounting Policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in net profit in the interim condensed consolidated statement of comprehensive income on a straight-line basis
over the requisite service period for each separately vesting portion of the award as if the award was in-substance, multiple awards with
a corresponding increase to share premium.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan):
On June 22, 2019 pursuant to the approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 plan shall not exceed 50,000,000
equity shares. To implement the 2019 Plan, up to 45,000,000 equity shares may be issued by way of secondary acquisition of shares by
the Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 plan shall vest based on the achievement
of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters
will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan):
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Stock Incentive Compensation Plan. The maximum number of shares under the 2015 plan
shall not exceed 24,038,883 equity shares (this includes 11,223,576 equity shares which are held by the trust towards the 2011 Plan as
at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers mentioned above are further adjusted
with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options
would be the market price as on the date of grant.
Controlled trust holds 10,246,512 and 10,916,829 shares
as at June 30, 2024 and March 31, 2024, respectively under the 2015 plan, out of which 2,00,000 equity shares each have been earmarked
for welfare activities of the employees as at June 30, 2024 and March 31, 2024.
The following is the summary of grants made during
the three months ended June 30, 2024 and June 30, 2023:
| |
2019 Plan |
2015 Plan |
| Particulars |
Three months ended June 30, |
Three months ended June 30, |
| |
2024 |
2023 |
2024 |
2023 |
| Equity settled RSUs |
|
|
|
|
| Key Management Personnel (KMP) |
70,699 |
78,281 |
295,168 |
333,596 |
| Employees other than KMP |
6,848 |
- |
96,490 |
4,500 |
| Total Grants |
77,547 |
78,281 |
391,658 |
338,096 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee approved the following grants for fiscal 2025. In accordance with such approval the following
grants were made effective May 2, 2024.
| - | | 245,679 performance-based RSUs (Annual performance equity grant) of fair value of 34.75
crore. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. |
| - | | 14,140 performance-based grant of RSUs (Annual performance equity ESG grant) of fair value
of 2 crore. These RSUs will vest in line with the employment agreement based on achievement of certain environment, social and
governance milestones as determined by the Board. |
| - | | 35,349 performance-based grant of RSUs (Annual performance Equity TSR grant) of fair value
of 5 crore. These RSUs will vest in line with the employment agreement based on Company’s performance on cumulative relative
TSR over the years and as determined by the Board. |
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of June 30, 2024, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with IFRS 2, Share
based payments. The grant date for this purpose in accordance with IFRS 2, Share based payments is July 1, 2022.
Under the 2019 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2025 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 70,699 performance based RSU’s
were granted effective May 2, 2024.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Granted to: |
|
|
| KMP |
18 |
20 |
| Employees other than KMP |
193 |
126 |
| Total (1) |
211 |
146 |
| (1) Cash settled stock compensation expense included in the above |
3 |
2 |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options is based on historical volatility of the observed market prices of the Company's publicly traded
equity shares during a period equivalent to the expected term of the options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2025-
Equity Shares-RSU |
Fiscal 2025-
ADS-RSU |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,414 |
16.87 |
1,588 |
19.19 |
| Exercise price ()/ ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-26 |
23-28 |
23-31 |
25-33 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
5 |
7 |
4-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,298 |
15.45 |
1,317 |
16.27 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.13 Income Taxes
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the interim condensed Consolidated Statement of Comprehensive income except to
the extent that it relates to items recognized directly in equity, in which case it is recognized in equity or other comprehensive income.
Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities,
using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred income tax assets
and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or
liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of
the transaction. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that
the related tax benefit will be realized.
Deferred income tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on
deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive
enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed
earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the
foreseeable future.
The Group offsets current tax assets and current tax
liabilities; deferred tax assets and deferred tax liabilities, where it has a legally enforceable right to set off the recognized amounts
and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the consolidated statement of
comprehensive income comprises:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Current taxes |
|
|
| Domestic taxes |
2,307 |
1,708 |
| Foreign taxes |
691 |
599 |
| |
2,998 |
2,307 |
| Deferred taxes |
|
|
| Domestic taxes |
(233) |
192 |
| Foreign taxes |
(118) |
(82) |
| |
(351) |
110 |
| Income tax expense |
2,647 |
2,417 |
Income tax expense for the three months ended June
30, 2024 and June 30, 2023 includes provisions (net of reversals) of 60 crore and reversals (net of provisions) of 15 crore,
respectively. These provisions and reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months ended June
30, 2024 and June 30, 2023 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
As at June 30, 2024, claims against the Group not acknowledged
as debts from the Income tax authorities amounted to 2,854 crore.
As at March 31, 2024, claims against the Group not
acknowledged as debts from the Income tax authorities amounted to 2,794 crore.
The amount paid to statutory authorities against the
tax claims amounted to 6,122 crore and 8,743 crore as at June 30, 2024 and March 31, 2024, respectively.
The claims against the Group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of issues of disallowance
of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding
of taxes, among others. These matters are pending before various Income Tax Authorities and the Management including its tax advisors
expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial
position and results of operations.
2.14 Reconciliation of basic and diluted shares
used in computing earnings per equity share
Accounting Policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group by the weighted average number of equity shares outstanding during the
period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group by the
weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number
of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares
are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes
effected prior to the approval of the financial statements by the Board of Directors.
2.15 Related party transactions
Refer to note 2.14 "Related party transactions"
in the Company’s 2024 Consolidated financial statements under IFRS in Indian rupee for the full names and other details of the Company's
subsidiaries and controlled trusts.
Changes in Subsidiaries
During the three months ended June 30, 2024, there
are no changes in the subsidiaries.
| - | | Danske IT and Support Services India Private Limited renamed as IDUNN Information Technology
Private Limited |
| - | | On May 10, 2024 Infosys Ltd. acquired 100% of voting interests in InSemi Technology Services
Private Limited along with its subsidiary Elbrus Labs Private Limited |
Change in key management personnel
The following are the changes in the key management
personnel:
Executive Officers:
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transactions with key management personnel
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended June 30 |
| |
2024 |
2023 |
| Salaries and other employee benefits to whole-time directors and executive officers(1)(2) |
28 |
32 |
| Commission and other benefits to non-executive/ independent directors |
4 |
4 |
| Total |
32 |
36 |
| (1) | | For the three months ended June 30, 2024 and June 30, 2023, includes a charge of 18
crore and 20 crore respectively, towards employee stock compensation expense. (Refer to note 2.12). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.16 Segment reporting
IFRS 8 Operating Segments establishes standards for
the way that public business enterprises report information about operating segments and related disclosures about products and services,
geographic areas, and major customers. The Group's operations predominantly relate to providing end-to-end business solutions to enable
clients to enhance business performance. The Chief Operating Decision Maker (CODM) evaluates the Group's performance and allocates resources
based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along business
segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and
expenditure in individual segments, and are as set out in the accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represents the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
Revenue and identifiable operating expenses in relation
to segments are categorized based on items that are individually identifiable to that segment. Revenue for 'all other segments' represents
revenue generated by Infosys Public Services and revenue generated from customers located in India, Japan and China and other enterprises
in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The Management believes that it is not practical to provide segment disclosures
relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted
against the total income of the Group.
Assets and liabilities used in the Group's business
are not identified to any of the reportable segments, as these are used interchangeably between segments. The Management believes that
it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation
of the available data is onerous.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.17 Revenue from operations.
2.16.1 Business segments
Three months ended June 30, 2024 and June 30, 2023
(In crore)
| Particulars |
Financial
Services(1) |
Retail(2) |
Communication(3) |
Energy, Utilities,
Resources and
Services |
Manufacturing |
Hi-Tech |
Life Sciences(4) |
All other segments(5) |
Total |
| Revenue |
10,816 |
5,428 |
4,744 |
5,220 |
5,778 |
3,147 |
2,866 |
1,316 |
39,315 |
| |
10,661 |
5,513 |
4,441 |
4,889 |
5,350 |
3,056 |
2,749 |
1,274 |
37,933 |
| Identifiable operating expenses |
6,088 |
2,697 |
3,114 |
2,715 |
3,783 |
1,783 |
1,757 |
751 |
22,688 |
| |
6,147 |
2,869 |
2,640 |
2,690 |
3,523 |
1,743 |
1,593 |
819 |
22,024 |
| Allocated expenses |
2,116 |
980 |
834 |
948 |
989 |
550 |
498 |
275 |
7,190 |
| |
1,969 |
1,015 |
817 |
909 |
855 |
511 |
454 |
315 |
6,845 |
| Segment Profit |
2,612 |
1,751 |
796 |
1,557 |
1,006 |
814 |
611 |
290 |
9,437 |
| |
2,545 |
1,629 |
984 |
1,290 |
972 |
802 |
702 |
140 |
9,064 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
1,149 |
| |
|
|
|
|
|
|
|
|
1,173 |
| Operating profit |
|
|
|
|
|
|
|
|
8,288 |
| |
|
|
|
|
|
|
|
|
7,891 |
| Other income, net (Refer to note 2.22) |
|
|
|
|
|
|
|
|
838 |
| |
|
|
|
|
|
|
|
|
561 |
| Finance cost |
|
|
|
|
|
|
|
|
105 |
| |
|
|
|
|
|
|
|
|
90 |
| Profit before income taxes |
|
|
|
|
|
|
|
|
9,021 |
| |
|
|
|
|
|
|
|
|
8,362 |
| Income tax expense |
|
|
|
|
|
|
|
|
2,647 |
| |
|
|
|
|
|
|
|
|
2,417 |
| Net profit |
|
|
|
|
|
|
|
|
6,374 |
| |
|
|
|
|
|
|
|
|
5,945 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
1,149 |
| |
|
|
|
|
|
|
|
|
1,173 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
| |
|
|
|
|
|
|
|
|
– |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
2.16.2 Significant clients
No client individually accounted for more than 10%
of the revenues for the three months ended June 30, 2024 and June 30, 2023, respectively.
2.17 Revenue from Operations
Accounting Policy
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-time frame basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Group’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Group uses the expected cost plus margin approach in
estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation service
the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue is recognized
using the percentage-of-completion method as the implementation is performed. Revenue from client training, support and other services
arising due to the sale of software products is recognized as the performance obligations are satisfied. ATS revenue is recognized ratably
on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
A contract modification is a change in the scope or
price or both of a contract that is approved by the parties to the contract. A contract modification that results in the addition of distinct
performance obligations are accounted for either as a separate contract if the additional services are priced at the standalone selling
price or as a termination of the existing contract and creation of a new contract if they are not priced at the standalone selling price.
If the modification does not result in a distinct performance obligation, it is accounted for as part of the existing contract on a cumulative
catch-up basis.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to cost of sales over the respective contract life on
a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored
regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient
to recover the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in
its interim condensed Consolidated Statement of Comprehensive Income.
Revenues for the three months ended June 30, 2024 and
June 30, 2023 is as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenue from software services |
37,496 |
35,735 |
| Revenue from products and platforms |
1,819 |
2,198 |
| Total revenue from operations |
39,315 |
37,933 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms like Finacle – core banking solution, Edge Suite of products, Panaya platform, Stater digital platform and Infosys
McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer note 2.16). The table below presents disaggregated revenues from contracts with customers by geography
and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty of revenues
and cash flows are affected by industry, market and other economic factors.
For the three months ended June 30, 2024 and June
30, 2023
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenues by Geography* |
|
|
| North America |
23,143 |
23,084 |
| Europe |
11,186 |
10,148 |
| India |
1,227 |
1,020 |
| Rest of the world |
3,759 |
3,681 |
| Total |
39,315 |
37,933 |
| * | | Geographical revenues is based on the domicile of customer. |
The percentage of revenue from fixed-price contracts
for the three months ended June 30, 2024 and June 30, 2023 is 54% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s Receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore, unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset
because the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the consolidated statement of balance sheet.
2.18 Unbilled Revenue
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Unbilled financial asset (1) |
9,329 |
9,600 |
| Unbilled non financial asset (2) |
4,924 |
4,948 |
| Total |
14,253 |
14,548 |
| (1) | | Right to consideration is unconditional and is due only after a passage of time. |
| (2) | | Right to consideration is dependent on completion of contractual milestones. |
2.19 Equity
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity. Incremental
costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction from equity,
net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to/from Share premium.
Description of reserves
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Share premium
The amount received in excess of the par value of equity
shares has been classified as share premium. Additionally, share-based interim condensed compensation recognized in net profit in the
consolidated statement of comprehensive income is credited to share premium. Amounts have been utilized for bonus issue and share buyback
from share premium account.
Other Reserve
The Special Economic Zone Re-investment reserve has
been created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA (1)(ii) of Income Tax Act, 1961. The reserve
should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the provisions of
the Sec 10AA (2) of the Income Tax Act, 1961.
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Cash flow hedge reserve
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the net profit in the interim condensed consolidated Statement of Comprehensive Income upon the occurrence of the related forecasted transaction.
Other components of equity
Other components of equity include currency translation,
re-measurement of net defined benefit liability/asset, fair value changes of equity instruments fair valued through other comprehensive
income, changes on fair valuation of investments, net of taxes.
2.19.1 Voting
Each holder of equity shares is entitled to one vote
per share. The equity shares represented by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other
equity shares. Each ADS represents one underlying equity share.
2.19.2 Liquidation
In the event of liquidation of the company, the holders
of shares shall be entitled to receive any of the remaining assets of the company, after distribution of all preferential amounts. However,
no such preferential amounts exist currently, other than the amounts held by irrevocable controlled trusts. The amount distributed will
be in proportion to the number of equity shares held by the shareholders. For irrevocable controlled trusts, the corpus would be settled
in favor of the beneficiaries.
2.19.3 Share options
There are no voting, dividend or liquidation rights
to the holders of options issued under the company's share option plans.
2.19.4 Share capital and share premium
The Company has only one class of shares referred to
as equity shares having a par value of 5/- each. 10,246,512 shares and 10,916,829 shares were held by controlled trust, as at June
30, 2024 and March 31, 2024, respectively.
2.19.5 Capital allocation policy
Effective fiscal 2025, the Company expects to continue
its policy of returning approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual
dividends and/or share buyback/ special dividends subject to applicable laws and requisite approvals, if any. Under this policy, the Company
expects to progressively increase its annual dividend per share (excluding special dividend if any).
Free cash flow is defined as net cash provided by operating
activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback include
applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of June 30, 2024, the Company has only one class of equity shares and
has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
Dividend
The final dividend on shares is recorded as a liability
on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company's
Board of Directors. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay / distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders is as follows:
(In )
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Final dividend for fiscal 2023 |
– |
17.50 |
| Special dividend for fiscal 2024 |
8.00 |
– |
| Final dividend for fiscal 2024 |
20.00 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June
26, 2024 which will result in a net cash outflow of 11,597 crore, excluding dividend paid on treasury shares. Payment date for
the dividend is July 01, 2024.
2.20 Break-up of expenses and other income, net
Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly of Infosys and its Indian subsidiaries. The Gratuity Plan provides
a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Group. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM Employees' Gratuity Fund
Trust and EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts
and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement and/or a lumpsum payment as set out in rules of each fund and includes death and disability benefits.
The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of the respective
employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method.
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
The Group recognizes the net obligation of a defined
benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability
/ (asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return
of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation
is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profit in the Consolidated Statement
of Comprehensive Income.
Provident fund
Eligible employees of Infosys receive benefits from
a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident
fund plan equal to a specified percentage of the covered employee's salary. The Company contributes a portion to the Infosys Limited Employees'
Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed
to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being
administered by the Government of India. The Company has an obligation to make good the shortfall, if any, between the return from the
investments of the trust and the notified interest rate.
In respect of Indian subsidiaries, eligible employees
receive benefits from a provident fund, which is a defined contribution plan. Both the eligible employee and the respective companies
make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected
under the provident fund plan are deposited in a government administered provident fund. The Companies have no further obligation to the
plan beyond its monthly contributions.
Superannuation
Certain employees of Infosys, Infosys BPM and EdgeVerve
are participants in a defined contribution plan. The Group has no further obligations to the plan beyond its monthly contributions which
are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
Compensated absences
The Group has a policy on compensated absences which
are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial
valuation performed by an external actuary at each Balance Sheet date using projected unit credit method on the additional amount expected
to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated
absences is recognized in the period in which the absences occur.
Other income, net
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
Foreign currency
Accounting policy
Functional currency
The functional currency of Infosys, its Indian subsidiaries
and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are their respective local currencies. These
financial statements are presented in Indian rupees (rounded off to crore; one crore equals ten million).
Transactions and translations
Foreign-currency denominated monetary assets and liabilities
are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting
from such translations are recognized in the interim condensed Consolidated Statement of Comprehensive Income and reported within exchange
gains/ (losses) on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow
hedges. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at
the exchange rate prevalent at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated
in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction. The related
revenue and expense are recognized using the same exchange rate.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense
and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the statement of comprehensive income. However when a change in the parent's
ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate in effect
at the Balance Sheet date.
Government grants
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them will be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in the net profit in the statement of comprehensive income on a systematic
and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis in the
statement of comprehensive income over the periods necessary to match them with the related costs which they are intended to compensate.
Operating Profits
Operating profit of the Group is computed considering
the revenues, net of cost of sales, selling and marketing expenses and administrative expenses.
The table below provides details of break-up of
expenses:
Cost of sales
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
18,823 |
18,736 |
| Depreciation and amortization |
1,149 |
1,173 |
| Travelling costs |
323 |
319 |
| Cost of technical sub-contractors |
3,168 |
3,123 |
| Cost of software packages for own use |
559 |
465 |
| Third party items bought for service delivery to clients |
2,867 |
2,231 |
| Consultancy and professional charges |
109 |
29 |
| Communication costs |
71 |
89 |
| Repairs and maintenance |
123 |
118 |
| Provision for post-sales client support |
(108) |
50 |
| Others |
93 |
49 |
| Total |
27,177 |
26,382 |
Selling and marketing expenses
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
1,416 |
1,380 |
| Travelling costs |
102 |
88 |
| Branding and marketing |
350 |
263 |
| Communication costs |
3 |
3 |
| Consultancy and professional charges |
34 |
31 |
| Others |
32 |
18 |
| Total |
1,937 |
1,783 |
Administrative expenses
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit costs |
695 |
665 |
| Consultancy and professional charges |
302 |
286 |
| Repairs and maintenance |
258 |
250 |
| Power and fuel |
63 |
50 |
| Communication costs |
73 |
90 |
| Travelling costs |
53 |
55 |
| Impairment loss recognized/(reversed) under expected credit loss model |
(3) |
91 |
| Rates and taxes |
117 |
94 |
| Insurance charges |
73 |
52 |
| Commission to non-whole time directors |
4 |
3 |
| Contribution towards Corporate Social Responsibility |
171 |
70 |
| Others |
107 |
171 |
| Total |
1,913 |
1,877 |
Other income for the three months ended June 30,
2024 and June 30, 2023 is as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Interest income on financial assets carried at amortized cost |
337 |
274 |
| Interest income on financial assets carried at fair value through other comprehensive income |
328 |
243 |
| Gain/(loss) on investments carried at fair value through profit or loss |
108 |
52 |
| Exchange gains / (losses) on forward and options contracts |
34 |
134 |
| Exchange gains / (losses) on translation of other assets and liabilities |
3 |
(137) |
| Others |
28 |
(5) |
| Total |
838 |
561 |
| for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer
and Managing Director |
Bobby Parikh
Director |
| |
|
|
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
| |
|
|
|
Bengaluru
July 18, 2024 |
|
|
Exhibit 99.9
Ind AS Standalone
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF
INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Standalone Financial Statements
Opinion
We have audited the accompanying interim condensed
standalone financial statements of INFOSYS LIMITED (the “Company”), which comprise the Condensed Balance Sheet as at
June 30, 2024, the Condensed Statement of Profit and Loss (including Other Comprehensive Income), the Condensed Statement of Changes in
Equity and the Condensed Statement of Cash Flows for the three months ended on that date, and notes to the financial statements including
a summary of the material accounting policies and other explanatory information (hereinafter referred to as the “interim condensed
standalone financial statements”).
In our opinion and to the best of our information
and according to the explanations given to us, the aforesaid interim condensed standalone financial statements give a true and fair view
in conformity with Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”) prescribed under
section 133 of the Companies Act, 2013 (the “Act”), read with relevant rules issued thereunder and other accounting principles
generally accepted in India, of the state of affairs of the Company as at June 30, 2024 its profit and total comprehensive income, changes
in equity and its cash flows for the three months ended on that date.
Basis for Opinion
We conducted our audit of the interim condensed
standalone financial statements in accordance with the Standards on Auditing (“SAs”) specified under section 143(10) of the
Act. Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim
Condensed Standalone Financial Statements section of our report. We are independent of the Company in accordance with the Code of Ethics
issued by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant
to our audit of the interim condensed standalone financial statements under the provisions of the Act and the Rules made thereunder, and
we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe
that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed
standalone financial statements.
Responsibilities of Management and Those
Charged with Governance for the Interim Condensed Standalone Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed standalone financial statements that give a true and fair view of the
financial position, financial performance, including total comprehensive income, changes in equity and cash flows of the Company in accordance
with Ind AS 34 and other accounting principles generally accepted in India. This responsibility also includes maintenance of adequate
accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are
reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively
for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the interim condensed
standalone financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the interim condensed standalone financial
statements, 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 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 are also responsible for
overseeing the Company’s financial reporting process.
Auditor’s Responsibilities for the
Audit of the Interim Condensed Standalone Financial Statements
Our objectives are to obtain reasonable assurance
about whether the interim condensed standalone financial statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed standalone financial statements.
As part of an audit in accordance with SAs, we
exercise professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the interim condensed standalone financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient
and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the interim condensed standalone financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Company to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the interim condensed standalone financial
statements, including the disclosures, and whether the interim condensed standalone financial statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
Materiality is the magnitude of misstatements in
the interim condensed standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed standalone financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed standalone financial statements.
We also communicate with those charged with governance
regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant deficiencies
in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: July 18, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
Vikas Bagaria
Partner
(Membership No.060408)
UDIN: 24060408BKFSMF4757 |
INFOSYS LIMITED
Condensed Standalone Financial Statements under
Indian Accounting Standards (Ind AS) for the three months ended June 30, 2024
| Index |
| Condensed Balance Sheet |
| Condensed Statement of Profit and Loss |
| Condensed Statement of Changes in Equity |
| Condensed Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Standalone Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Use of estimates and judgments |
| 1.4 Critical accounting estimates and judgements |
| 2. Notes to the Interim Condensed Financial Statements |
| 2.1 Property, plant and equipment |
| 2.2 Goodwill and intangible assets |
| 2.3 Leases |
| 2.4 Investments |
| 2.5 Loans |
| 2.6 Other financial assets |
| 2.7 Trade Receivables |
| 2.8 Cash and cash equivalents |
| 2.9 Earmarked bank balance for dividend |
| 2.10 Other assets |
| 2.11 Financial instruments |
| 2.12 Equity |
| 2.13 Other financial liabilities |
| 2.14 Trade payables |
| 2.15 Other liabilities |
| 2.16 Provisions |
| 2.17 Income taxes |
| 2.18 Revenue from operations |
| 2.19 Other income, net |
| 2.20 Expenses |
| 2.21 Basic and diluted shares used in computing earnings per equity share |
| 2.22 Contingent liabilities and commitments |
| 2.23 Related party transactions |
| 2.24 Segment Reporting |
INFOSYS LIMITED
(In crore)
| Condensed Balance Sheet as at |
Note No. |
June 30, 2024 |
March 31, 2024 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.1 |
10,435 |
10,813 |
| Right-of-use assets |
2.3 |
3,287 |
3,303 |
| Capital work-in-progress |
|
345 |
277 |
| Goodwill |
2.2 |
211 |
211 |
| Other intangible assets |
|
– |
– |
| Financial assets |
|
|
|
| Investments |
2.4 |
23,120 |
23,352 |
| Loans |
2.5 |
39 |
34 |
| Other financial assets |
2.6 |
1,697 |
1,756 |
| Deferred tax assets (net) |
2.17 |
– |
– |
| Income tax assets (net) |
2.17 |
2,981 |
2,583 |
| Other non-current assets |
2.10 |
1,641 |
1,669 |
| Total non-current assets |
|
43,756 |
43,998 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.4 |
7,615 |
11,307 |
| Trade receivables |
2.7 |
25,919 |
25,152 |
| Cash and cash equivalents |
2.8 |
9,176 |
8,191 |
| Earmarked bank balance for dividend |
2.9 |
11,625 |
- |
| Loans |
2.5 |
207 |
208 |
| Other financial assets |
2.6 |
10,353 |
10,129 |
| Income tax assets (net) |
2.17 |
3,003 |
6,329 |
| Other current assets |
2.10 |
9,733 |
9,636 |
| Total current assets |
|
77,631 |
70,952 |
| Total assets |
|
121,387 |
114,950 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.12 |
2,076 |
2,075 |
| Other equity |
|
73,521 |
79,101 |
| Total equity |
|
75,597 |
81,176 |
| LIABILITIES |
|
|
|
| Non-current liabilities |
|
|
|
| Financial liabilities |
|
|
|
| Lease liabilities |
2.3 |
2,951 |
3,088 |
| Other financial liabilities |
2.13 |
1,782 |
1,941 |
| Deferred tax liabilities (net) |
|
1,188 |
1,509 |
| Other non-current liabilities |
2.15 |
159 |
150 |
| Total non - current liabilities |
|
6,080 |
6,688 |
| Current liabilities |
|
|
|
| Financial liabilities |
|
|
|
| Lease liabilities |
2.3 |
791 |
678 |
| Trade payables |
2.14 |
|
|
| Total outstanding dues of micro enterprises and small enterprises |
|
109 |
92 |
| Total outstanding dues of creditors other than micro enterprises and small enterprises |
|
2,760 |
2,401 |
| Other financial liabilities |
2.13 |
22,364 |
11,808 |
| Other current liabilities |
2.15 |
8,775 |
7,681 |
| Provisions |
2.16 |
1,137 |
1,464 |
| Income tax liabilities (net) |
|
3,774 |
2,962 |
| Total current liabilities |
|
39,710 |
27,086 |
| Total equity and liabilities |
|
121,387 |
114,950 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman
DIN: 00041245 |
Salil Parekh
Chief Executive Officer
and Managing Director
DIN: 01876159 |
Bobby Parikh
Director
DIN: 00019437 |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
Membership No. A21918 |
|
INFOSYS LIMITED
(In crore except equity share and per equity
share data)
| Condensed Statement of Profit and Loss for the |
Note No. |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Revenue from operations |
2.18 |
33,283 |
31,811 |
| Other income, net |
2.19 |
721 |
1,001 |
| Total income |
|
34,004 |
32,812 |
| Expenses |
|
|
|
| Employee benefit expenses |
2.20 |
16,495 |
16,353 |
| Cost of technical sub-contractors |
|
4,831 |
4,676 |
| Travel expenses |
|
371 |
359 |
| Cost of software packages and others |
2.20 |
2,117 |
1,174 |
| Communication expenses |
|
105 |
129 |
| Consultancy and professional charges |
|
266 |
215 |
| Depreciation and amortization expenses |
|
698 |
746 |
| Finance cost |
|
59 |
43 |
| Other expenses |
2.20 |
934 |
971 |
| Total expenses |
|
25,876 |
24,666 |
| Profit before tax |
|
8,128 |
8,146 |
| Tax expense: |
|
|
|
| Current tax |
2.17 |
2,686 |
2,065 |
| Deferred tax |
2.17 |
(326) |
125 |
| Profit for the period |
|
5,768 |
5,956 |
| |
|
|
|
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
19 |
87 |
| Equity instruments through other comprehensive income, net |
|
14 |
1 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(3) |
6 |
| Fair value changes on investments, net |
|
36 |
68 |
| |
|
|
|
| Total other comprehensive income/ (loss), net of tax |
|
66 |
162 |
| |
|
|
|
| Total comprehensive income for the period |
|
5,834 |
6,118 |
| Earnings per equity share |
|
|
|
| Equity shares of par value 5/- each |
|
|
|
| Basic (in per share) |
|
13.90 |
14.36 |
| Diluted (in per share) |
|
13.87 |
14.34 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
| Basic (in shares) |
2.21 |
4,151,073,773 |
4,149,157,540 |
| Diluted (in shares) |
2.21 |
4,157,355,048 |
4,152,638,175 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman
DIN: 00041245 |
Salil Parekh
Chief Executive Officer
and Managing Director
DIN: 01876159 |
Bobby Parikh
Director
DIN: 00019437 |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
Membership No. A21918 |
|
INFOSYS LIMITED
Condensed Statement of Changes in Equity
(In crore)
| Particulars |
|
Other Equity |
|
| |
|
Reserves & Surplus |
|
Other comprehensive income |
| |
Equity Share Capital |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
|
Equity Instruments through other comprehensive income |
Effective portion of Cash flow hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
| |
|
Capital reserve |
Other reserves (2) |
|
|
|
|
|
|
|
|
|
|
|
| Balance as at April 1, 2023 |
2,074 |
54 |
2,862 |
169 |
133 |
52,183 |
2 |
878 |
9,654 |
|
260 |
(5) |
(519) |
67,745 |
| Changes in equity for the three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
– |
5,956 |
– |
– |
– |
|
– |
– |
– |
5,956 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
87 |
87 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
1 |
– |
– |
1 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
6 |
– |
6 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
68 |
68 |
| Total comprehensive income for the period |
– |
– |
– |
– |
– |
5,956 |
– |
– |
– |
|
1 |
6 |
155 |
6,118 |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
– |
(760) |
– |
– |
760 |
|
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
– |
194 |
– |
– |
(194) |
|
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to note 2.12) |
– |
– |
– |
– |
274 |
– |
– |
(274) |
– |
|
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
– |
6 |
(6) |
– |
|
– |
– |
– |
– |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
– |
1 |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
– |
– |
– |
– |
– |
144 |
– |
|
– |
– |
– |
144 |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
– |
– |
| Reserves on common control transaction |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
– |
– |
| Dividends |
– |
– |
– |
– |
– |
(7,262) |
– |
– |
– |
|
– |
– |
– |
(7,262) |
| Balance as at June 30, 2023 |
2,075 |
54 |
2,862 |
169 |
407 |
50,311 |
8 |
742 |
10,220 |
|
261 |
1 |
(364) |
66,746 |
INFOSYS LIMITED
Condensed Statement of Changes in Equity (contd.)
(In crore)
| Particulars |
|
Other Equity |
|
| |
|
Reserves & Surplus |
|
Other comprehensive income |
| |
Equity Share Capital |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (1) |
|
Equity Instruments through other comprehensive income |
Effective portion of Cash flow hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
| |
|
Capital reserve |
Other reserves (2) |
|
|
|
|
|
|
|
|
|
|
|
| Balance as at April 1, 2024 |
2,075 |
54 |
2,862 |
169 |
580 |
62,551 |
162 |
913 |
11,787 |
|
279 |
6 |
(262) |
81,176 |
| Changes in equity for the three months ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
– |
5,768 |
– |
– |
– |
|
– |
– |
– |
5,768 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
19 |
19 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
14 |
– |
– |
14 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
(3) |
– |
(3) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
|
– |
– |
36 |
36 |
| Total comprehensive income for the period |
– |
– |
– |
– |
– |
5,768 |
– |
– |
– |
|
14 |
(3) |
55 |
5,834 |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
– |
95 |
– |
– |
(95) |
|
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve to retained earnings |
– |
– |
– |
– |
– |
247 |
– |
– |
(247) |
|
– |
– |
– |
– |
| Transferred on account of exercise of stock options (Refer to note 2.12) |
– |
– |
– |
– |
221 |
– |
– |
(221) |
– |
|
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
– |
18 |
(18) |
– |
|
– |
– |
– |
– |
| Shares issued on exercise of employee stock options (Refer to note 2.12) |
1 |
– |
– |
– |
1 |
– |
– |
– |
– |
|
– |
– |
– |
2 |
| Employee stock compensation expense (Refer to note 2.12) |
– |
– |
– |
– |
– |
– |
– |
208 |
– |
|
– |
– |
– |
208 |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
– |
– |
– |
2 |
– |
|
– |
– |
– |
2 |
| Dividends |
– |
– |
– |
– |
– |
(11,625) |
– |
– |
– |
|
– |
– |
– |
(11,625) |
| Balance as at June 30, 2024 |
2,076 |
54 |
2,862 |
169 |
802 |
57,036 |
180 |
884 |
11,445 |
|
293 |
3 |
(207) |
75,597 |
| (1) | | The Special Economic Zone Re-investment Reserve has been created out of the profit of
eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act, 1961. The reserve should be utilized by the Company
for acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961. |
| (2) | | Profit / loss on transfer of business between entities under common control taken to reserve. |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman
DIN: 00041245 |
Salil Parekh
Chief Executive Officer
and Managing Director
DIN: 01876159 |
Bobby Parikh
Director
DIN: 00019437 |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
Membership No. A21918 |
|
INFOSYS LIMITED
Condensed Statement of Cash Flows
Accounting Policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Company are segregated. The Company considers all highly liquid investments that
are readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
Note No. |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Cash flow from operating activities |
|
|
|
| Profit for the period |
|
5,768 |
5,956 |
| Adjustments to reconcile net profit to net cash provided by operating activities |
|
|
|
| Depreciation and Amortization |
|
698 |
746 |
| Income tax expense |
|
2.17 |
2,360 |
2,190 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
4 |
86 |
| Finance cost |
|
59 |
43 |
| Interest and dividend income |
|
(576) |
(817) |
| Stock compensation expense |
|
188 |
132 |
| Provision for post sale client support |
|
(110) |
54 |
| Exchange differences on translation of assets and liabilities, net |
|
46 |
19 |
| Other adjustments |
|
(218) |
159 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(830) |
(476) |
| Loans, other financial assets and other assets |
|
(308) |
(523) |
| Trade payables |
|
376 |
233 |
| Other financial liabilities, other liabilities and provisions |
|
(49) |
(1,159) |
| Cash generated from operations |
|
7,408 |
6,643 |
| Income taxes (paid)/received |
|
1,050 |
(1,252) |
| Net cash generated by operating activities |
|
8,458 |
5,391 |
| Cash flow from investing activities |
|
|
|
| Expenditure on property, plant and equipment |
|
(296) |
(736) |
| Deposits placed with corporation |
|
(260) |
(392) |
| Redemption of deposits placed with corporation |
|
76 |
226 |
| Interest and dividend received |
|
731 |
571 |
| Dividend received from subsidiary |
|
– |
400 |
| Loan given to subsidiaries |
|
(10) |
– |
| Investment in subsidiaries |
|
– |
(9) |
| Payment towards acquisition |
|
(165) |
– |
| Receipt towards business transfer for entities under common control |
|
1 |
– |
| Receipt / (payment) from entities under liquidation |
|
– |
79 |
| Other receipts |
|
– |
123 |
| Payments to acquire investments |
|
|
|
| Liquid mutual fund units |
|
(15,699) |
(15,756) |
| Commercial papers |
|
(2,077) |
(1,336) |
| Certificates of deposit |
|
(1,415) |
(817) |
| Non-convertible debentures |
|
(1,051) |
(104) |
| Proceeds on sale of investments |
|
|
|
| Liquid mutual fund units |
|
14,681 |
15,350 |
| Non-convertible debentures |
|
350 |
275 |
| Certificates of deposit |
|
2,695 |
3,350 |
| Commercial papers |
|
6,660 |
600 |
| Government Securities |
|
200 |
– |
| Net cash (used in) / generated from investing activities |
|
4,421 |
1,824 |
| Cash flow from financing activities |
|
|
|
| Payment of Lease Liabilities |
|
(223) |
(191) |
| Shares issued on exercise of employee stock options |
|
2 |
1 |
| Other payments |
|
(34) |
(21) |
| Payment of dividends |
|
– |
(1) |
| Net cash used in financing activities |
|
(255) |
(212) |
| Net increase / (decrease) in cash and cash equivalents |
|
12,624 |
7,003 |
| Effect of exchange rate changes on cash and cash equivalents |
|
(14) |
(8) |
| Cash and cash equivalents at the beginning of the period |
2.8 |
8,191 |
6,534 |
| Cash and cash equivalents at the end of the period |
2.8 |
20,801 |
13,529 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.8 |
78 |
77 |
| Closing cash and cash equivalents as per Standalone Statement of Cash flow |
|
20,801 |
13,529 |
| Less: Earmarked bank balance for dividend |
2.9 |
11,625 |
7,262 |
| Closing cash and cash equivalents as per Standalone Balance Sheet |
|
9,176 |
6,267 |
The accompanying notes form an integral part of
the interim condensed standalone financial statements.
As per our report of even date attached
|
for Deloitte Haskins & Sells LLP
Chartered Accountants
Firm’s Registration No:
117366W/ W-100018 |
for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Vikas Bagaria
Partner
Membership No. 060408 |
Nandan M. Nilekani
Chairman
DIN: 00041245 |
Salil Parekh
Chief Executive Officer
and Managing Director
DIN: 01876159 |
Bobby Parikh
Director
DIN: 00019437 |
| |
|
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
Membership No. A21918 |
|
INFOSYS LIMITED
Overview and Notes to the Interim Condensed Standalone
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics City, Hosur Road, Bengaluru 560100, Karnataka, India. The company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The interim condensed standalone financial statements
are approved for issue by the Company's Board of Directors on July 18, 2024.
1.2 Basis of preparation of financial statements
These interim condensed standalone financial statements
are prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting, under the historical cost convention
on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013
(''the Act'') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed standalone
financial statements do not include all the information required for a complete set of financial statements. These interim condensed standalone
financial statements should be read in conjunction with the standalone financial statements and related notes included in the Company’s
Annual Report for the year ended March 31, 2024. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change
in the accounting policy hitherto in use. The material accounting policy information used in preparation of the audited interim condensed
standalone financial statements have been discussed in the respective notes.
1.3 Use of estimates and judgments
The preparation of the interim condensed standalone
financial statements in conformity with Ind AS requires the management to make estimates, judgments and assumptions. These estimates,
judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures
of contingent assets and liabilities at the date of the interim condensed standalone financial statements and reported amounts of revenues
and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and
subjective judgments and the use of assumptions in these financial statements have been disclosed in Note no. 1.4. Accounting estimates
could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as management
becomes aware of changes in circumstances surrounding the estimates. Changes in estimates and judgements are reflected in the interim
condensed standalone financial statements in the period in which changes are made and, if material, their effects are disclosed in the
notes to the interim condensed standalone financial statements.
1.4 Critical accounting estimates and judgments
a. Revenue recognition
The Company’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to
perform their respective obligations under the contract, and the contract is legally enforceable. The Company assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgement.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and Company’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Company uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Company to determine the actual
efforts or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have
been used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgement and is assessed throughout the period of the contract to reflect any changes based on
the latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer
and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it obtains
control of the specified goods or services before they are transferred to the customer. The Company considers whether it is primarily
responsible for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors
to determine whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Company's two major tax jurisdictions are India
and the United States, though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in
determining the provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions.
In assessing the realizability of deferred income tax
assets, Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and
tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, management believes that the company will realize the
benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced
in the near term if estimates of future taxable income during the carry forward period are reduced. (Refer to note 2.16).
c. Property, plant and equipment
Property, plant and equipment represent a significant
proportion of the asset base of the Company. The charge in respect of periodic depreciation is derived after determining an estimate
of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values
of Company's assets are determined by the management at the time the asset is acquired and reviewed periodically, including at each financial
year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact
their life, such as changes in technology. (Refer to note 2.1).
2. Notes to the Interim Condensed Standalone Financial
Statements
2.1 PROPERTY, PLANT AND EQUIPMENT
Accounting Policy
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant
and equipment are ready for use, as intended by the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The Company depreciates property,
plant and equipment over their estimated useful lives using the straight-line method.
The estimated useful lives of assets are as follows:
| Building(1) |
22-25 years |
| Plant and machinery(1) |
5 years |
| Office equipment |
5 years |
| Computer equipment(1) |
3-5 years |
| Furniture and fixtures(1) |
5 years |
| Vehicles(1) |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1) | | Based on technical evaluation, the Management believes that the useful lives as given
above best represent the period over which Management expects to use these assets. Hence, the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013. |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful lives are based on historical experience with similar assets
as well as anticipation of future events, which may impact their life, such as changes in technology.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets and the cost
of assets not ready to use before such date are disclosed under ‘Capital work-in-progress’. Subsequent expenditures relating
to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow
to the Company and the cost of the item can be measured reliably. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
Impairment
Property, plant and equipment are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the condensed Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds
the estimated recoverable amount of the asset. An impairment loss is reversed in the condensed Statement of Profit and Loss if there has
been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised
recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated
depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2024 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2024 |
1,430 |
10,679 |
3,214 |
1,370 |
7,379 |
2,160 |
963 |
45 |
27,240 |
| Additions |
– |
14 |
20 |
13 |
117 |
9 |
11 |
1 |
185 |
| Deletions** |
– |
(37) |
(3) |
(3) |
(139) |
(19) |
(26) |
(1) |
(228) |
| Gross carrying value as at June 30, 2024 |
1,430 |
10,656 |
3,231 |
1,380 |
7,357 |
2,150 |
948 |
45 |
27,197 |
| Gross carrying value as at April 1, 2024 |
– |
(4,575) |
(2,732) |
(1,139) |
(5,497) |
(1,709) |
(733) |
(42) |
(16,427) |
| Depreciation |
– |
(101) |
(48) |
(25) |
(271) |
(46) |
(37) |
(1) |
(529) |
| Accumulated depreciation on deletions** |
– |
5 |
3 |
3 |
138 |
18 |
26 |
1 |
194 |
| Accumulated depreciation as at June 30, 2024 |
– |
(4,671) |
(2,777) |
(1,161) |
(5,630) |
(1,737) |
(744) |
(42) |
(16,762) |
| Carrying value as at April 1, 2024 |
1,430 |
6,104 |
482 |
231 |
1,882 |
451 |
230 |
3 |
10,813 |
| Carrying value as at June 30, 2024 |
1,430 |
5,985 |
454 |
219 |
1,727 |
413 |
204 |
3 |
10,435 |
| ** | | During the three months ended June 30, 2024, certain assets which were not in use having gross book
value of 101 crore (net book value: nil)
were retired. |
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2023 are as follows:
(In crore)
| Particulars |
Land- Freehold |
Buildings(1)(2) |
Plant and machinery(2) |
Office Equipment(2) |
Computer equipment(2) |
Furniture and fixtures(2) |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,429 |
10,445 |
3,144 |
1,314 |
7,235 |
2,129 |
968 |
45 |
26,709 |
| Additions |
– |
5 |
16 |
21 |
187 |
24 |
22 |
– |
275 |
| Deletions* |
– |
– |
(13) |
(10) |
(224) |
(18) |
(7) |
– |
(272) |
| Gross carrying value as at June 30, 2023 |
1,429 |
10,450 |
3,147 |
1,325 |
7,198 |
2,135 |
983 |
45 |
26,712 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,223) |
(2,558) |
(1,060) |
(4,977) |
(1,549) |
(646) |
(40) |
(15,053) |
| Depreciation |
– |
(98) |
(57) |
(29) |
(301) |
(60) |
(44) |
(1) |
(590) |
| Accumulated depreciation on deletions* |
– |
– |
13 |
10 |
224 |
18 |
6 |
– |
271 |
| Accumulated depreciation as at June 30, 2023 |
– |
(4,321) |
(2,602) |
(1,079) |
(5,054) |
(1,591) |
(684) |
(41) |
(15,372) |
| Carrying value as at April 1, 2023 |
1,429 |
6,222 |
586 |
254 |
2,258 |
580 |
322 |
5 |
11,656 |
| Carrying value as at June 30, 2023 |
1,429 |
6,129 |
545 |
246 |
2,144 |
544 |
299 |
4 |
11,340 |
| * | | During the three months ended June 30, 2023, certain assets which were not in use having gross book
value of 250 crore (net book value: nil) were
retired. |
| (1) | | Buildings include 250/- being the value of five shares of 50/- each in Mittal
Towers Premises Co-operative Society Limited. |
| (2) | | Includes certain assets provided on cancellable operating lease to subsidiaries. |
The aggregate depreciation has been included under
depreciation and amortization expense in the statement of Profit and Loss.
Repairs and maintenance costs are recognized in the
statement of Profit and Loss when incurred.
2.2 GOODWILL AND INTANGIBLE ASSETS
2.2.1 Goodwill
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Carrying value at the beginning |
211 |
211 |
| Carrying value at the end |
211 |
211 |
2.2.2 Other Intangible Assets
Accounting Policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry,
and known technological advances), and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Company has an intention and ability to complete and use or sell the software and the costs can be measured
reliably. The costs which can be capitalized include the cost of material, direct labor, overhead costs that are directly attributable
to prepare the asset for its intended use.
2.3 LEASES
Accounting Policy
The Company as a lessee
The Company’s lease asset classes primarily consist
of leases for land, buildings and computers. The Company assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:
(i) the contract involves the use of an identified asset (ii) the Company has substantially all of the economic benefits from use of the
asset through the period of the lease and (iii) the Company has the right to direct the use of the asset.
At the date of commencement of the lease, the Company
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Company recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Company determines the lease term
as the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Company makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Company considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Infosys’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements include the options to extend
or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset. Right-of-use assets are evaluated
for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose
of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined
on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In
such cases, the recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right of use asset if the Company changes its assessment if whether it will
exercise an extension or a termination option. Lease liability and ROU asset have been separately presented in the Balance Sheet and lease
payments have been classified as financing cash flows.
The Company as a lessor
Leases for which the Company is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Company is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2024:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at April 1, 2024 |
534 |
2,266 |
503 |
3,303 |
| Additions* |
– |
89 |
109 |
198 |
| Deletions |
– |
– |
(43) |
(43) |
| Depreciation |
(1) |
(118) |
(52) |
(171) |
| Balance as at June 30, 2024 |
533 |
2,237 |
517 |
3,287 |
| * | | Net of adjustments on account of modifications |
Following are the changes in the carrying value of right-of-use
assets for the three months ended June 30, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Computers |
|
| Balance as at April 1, 2023 |
548 |
2,669 |
344 |
3,561 |
| Additions* |
– |
256 |
72 |
328 |
| Deletions |
– |
(2) |
(46) |
(48) |
| Depreciation |
(1) |
(122) |
(32) |
(155) |
| Balance as at June 30, 2023 |
547 |
2,801 |
338 |
3,686 |
| * | | Net of adjustments on account of modifications and lease incentives |
The aggregate depreciation expense on ROU assets is
included under depreciation and amortization expense in the interim condensed statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at June 30, 2024 and March 31, 2024:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current lease liabilities |
791 |
678 |
| Non-current lease liabilities |
2,951 |
3,088 |
| Total |
3,742 |
3,766 |
2.4 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current investments |
|
|
| Equity instruments of subsidiaries |
9,348 |
9,150 |
| Redeemable Preference shares of subsidiary |
2,831 |
2,831 |
| Preference securities and equity securities |
222 |
206 |
| Target maturity fund units |
439 |
431 |
| Others |
87 |
84 |
| Tax free bonds |
1,729 |
1,731 |
| Government bonds |
13 |
14 |
| Non-convertible debentures |
2,548 |
2,216 |
| Government Securities |
5,903 |
6,689 |
| Total non-current investments |
23,120 |
23,352 |
| Current investments |
|
|
| Liquid mutual fund units |
3,017 |
1,913 |
| Commercial Papers |
– |
4,507 |
| Certificates of deposit |
1,718 |
2,945 |
| Government Securities |
774 |
204 |
| Non-convertible debentures |
2,106 |
1,738 |
| Total current investments |
7,615 |
11,307 |
| Total carrying value |
30,735 |
34,659 |
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current investments |
|
|
| Unquoted |
|
|
| Investment carried at cost |
|
|
| Investments in equity instruments of subsidiaries |
|
|
| Infosys BPM Limited |
662 |
662 |
| 33,828 (33,828) equity shares of 10,000/- each, fully paid up |
|
|
| Infosys Technologies (China) Co. Limited |
369 |
369 |
| Infosys Technologies, S. de R.L. de C.V., Mexico |
65 |
65 |
| 17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up |
|
|
| Infosys Technologies (Sweden) AB |
76 |
76 |
| 1,000 (1,000) equity shares of SEK 100 par value, fully paid |
|
|
| Infosys Technologies (Shanghai) Company Limited |
1,010 |
1,010 |
| Infosys Public Services, Inc. |
99 |
99 |
| 3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid |
|
|
| Infosys Consulting Holding AG |
1,323 |
1,323 |
| 23,350 (23,350) - Class A shares of CHF 1,000 each and |
|
|
| 26,460 (26,460) - Class B Shares of CHF 100 each, fully paid up |
|
|
| Infosys Americas Inc. |
– |
– |
| Nil (Nil) shares of USD 10 per share, fully paid up |
|
|
| EdgeVerve Systems Limited |
1,312 |
1,312 |
| 1,31,18,40,000 (1,31,18,40,000) equity shares of 10/- each, fully paid up |
|
|
| Infosys Nova Holdings LLC# |
2,637 |
2,637 |
| Infosys Singapore Pte Ltd |
10 |
10 |
| 1,09,90,000 (1,09,90,000) shares |
|
|
| Brilliant Basics Holding Limited |
59 |
59 |
| 1,346 (1,346) shares of GBP 0.005 each, fully paid up |
|
|
| Infosys Arabia Limited |
2 |
2 |
| 70 (70) shares |
|
|
| Skava Systems Private Limited |
– |
– |
| Nil (Nil) shares of 10/- each, fully paid up |
|
|
| Panaya Inc. |
582 |
582 |
| 2 (2) shares of USD 0.01 per share, fully paid up |
|
|
| Infosys Chile SpA |
7 |
7 |
| 100 (100) shares |
|
|
| WongDoody, Inc. |
380 |
380 |
| 100 (100) shares |
|
|
| Infosys Luxembourg S.a r.l. |
26 |
26 |
| 30,000 (30,000) shares |
|
|
| Infosys Austria GmbH |
– |
– |
| 80,000 (80,000) shares of EUR 1 par value, fully paid up |
|
|
| Infosys Consulting Brazil |
337 |
337 |
| 27,50,71,070 (27,50,71,070) shares of BRL 1 per share, fully paid up |
|
|
| Infosys Consulting S.R.L. (Romania) |
34 |
34 |
| 99,183 (99,183) shares of RON 100 per share, fully paid up |
|
|
| Infosys Limited Bulgaria EOOD |
2 |
2 |
| 4,58,000 (4,58,000) shares of BGN 1 per share, fully paid up |
|
|
| Infosys Germany Holdings GmbH |
2 |
2 |
| 25,000 (25,000) shares EUR 1 per share, fully paid up |
|
|
| Infosys Green Forum |
1 |
1 |
| 10,00,000 (10,00,000) shares 10 per share, fully paid up |
|
|
| Infosys Automotive and Mobility GmbH |
15 |
15 |
| Infosys Turkey Bilgi Teknolojileri Limited Sirketi |
48 |
48 |
| 1,508,060 (1,508,060) share Turkish Liras 100 (10,000) per share, fully paid up |
|
|
| Infosys Consulting S.R.L. (Argentina) |
2 |
2 |
| 2,94,500 (2,94,500) shares AR$ 100 per share, fully paid up |
|
|
| Infosys Business Solutions LLC |
8 |
8 |
| 10,000 (10,000) shares USD 100 per share, fully paid up |
|
|
| Danske IT and Support Services India Private Limited |
82 |
82 |
| 3,27,788 (3,27,788) shares 10 per share fully paid up |
|
|
| InSemi Technology Services Private Limited(2) |
198 |
– |
| 10,33,440 (Nil) shares 10 per share fully paid up |
|
|
| Investments in Redeemable Preference shares of subsidiary |
|
|
| Infosys Singapore Pte Ltd |
2,831 |
2,831 |
| 51,02,00,000 (51,02,00,000 ) shares |
|
|
| |
12,179 |
11,981 |
| Investments carried at fair value through profit or loss |
|
|
| Target maturity fund units |
439 |
431 |
| Others (1) |
87 |
84 |
| |
526 |
515 |
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
91 |
91 |
| Equity securities |
2 |
2 |
| |
93 |
93 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Tax free bonds |
1,729 |
1,731 |
| Government bonds |
13 |
14 |
| |
1,742 |
1,745 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non-convertible debentures |
2,548 |
2,216 |
| Equity Securities |
129 |
113 |
| Government Securities |
5,903 |
6,689 |
| |
8,580 |
9,018 |
| Total non-current investments |
23,120 |
23,352 |
| Current investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
3,017 |
1,913 |
| |
3,017 |
1,913 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Papers |
– |
4,507 |
| Certificates of deposit |
1,718 |
2,945 |
| |
1,718 |
7,452 |
| Quoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Government Securities |
774 |
204 |
| Non-convertible debentures |
2,106 |
1,738 |
| |
2,880 |
1,942 |
| Total current investments |
7,615 |
11,307 |
| Total investments |
30,735 |
34,659 |
| Aggregate amount of quoted investments |
13,202 |
12,705 |
| Market value of quoted investments (including interest accrued), current |
2,880 |
1,942 |
| Market value of quoted investments (including interest accrued), non-current |
10,537 |
10,978 |
| Aggregate amount of unquoted investments |
17,533 |
21,954 |
| # Aggregate amount of impairment in value of investments |
94 |
94 |
| Reduction in the fair value of assets held for sale |
854 |
854 |
| Investments carried at cost |
12,179 |
11,981 |
| Investments carried at amortized cost |
1,742 |
1,745 |
| Investments carried at fair value through other comprehensive income |
13,271 |
18,505 |
| Investments carried at fair value through profit or loss |
3,543 |
2,428 |
| (1) | | Uncalled capital commitments outstanding as of June 30, 2024 and March 31, 2024 was 5
crore and 5 crore, respectively. |
| (2) | | On May 10, 2024, Infosys Ltd acquired 100% voting interests in InSemi Technology Services
Private Limited, a semiconductor design services company headquartered in India. This acquisition is expected to strengthen our expertise
in semiconductor ecosystem and Engineering R&D services. The business acquisition was conducted by entering into a share purchase
agreement for a total consideration of 198 crore as on acquisition date, which includes a cash consideration of 168 crore
and contingent consideration of up to 35 crore. The fair value of contingent consideration as of June 30, 2024 is 30 crore. |
Refer to note 2.11 for accounting policies on financial
instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
June 30, 2024 |
March 31, 2024 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
3,017 |
1,913 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
439 |
431 |
| Tax free bonds and government bonds - carried at amortized cost |
Quoted price and market observable inputs |
1,955 |
1,959 |
| Non-convertible debentures - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
4,654 |
3,954 |
| Government securities - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
6,677 |
6,893 |
| Commercial Papers - carried at fair value through other comprehensive income |
Market observable inputs |
– |
4,507 |
| Certificates of deposit - carried at fair value through other comprehensive income |
Market observable inputs |
1,718 |
2,945 |
| Quoted equity securities - carried at fair value through other comprehensive income |
Quoted price |
129 |
113 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
93 |
93 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
87 |
84 |
| Total |
|
18,769 |
22,892 |
Note : Certain quoted investments are classified as Level
2 in the absence of active market for such investments.
2.5 LOANS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non- Current |
|
|
| Loan to subsidiary |
10 |
– |
| Loans considered good - Unsecured |
|
|
| Other Loans |
|
|
| Loans to employees |
29 |
34 |
| |
39 |
34 |
| Loans credit impaired - Unsecured |
|
|
| Other Loans |
|
|
| Loans to employees |
– |
– |
| Less: Allowance for credit impairment |
– |
– |
| |
– |
– |
| Total non - current loans |
39 |
34 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other Loans |
|
|
| Loans to employees |
207 |
208 |
| Total current loans |
207 |
208 |
| Total Loans |
246 |
242 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Security deposits (1) |
208 |
205 |
| Unbilled revenues (1)(5)# |
1,278 |
1,366 |
| Others(1)** |
211 |
185 |
| Total non-current other financial assets |
1,697 |
1,756 |
| Current |
|
|
| Security deposits (1) |
23 |
25 |
| Restricted deposits (1)* |
2,466 |
2,282 |
| Unbilled revenues (1)(5)# |
5,026 |
4,993 |
| Interest accrued but not due (1) |
242 |
476 |
| Foreign currency forward and options contracts (2)(3) |
79 |
81 |
| Others (1)(4)** |
2,517 |
2,272 |
| Total current other financial assets |
10,353 |
10,129 |
| Total other financial assets |
12,050 |
11,885 |
| (1) Financial assets carried at amortized cost |
11,971 |
11,804 |
| (2) Financial assets carried at fair value through other comprehensive income |
18 |
23 |
| (3) Financial assets carried at fair value through Profit or Loss |
61 |
58 |
| (4) Includes dues from subsidiaries |
2,229 |
2,052 |
| (5) Includes dues from subsidiaries |
136 |
153 |
| * | | Restricted deposits represent deposit with financial institutions to settle employee related
obligations as and when they arise during the normal course of business. |
| # | | Classified as financial asset as right to consideration is unconditional and is due only
after a passage of time. |
| ** | | Primarily includes net investment in lease arising on assets that are leased to customers
for a contract term normally ranging between 3 to 4 years, with lease payments generally due in monthly installments. |
2.7 TRADE RECEIVABLES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Trade Receivable considered good - Unsecured (1) |
26,373 |
25,575 |
| Less: Allowance for expected credit loss |
454 |
423 |
| Trade Receivable considered good - Unsecured |
25,919 |
25,152 |
| Trade Receivable - credit impaired - Unsecured |
134 |
157 |
| Less: Allowance for credit impairment |
134 |
157 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables (2) |
25,919 |
25,152 |
| (1) Includes dues from subsidiaries |
252 |
259 |
| (2) Includes dues from companies where directors are interested |
– |
– |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Balances with banks |
|
|
| In current and deposit accounts |
9,176 |
8,191 |
| Cash on hand |
– |
– |
| Total Cash and cash equivalents |
9,176 |
8,191 |
| Balances with banks in unpaid dividend accounts |
37 |
37 |
| Deposit with more than 12 months maturity |
|
– |
– |
Cash and cash equivalents as at June 30, 2024 and March
31, 2024 include restricted cash and bank balances of 78 crore and 44 crore, respectively.
The deposits maintained by the Company with banks and
financial institutions comprise of time deposits, which can be withdrawn by the Company at any point without prior notice or penalty on
the principal.
2.9 EARMARKED BANK BALANCE FOR DIVIDEND
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Earmarked bank balance for dividend |
11,625 |
– |
| Total other assets |
11,625 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20.00/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8.00/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on
June 26, 2024. Payment date for the dividend is July 01,2024. Earmarked bank balance for dividend represents cash which is deposited in
a designated bank account only for payment of final dividend and special dividend for financial year ended March 31, 2024.
2.10 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Capital advances |
176 |
151 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Prepaid expenses |
60 |
68 |
| Defined benefit plan assets |
9 |
9 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract |
75 |
88 |
| Cost of fulfillment |
601 |
640 |
| Unbilled revenues(2) |
64 |
58 |
| Withholding taxes and others |
656 |
655 |
| Total non-current other assets |
1,641 |
1,669 |
| Current |
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
428 |
325 |
| Others |
|
|
| Prepaid expenses (1) |
2,020 |
1,886 |
| Unbilled revenues(2) |
4,404 |
4,397 |
| Deferred contract cost |
|
|
| Cost of obtaining a contract |
211 |
154 |
| Cost of fulfillment |
307 |
266 |
| Withholding taxes and others |
2,347 |
2,593 |
| Other receivables (1) |
16 |
15 |
| Total current other assets |
9,733 |
9,636 |
| Total other assets |
11,374 |
11,305 |
| (1) Includes dues from subsidiaries |
143 |
155 |
| (2) Classified as non-financial asset as
the contractual right to consideration is dependent on completion of contractual milestones. |
Withholding taxes and others primarily consist of input
tax credits and Cenvat/ VAT recoverable from Government of India.
2.11 FINANCIAL INSTRUMENTS
Accounting Policy
2.11.1 Initial recognition
The Company recognizes financial assets and financial
liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value
through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted
for at trade date.
2.11.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Company has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss (FVTPL)
A financial asset which is not classified in any of
the above categories are subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently
measured at fair value through profit or loss.
(v) Investment in subsidiaries
Investment in subsidiaries is carried at cost in the
separate financial statements.
b. Derivative financial instruments
The Company holds derivative financial instruments
such as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures.
The counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities,
carried at fair value through profit or loss.
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the Company believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any
derivative that is either not designated as hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial
asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized
initially at fair value and attributable transaction costs are recognized in net profit in the Statement of Profit and Loss when incurred.
Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains
or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities if they
are either held for trading or are expected to be realized within 12 months after the Balance Sheet date.
(ii) Cash flow hedge
The Company designates certain foreign exchange forward
and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedge instrument, the effective portion of changes in the fair value of the derivative
is recognized in other comprehensive income and accumulated in the cash flow hedge reserve. Any ineffective portion of changes in the
fair value of the derivative is recognized immediately in the net profit in the condensed standalone Statement of Profit and Loss. If
the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the
hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash
flow hedge reserve till the period the hedge was effective remains in cash flow hedge reserve until the forecasted transaction occurs.
The cumulative gain or loss previously recognized in the cash flow hedge reserve is transferred to the net profit in the condensed standalone
Statement of Profit and Loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected
to occur, then the amount accumulated in cash flow hedge reserve is reclassified to net profit in the Statement of Profit and Loss.
2.11.3 Derecognition of financial instruments
The Company derecognizes a financial asset when the
contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for
derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Company's Balance
Sheet when the obligation specified in the contract is discharged or cancelled or expires.
2.11.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the Company uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, option pricing model, market multiples, available quoted market
prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
Refer to table 'Financial instruments by category'
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to
the short maturity of these instruments.
2.11.5 Impairment
The Company recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenues which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For
all other financial assets, expected credit losses are measured at an amount equal to the 12-month ECL, unless there has been a significant
increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The Company determines the allowance
for credit losses based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Company
considers current and anticipated future economic conditions relating to industries the Company deals with and the countries where it
operates.The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required
to be recorded is recognized as an impairment loss or gain in statement of profit and loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at June 30, 2024 are as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss
|
Financial assets/liabilities at fair value through OCI
|
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.8) |
9,176 |
– |
– |
– |
– |
9,176 |
9,176 |
| Earmarked bank balance for dividend (Refer to note 2.9) |
11,625 |
– |
– |
– |
– |
11,625 |
11,625 |
| Investments (Refer to note 2.4) |
|
|
|
|
|
|
|
| Preference securities, Equity securities and others |
– |
– |
87 |
222 |
– |
309 |
309 |
| Tax free bonds and government bonds |
1,742 |
– |
– |
– |
– |
1,742 |
1,955(1) |
| Liquid mutual fund units |
– |
– |
3,017 |
– |
– |
3,017 |
3,017 |
| Target maturity fund units |
– |
– |
439 |
– |
– |
439 |
439 |
| Certificates of deposit |
– |
– |
– |
– |
1,718 |
1,718 |
1,718 |
| Non convertible debentures |
– |
– |
– |
– |
4,654 |
4,654 |
4,654 |
| Government Securities |
– |
– |
– |
– |
6,677 |
6,677 |
6,677 |
| Trade receivables (Refer to note 2.7) |
25,919 |
– |
– |
– |
– |
25,919 |
25,919 |
| Loans (Refer to note 2.5) |
246 |
– |
– |
– |
– |
246 |
246 |
| Other financial assets (Refer to note 2.6) (3) |
11,971 |
– |
61 |
– |
18 |
12,050 |
11,961(2) |
| Total |
60,679 |
– |
3,604 |
222 |
13,067 |
77,572 |
77,696 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables (Refer to note 2.14) |
2,869 |
– |
– |
– |
– |
2,869 |
2,869 |
| Lease liabilities (Refer to note 2.3) |
3,742 |
– |
– |
– |
– |
3,742 |
3,742 |
| Other financial liabilities (Refer to note 2.13) |
21,785 |
– |
41 |
– |
3 |
21,829 |
21,829 |
| Total |
28,396 |
– |
41 |
– |
3 |
28,440 |
28,440 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 89 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2024 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss
|
Financial assets/liabilities at fair value through OCI
|
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to note 2.8) |
8,191 |
– |
– |
– |
– |
8,191 |
8,191 |
| Investments (Refer to note 2.4) |
|
|
|
|
|
|
|
| Preference securities, Equity securities and others |
– |
– |
84 |
206 |
– |
290 |
290 |
| Tax free bonds and government bonds |
1,745 |
– |
– |
– |
– |
1,745 |
1,959(1) |
| Target maturity fund units |
– |
– |
431 |
– |
– |
431 |
431 |
| Liquid mutual fund units |
– |
– |
1,913 |
– |
– |
1,913 |
1,913 |
| Commercial Papers |
– |
– |
– |
– |
4,507 |
4,507 |
4,507 |
| Certificates of deposit |
– |
– |
– |
– |
2,945 |
2,945 |
2,945 |
| Non convertible debentures |
– |
– |
– |
– |
3,954 |
3,954 |
3,954 |
| Government Securities |
– |
– |
– |
– |
6,893 |
6,893 |
6,893 |
| Trade receivables (Refer to note 2.7) |
25,152 |
– |
– |
– |
– |
25,152 |
25,152 |
| Loans (Refer to note 2.5) |
242 |
– |
– |
– |
– |
242 |
242 |
| Other financial assets (Refer to note 2.6)(3) |
11,804 |
– |
58 |
– |
23 |
11,885 |
11,801(2) |
| Total |
47,134 |
– |
2,486 |
206 |
18,322 |
68,148 |
68,278 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables (Refer to note 2.14) |
2,493 |
– |
– |
– |
– |
2,493 |
2,493 |
| Lease Liabilities (Refer to note 2.3) |
3,766 |
– |
– |
– |
– |
3,766 |
3,766 |
| Other financial liabilities (Refer to note 2.13) |
11,569 |
– |
20 |
– |
1 |
11,590 |
11,590 |
| Total |
17,828 |
– |
20 |
– |
1 |
17,849 |
17,849 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 84 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
For trade receivables, trade payables, other assets
and payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 – Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from
prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at June 30, 2024 is as follows:
(In crore)
| Particulars |
As at June 30, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in tax free bonds |
1,941 |
1,416 |
525 |
– |
| Investments in government bonds |
14 |
14 |
– |
– |
| Investments in liquid mutual fund units |
3,017 |
3,017 |
– |
– |
| Investments in target maturity fund units |
439 |
439 |
– |
– |
| Investments in certificates of deposit |
1,718 |
– |
1,718 |
– |
| Investments in non convertible debentures |
4,654 |
4,407 |
247 |
– |
| Investments in government securities |
6,677 |
6,677 |
– |
– |
| Investments in equity securities |
131 |
129 |
– |
2 |
| Investments in preference securities |
91 |
– |
– |
91 |
| Other investments |
87 |
– |
– |
87 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) |
79 |
– |
79 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to note 2.13) |
14 |
– |
14 |
– |
| Liability towards contingent consideration (Refer to note 2.13)(1) |
30 |
– |
– |
30 |
During the three months ended June 30, 2024, Government
securities of 72 crore were transferred from Level 2 to Level 1 of fair value hierarchy since these were valued based on quoted
price. Further Tax free bonds of 525 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued
based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2024 was as follows:
(In crore)
| Particulars |
As at March 31, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in tax free bonds |
1,944 |
1,944 |
– |
– |
| Investments in target maturity fund units |
431 |
431 |
– |
– |
| Investments in government bonds |
15 |
15 |
– |
– |
| Investments in liquid mutual fund units |
1,913 |
1,913 |
– |
– |
| Investments in certificates of deposit |
2,945 |
– |
2,945 |
– |
| Investments in commercial papers |
4,507 |
– |
4,507 |
– |
| Investments in non convertible debentures |
3,954 |
3,697 |
257 |
– |
| Investments in government securities |
6,893 |
6,820 |
73 |
– |
| Investments in equity securities |
115 |
113 |
– |
2 |
| Investments in preference securities |
91 |
– |
– |
91 |
| Other investments |
84 |
– |
– |
84 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to note 2.6) |
81 |
– |
81 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer note 2.13) |
21 |
– |
21 |
– |
During the year ended March 31, 2024, tax free bonds
and non-convertible debentures of 1,986 crore were transferred from Level 2 to Level 1 of fair value hierarchy since these were
valued based on quoted price. Further government securities of 73 crore were transferred from Level 1 to Level 2 of fair value
hierarchy, since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Company are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund
units, tax free bonds, certificates of deposit, commercial papers, treasury bills, government securities, non-convertible debentures,
quoted bonds issued by government and quasi-government organizations. The Company invests after considering counterparty risks based
on multiple criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks
and financial institutions. These risks are monitored regularly as per Company's risk management program.
2.12 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity share capital.
Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction
from equity, net of any tax effects.
Description of reserves
Capital redemption reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Company.
Securities premium
The amount received in excess of the par value of equity
shares has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The Share options outstanding account is used to record
the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account
are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not
exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA (1)(ii) of Income Tax Act, 1961. The reserve
should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the provisions of
the Sec 10AA (2) of the Income Tax Act, 1961.
Other components of equity
Other components of equity include remeasurement of
net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on fair valuation of
investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Cash flow hedge reserve
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the condensed standalone Statement of Profit and Loss upon the occurrence of the related forecasted transaction.
2.12.1 EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Authorized |
|
|
| Equity shares, 5/- par value |
|
|
| 480,00,00,000 (480,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5/- par value (1) |
2,076 |
2,075 |
| 415,20,28,475 (415,08,67,464) equity shares fully paid-up |
|
|
| |
2,076 |
2,075 |
| (1) | | Refer to note 2.21 for details of basic and diluted shares |
Forfeited shares amounted to 1,500/- (1,500/-)
The Company has only one class of shares referred to
as equity shares having a par value of 5/-. Each holder of equity shares is entitled to one vote per share. The equity shares represented
by American Depository Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying
equity share.
In the event of liquidation of the Company, the holders
of equity shares will be entitled to receive any of the remaining assets of the company in proportion to the number of equity shares held
by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts exist currently. There are
no voting, dividend or liquidation rights to the holders of options issued under the company's share option plans.For details of shares
reserved for issue under the employee stock option plan of the Company, refer to the note below.
The reconciliation of the number of shares outstanding
and the amount of share capital as at June 30, 2024 and March 31, 2024 is set out below:
(in crore, except as stated otherwise)
| Particulars |
As at June 30, 2024 |
As at March 31, 2024 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
4,15,08,67,464 |
2,075 |
4,14,85,60,044 |
2,074 |
| Add: Shares issued on exercise of employee stock options |
1,161,011 |
1 |
2,307,420 |
1 |
| As at the end of the period |
4,15,20,28,475 |
2,076 |
4,15,08,67,464 |
2,075 |
Capital allocation policy
Effective fiscal 2025, the Company expects to continue
its policy of returning approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual
dividends and/or share buyback/ special dividends subject to applicable laws and requisite approvals, if any. Under this policy, the Company
expects to progressively increase its annual dividend per share (excluding special dividend if any).Free cash flow is defined as net cash
provided by operating activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend
and buyback include applicable taxes
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of June 30, 2024, the Company has only one class of equity shares and
has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
2.12.2 DIVIDEND
The final dividend on shares is recorded as a liability
on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company's
Board of Directors. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders is as follows:-
(in )
| Particulars |
Three months ended June 30, |
|
2024 |
2023 |
| Final dividend for fiscal 2023 |
– |
17.50 |
| Special dividend for fiscal 2024 |
8.00 |
– |
| Final dividend for fiscal 2024 |
20.00 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June
26, 2024 which will result in a net cash outflow of 11,625 crore. Payment date for the dividend is July 01, 2024.
2.12.3 Employee Stock Option Plan (ESOP):
Accounting Policy
The Company recognizes compensation expense relating
to share-based payments in net profit based on estimated fair-values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in the statement of profit and loss on a straight-line basis over the requisite service period for each separately
vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding
account.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan): On June 22, 2019 pursuant to approval by the shareholders in the Annual General Meeting, the Board has been authorized
to introduce, offer, issue and provide share-based incentives to eligible employees of the Company and its subsidiaries under the 2019
Plan. The maximum number of shares under the 2019 plan shall not exceed 5,00,00,000 equity shares. To implement the 2019 Plan, up to 4,50,00,000
equity shares may be issued by way of secondary acquisition of shares by Infosys Expanded Stock Ownership Trust. The Restricted Stock
Units (RSUs) granted under the 2019 plan shall vest based on the achievement of defined annual performance parameters as determined by
the administrator (Nomination and Remuneration Committee). The performance parameters will be based on a combination of relative Total
Shareholder Return (TSR) against selected industry peers and certain broader market domestic and global indices and operating performance
metrics of the company as decided by administrator. Each of the above performance parameters will be distinct for the purposes of calculation
of quantity of shares to vest based on performance. These instruments will generally vest between a minimum of 1 to maximum of 3 years
from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan): On March 31, 2016, pursuant to the approval by the shareholders through postal ballot, the Board was authorized to introduce,
offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the 2015 Plan. The maximum
number of shares under the 2015 plan shall not exceed 2,40,38,883 equity shares (this includes 1,12,23,576 equity shares which are held
by the trust towards the 2011 Plan as at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers
mentioned above are further adjusted with the September 2018 bonus issue.The equity settled and cash settled RSUs and stock options would
vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration Committee
(NARC). The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options would
be the market price as on the date of grant.
Controlled trust holds 10,246,512 shares and 10,916,829
shares as at June 30, 2024 and March 31, 2024, respectively under the 2015 plan. Out of these shares, 2,00,000 equity shares each have
been earmarked for welfare activities of the employees as at June 30, 2024 and March 31, 2024.
The following is the summary of grants made during
the three months ended June 30, 2024
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended June 30, |
Three months ended June 30, |
| |
2024 |
2023 |
2024 |
2023 |
| Equity settled RSUs |
|
|
|
|
| Key Management Personnel (KMP) |
70,699 |
78,281 |
295,168 |
333,596 |
| Employees other than KMP |
6,848 |
– |
96,490 |
4,500 |
| Total Grants |
77,547 |
78,281 |
391,658 |
338,096 |
Notes on grants to KMP:
CEO & MD
Under the 2015 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee approved the following grants for fiscal 2025. In accordance with such approval the following
grants were made effective May 2, 2024.
| - | | 245,679 performance-based RSUs (Annual performance equity grant) of fair value of 34.75
crore. These RSUs will vest in line with the employment agreement based on achievement of certain performance targets. |
| - | | 14,140 performance-based grant of RSUs (Annual performance equity ESG grant) of fair value
of 2 crore. These RSUs will vest in line with the employment
agreement based on achievement of certain environment, social and governance milestones as determined by the Board. |
| - | | 35,349 performance-based grant of RSUs (Annual performance Equity TSR grant) of fair value
of 5 crore. These RSUs will vest in line with the employment
agreement based on Company’s performance on cumulative relative TSR over the years and as determined by the Board. |
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of June 30, 2024, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with Ind AS 102,
Share based payment. The grant date for this purpose in accordance with Ind AS 102, Share based payment is July 1, 2022.
Under the 2019 plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2025 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 70,699 performance based RSU’s
were granted effective May 2, 2024.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Granted to: |
|
|
| KMP |
18 |
20 |
| Employees other than KMP |
170 |
112 |
| Total (1) |
188 |
132 |
| (1) Cash settled stock compensation expense included in the above |
1 |
1 |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance-based options and Monte Carlo simulation model is used for TSR based options.The
inputs to the model include the share price at date of grant, exercise price, expected volatility, expected dividends, expected term and
the risk free rate of interest. Expected volatility during the expected term of the options is based on historical volatility of the observed
market prices of the Company's publicly traded equity shares during a period equivalent to the expected term of the options. Expected
volatility of the comparative company have been modelled based on historical movements in the market prices of their publicly traded equity
shares during a period equivalent to the expected term of the options. Correlation coefficient is calculated between each peer entity
and the indices as a whole or between each entity in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2025-
Equity Shares-RSU |
Fiscal 2025-
ADR-RSU |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADR-RSU |
| Weighted average share price () / ($ ADS) |
1,414 |
16.87 |
1,588 |
19.19 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-26 |
23-28 |
23-31 |
25-33 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
5 |
7 |
4-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,298 |
15.45 |
1,317 |
16.27 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.13 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Others |
|
|
| Compensated absences |
85 |
81 |
| Accrued compensation to employees (1) |
11 |
7 |
| Accrued expenses (1) |
1,663 |
1,779 |
| Payable for acquisition of business - Contingent consideration (2) |
18 |
– |
| Other payables (1) |
5 |
74 |
| Total non-current other financial liabilities |
1,782 |
1,941 |
| Current |
|
|
| Unpaid dividends (1) |
37 |
37 |
| Others |
|
|
| Accrued compensation to employees (1) |
2,836 |
3,336 |
| Accrued expenses (1)(4) |
5,452 |
5,134 |
| Capital creditors (1) |
206 |
269 |
| Compensated absences |
2,232 |
2,078 |
| Final dividend payable to shareholders(1)(6) |
10,481 |
– |
| Payable for acquisition of business - Contingent consideration (2) |
12 |
– |
| Other payables (1)(5) |
1,094 |
933 |
| Foreign currency forward and options contracts (2)(3) |
14 |
21 |
| Total current other financial liabilities |
22,364 |
11,808 |
| Total other financial liabilities |
24,146 |
13,749 |
| (1) Financial liability carried at amortized cost |
21,785 |
11,569 |
| (2) Financial liability carried at fair value through profit or loss |
41 |
20 |
| (3) Financial liability carried at fair value through other comprehensive income |
3 |
1 |
| (4) Includes dues to subsidiaries |
29 |
29 |
| (5) Includes dues to subsidiaries |
411 |
405 |
| (6) | | Pertains to final dividend and special dividend for fiscal 2024 declared by the Company
and approved by the shareholders on June 26, 2024. Payment date for dividend is July 01, 2024 (Refer note 2.12.2) |
Accrued expenses primarily relate to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses, office
maintenance and cost of third party software and hardware.
2.14 TRADE PAYABLES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Outstanding dues of micro enterprises and small enterprises |
109 |
92 |
| Outstanding dues of creditors other than micro enterprises and small enterprises(1) |
2,760 |
2,401 |
| Total trade payables |
2,869 |
2,493 |
| (1) Includes dues to
subsidiaries |
1,167 |
778 |
2.15 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Others |
|
|
| Accrued defined benefit liability |
133 |
123 |
| Others |
26 |
27 |
| Total non - current other liabilities |
159 |
150 |
| Current |
|
|
| Unearned revenue |
5,420 |
5,698 |
| Others |
|
|
| Withholding taxes and others |
3,346 |
1,974 |
| Accrued defined benefit liability |
2 |
2 |
| Others |
7 |
7 |
| Total current other liabilities |
8,775 |
7,681 |
| Total other liabilities |
8,934 |
7,831 |
2.16 PROVISIONS
Accounting Policy
A provision is recognized if, as a result of a past
event, the Company has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of
economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at
a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.
a. Post-sales client support
The Company provides its clients with a fixed-period
post sales support on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time
related revenues are recorded in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and
estimates are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when
the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations
under the contract. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete the contract. The provision is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established,
the Company recognizes any impairment loss on the assets associated with that contract.
Provision for post-sales client support and other
provisions
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,137 |
1,464 |
| Total provisions |
1,137 |
1,464 |
Provision for post sales client support and other provisions
majorly represents costs associated with providing sales support services which are accrued at the time of recognition of revenues and
are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the condensed consolidated statement of profit and loss.
2.17 INCOME TAXES
Accounting Policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items
recognized directly in equity, in which case it is recognized in equity or other comprehensive income. Current income tax for current
and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax
laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred income tax assets and liabilities are recognized
for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax
benefit will be realized.
Deferred income tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on
deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive
enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed
earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the
foreseeable future.The Company offsets current tax assets and current tax liabilities; deferred tax assets and deferred tax liabilities,
where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to
realize the asset and settle the liability simultaneously. The income tax provision for the interim period is made based on the best estimate
of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of
employee share options in excess of compensation charged to income are credited to equity.
Income tax expense in the statement of Profit and Loss
comprises:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Current taxes |
2,686 |
2,065 |
| Deferred taxes |
(326) |
125 |
| Income tax expense |
2,360 |
2,190 |
Income tax expense for the three months
ended June 30, 2024 and June 30, 2023 includes provisions (net of reversals) of 45 crore and reversals (net of provisions) 46
crore, respectively. These provisions and reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months ended June
30, 2024 and June 30, 2023 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.18 REVENUE FROM OPERATIONS
Accounting Policy
The Company derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Company’s core and digital offerings (together called as “software
related services”). Contracts with customers are either on a time-and-material, unit of work, fixed-price or on a fixed-timeframe
basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing, by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Company has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Company assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Company allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Company estimates the cost of satisfying the performance obligation and then
adds an appropriate margin based on similar services.
The Company’s contracts may include variable
consideration including rebates, volume discounts and penalties. The Company includes variable consideration as part of transaction price
when there is a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal
of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and Company’s costs to fulfil the contract
is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue from other
fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as "unearned revenues").
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Company measures the revenue in respect of each performance obligation of a contract at its
relative standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Company is unable to determine the standalone selling price, the Company uses the expected cost plus
margin approach in estimating the standalone selling price. For software development and related services, the performance obligations
are satisfied as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Company is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Company uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license is made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products generally
have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are provided in conjunction
with the licensing arrangement and the license and implementation have been identified as two distinct separate performance obligations,
the transaction price for such contracts are allocated to each performance obligation of the contract based on their relative standalone
selling prices. In the absence of standalone selling price for implementation, the Company uses the expected cost plus margin approach
in estimating the standalone selling price. Where the license is required to be substantially customized as part of the implementation
service the entire arrangement fee for license and implementation is considered to be a single performance obligation and the revenue
is recognized using the percentage-of-completion method as the implementation is performed. Revenue from client training, support and
other services arising due to the sale of software products is recognized as the performance obligations are satisfied. ATS revenue is
recognized ratably on a straight line basis over the period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Company is acting as an agent between the customer
and the vendor, and gross when the Company is the principal for the transaction. In doing so, the Company first evaluates whether it obtains
control of the specified goods or services before they are transferred to the customer. The Company considers whether it is primarily
responsible for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors
to determine whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
A contract modification is a change in the scope or
price or both of a contract that is approved by the parties to the contract. A contract modification that results in the addition of distinct
performance obligations are accounted for either as a separate contract if the additional services are priced at the standalone selling
price or as a termination of the existing contract and creation of a new contract if they are not priced at the standalone selling price.
If the modification does not result in a distinct performance obligation, it is accounted for as part of the existing contract on a cumulative
catch-up basis.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Company expects to recover
them.Certain eligible, nonrecurring costs (e.g. set-up or transition or transformation costs) that do not represent a separate performance
obligation are recognized as an asset when such costs (a) relate directly to the contract; (b) generate or enhance resources of the Company
that will be used in satisfying the performance obligation in the future; and (c) are expected to be recovered.Capitalized contract costs
relating to upfront payments to customers are amortized to revenue and other capitalized costs are amortized to expenses over the respective
contract life on a systematic basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized
costs are monitored regularly for impairment. Impairment losses are recorded when present value of projected remaining operating cash
flows is not sufficient to recover the carrying amount of the capitalized costs.
The Company presents revenues net of indirect taxes
in its Statement of Profit and Loss.
Revenue from operations for the three months ended
June 30, 2024 and March 31, 2024 is as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenue from software services |
33,017 |
31,748 |
| Revenue from products and platforms |
266 |
63 |
| Total revenue from operations |
33,283 |
31,811 |
The percentage of revenue from fixed-price contracts
for the three months ended June 30, 2024 and June 30, 2023 is 57% and 55%, respectively.
Trade receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Company’s Balance Sheet. Amounts are billed as
work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly) or upon achievement
of contractual milestones.
The Company’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because
the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the Balance Sheet.
2.19 OTHER INCOME, NET
2.19.1 Other income
Accounting Policy
Other income is comprised primarily of interest income,
dividend income, gain / loss on investments and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
2.19.2 Foreign currency
Accounting Policy
Functional currency
The functional currency of the Company is the Indian
rupee. These financial statements are presented in Indian rupees (rounded off to crore; one crore equals ten million).
Transactions and translations
Foreign-currency denominated monetary assets and liabilities
are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting
from such translations are recognized in the condensed standalone Statement of Profit and Loss and reported within exchange gains/(losses)
on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. Non-monetary
assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent
at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and
measured at historical cost are translated at the exchange rate prevalent at the date of the transaction. The related revenue and expense
are recognized using the same exchange rate.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense
and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
Government grant
The Company recognizes government grants only when
there is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government
grants related to assets are treated as deferred income and are recognized in the net profit in the Statement of Profit and Loss on a
systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic basis
in the net profit in the Statement of Profit and Loss over the periods necessary to match them with the related costs which they are intended
to compensate.
Other income for the three months ended June 30, 2024
and June 30, 2023 is as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Interest income on financial assets carried at amortized cost |
|
|
| Tax free bonds and government bonds |
30 |
33 |
| Deposit with Bank and others |
231 |
179 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
| Non-convertible debentures, commercial papers, certificates of deposit and government securities |
315 |
205 |
| Income on investments carried at fair value through profit or loss |
|
|
| Gain / (loss) on liquid mutual funds and other investments |
96 |
41 |
| Dividend received from subsidiary |
– |
400 |
| Exchange gains/(losses) on foreign currency forward and options contracts |
46 |
135 |
| Exchange gains/(losses) on translation of other assets and liabilities |
(36) |
(66) |
| Miscellaneous income, net |
39 |
74 |
| Total other income |
721 |
1,001 |
2.20 EXPENSES
Accounting Policy
2.20.1 Gratuity and Pension
The Company provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible Indian employees of Infosys. The Gratuity Plan provides a lump-sum payment to
vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee's salary
and the tenure of employment with the Company. The Company contributes Gratuity liabilities to the Infosys Limited Employees' Gratuity
Fund Trust (the Trust). Trustees administer contributions made to the Trusts and contributions are invested in a scheme with the Life
Insurance Corporation of India as permitted by Indian law.
The Company operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement and / or for a lumpsum payment as set out in rules of each fund and includes death and disability
benefits. The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of
the respective employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method.
These defined benefit plans expose the Company to actuarial risks, such as longevity risk, interest rate risk and market risk.
The Company recognizes the net obligation of a defined
benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability/(asset)
are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return of the
portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation
is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profit in the Statement of Profit
and Loss.
2.20.2 Provident fund
Eligible employees of Infosys receive benefits from
a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident
fund plan equal to a specified percentage of the covered employee's salary. The Company contributes a portion to the Infosys Limited Employees'
Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed
to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being
administered by the Government of India. The Company has an obligation to make good the shortfall, if any, between the return from the
investments of the Trust and the notified interest rate.
2.20.3 Superannuation
Certain employees of Infosys are participants in a
defined contribution plan. The Company has no further obligations to the Plan beyond its monthly contributions which are periodically
contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
2.20.4 Compensated absences
The Company has a policy on compensated absences which
are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial
valuation performed by an external actuary at each Balance Sheet date using projected unit credit method on the additional amount expected
to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated
absences is recognized in the period in which the absences occur.
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit expenses |
|
|
| Salaries including bonus |
15,752 |
15,708 |
| Contribution to provident and other funds |
510 |
499 |
| Share based payments to employees (Refer to note 2.12) |
188 |
132 |
| Staff welfare |
45 |
14 |
| |
16,495 |
16,353 |
| Cost of software packages and others |
|
|
| For own use |
462 |
378 |
| Third party items bought for service delivery to clients |
1,655 |
796 |
| |
2,117 |
1,174 |
| Other expenses |
|
|
| Power and fuel |
58 |
44 |
| Brand and Marketing |
310 |
224 |
| Rates and taxes |
94 |
75 |
| Repairs and Maintenance |
248 |
242 |
| Consumables |
7 |
7 |
| Insurance |
|
62 |
42 |
| Provision for post-sales client support and others |
(110) |
54 |
| Commission to non-whole time directors |
4 |
3 |
| Impairment loss recognized / (reversed) under expected credit loss model |
4 |
86 |
| Auditor's remuneration |
|
|
| Statutory audit fees |
2 |
1 |
| Contributions towards Corporate Social Responsibility |
160 |
60 |
| Others |
95 |
133 |
| |
934 |
971 |
2.21 BASIC AND DILUTED SHARES USED IN COMPUTING
EARNINGS PER EQUITY SHARE
Accounting Policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the
period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Company by
the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number
of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares
are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and
potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues
including for changes effected prior to the approval of the financial statements by the Board of Directors.
2.22 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting Policy
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
(In crore)
| Particulars |
|
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Contingent liabilities: |
|
|
| Claims against the Company, not acknowledged as debts(1) |
2,703 |
2,649 |
| [Amount paid to statutory authorities 5,640 crore (8,283 crore)] |
|
|
| Commitments: |
|
|
|
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(2) |
849 |
688 |
| Other Commitments* |
|
5 |
5 |
| * | | Uncalled capital pertaining to investments |
| (1) | | As at June
30, 2024 and March 31, 2024, claims against the Company not acknowledged as debts in respect
of income tax matters amounted to 2,296 crore and 2,260 crore, respectively.The
claims against the Company primarily represent demands arising on completion of assessment
proceedings under the Income Tax Act, 1961. These claims are on account of issues of disallowance
of expenditure towards software being held as capital in nature, payments made to Associated
Enterprises held as liable for withholding of taxes, among others. These matters are pending
before various Income Tax Authorities and the Management including its tax advisors expect
that its position will likely be upheld on ultimate resolution and will not have a material
adverse effect on the Company financial position and results of operations.Amount paid to
statutory authorities against the tax claims amounted to 5,630 crore and 8,273
crore as at June 30, 2024 and March 31, 2024, respectively. |
| (2) | | Capital
contracts primarily comprises of commitments for infrastructure facilities and computer equipments. |
Legal Proceedings
The Company is subject to legal proceedings and claims,
which have arisen in the ordinary course of business. The Company’s management reasonably expects that such ordinary course legal
actions, when ultimately concluded and determined, will not have a material and adverse effect on the Company’s results of operations
or financial condition.
2.23 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended
March 31, 2024 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the three months ended June 30, 2024, the following
are the changes in the subsidiaries:
| - | | Danske IT and Support Services India Private Limited renamed as IDUNN Information Technology
Private Limited |
| - | | On May 10, 2024 Infosys Ltd. acquired 100% of voting interests in InSemi Technology Services
Private Limited along with its subsidiary Elbrus Labs Private Limited |
The Company’s related party transactions during
the three months ended June 30, 2024 and March 31, 2024 and outstanding balances as at June 30, 2024 and March 31, 2024 are with its subsidiaries
with whom the Company generally enters into transactions which are at arms length and in the ordinary course of business.
Change in key management personnel
The following are the changes in the key management
personnel:
Executive Officers:
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transactions with key management personnel
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Salaries and other short term employee benefits to whole-time directors and executive officers(1)(2) |
28 |
32 |
| Commission and other benefits to non-executive / independent directors |
4 |
4 |
| Total |
32 |
36 |
| (1) | | Total employee stock compensation expense for the three months ended June 30, 2024 and
June 30, 2023 includes a charge of 18 crore and 20 crore, respectively, towards key management personnel. (Refer to note
2.12). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.24 SEGMENT REPORTING
The Company publishes this financial statement along
with the interim condensed consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed
the segment information in the interim condensed consolidated financial statements.
| for and on behalf of the Board of Directors of Infosys Limited |
| |
|
|
Nandan M. Nilekani
Chairman
DIN: 00041245 |
Salil Parekh
Chief Executive Officer
and Managing Director
DIN: 01876159 |
Bobby Parikh
Director
DIN: 00019437 |
| |
|
|
|
Bengaluru
July 18, 2024 |
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary
Membership No. A21918 |
Exhibit 99.10
Ind AS Consolidated
INDEPENDENT AUDITOR’S REPORT
TO THE BOARD OF DIRECTORS OF INFOSYS LIMITED
Report on the Audit of the Interim Condensed
Consolidated Financial Statements
Opinion
We have audited the accompanying interim condensed
consolidated financial statements of INFOSYS LIMITED (the “Company”), and its subsidiaries (the Company and its subsidiaries
together referred to as the “Group”), which comprise the Condensed Consolidated Balance Sheet as at June 30, 2024, the Condensed
Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Condensed Consolidated Statement of Changes in Equity
and the Condensed Consolidated Statement of Cash Flows for the three months ended on that date, and notes to the financial statements
including a summary of the material accounting policies and other explanatory information (hereinafter referred to as the “interim
condensed consolidated financial statements”).
In our opinion and to the best of our information and
according to the explanations given to us, the aforesaid interim condensed consolidated financial statements give a true and fair view
in conformity with the Indian Accounting Standard 34 “Interim Financial Reporting” (“Ind AS 34”) prescribed under
section 133 of the Companies Act, 2013 (the “Act”), read with relevant rules issued thereunder and other accounting principles
generally accepted in India, of the consolidated state of affairs of the Group as at June 30, 2024, its consolidated profit and its consolidated
total comprehensive income for the three months ended on that date, its consolidated changes in equity and its consolidated cash flows
for the three 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 (“SAs”) specified under section 143 (10) of the Act. Our
responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Interim Condensed
Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued
by the Institute of Chartered Accountants of India (“ICAI”) together with the ethical requirements that are relevant to our
audit of the interim condensed consolidated financial statements under the provisions of the Act and the Rules made thereunder, and we
have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe
that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the interim condensed
consolidated financial statements.
Responsibilities of Management and Those Charged
with Governance for the Interim Condensed Consolidated Financial Statements
The Company’s Board of Directors is responsible
for the preparation and presentation of these interim condensed consolidated financial statements that give a true and fair view of the
consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in
equity and consolidated cash flows of the Group in accordance with Ind AS 34 and other accounting principles generally accepted in India.
The respective Boards of Directors/Trustees of the entities included in the Group are responsible for maintenance of the adequate accounting
records for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application
of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance
of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the respective interim financial statements that give a true and fair view and
are free from material misstatement, whether due to fraud or error which have been used for the purpose of preparation of the interim
condensed consolidated financial statements by the Directors of the Company, as aforesaid.
In preparing the interim condensed consolidated financial
statements, the respective Boards of Directors/Trustees of the entities included in the Group are responsible for assessing the ability
of the respective entities to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless the respective Boards of Directors either intend to liquidate their own respective entities or to cease
operations, or have no realistic alternative but to do so.
The respective Boards of Directors/Trustees of the
entities included in the Group are also responsible for overseeing the financial reporting process of the Group.
Auditor’s Responsibilities for the Audit of
the Interim Condensed Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about
whether the interim condensed consolidated financial statements as a whole are free from material misstatement, whether due to fraud or
error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence
the economic decisions of users taken on the basis of these interim condensed consolidated financial statements.
As part of an audit in accordance with SAs, we exercise
professional judgment and maintain professional scepticism throughout the audit. We also:
| · | Identify and assess the risks of material misstatement of the interim condensed consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud
is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. |
| · | Obtain an understanding of internal financial controls relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on effectiveness of such controls. |
| · | Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management. |
| · | Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant
doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to
draw attention in our auditor’s report to the related disclosures in the interim condensed consolidated financial statements or,
if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of
our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern. |
| · | Evaluate the overall presentation, structure and content of the interim condensed consolidated financial
statements, including the disclosures, and whether the interim condensed consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation. |
| · | Obtain sufficient appropriate audit evidence regarding the financial information of the entities within
the Group to express an opinion on the interim condensed consolidated financial statements. We are responsible for the direction, supervision
and performance of the audit of financial statements of such entities included in the interim condensed consolidated financial statements
of which we are independent auditors. |
Materiality is the magnitude of misstatements in the
interim condensed consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions
of a reasonably knowledgeable user of the interim condensed consolidated financial statements may be influenced. We consider quantitative
materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the interim condensed consolidated financial statements.
We communicate with those charged with governance of
the Company and such other entities included in the interim condensed consolidated financial statements of which we are the independent
auditors regarding, among other matters, the planned scope and timing of the audit and significant audit findings including any significant
deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with
a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships
and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
|
Place: Bengaluru
Date: July 18, 2024 |
For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No. 117366W/W-100018)
Vikas Bagaria
Partner
(Membership No.060408)
UDIN: 24060408BKFSMD5761 |
INFOSYS LIMITED AND
SUBSIDIARIES
Condensed Consolidated Financial Statements under Indian
Accounting Standards (Ind AS) for the three months ended June 30, 2024
| Index |
| Condensed Consolidated Balance Sheet |
| Condensed Consolidated Statement of Profit and Loss |
| Condensed Consolidated Statement of Changes in Equity |
| Condensed Consolidated Statement of Cash Flows |
| Overview and Notes to the Interim Condensed Consolidated Financial Statements |
| 1. Overview |
| 1.1 Company overview |
| 1.2 Basis of preparation of financial statements |
| 1.3 Basis of consolidation |
| 1.4 Use of estimates and judgments |
| 1.5 Critical accounting estimates and judgments |
| 1.6 Recent accounting pronouncements |
| 2. Notes to the Interim Condensed Consolidated Financial Statements |
| 2.1 Business Combinations |
| 2.2 Property, plant and equipment |
| 2.3 Goodwill and intangible assets |
| 2.4 Investments |
| 2.5 Loans |
| 2.6 Other financial assets |
| 2.7 Trade receivables |
| 2.8 Cash and cash equivalents |
| 2.9 Earmarked bank balance for dividend |
| 2.10 Other assets |
| 2.11 Financial instruments |
| 2.12 Equity |
| 2.13 Other financial liabilities |
| 2.14 Other liabilities |
| 2.15 Provisions |
| 2.16 Income taxes |
| 2.17 Revenue from operations |
| 2.18 Other income, net |
| 2.19 Expenses |
| 2.20 Leases |
| 2.21 Basic and diluted shares used in computing earnings per equity share |
| 2.22 Contingent liabilities and commitments |
| 2.23 Related party transactions |
| 2.24 Segment reporting |
| 2.25 Function wise classification of Condensed Consolidated Statement of Profit and Loss |
INFOSYS LIMITED AND SUBSIDIARIES
(In crore )
| Condensed Consolidated Balance Sheets as at |
Note No. |
June 30, 2024 |
March 31, 2024 |
| ASSETS |
|
|
|
| Non-current assets |
|
|
|
| Property, plant and equipment |
2.2 |
11,967 |
12,370 |
| Right-of-use assets |
2.20 |
6,512 |
6,552 |
| Capital work-in-progress |
|
395 |
293 |
| Goodwill |
2.3 |
7,405 |
7,303 |
| Other intangible assets |
|
1,391 |
1,397 |
| Financial assets |
|
|
|
| Investments |
2.4 |
11,174 |
11,708 |
| Loans |
2.5 |
29 |
34 |
| Other financial assets |
2.6 |
3,069 |
3,105 |
| Deferred tax assets (net) |
|
469 |
454 |
| Income tax assets (net) |
|
3,487 |
3,045 |
| Other non-current assets |
2.10 |
2,066 |
2,121 |
| Total non-current assets |
|
47,964 |
48,382 |
| Current assets |
|
|
|
| Financial assets |
|
|
|
| Investments |
2.4 |
8,762 |
12,915 |
| Trade receivables |
2.7 |
30,930 |
30,193 |
| Cash and cash equivalents |
2.8 |
16,432 |
14,786 |
| Earmarked bank balance for dividend |
2.9 |
11,625 |
– |
| Loans |
2.5 |
251 |
248 |
| Other financial assets |
2.6 |
12,011 |
12,085 |
| Income tax assets (net) |
|
3,032 |
6,397 |
| Other current assets |
2.10 |
13,012 |
12,808 |
| Total current assets |
|
96,055 |
89,432 |
| Total assets |
|
144,019 |
137,814 |
| EQUITY AND LIABILITIES |
|
|
|
| Equity |
|
|
|
| Equity share capital |
2.12 |
2,072 |
2,071 |
| Other equity |
|
80,997 |
86,045 |
| Total equity attributable to equity holders of the Company |
|
83,069 |
88,116 |
| Non-controlling interests |
|
349 |
345 |
| Total equity |
|
83,418 |
88,461 |
| Liabilities |
|
|
|
| Non-current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.20 |
6,174 |
6,400 |
| Other financial liabilities |
2.13 |
1,959 |
2,130 |
| Deferred tax liabilities (net) |
|
1,474 |
1,794 |
| Other non-current liabilities |
2.14 |
243 |
235 |
| Total non-current liabilities |
|
9,850 |
10,559 |
| Current liabilities |
|
|
|
| Financial Liabilities |
|
|
|
| Lease liabilities |
2.20 |
2,187 |
1,959 |
| Trade payables |
|
3,693 |
3,956 |
| Other financial liabilities |
2.13 |
27,273 |
16,959 |
| Other current liabilities |
2.14 |
11,600 |
10,539 |
| Provisions |
2.15 |
1,504 |
1,796 |
| Income tax liabilities (net) |
|
4,494 |
3,585 |
| Total current liabilities |
|
50,751 |
38,794 |
| Total equity and liabilities |
|
144,019 |
137,814 |
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
|
|
Vikas Bagaria
Partner Membership No. 060408 |
Nandan M. Nilekani
Chairman DIN: 00041245 |
Salil Parekh
Chief Executive Officer and Managing Director DIN: 01876159
|
Bobby Parikh
Director DIN: 00019437 |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary Membership No. A21918 |
|
|
Bengaluru
July 18, 2024 |
|
|
|
(In crore, except equity share and per equity
share data)
| Condensed Consolidated Statement of Profit and Loss for the |
Note No. |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Revenue from operations |
2.17 |
39,315 |
37,933 |
| Other income, net |
2.18 |
838 |
561 |
| Total income |
|
40,153 |
38,494 |
| Expenses |
|
|
|
| Employee benefit expenses |
2.19 |
20,934 |
20,781 |
| Cost of technical sub-contractors |
|
3,169 |
3,124 |
| Travel expenses |
|
478 |
462 |
| Cost of software packages and others |
2.19 |
3,455 |
2,720 |
| Communication expenses |
|
147 |
182 |
| Consultancy and professional charges |
|
445 |
346 |
| Depreciation and amortization expenses |
|
1,149 |
1,173 |
| Finance cost |
|
105 |
90 |
| Other expenses |
2.19 |
1,250 |
1,254 |
| Total expenses |
|
31,132 |
30,132 |
| Profit before tax |
|
9,021 |
8,362 |
| Tax expense: |
|
|
|
| Current tax |
2.16 |
2,998 |
2,307 |
| Deferred tax |
2.16 |
(351) |
110 |
| Profit for the period |
|
6,374 |
5,945 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
20 |
87 |
| Equity instruments through other comprehensive income, net |
|
14 |
1 |
| |
|
34 |
88 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(3) |
6 |
| Exchange differences on translation of foreign operations |
|
(104) |
15 |
| Fair value changes on investments, net |
|
40 |
75 |
| |
|
(67) |
96 |
| Total other comprehensive income /(loss), net of tax |
|
(33) |
184 |
| Total comprehensive income for the period |
|
6,341 |
6,129 |
| Profit attributable to: |
|
|
|
| Owners of the Company |
|
6,368 |
5,945 |
| Non-controlling interests |
|
6 |
– |
| |
|
6,374 |
5,945 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
6,337 |
6,132 |
| Non-controlling interests |
|
4 |
(3) |
| |
|
6,341 |
6,129 |
| Earnings per equity share |
|
|
|
| Equity shares of par value 5/- each |
|
|
|
| Basic () |
|
15.38 |
14.37 |
| Diluted () |
|
15.35 |
14.35 |
| Weighted average equity shares used in computing earnings per equity share |
|
|
|
| Basic (in shares) |
2.21 |
4,140,272,627 |
4,137,234,750 |
| Diluted (in shares) |
2.21 |
4,148,077,672 |
4,142,207,951 |
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
|
|
Vikas Bagaria
Partner Membership No. 060408 |
Nandan M. Nilekani
Chairman DIN: 00041245 |
Salil Parekh
Chief Executive Officer and Managing Director DIN: 01876159
|
Bobby Parikh
Director DIN: 00019437 |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary Membership No. A21918 |
|
|
Bengaluru
July 18, 2024 |
|
|
|
Condensed Consolidated Statement of Changes in Equity
(In crore)
| Particulars |
|
OTHER EQUITY |
|
|
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
Equity Share capital (1) |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (2) |
Other reserves (3) |
Equity instruments through other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| Balance as at April 1, 2023 |
2,069 |
54 |
169 |
166 |
58,957 |
1,054 |
878 |
10,014 |
19 |
247 |
2,325 |
(5) |
(540) |
75,407 |
388 |
75,795 |
| Changes in equity for the three months ended June 30, 2023 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
5,945 |
– |
– |
– |
– |
– |
– |
– |
– |
5,945 |
– |
5,945 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
87 |
87 |
– |
87 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
1 |
– |
– |
– |
1 |
– |
1 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
6 |
– |
6 |
– |
6 |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
18 |
– |
– |
18 |
(3) |
15 |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
75 |
75 |
– |
75 |
| Total Comprehensive income for the period |
– |
– |
– |
– |
5,945 |
– |
– |
– |
– |
1 |
18 |
6 |
162 |
6,132 |
(3) |
6,129 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
1 |
– |
– |
1 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
2 |
– |
2 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
144 |
– |
– |
– |
– |
– |
– |
144 |
– |
144 |
| Transferred on account of exercise of stock options (Refer to note 2.12) |
– |
– |
– |
274 |
– |
– |
(274) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
6 |
(6) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Dividends (1) |
– |
– |
– |
– |
(7,242) |
– |
– |
– |
– |
– |
– |
– |
– |
(7,242) |
– |
(7,242) |
| Transferred to Special Economic Zone Re-investment reserve |
– |
– |
– |
– |
(760) |
– |
– |
760 |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
202 |
– |
– |
(202) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at June 30, 2023 |
2,070 |
54 |
169 |
441 |
57,102 |
1,060 |
742 |
10,572 |
19 |
248 |
2,343 |
1 |
(378) |
74,443 |
385 |
74,828 |
Condensed Consolidated Statement of Changes in Equity
(contd.)
(In crore)
| Particulars |
|
OTHER EQUITY |
|
|
|
| |
|
Reserves & Surplus |
Other comprehensive income |
|
|
|
| |
Equity Share capital (1) |
Capital reserve |
Capital redemption reserve |
Securities Premium |
Retained earnings |
General reserve |
Share Options Outstanding Account |
Special Economic Zone Re-investment reserve (2) |
Other reserves (3) |
Equity instruments through other comprehensive income |
Exchange differences on translating the financial statements of a foreign operation |
Effective portion of Cash Flow Hedges |
Other items of other comprehensive income / (loss) |
Total equity attributable to equity holders of the Company |
Non-controlling interest |
Total equity |
| Balance as at April 1, 2024 |
2,071 |
54 |
169 |
616 |
68,405 |
1,214 |
913 |
12,104 |
22 |
266 |
2,552 |
6 |
(276) |
88,116 |
345 |
88,461 |
| Changes in equity for the three months ended June 30, 2024 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Profit for the period |
– |
– |
– |
– |
6,368 |
– |
– |
– |
– |
– |
– |
– |
– |
6,368 |
6 |
6,374 |
| Remeasurement of the net defined benefit liability/asset, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
20 |
20 |
– |
20 |
| Equity instruments through other comprehensive income, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
14 |
– |
– |
– |
14 |
– |
14 |
| Fair value changes on derivatives designated as cash flow hedge, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(3) |
– |
(3) |
– |
(3) |
| Exchange differences on translation of foreign operations |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
(102) |
– |
– |
(102) |
(2) |
(104) |
| Fair value changes on investments, net* |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
– |
40 |
40 |
– |
40 |
| Total Comprehensive income for the period |
– |
– |
– |
– |
6,368 |
– |
– |
– |
– |
14 |
(102) |
(3) |
60 |
6,337 |
4 |
6,341 |
| Shares issued on exercise of employee stock options (Refer to Note 2.12) |
1 |
– |
– |
2 |
– |
– |
– |
– |
– |
– |
– |
– |
– |
3 |
– |
3 |
| Employee stock compensation expense (Refer to Note 2.12) |
– |
– |
– |
– |
– |
– |
208 |
– |
– |
– |
– |
– |
– |
208 |
– |
208 |
| Transferred on account of exercise of stock options (Refer to Note 2.12) |
– |
– |
– |
220 |
– |
– |
(220) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred on account of options not exercised |
– |
– |
– |
– |
– |
18 |
(18) |
– |
– |
– |
– |
– |
– |
– |
– |
– |
| Income tax benefit arising on exercise of stock options |
– |
– |
– |
– |
|
– |
2 |
– |
– |
– |
– |
– |
– |
2 |
– |
2 |
| Transfer to legal reserve |
– |
– |
– |
– |
(2) |
– |
– |
– |
2 |
– |
– |
– |
– |
– |
– |
– |
| Dividends (1) |
– |
– |
– |
– |
(11,597) |
– |
– |
– |
– |
– |
– |
– |
– |
(11,597) |
– |
(11,597) |
| Transferred from Special Economic Zone Re-investment reserve to retained earnings |
– |
– |
– |
– |
247 |
– |
– |
(247) |
– |
– |
– |
– |
– |
– |
– |
– |
| Transferred from Special Economic Zone Re-investment reserve on utilization |
– |
– |
– |
– |
104 |
– |
– |
(104) |
– |
– |
– |
– |
– |
– |
– |
– |
| Balance as at June 30, 2024 |
2,072 |
54 |
169 |
838 |
63,525 |
1,232 |
885 |
11,753 |
24 |
280 |
2,450 |
3 |
(216) |
83,069 |
349 |
83,418 |
| (1) | | Net of treasury shares |
| (2) | | The Special Economic Zone Re-investment Reserve has been created out of the profit of
eligible SEZ units in terms of the provisions of Sec 10AA(1)(ii) of Income Tax Act, 1961. The reserve should be utilized by the Group
for acquiring new plant and machinery for the purpose of its business in the terms of the Sec 10AA(2) of the Income Tax Act, 1961. |
| (3) | | Under the Swiss Code of Obligation, few subsidiaries of Infosys Consulting are required
to appropriate a certain percentage of the annual profit to legal reserve which may be used only to cover losses or for measures designed
to sustain the Company through difficult times, to prevent unemployment or to mitigate its consequences. |
The accompanying notes form an integral part of
the interim condensed consolidated financial statements.
As per our report of even date attached
| for Deloitte Haskins & Sells LLP |
for and on behalf of the Board of Directors of Infosys Limited |
| Chartered Accountants |
| Firm’s Registration No: |
117366W/ W-100018
|
|
Vikas Bagaria
Partner Membership No. 060408 |
Nandan M. Nilekani
Chairman DIN: 00041245 |
Salil Parekh
Chief Executive Officer and Managing Director DIN: 01876159
|
Bobby Parikh
Director DIN: 00019437 |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary Membership No. A21918 |
|
|
Bengaluru
July 18, 2024 |
|
|
|
Condensed Consolidated Statement of Cash Flows
Accounting policy
Cash flows are reported using the indirect method,
whereby profit for the period is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future
operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from
operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are
readily convertible to known amounts of cash to be cash equivalents.
(In crore)
| Particulars |
Note No. |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Cash flow from operating activities |
|
|
|
| Profit for the period |
|
6,374 |
5,945 |
| Adjustments to reconcile net profit to net cash provided by operating activities: |
|
|
|
| Income tax expense |
2.16 |
2,647 |
2,417 |
| Depreciation and amortization |
|
1,149 |
1,173 |
| Interest and dividend income |
|
(665) |
(517) |
| Finance cost |
|
106 |
90 |
| Impairment loss recognized / (reversed) under expected credit loss model |
|
(3) |
91 |
| Exchange differences on translation of assets and liabilities, net |
|
23 |
(20) |
| Stock compensation expense |
|
211 |
146 |
| Provision for post sale client support |
|
(108) |
50 |
| Other adjustments |
|
62 |
505 |
| Changes in assets and liabilities |
|
|
|
| Trade receivables and unbilled revenue |
|
(499) |
(101) |
| Loans, other financial assets and other assets |
|
(422) |
(311) |
| Trade payables |
|
(271) |
(106) |
| Other financial liabilities, other liabilities and provisions |
|
(389) |
(1,822) |
| Cash generated from operations |
|
8,215 |
7,540 |
| Income taxes (paid)/received |
|
841 |
(1,379) |
| Net cash generated by operating activities |
|
9,056 |
6,161 |
| Cash flows from investing activities |
|
|
|
| Expenditure on property, plant and equipment and intangibles |
|
(455) |
(807) |
| Deposits placed with corporation |
|
(335) |
(444) |
| Redemption of deposits placed with Corporation |
|
120 |
252 |
| Interest and dividend received |
|
853 |
670 |
| Payment towards acquisition of business, net of cash acquired |
2.1 |
(124) |
– |
| Other receipts |
|
1 |
126 |
| Payments to acquire Investments |
|
|
|
| Liquid mutual fund units |
|
(16,989) |
(17,680) |
| Certificates of deposit |
|
(1,440) |
(1,285) |
| Commercial Papers |
|
(2,226) |
(1,558) |
| Non-convertible debentures |
|
(1,051) |
(104) |
| Other Investments |
|
(6) |
(3) |
| Proceeds on sale of Investments |
|
|
|
| Liquid mutual funds units |
|
15,975 |
17,304 |
| Certificates of deposit |
|
2,820 |
3,974 |
| Commercial Papers |
|
7,135 |
824 |
| Non-convertible debentures |
|
490 |
375 |
| Government securities |
|
200 |
226 |
| Net cash generated / (used in) from investing activities |
|
4,968 |
1,870 |
| Cash flows from financing activities |
|
|
|
| Payment of lease liabilities |
|
(576) |
(439) |
| Payment of dividends |
|
– |
(1) |
| Shares issued on exercise of employee stock options |
|
3 |
2 |
| Other payments |
|
(118) |
(209) |
| Net cash used in financing activities |
|
(691) |
(647) |
| Net increase / (decrease) in cash and cash equivalents |
|
13,333 |
7,384 |
| Effect of exchange rate changes on cash and cash equivalents |
|
(62) |
15 |
| Cash and cash equivalents at the beginning of the period |
2.8 |
14,786 |
12,173 |
| Cash and cash equivalents at the end of the period |
2.8 |
28,057 |
19,572 |
| Supplementary information: |
|
|
|
| Restricted cash balance |
2.8 |
398 |
381 |
| Closing cash and cash equivalents as per Consolidated Statement of Cash Flows |
|
28,057 |
19,572 |
| Less: Earmarked bank balance for dividend |
2.9 |
11,625 |
7,262 |
| Closing cash and cash equivalents as per Consolidated Balance Sheet |
2.8 |
16,432 |
12,310 |
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
|
|
Vikas Bagaria
Partner Membership No. 060408 |
Nandan M. Nilekani
Chairman DIN: 00041245 |
Salil Parekh
Chief Executive Officer and Managing Director DIN: 01876159
|
Bobby Parikh
Director DIN: 00019437 |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary Membership No. A21918 |
|
|
Bengaluru
July 18, 2024 |
|
|
|
Overview and notes to the Interim Condensed Consolidated
Financial Statements
1. Overview
1.1 Company overview
Infosys Limited ('the Company' or Infosys) provides
consulting, technology, outsourcing and next-generation digital services, to enable clients to execute strategies for their digital transformation.
Infosys strategic objective is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth
opportunities for employees and generating profitable returns for investors. Infosys strategy is to be a navigator for our clients as
they ideate, plan and execute on their journey to a digital future.
Infosys together with its subsidiaries and controlled
trusts is hereinafter referred to as "the Group".
The Company is a public limited company incorporated
and domiciled in India and has its registered office at Electronics city, Hosur Road, Bengaluru 560100, Karnataka, India. The Company
has its primary listings on the BSE Ltd. and National Stock Exchange of India Limited. The Company’s American Depositary Shares
(ADS) representing equity shares are listed on the New York Stock Exchange (NYSE).
The Group's interim condensed consolidated financial
statements are approved for issue by the Company's Board of Directors on July 18, 2024.
1.2 Basis of preparation of financial statements
These interim condensed consolidated financial statements
are prepared in compliance with Indian Accounting Standard (Ind AS) 34 Interim Financial Reporting , under the historical cost convention
on accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013
('the Act') and guidelines issued by the Securities and Exchange Board of India (SEBI). Accordingly, these interim condensed consolidated
financial statements do not include all the information required for a complete set of financial statements. These interim condensed consolidated
financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company’s
Annual Report for the year ended March 31, 2024. The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies
(Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.
Accounting policies have been consistently applied
except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change
in the accounting policy hitherto in use. The material accounting policy information used in preparation of the audited interim condensed
consolidated financial statements have been discussed in the respective notes.
1.3 Basis of consolidation
Infosys consolidates entities which it owns or controls.
The interim condensed consolidated financial statements comprise the financial statements of the Company, its controlled trusts and its
subsidiaries. Control exists when the parent has power over the entity, is exposed, or has rights to variable returns from its involvement
with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing
rights that give the ability to direct relevant activities, those which significantly affect the entity's returns. Subsidiaries are consolidated
from the date control commences until the date control ceases.
The financial statements of the Group companies are
consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions
are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group.
Non-controlling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly,
owned or controlled by the Company, are excluded.
1.4 Use of estimates and judgments
The preparation of the interim condensed consolidated
financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates,
judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures
of contingent assets and liabilities at the date of the interim condensed consolidated financial statements and reported amounts of revenues
and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and
subjective judgments and the use of assumptions in these financial statements have been disclosed in Note no. 1.5. Accounting estimates
could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management
becomes aware of changes in circumstances surrounding the estimates. Changes in estimates and judgements are reflected in the interim
condensed consolidated financial statements in the period in which changes are made and, if material, their effects are disclosed in the
notes to the interim condensed consolidated financial statements.
1.5 Critical accounting estimates and judgments
a. Revenue recognition
The Group’s contracts with customers include
promises to transfer multiple products and services to a customer. Revenues from customer contracts are considered for recognition and
measurement when the contract has been approved, in writing, by the parties to the contract, the parties to contract are committed to
perform their respective obligations under the contract, and the contract is legally enforceable. The Group assesses the services promised
in a contract and identifies distinct performance obligations in the contract. Identification of distinct performance obligations to determine
the deliverables and the ability of the customer to benefit independently from such deliverables, and allocation of transaction price
to these distinct performance obligations involves significant judgment.
Fixed price maintenance revenue is recognized ratably
on a straight-line basis when services are performed through an indefinite number of repetitive acts over a specified period. Revenue
from fixed price maintenance contract is recognized ratably using a percentage of completion method when the pattern of benefits from
the services rendered to the customer and the Group’s costs to fulfil the contract is not even through the period of the contract
because the services are generally discrete in nature and not repetitive. The use of method to recognize the maintenance revenues requires
judgment and is based on the promises in the contract and nature of the deliverables.
The Group uses the percentage-of-completion method
in accounting for other fixed-price contracts. Use of the percentage-of-completion method requires the Group to determine the actual efforts
or costs expended to date as a proportion of the estimated total efforts or costs to be incurred. Efforts or costs expended have been
used to measure progress towards completion as there is a direct relationship between input and productivity. The estimation of total
efforts or costs involves significant judgment and is assessed throughout the period of the contract to reflect any changes based on the
latest available information.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
Provisions for estimated losses, if any, on incomplete
contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete the contract.
b. Income taxes
The Group's two major tax jurisdictions are India and
the United States, though the Company also files tax returns in other overseas jurisdictions.
Significant judgments are involved in determining the
provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions.
In assessing the realizability of deferred income tax
assets, the Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization
of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences
become deductible. Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income and
tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable
income over the periods in which the deferred income tax assets are deductible, the Management believes that the Group will realize the
benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced
in the near term if estimates of future taxable income during the carry forward period are reduced (Refer to Notes 2.16).
c. Business combinations and intangible assets
Business combinations are accounted for using Ind
AS 103, Business Combinations. Ind AS 103 requires us to fair value identifiable intangible assets and contingent consideration to
ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. These valuations are
conducted by external valuation experts. Estimates are required to be made in determining the value of contingent consideration,
value of option arrangements and intangible assets. These measurements are based on information available at the acquisition date
and are based on expectations and assumptions that have been deemed reasonable by the Management (Refer to Note 2.1 and
2.3.2).
d. Property, plant and equipment
Property, plant and equipment represent a significant
proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate of
an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of
Group's assets are determined by the Management at the time the asset is acquired and reviewed periodically, including at each financial
year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact
their life, such as changes in technology (Refer to Note 2.2).
e. Impairment of Goodwill
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGUs) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represent the lowest level at which goodwill is monitored for internal management purposes.
The recoverable amount of CGUs is determined based
on higher of value-in-use and fair value less cost to sell. Key assumptions in the cash flow projections are prepared based on current
economic conditions and comprises estimated long term growth rates, weighted average cost of capital and estimated operating margins.
2. Notes to the Interim Condensed Consolidated Financial
Statements
2.1 BUSINESS COMBINATIONS
Accounting policy
Business combinations have been accounted for using
the acquisition method under the provisions of Ind AS 103, Business Combinations.
The purchase price in an acquisition is measured at
the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which
is the date on which control is transferred to the Group. The purchase price also includes the fair value of any contingent consideration.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair value on the date of acquisition. Contingent consideration is remeasured at fair value at each reporting date and changes in the
fair value of the contingent consideration are recognized in the interim condensed Consolidated Statement of Profit and Loss.
The interest of non-controlling shareholders is initially
measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net
assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount
of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of
subsequent changes in equity of subsidiaries.
Business combinations between entities under
common control is accounted for at carrying value of the assets acquired and liabilities assumed in the Group's consolidated
financial statements.
The payments related to options issued by the Group
over the non-controlling interests in its subsidiaries are accounted as financial liabilities and initially recognized at the estimated
present value of gross obligations. Such options are subsequently measured at fair value in order to reflect the amount payable under
the option at the date at which it becomes exercisable. In the event that the option expires unexercised, the liability is derecognized.
Acquisitions during the quarter ended June 30, 2024
On May 10, 2024, Infosys Ltd acquired 100% voting interests
in InSemi Technology Services Private Limited, a semiconductor design services company headquartered in India. This acquisition is expected
to strengthen our expertise in semiconductor ecosystem and Engineering R&D services.
The purchase price is allocated to assets acquired
and liabilities assumed based upon determination of fair values at the date of acquisition as follows:
(In crore)
| Component |
Acquiree's carrying amount |
Fair value adjustments |
Purchase price allocated |
| Net Assets(1) |
40 |
– |
40 |
| Intangible assets : |
|
|
|
| Customer contracts and relationships # |
– |
60 |
60 |
| Brand# |
– |
13 |
13 |
| Deferred tax liabilities on intangible assets |
– |
(18) |
(18) |
| Total |
40 |
55 |
95 |
| Goodwill |
|
|
103 |
| Total purchase price |
|
|
198 |
| (1) | | Includes cash and cash equivalents acquired of 41
crore. |
| # | | The estimated useful life is around 1 year to 5 years |
The excess of the purchase consideration paid over
the fair value of assets acquired has been attributed to goodwill. The primary items that generated this goodwill are the value of the
acquired assembled workforce and estimated synergies, neither of which qualify as an intangible asset.
Goodwill is not tax-deductible.
The purchase consideration of 198 crore includes
cash of 168 crore and contingent consideration with an estimated fair value of 30 crore as on the date of acquisition.
At the acquisition date, the key inputs used in determination
of the fair value of contingent consideration are the probabilities assigned towards achievement of financial targets and discount rate
of 5.9%. The undiscounted value of contingent consideration as of June 30, 2024 was 33 crore.
Additionally, this acquisition has retention bonus
and management incentive payable to the employees of the acquiree over three years, subject to their continuous employment with the Group
and achievement of financial targets for the respective years. Bonus and incentives are recognized in employee benefit expenses in the
Statement of Profit and loss over the period of service.
Fair value of trade receivables acquired is 32
crore as of acquisition date and as of June 30, 2024 the amounts are substantially collected.
Transaction costs that the Group incurs in connection
with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are
expensed as incurred. The transaction costs of 2 crore related to the acquisition have been included under administrative expenses
in the Consolidated Statement of Profit and loss for the three months ended June 30, 2024.
Proposed acquisition
On April 18, 2024, Infosys Germany GmBH wholly owned
step down subsidiary of Infosys Limited entered into a definitive agreement to acquire 100% of the equity share capital in in-tech Holding
GmbH, leading provider of Engineering R&D services headquartered in Germany, for a consideration including earn-outs amounting up
to EUR 450 million (approximately 4,045 crore), subject to customary closing adjustments. Subsequently in July 2024 as on the date
these financial statements were authorized for issuance, Infosys Germany GmBH completed its acquisition of in-tech Holding GmbH. Given
the recent timing of the acquisition and pending completion of the valuations for identifiable net assets acquired and liabilities assumed,
at the time these financial statements were authorized for issuance, the initial accounting for the business combination is incomplete.
Accordingly, all the required disclosures for the business combination have not been made.
2.2 PROPERTY, PLANT AND EQUIPMENT
Accounting policy
Property, plant and equipment are stated at cost, less
accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant
and equipment are ready for use, as intended by the Management. The charge in respect of periodic depreciation is derived at after determining
an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The Group depreciates property,
plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows:
| Buildings (1) |
22-25 years |
| Plant and machinery (1)(2) |
5 years |
| Office equipment |
5 years |
| Computer equipment (1) |
3-5 years |
| Furniture and fixtures (1) |
5 years |
| Vehicles(1) |
5 years |
| Leasehold improvements |
Lower of useful life of the asset or lease term |
| (1)- | | Based on technical evaluation, the Management believes that the useful lives as given
above best represent the period over which the Management expects to use these assets. Hence, the useful lives for these assets is different
from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013 |
| (2) | | Includes Solar plant with a useful life of 25 years |
Depreciation methods, useful lives and residual values
are reviewed periodically, including at each financial year end. The useful lives are based on historical experience with similar assets
as well as anticipation of future events, which may impact their life, such as changes in technology.
Advances paid towards the acquisition of property,
plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets and the cost
of assets not ready to use before such date are disclosed under ‘Capital work-in-progress’. Subsequent expenditures relating
to property, plant and equipment is capitalized only when it is probable that future economic benefits associated with these will flow
to the Group and the cost of the item can be measured reliably. The cost and related accumulated depreciation are eliminated from the
financial statements upon sale or retirement of the asset.
Impairment
Property, plant and equipment are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the Consolidated Statement of Profit and Loss is measured by the amount by which the carrying value of the assets
exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Consolidated Statement of Profit and Loss
if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to
its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of
any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2024 are as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2024 |
1,432 |
11,770 |
3,428 |
1,528 |
8,611 |
2,326 |
1,447 |
45 |
30,587 |
| Additions |
– |
15 |
21 |
16 |
178 |
12 |
15 |
1 |
258 |
| Additions on Business Combinations |
– |
– |
– |
– |
1 |
– |
– |
– |
1 |
| Deletions* |
– |
(38) |
(3) |
(6) |
(164) |
(26) |
(48) |
(1) |
(286) |
| Translation difference |
– |
(4) |
(1) |
– |
(9) |
(3) |
(1) |
– |
(18) |
| Gross carrying value as at June 30, 2024 |
1,432 |
11,743 |
3,445 |
1,538 |
8,617 |
2,309 |
1,413 |
45 |
30,542 |
| Accumulated depreciation as at April 1, 2024 |
– |
(4,921) |
(2,630) |
(1,269) |
(6,380) |
(1,837) |
(1,138) |
(42) |
(18,217) |
| Depreciation |
– |
(111) |
(57) |
(28) |
(327) |
(52) |
(45) |
(1) |
(621) |
| Accumulated depreciation on deletions* |
– |
5 |
3 |
5 |
163 |
26 |
48 |
1 |
251 |
| Translation difference |
– |
1 |
1 |
1 |
6 |
2 |
1 |
– |
12 |
| Accumulated depreciation as at June 30, 2024 |
– |
(5,026) |
(2,683) |
(1,291) |
(6,538) |
(1,861) |
(1,134) |
(42) |
(18,575) |
| Carrying value as at April 1, 2024 |
1,432 |
6,849 |
798 |
259 |
2,231 |
489 |
309 |
3 |
12,370 |
| Carrying value as at June 30, 2024 |
1,432 |
6,717 |
762 |
247 |
2,079 |
448 |
279 |
3 |
11,967 |
The changes in the carrying value of property, plant
and equipment for the three months ended June 30, 2023 were as follows:
(In crore)
| Particulars |
Land - Freehold |
Buildings (1) |
Plant and machinery |
Office Equipment |
Computer equipment |
Furniture and fixtures |
Leasehold Improvements |
Vehicles |
Total |
| Gross carrying value as at April 1, 2023 |
1,431 |
11,562 |
3,302 |
1,482 |
8,519 |
2,303 |
1,445 |
45 |
30,089 |
| Additions |
– |
5 |
22 |
26 |
219 |
28 |
27 |
– |
327 |
| Deletions* |
– |
– |
(27) |
(22) |
(266) |
(24) |
(7) |
– |
(346) |
| Translation difference |
– |
(53) |
(4) |
(2) |
(1) |
– |
(8) |
– |
(68) |
| Gross carrying value as at June 30, 2023 |
1,431 |
11,514 |
3,293 |
1,484 |
8,471 |
2,307 |
1,457 |
45 |
30,002 |
| Accumulated depreciation as at April 1, 2023 |
– |
(4,535) |
(2,437) |
(1,198) |
(5,826) |
(1,675) |
(1,032) |
(40) |
(16,743) |
| Depreciation |
– |
(109) |
(66) |
(33) |
(362) |
(65) |
(53) |
(1) |
(689) |
| Accumulated depreciation on deletions* |
– |
– |
27 |
22 |
265 |
24 |
5 |
– |
343 |
| Translation difference |
– |
13 |
4 |
1 |
1 |
– |
7 |
– |
26 |
| Accumulated depreciation as at June 30, 2023 |
– |
(4,631) |
(2,472) |
(1,208) |
(5,922) |
(1,716) |
(1,073) |
(41) |
(17,063) |
| Carrying value as at April 1, 2023 |
1,431 |
7,027 |
865 |
284 |
2,693 |
628 |
413 |
5 |
13,346 |
| Carrying value as at June 30, 2023 |
1,431 |
6,883 |
821 |
276 |
2,549 |
591 |
384 |
4 |
12,939 |
| * | | During the three months ended June 30, 2024 and June 30, 2023, certain assets which were
not in use having gross book value of 126 crore (net book value: Nil) and 320
crore (net book value: Nil) respectively, were retired. |
| (1) | | Buildings include 250/- being the value of five shares
of 50/- each in Mittal Towers Premises Co-operative Society Limited. |
The aggregate depreciation has been included under
depreciation and amortization expense in the interim condensed Consolidated Statement of Profit and Loss.
Repairs and maintenance costs are recognized in the
Consolidated Statement of Profit and Loss when incurred.
Consequent to the Companies (Corporate Social Responsibility
Policy) Amendment Rules, 2021 (“the Rules”), the Company was required to transfer its CSR capital assets installed prior to
January 2021. Towards this the Company had incorporated a subsidiary ‘Infosys Green Forum’ (IGF) under Section 8 of the Companies
Act, 2013. During the year ended March 31, 2022 the Company had completed the transfer of assets upon obtaining the required approvals
from regulatory authorities, as applicable. During March 31, 2024, the application filed by IGF for registration u/s.12AB of the Income
Tax Act was rejected and registration cancelled. During the quarter ending June 30, 2024 IGF has filed an appeal against this order before
Income Tax Appellate Tribunal.
2.3 GOODWILL AND OTHER INTANGIBLE ASSETS
2.3.1 Goodwill
Accounting policy
Goodwill represents the purchase consideration in excess
of the Group's interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquired entity. When
the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds purchase consideration, the fair
value of net assets acquired is reassessed and the bargain purchase gain is recognized in capital reserve. Goodwill is measured at cost
less accumulated impairment losses.
Impairment
Goodwill is tested for impairment on an annual basis
and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount. For
the impairment test, goodwill is allocated to the CGU or groups of CGUs which benefit from the synergies of the acquisition and which
represents the lowest level at which goodwill is monitored for internal management purposes. A CGU is the smallest identifiable group
of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment
occurs when the carrying amount of a CGU including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable
amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of future cash
flows expected to be derived from the CGU. Key assumptions in the cash flow projections are prepared based on current economic conditions
and includes estimated long term growth rates, weighted average cost of capital and estimated operating margins.
Following is a summary of changes in the carrying amount
of goodwill:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Carrying value at the beginning |
7,303 |
7,248 |
| Goodwill on acquisitions (Refer to note 2.1) |
103 |
– |
| Translation differences |
(1) |
55 |
| Carrying value at the end |
7,405 |
7,303 |
For the purpose of impairment testing, goodwill acquired
in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition.
2.3.2 Intangible Assets
Accounting policy
Intangible assets are stated at cost less accumulated
amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line
basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number
of factors including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry,
and known technological advances) and the level of maintenance expenditures required to obtain the expected future cash flows from the
asset. Amortization methods and useful lives are reviewed periodically including at each financial year end.
Research costs are expensed as incurred. Software product
development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic
benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably.
The costs which can be capitalized include the cost of material, direct labor, overhead costs that are directly attributable to prepare
the asset for its intended use.
Impairment
Intangible assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the CGU to which the asset belongs.
If such assets are considered to be impaired, the impairment
to be recognized in the Consolidated Statement of Profit and Loss is measured by the amount by which the carrying value of the assets
exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Consolidated Statement of Profit and Loss
if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to
its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of
any accumulated amortization) had no impairment loss been recognized for the asset in prior years.
2.4 INVESTMENTS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Preference securities |
91 |
91 |
| Equity instruments |
2 |
2 |
| |
93 |
93 |
| Investments carried at fair value through profit or loss |
|
|
| Target maturity fund units |
439 |
431 |
| Others (1) |
203 |
198 |
| |
642 |
629 |
| Quoted |
|
|
| Investments carried at amortized cost |
|
|
| Government bonds |
27 |
28 |
| Tax free bonds |
1,729 |
1,731 |
| |
1,756 |
1,759 |
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
2,548 |
2,217 |
| Equity securities |
129 |
113 |
| Government securities |
6,006 |
6,897 |
| |
8,683 |
9,227 |
| Total non-current investments |
11,174 |
11,708 |
| Current Investments |
|
|
| Unquoted |
|
|
| Investments carried at fair value through profit or loss |
|
|
| Liquid mutual fund units |
3,729 |
2,615 |
| |
3,729 |
2,615 |
| Investments carried at fair value through other comprehensive income |
|
|
| Commercial Paper |
– |
4,830 |
| Certificates of deposit |
1,718 |
3,043 |
| |
1,718 |
7,873 |
| Quoted |
|
|
| Investments carried at fair value through other comprehensive income |
|
|
| Non convertible debentures |
2,183 |
1,962 |
| Government securities |
1,132 |
465 |
| |
3,315 |
2,427 |
| Total current investments |
8,762 |
12,915 |
| Total investments |
19,936 |
24,623 |
| Aggregate amount of quoted investments |
13,754 |
13,413 |
| Market value of quoted investments (including interest accrued), current |
3,314 |
2,428 |
| Market value of quoted investments (including interest accrued), non current |
10,654 |
11,201 |
| Aggregate amount of unquoted investments |
6,182 |
11,210 |
| Investments carried at amortized cost |
1,756 |
1,759 |
| Investments carried at fair value through other comprehensive income |
13,809 |
19,620 |
|
Investments carried at fair value through profit or loss
|
4,371 |
3,244 |
| (1) | | Uncalled capital commitments outstanding as at June 30, 2024 and March 31, 2024 was 72
crore and 79 crore, respectively. |
Refer to Note 2.11 for Accounting policies on Financial
Instruments.
Method of fair valuation:
(In crore)
| Class of investment |
Method |
Fair value as at |
| |
|
June 30, 2024 |
March 31, 2024 |
| Liquid mutual fund units - carried at fair value through profit or loss |
Quoted price |
3,729 |
2,615 |
| Target maturity fund units - carried at fair value through profit or loss |
Quoted price |
439 |
431 |
| Tax free bonds and government bonds - carried at amortized cost |
Quoted price and market observable inputs |
1,968 |
1,973 |
| Non-convertible debentures - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
4,731 |
4,179 |
| Government securities - carried at fair value through other comprehensive income |
Quoted price and market observable inputs |
7,138 |
7,362 |
| Commercial Papers - carried at fair value through other comprehensive income |
Market observable inputs |
– |
4,830 |
| Certificates of deposit - carried at fair value through other comprehensive income |
Market observable inputs |
1,718 |
3,043 |
| Quoted Equity securities - carried at fair value through other comprehensive income |
Quoted price |
129 |
113 |
| Unquoted equity and preference securities - carried at fair value through other comprehensive income |
Discounted cash flows method, Market multiples method, Option pricing model |
93 |
93 |
| Others - carried at fair value through profit or loss |
Discounted cash flows method, Market multiples method, Option pricing model |
203 |
198 |
| Total |
|
20,148 |
24,837 |
Note: Certain quoted investments are classified as
Level 2 in the absence of active market for such investments.
2.5 LOANS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
29 |
34 |
| |
29 |
34 |
| Loans credit impaired - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
2 |
2 |
| Less: Allowance for credit impairment |
(2) |
(2) |
| |
– |
– |
| Total non-current loans |
29 |
34 |
| Current |
|
|
| Loans considered good - Unsecured |
|
|
| Other loans |
|
|
| Loans to employees |
251 |
248 |
| Total current loans |
251 |
248 |
| Total loans |
280 |
282 |
2.6 OTHER FINANCIAL ASSETS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non Current |
|
|
| Security deposits (1) |
267 |
259 |
| Unbilled revenues (1)# |
1,557 |
1,677 |
| Restricted deposits (1)* |
58 |
47 |
| Others (1) |
1,187 |
1,122 |
| Total non-current other financial assets |
3,069 |
3,105 |
| Current |
|
|
| Security deposits (1) |
66 |
75 |
| Restricted deposits (1)* |
2,739 |
2,535 |
| Unbilled revenues (1)# |
7,772 |
7,923 |
| Interest accrued but not due (1) |
286 |
537 |
| Foreign currency forward and options contracts (2) (3) |
86 |
84 |
| Others (1)** |
1,062 |
931 |
| Total current other financial assets |
12,011 |
12,085 |
| Total other financial assets |
15,080 |
15,190 |
| (1) Financial assets carried at amortized cost |
14,994 |
15,106 |
| (2) Financial assets carried at fair value through other comprehensive income |
18 |
23 |
| (3) Financial assets carried at fair value through profit or loss |
68 |
61 |
| * | | Restricted deposits represent deposits with financial institutions to settle employee related
obligations as and when they arise during the normal course of business. |
| # | | Classified as financial asset as right to consideration is unconditional and is due only
after a passage of time. |
| ** | | Primarily includes net investment in lease arising on assets that are leased to customers
for a contract term normally ranging between 3 to 4 years, with lease payments generally due in monthly installments. |
2.7 TRADE RECEIVABLES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Trade Receivable considered good - Unsecured |
31,478 |
30,713 |
| Less: Allowance for expected credit loss |
548 |
520 |
| Trade Receivable considered good - Unsecured |
30,930 |
30,193 |
| Trade Receivable - credit impaired - Unsecured |
171 |
196 |
| Less: Allowance for credit impairment |
171 |
196 |
| Trade Receivable - credit impaired - Unsecured |
– |
– |
| Total trade receivables |
30,930 |
30,193 |
2.8 CASH AND CASH EQUIVALENTS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Balances with banks |
|
|
| In current and deposit accounts |
16,432 |
14,786 |
| Cash on hand |
– |
– |
| Total cash and cash equivalents |
16,432 |
14,786 |
| Balances with banks in unpaid dividend accounts |
37 |
37 |
|
Deposit with more than 12 months maturity
|
50 |
57 |
Cash and cash equivalents as at June 30, 2024 and March
31, 2024 include restricted cash and bank balances of 398 crore and 348 crore respectively. The restrictions are primarily
on account of bank balances held by irrevocable trusts controlled by the company.
The deposits maintained by the Group with banks and
financial institutions comprise of time deposits, which can be withdrawn by the Group at any point without prior notice or penalty on
the principal.
2.9 EARMARKED BANK BALANCE FOR DIVIDEND
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Earmarked bank balance for dividend |
11,625 |
– |
| Total |
11,625 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June
26, 2024. Payment date for the dividend is July 01, 2024. Earmarked bank balance for dividend represents cash which is deposited in a
designated bank account only for payment of final dividend and special dividend for financial year ended March 31, 2024.
2.10 OTHER ASSETS
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Capital advances |
178 |
155 |
| Advances other than capital advances |
|
|
| Others |
|
|
| Withholding taxes and others |
678 |
673 |
| Unbilled revenues # |
95 |
103 |
| Defined benefit plan assets |
34 |
31 |
| Prepaid expenses |
319 |
343 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract |
111 |
129 |
| Cost of fulfillment |
651 |
687 |
| Total non-current other assets |
2,066 |
2,121 |
| Current |
|
|
|
| Advances other than capital advances |
|
|
| Payment to vendors for supply of goods |
480 |
356 |
| Others |
|
|
|
| Unbilled revenues # |
4,829 |
4,845 |
| Withholding taxes and others |
3,326 |
3,540 |
| Prepaid expenses |
3,502 |
3,329 |
| Deferred Contract Cost |
|
|
| Cost of obtaining a contract |
254 |
200 |
| Cost of fulfillment |
409 |
358 |
| Other receivables |
212 |
180 |
| Total current other assets |
13,012 |
12,808 |
| Total other assets |
15,078 |
14,929 |
# Classified as non financial asset as the
contractual right to consideration is dependent on completion of contractual milestones.
Withholding taxes and others primarily consist of input
tax credits and Cenvat/VAT recoverable from Government of India.
2.11 FINANCIAL INSTRUMENTS
Accounting policy
2.11.1 Initial recognition
The Group recognizes financial assets and financial
liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized
at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs
that are directly attributable to the acquisition or issue of financial assets and financial liabilities, which are not at fair value
through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted
for at trade date.
2.11.2 Subsequent measurement
a. Non-derivative financial instruments
(i) Financial assets carried at amortized cost
A financial asset is subsequently measured at amortized
cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual
terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
(ii) Financial assets carried at fair value through
other comprehensive income (FVOCI)
A financial asset is subsequently measured at fair
value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual
cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its
investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based
on its business model.
(iii) Financial assets carried at fair value
through profit or loss
A financial asset which is not classified in any of
the above categories is subsequently fair valued through profit or loss.
(iv) Financial liabilities
Financial liabilities are subsequently carried at amortized
cost using the effective interest method, except for contingent consideration and financial liability under option arrangements recognized
in a business combination which is subsequently measured at fair value through profit or loss.
b. Derivative financial instruments
The Group holds derivative financial instruments such
as foreign exchange forward and option contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for such contracts is generally a bank.
(i) Financial assets or financial liabilities,
carried at fair value through profit or loss.
This category includes derivative financial assets
or liabilities which are not designated as hedges.
Although the Group believes that these derivatives
constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any
derivative that is either not designated as hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial
asset or financial liability, at fair value through profit or loss.
Derivatives not designated as hedges are recognized
initially at fair value and attributable transaction costs are recognized in net profit in the Consolidated Statement of Profit and Loss
when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting
exchange gains or losses are included in other income. Assets/ liabilities in this category are presented as current assets/current liabilities
if they are either held for trading or are expected to be realized within 12 months after the Balance Sheet date.
(ii) Cash flow hedge
The Group designates certain foreign exchange forward
and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in
the net profit in the interim condensed Consolidated Statement of Profit and Loss. If the hedging instrument no longer meets the criteria
for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or
exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was
effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized
in the cash flow hedging reserve is transferred to the net profit in the Consolidated Statement of Profit and Loss upon the occurrence
of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash
flow hedging reserve is reclassified to net profit in the interim condensed Consolidated Statement of Profit and Loss.
2.11.3 Derecognition of financial instruments
The Group derecognizes a financial asset when the contractual
rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition
under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group's Balance Sheet when the obligation
specified in the contract is discharged or cancelled or expires.
2.11.4 Fair value of financial instruments
In determining the fair value of its financial instruments,
the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The
methods used to determine fair value include discounted cash flow analysis, option pricing model, market multiples, available quoted market
prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually
be realized.
Refer to table 'Financial instruments by category'
below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing
within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximates fair value due
to the short maturity of these instruments.
2.11.5 Impairment
The Group recognizes loss allowances using the expected
credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance
for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For
all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in
credit risk from initial recognition in which case those are measured at lifetime ECL.
The Group determines the allowance for credit losses
based on historical loss experience adjusted to reflect current and estimated future economic conditions. The Group considers current
and anticipated future economic conditions relating to industries the Group deals with and the countries where it operates.
The amount of ECL (or reversal) that is required to
adjust the loss allowance at the reporting date to the amount that is required to be recorded is recognized as an impairment loss or gain
in Consolidated Statement of Profit and Loss.
Financial instruments by category
The carrying value and fair value of financial instruments
by categories as at June 30, 2024 are as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to Note 2.8) |
16,432 |
– |
– |
– |
– |
16,432 |
16,432 |
Earmarked bank balance for dividend (Refer
Note no. 2.9) |
11,625 |
– |
– |
– |
– |
11,625 |
11,625 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
222 |
– |
222 |
222 |
| Tax free bonds and government bonds |
1,756 |
– |
– |
– |
– |
1,756 |
1,968(1) |
| Liquid mutual fund units |
– |
– |
3,729 |
– |
– |
3,729 |
3,729 |
| Target maturity fund units |
– |
– |
439 |
– |
– |
439 |
439 |
| Non convertible debentures |
– |
– |
– |
– |
4,731 |
4,731 |
4,731 |
| Government securities |
– |
– |
– |
– |
7,138 |
7,138 |
7,138 |
| Certificates of deposit |
– |
– |
– |
– |
1,718 |
1,718 |
1,718 |
| Other investments |
– |
– |
203 |
– |
– |
203 |
203 |
| Trade receivables (Refer to Note 2.7) |
30,930 |
– |
– |
– |
– |
30,930 |
30,930 |
| Loans (Refer to Note 2.5) |
280 |
– |
– |
– |
– |
280 |
280 |
| Other financials assets (Refer to Note 2.6)(3) |
14,994 |
– |
68 |
– |
18 |
15,080 |
14,991(2) |
| Total |
76,017 |
– |
4,439 |
222 |
13,605 |
94,283 |
94,406 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,693 |
– |
– |
– |
– |
3,693 |
3,693 |
| Lease liabilities (Refer to Note 2.20) |
8,361 |
– |
– |
– |
– |
8,361 |
8,361 |
| Financial Liability under option arrangements (Refer to Note 2.13) |
– |
– |
590 |
– |
– |
590 |
590 |
| Other financial liabilities (Refer to Note 2.13) |
25,686 |
– |
55 |
– |
3 |
25,744 |
25,744 |
| Total |
37,740 |
– |
645 |
– |
3 |
38,388 |
38,388 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 89 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
The carrying value and fair value of financial instruments
by categories as at March 31, 2024 were as follows:
(In crore)
| Particulars |
Amortized cost |
Financial assets/ liabilities at fair value through profit or loss |
Financial assets/liabilities at fair value through OCI |
Total carrying value |
Total fair value |
| |
|
Designated upon initial recognition |
Mandatory |
Equity instruments designated upon initial recognition |
Mandatory |
|
|
| Assets: |
|
|
|
|
|
|
|
| Cash and cash equivalents (Refer to Note 2.8) |
14,786 |
– |
– |
– |
– |
14,786 |
14,786 |
| Investments (Refer to Note 2.4) |
|
|
|
|
|
|
|
| Equity and preference securities |
– |
– |
– |
206 |
– |
206 |
206 |
| Tax free bonds and government bonds |
1,759 |
– |
– |
– |
– |
1,759 |
1,973(1) |
| Liquid mutual fund units |
– |
– |
2,615 |
– |
– |
2,615 |
2,615 |
| Target maturity fund units |
– |
– |
431 |
– |
– |
431 |
431 |
| Non convertible debentures |
– |
– |
– |
– |
4,179 |
4,179 |
4,179 |
| Government securities |
– |
– |
– |
– |
7,362 |
7,362 |
7,362 |
| Commercial paper |
– |
– |
– |
– |
4,830 |
4,830 |
4,830 |
| Certificates of deposit |
– |
– |
– |
– |
3,043 |
3,043 |
3,043 |
| Other investments |
– |
– |
198 |
– |
– |
198 |
198 |
| Trade receivables (Refer to Note 2.7) |
30,193 |
– |
– |
– |
– |
30,193 |
30,193 |
| Loans (Refer to Note 2.5) |
282 |
– |
– |
– |
– |
282 |
282 |
| Other financials assets (Refer to Note 2.6)(3) |
15,106 |
– |
61 |
– |
23 |
15,190 |
15,106(2) |
| Total |
62,126 |
– |
3,305 |
206 |
19,437 |
85,074 |
85,204 |
| Liabilities: |
|
|
|
|
|
|
|
| Trade payables |
3,956 |
– |
– |
– |
– |
3,956 |
3,956 |
| Lease liabilities (Refer to Note 2.20) |
8,359 |
– |
– |
– |
– |
8,359 |
8,359 |
| Financial Liability under option arrangements (Refer to Note 2.13) |
– |
– |
597 |
– |
– |
597 |
597 |
| Other financial liabilities (Refer to Note 2.13) |
15,750 |
– |
30 |
– |
1 |
15,781 |
15,781 |
| Total |
28,065 |
– |
627 |
– |
1 |
28,693 |
28,693 |
| (1) | | On account of fair value changes including interest accrued |
| (2) | | Excludes interest accrued on tax free bonds and government bonds carried at amortized
cost of 84 crore |
| (3) | | Excludes unbilled revenue on contracts where the right to consideration is dependent on
completion of contractual milestones |
For trade receivables, trade payables, other assets
and payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity
of these instruments.
Fair value hierarchy
Level 1 - Quoted prices (unadjusted) in active
markets for identical assets or liabilities.
Level 2 - Inputs other than quoted prices included
within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
Level 3 - Inputs for the assets or liabilities
that are not based on observable market data (unobservable inputs).
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at June 30, 2024 is as follows:
(In crore)
| Particulars |
As at June 30, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
3,729 |
3,729 |
– |
– |
| Investments in target maturity fund units |
439 |
439 |
– |
– |
| Investments in tax free bonds |
1,941 |
1,416 |
525 |
– |
| Investments in government bonds |
27 |
27 |
– |
– |
| Investments in non convertible debentures |
4,731 |
4,484 |
247 |
– |
| Investment in government securities |
7,138 |
7,057 |
81 |
– |
| Investments in equity instruments |
131 |
129 |
– |
2 |
| Investments in preference securities |
91 |
– |
– |
91 |
| Investments in certificates of deposit |
1,718 |
– |
1,718 |
– |
| Other investments |
203 |
– |
– |
203 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
86 |
– |
86 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.13) |
28 |
– |
28 |
– |
| Financial liability under option arrangements (Refer to Note 2.13) (1) |
590 |
– |
– |
590 |
| Liability towards contingent consideration (Refer to Note 2.13)(2) |
30 |
– |
– |
30 |
| (1) | | Discount rate ranges from 9% to 15% |
During the three months ended June 30, 2024, government
securities of 72 crore was transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted
price. Further, tax free bonds of 525 and government securities of 81 crore were transferred from Level 1 to Level 2 of
fair value hierarchy, since these were valued based on market observable inputs.
The fair value hierarchy of assets and liabilities
measured at fair value on a recurring basis as at March 31, 2024 was as follows:
(In crore)
| Particulars |
As at March 31, 2024 |
Fair value measurement at end of the reporting period using |
| |
|
Level 1 |
Level 2 |
Level 3 |
| Assets |
|
|
|
|
| Investments (Refer to note 2.4) |
|
|
|
|
| Investments in liquid mutual funds |
2,615 |
2,615 |
– |
– |
| Investments in target maturity fund units |
431 |
431 |
– |
– |
| Investments in tax free bonds |
1,944 |
1,944 |
– |
– |
| Investments in government bonds |
29 |
29 |
– |
– |
| Investments in non convertible debentures |
4,179 |
3,922 |
257 |
– |
| Investment in government securities |
7,362 |
7,289 |
73 |
– |
| Investments in equity instruments |
115 |
113 |
– |
2 |
| Investments in preference securities |
91 |
– |
– |
91 |
| Investments in commercial paper |
4,830 |
– |
4,830 |
– |
| Investments in certificates of deposit |
3,043 |
– |
3,043 |
– |
| Other investments |
198 |
– |
– |
198 |
| Others |
|
|
|
|
| Derivative financial instruments - gain on outstanding foreign exchange forward and option contracts (Refer to Note 2.6) |
84 |
– |
84 |
– |
| Liabilities |
|
|
|
|
| Derivative financial instruments - loss on outstanding foreign exchange forward and option contracts (Refer to Note 2.13) |
31 |
– |
31 |
– |
| Financial liability under option arrangements (Refer to Note 2.13) (1) |
597 |
– |
– |
597 |
| (1) | | Discount rate ranges from 9% to 15% |
During the year ended March 31, 2024, government securities
, non convertible debentures and tax free bonds of 2,143 crore was transferred from Level 2 to Level 1 of fair value hierarchy,
since these were valued based on quoted price. Further, government securities of 73 crore were transferred from Level 1 to Level
2 of fair value hierarchy, since these were valued based on market observable inputs.
A one percentage point change in the unobservable inputs
used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.
Majority of investments of the Group are fair valued
based on Level 1 or Level 2 inputs. These investments primarily include investment in liquid mutual fund units, target maturity fund units,
tax-free bonds, certificates of deposit, commercial papers, treasury bills, government securities, non-convertible debentures, quoted
bonds issued by government and quasi-government organizations. The Group invests after considering counterparty risks based on multiple
criteria including Tier I capital, Capital Adequacy Ratio, Credit Rating, Profitability, NPA levels and Deposit base of banks and financial
institutions. These risks are monitored regularly as per Group's risk management program.
2.12 EQUITY
Accounting policy
Ordinary Shares
Ordinary shares are classified as equity share capital.
Incremental costs directly attributable to the issuance of new ordinary shares, share options and buyback are recognized as a deduction
from equity, net of any tax effects.
Treasury Shares
When any entity within the Group purchases the company's
ordinary shares, the consideration paid including any directly attributable incremental cost is presented as a deduction from total equity,
until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized
as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to / from securities premium.
Description of reserves
Capital Redemption Reserve
In accordance with section 69 of the Indian Companies
Act, 2013, the Company creates capital redemption reserve equal to the nominal value of the shares bought back as an appropriation from
general reserve / retained earnings.
Retained earnings
Retained earnings represent the amount of accumulated
earnings of the Group.
Securities premium
The amount received in excess of the par value of equity
shares has been classified as securities premium. Amounts have been utilized for bonus issue and share buyback from share premium account.
Share options outstanding account
The share options outstanding account is used to record
the fair value of equity-settled share based payment transactions with employees. The amounts recorded in share options outstanding account
are transferred to securities premium upon exercise of stock options and transferred to general reserve on account of stock options not
exercised by employees.
Special Economic Zone Re-investment reserve
The Special Economic Zone Re-investment reserve has
been created out of the profit of the eligible SEZ unit in terms of the provisions of Sec 10AA (1)(ii) of Income Tax Act, 1961. The reserve
should be utilized by the Company for acquiring new plant and machinery for the purpose of its business in terms of the provisions of
the Sec 10AA (2) of the Income Tax Act, 1961.
Other components of equity
Other components of equity include currency translation,
remeasurement of net defined benefit liability / asset, equity instruments fair valued through other comprehensive income, changes on
fair valuation of investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.
Currency translation reserve
The exchange differences arising from the translation
of financial statements of foreign subsidiaries with functional currency other than Indian rupees is recognized in other comprehensive
income and is presented within equity.
Cash flow hedge reserve
When a derivative is designated as a cash flow hedging
instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated
in the cash flow hedging reserve. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to
the interim condensed Consolidated Statement of Profit and Loss upon the occurrence of the related forecasted transaction.
EQUITY SHARE CAPITAL
(In crore, except as otherwise stated)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Authorized |
|
|
| Equity shares, 5 par value |
|
|
| 480,00,00,000 (480,00,00,000) equity shares |
2,400 |
2,400 |
| Issued, Subscribed and Paid-Up |
|
|
| Equity shares, 5 par value(1) |
2,072 |
2,071 |
| 4,14,17,81,963 (4,13,99,50,635) equity shares fully paid-up(2) |
|
|
| |
2,072 |
2,071 |
Note: Forfeited shares amounted to 1,500 (1,500)
| (1) | | Refer to Note 2.21 for details of basic and diluted shares |
| (2) | | Net of treasury shares 1,02,46,512 (1,09,16,829) |
The Company has only one class of shares referred to
as equity shares having a par value of 5/-. Each holder of equity shares is entitled to one vote per share. The equity shares represented
by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying
equity share.
In the event of liquidation of the Company, the holders
of equity shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of equity shares held
by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts exist currently, other than
the amounts held by irrevocable controlled trusts. For irrevocable controlled trusts, the corpus would be settled in favor of the beneficiaries.
There are no voting, dividend or liquidation rights
to the holders of options issued under the company's share option plans
For details of shares reserved for issue under the
employee stock option plan of the Company refer to the note below.
The reconciliation of the number of shares outstanding
and the amount of share capital as at June 30, 2024 and March 31, 2024 are as follows:
(In crore, except as stated otherwise)
| Particulars |
As at June 30, 2024 |
As at March 31, 2024 |
| |
Number of shares |
Amount |
Number of shares |
Amount |
| As at the beginning of the period |
413,99,50,635 |
2,071 |
413,63,87,925 |
2,069 |
| Add: Shares issued on exercise of employee stock options |
18,31,328 |
1 |
35,62,710 |
2 |
| As at the end of the period |
414,17,81,963 |
2,072 |
413,99,50,635 |
2,071 |
Capital allocation policy
Effective fiscal 2025, the Company expects to continue
its policy of returning approximately 85% of the free cash flow cumulatively over a 5-year period through a combination of semi-annual
dividends and/or share buyback/ special dividends subject to applicable laws and requisite approvals, if any. Under this policy, the Company
expects to progressively increase its annual dividend per share (excluding special dividend if any).
Free cash flow is defined as net cash provided by operating
activities less capital expenditure as per the consolidated statement of cash flows prepared under IFRS. Dividend and buyback include
applicable taxes.
The Company’s objective when managing capital
is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder
value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital
to shareholders, issue new shares or buy back issued shares. As of June 30, 2024, the Company has only one class of equity shares and
has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.
Dividend
The final dividend on shares is recorded as a liability
on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company's
Board of Directors. Income tax consequences of dividends on financial instruments classified as equity will be recognized according to
where the entity originally recognized those past transactions or events that generated distributable profits.
The Company declares and pays dividends in Indian rupees.
Companies are required to pay/distribute dividend after deducting applicable taxes. The remittance of dividends outside India is governed
by Indian law on foreign exchange and is also subject to withholding tax at applicable rates.
The amount of per share dividend recognized as distribution
to equity shareholders in accordance with Companies Act 2013 is as follows:
(in )
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Final dividend for fiscal 2023 |
– |
17.50 |
| Special dividend for fiscal 2024 |
8.00 |
– |
| Final dividend for fiscal 2024 |
20.00 |
– |
The Board of Directors in their meeting held on April
18, 2024 recommended a final dividend of 20/- per equity share for the financial year ended March 31, 2024 and a special dividend
of 8/- per equity share. The same was approved by the shareholders at the Annual General Meeting (AGM) of the Company held on June
26, 2024 which will result in a net cash outflow of 11,597 crore, excluding dividend paid on treasury shares. Payment date for
the dividend is July 01, 2024.
Employee Stock Option Plan (ESOP):
Accounting policy
The Group recognizes compensation expense relating
to share-based payments in net profit based on estimated fair values of the awards on the grant date. The estimated fair value of awards
is recognized as an expense in the statement of profit and loss on a straight-line basis over the requisite service period for each separately
vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding
account.
Infosys Expanded Stock Ownership Program 2019 (the
2019 Plan) :
On June 22, 2019 pursuant to approval by the shareholders
in the Annual General Meeting, the Board has been authorized to introduce, offer, issue and provide share-based incentives to eligible
employees of the Company and its subsidiaries under the 2019 Plan. The maximum number of shares under the 2019 Plan shall not exceed 5,00,00,000
equity shares. To implement the 2019 Plan, up to 4,50,00,000 equity shares may be issued by way of secondary acquisition of shares by
Infosys Expanded Stock Ownership Trust. The Restricted Stock Units (RSUs) granted under the 2019 Plan shall vest based on the achievement
of defined annual performance parameters as determined by the administrator (Nomination and Remuneration Committee). The performance parameters
will be based on a combination of relative Total Shareholder Return (TSR) against selected industry peers and certain broader market domestic
and global indices and operating performance metrics of the Company as decided by administrator. Each of the above performance parameters
will be distinct for the purposes of calculation of quantity of shares to vest based on performance. These instruments will generally
vest between a minimum of 1 to maximum of 3 years from the grant date.
2015 Stock Incentive Compensation Plan (the 2015
Plan) :
On March 31, 2016, pursuant to the approval by the
shareholders through postal ballot, the Board was authorized to introduce, offer, issue and allot share-based incentives to eligible employees
of the Company and its subsidiaries under the 2015 Stock Incentive Compensation Plan. The maximum number of shares under the 2015 Plan
shall not exceed 2,40,38,883 equity shares (this includes 1,12,23,576 equity shares which are held by the trust towards the 2011 Plan
as at March 31, 2016). These instruments will generally vest over a period of 4 years. The plan numbers mentioned above are further adjusted
with the September 2018 bonus issue.
The equity settled and cash settled RSUs and stock
options would vest generally over a period of 4 years and shall be exercisable within the period as approved by the Nomination and Remuneration
Committee (NARC). The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options
would be the market price as on the date of grant.
Controlled trust holds 1,02,46,512 and 1,09,16,829
shares as at June 30, 2024 and March 31, 2024, respectively, under the 2015 Plan. Out of these shares, 200,000 equity shares each have
been earmarked for welfare activities of the employees as at June 30, 2024 and March 31, 2024.
The following is the summary of grants made during
the three months ended June 30, 2024 and June 30, 2023:
| Particulars |
2019 Plan |
2015 Plan |
| |
Three months ended June 30, |
Three months ended June 30, |
| |
2024 |
2023 |
2024 |
2023 |
| Equity Settled RSUs |
|
|
|
|
| Key Management Personnel (KMP) |
70,699 |
78,281 |
295,168 |
333,596 |
| Employees other than KMP |
6,848 |
– |
96,490 |
4,500 |
| Total Grants |
77,547 |
78,281 |
391,658 |
338,096 |
Notes on grants to KMP:
CEO & MD
Under the 2015 Plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee approved the following grants for fiscal 2025. In accordance with such approval the following
grants were made effective May 2, 2024.
- 245,679 performance-based RSUs (Annual performance
equity grant) of fair value of 34.75 crore. These RSUs will vest in line with the employment agreement based on achievement of
certain performance targets.
- 14,140 performance-based grant of RSUs (Annual performance
equity ESG grant) of fair value of 2 crore. These RSUs will vest in line with the employment agreement based on achievement of
certain environment, social and governance milestones as determined by the Board.
- 35,349 performance-based grant of RSUs (Annual performance
Equity TSR grant) of fair value of 5 crore . These RSUs will vest in line with the employment agreement based on Company’s
performance on cumulative relative TSR over the years and as determined by the Board.
Though the annual time based grants and annual performance
equity TSR grant for the remaining employment term ending on March 31, 2027 have not been granted as of June 30, 2024, since the service
commencement date precedes the grant date, the company has recorded employment stock compensation expense in accordance with Ind AS 102,
Share based payment. The grant date for this purpose in accordance with Ind AS 102, Share based payment is July 01, 2022.
Under the 2019 Plan:
The Board, on April 18, 2024, based on the recommendations
of the Nomination and Remuneration Committee, approved performance-based grant of RSUs amounting to 10 crore for fiscal 2025 under
the 2019 Plan. These RSUs will vest based on achievement of certain performance targets. Accordingly, 70,699 performance based RSU’s
were granted effective May 2, 2024.
The break-up of employee stock compensation expense
is as follows:
(in crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Granted to: |
|
|
| KMP |
18 |
20 |
| Employees other than KMP |
193 |
126 |
| Total (1) |
211 |
146 |
| (1) Cash-settled stock compensation expense included in the above |
3 |
2 |
The fair value of the awards are estimated using the
Black-Scholes Model for time and non-market performance based options and Monte Carlo simulation model is used for TSR based options.
The inputs to the model include the share price at
date of grant, exercise price, expected volatility, expected dividends, expected term and the risk free rate of interest. Expected volatility
during the expected term of the options is based on historical volatility of the observed market prices of the Company's publicly traded
equity shares during a period equivalent to the expected term of the options. Expected volatility of the comparative company have been
modelled based on historical movements in the market prices of their publicly traded equity shares during a period equivalent to the expected
term of the options. Correlation coefficient is calculated between each peer entity and the indices as a whole or between each entity
in the peer group.
The fair value of each equity settled award is estimated
on the date of grant using the following assumptions:
| Particulars |
For options granted in |
| |
Fiscal 2025-
Equity Shares-RSU |
Fiscal 2025-
ADS-RSU |
Fiscal 2024-
Equity Shares-RSU |
Fiscal 2024-
ADS-RSU |
| Weighted average share price () / ($ ADS) |
1,414 |
16.87 |
1,588 |
19.19 |
| Exercise price () / ($ ADS) |
5.00 |
0.07 |
5.00 |
0.07 |
| Expected volatility (%) |
23-26 |
23-28 |
23-31 |
25-33 |
| Expected life of the option (years) |
1-4 |
1-4 |
1-4 |
1-4 |
| Expected dividends (%) |
2-3 |
2-3 |
2-3 |
2-3 |
| Risk-free interest rate (%) |
7 |
5 |
7 |
4-5 |
| Weighted average fair value as on grant date () / ($ ADS) |
1,298 |
15.45 |
1,317 |
16.27 |
The expected life of the RSU/ESOP is estimated based
on the vesting term and contractual term of the RSU/ESOP, as well as expected exercise behavior of the employee who receives the RSU/ESOP.
2.13 OTHER FINANCIAL LIABILITIES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Others |
|
|
| Accrued compensation to employees (1) |
11 |
7 |
| Accrued expenses (1) |
1,690 |
1,779 |
| Compensated absences |
93 |
89 |
| Financial liability under option arrangements (2) # |
98 |
98 |
| Payable for acquisition of business - Contingent consideration (2) |
18 |
– |
| Other Payables (1)(4) |
49 |
157 |
| Total non-current other financial liabilities |
1,959 |
2,130 |
| Current |
|
|
| Unpaid dividends (1) |
37 |
37 |
| Others |
|
|
| Accrued compensation to employees (1) |
3,807 |
4,454 |
| Accrued expenses (1) |
8,396 |
8,224 |
| Payable for acquisition of business - Contingent consideration (2) |
12 |
– |
| Payable by controlled trusts (1) |
211 |
211 |
| Compensated absences |
2,805 |
2,622 |
| Financial liability under option arrangements (2) # |
492 |
499 |
| Foreign currency forward and options contracts (2) (3) |
28 |
31 |
| Capital creditors (1) |
227 |
310 |
| Final dividend payable to shareholders (1)* |
10,452 |
– |
| Other payables (1)(4) |
806 |
571 |
| Total current other financial liabilities |
27,273 |
16,959 |
| Total other financial liabilities |
29,232 |
19,089 |
| (1) Financial liability carried at amortized cost |
25,686 |
15,750 |
| (2) Financial liability carried at fair value through profit or loss |
645 |
627 |
| (3) Financial liability carried at fair value through other comprehensive income |
3 |
1 |
(4) The Group entered into financing arrangements
with a third party towards technology assets taken over by the Group from a customer as a part of transformation project which was not
considered as distinct goods or services as the control related to those assets was not transferred to the Group in accordance with Ind
AS 115 - Revenue from contract with customers. As at June 30, 2024 and March 31, 2024, the financial liability pertaining to such arrangements
amounts to 263 crore and 372 crore, respectively.
# Represents liability related to options issued by
the Group over the non-controlling interests in its subsidiaries
* Pertains to final dividend and special dividend declared
by the Company for fiscal 2024 and approved by the shareholders on June 26, 2024. Payment date for dividend is July 01, 2024 (refer note
no. 2.12)
Accrued expenses primarily relate to cost of technical
sub-contractors, telecommunication charges, legal and professional charges, brand building expenses, overseas travel expenses, office
maintenance and cost of third party software and hardware.
2.14 OTHER LIABILITIES
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Non-current |
|
|
| Others |
|
|
| Accrued defined benefit liability |
168 |
159 |
| Others |
75 |
76 |
| Total non-current other liabilities |
243 |
235 |
| Current |
|
|
| Unearned revenue |
6,956 |
7,341 |
| Others |
|
|
| Withholding taxes and others |
4,625 |
3,185 |
| Accrued defined benefit liability |
9 |
5 |
| Others |
10 |
8 |
| Total current other liabilities |
11,600 |
10,539 |
| Total other liabilities |
11,843 |
10,774 |
2.15 PROVISIONS
Accounting policy
A provision is recognized if, as a result of a past
event, the Group has a present legal or constructive obligation that is reasonably estimable, and it is probable that an outflow of economic
benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the risks specific to the liability.
a. Post sales client support
The Group provides its clients with a fixed-period
post sales support on its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time
related revenues are recorded and included in Consolidated Statement of Profit and Loss. The Group estimates such costs based on historical
experience and estimates are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.
b. Onerous contracts
Provisions for onerous contracts are recognized when
the expected benefits to be derived by the Group from a contract are lower than the unavoidable costs of meeting the future obligations
under the contract. Provisions for estimated losses, if any, on incomplete contracts are recorded in the period in which such losses become
probable based on the estimated efforts or costs to complete the contract. The provision is measured at the present value of the lower
of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established
the Group recognizes any impairment loss on the assets associated with that contract.
Provision for post-sales client support and other
provisions:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current |
|
|
| Others |
|
|
| Post-sales client support and other provisions |
1,504 |
1,796 |
| Total provisions |
1,504 |
1,796 |
Provision for post sales client support and other provisions
majorly represents costs associated with providing sales support services which are accrued at the time of recognition of revenues and
are expected to be utilized over a period of 1 year.
Provision for post sales client support and other provisions
is included in cost of sales in the condensed consolidated statement of profit and loss.
2.16 INCOME TAXES
Accounting policy
Income tax expense comprises current and deferred income
tax. Income tax expense is recognized in net profit in the Consolidated Statement of Profit and Loss except to the extent that it relates
to items recognized directly in equity, in which case it is recognized in equity or other comprehensive income. Current income tax for
current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates
and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred income tax assets and liabilities are
recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial
statements except when the deferred income tax arises from the initial recognition of goodwill or an asset or liability in a transaction
that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction. Deferred
tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realized.
Deferred income tax assets and liabilities are measured
using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on
deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive
enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available
against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed
earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the
foreseeable future.
The Group offsets current tax assets and current tax
liabilities; deferred tax assets and deferred tax liabilities, where it has a legally enforceable right to set off the recognized amounts
and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. The income tax
provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full
financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to income are
credited to equity.
Income tax expense in the Consolidated Statement of
Profit and Loss comprises:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Current taxes |
2,998 |
2,307 |
| Deferred taxes |
(351) |
110 |
| Income tax expense |
2,647 |
2,417 |
Income tax expense for the three months ended June
30, 2024 and June 30, 2023 includes provisions (net of reversals) of 60 crore and reversals (net of provisions) of 15 crore,
respectively. These provisions and reversals pertaining to prior periods are primarily on account of adjudication of certain disputed
matters, upon filing of tax return and completion of assessments, across various jurisdictions.
Deferred income tax for the three months ended June
30, 2024 and June 30, 2023 substantially relates to origination and reversal of temporary differences.
The Company’s Advanced Pricing Arrangement (APA)
with the Internal Revenue Service (IRS) for US branch income tax expired in March 2021. The Company has applied for renewal of APA and
currently the US taxable income is based on the Company’s best estimate determined based on the expected value method.
2.17 REVENUE FROM OPERATIONS
Accounting policy
The Group derives revenues primarily from IT services
comprising software development and related services, cloud and infrastructure services, maintenance, consulting and package implementation,
licensing of software products and platforms across the Group’s core and digital offerings (together called as “software related
services”) and business process management services. Contracts with customers are either on a time-and-material, unit of work, fixed-price
or on a fixed-timeframe basis.
Revenues from customer contracts are considered for
recognition and measurement when the contract has been approved in writing by the parties, to the contract, the parties to contract are
committed to perform their respective obligations under the contract, and the contract is legally enforceable. Revenue is recognized upon
transfer of control of promised products or services (“performance obligations”) to customers in an amount that reflects the
consideration the Group has received or expects to receive in exchange for these products or services (“transaction price”).
When there is uncertainty as to collectability, revenue recognition is postponed until such uncertainty is resolved.
The Group assesses the services promised in a contract
and identifies distinct performance obligations in the contract. The Group allocates the transaction price to each distinct performance
obligation based on the relative standalone selling price. The price that is regularly charged for an item when sold separately is the
best evidence of its standalone selling price. In the absence of such evidence, the primary method used to estimate standalone selling
price is the expected cost plus a margin, under which the Group estimates the cost of satisfying the performance obligation and then adds
an appropriate margin based on similar services.
The Group’s contracts may include variable consideration
including rebates, volume discounts and penalties. The Group includes variable consideration as part of transaction price when there is
a basis to reasonably estimate the amount of the variable consideration and when it is probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved.
Revenue on time-and-material and unit of work based
contracts, are recognized as the related services are performed. Fixed price maintenance revenue is recognized ratably either on a straight-line
basis when services are performed through an indefinite number of repetitive acts over a specified period or ratably using a percentage
of completion method when the pattern of benefits from the services rendered to the customer and the Group’s costs to fulfil the
contract is not even through the period of contract because the services are generally discrete in nature and not repetitive. Revenue
from other fixed-price, fixed-timeframe contracts, where the performance obligations are satisfied over time is recognized using the percentage-of-completion
method. Efforts or costs expended are used to determine progress towards completion as there is a direct relationship between input and
productivity. Progress towards completion is measured as the ratio of costs or efforts incurred to date (representing work performed)
to the estimated total costs or efforts. Estimates of transaction price and total costs or efforts are continuously monitored over the
term of the contracts and are recognized in net profit in the period when these estimates change or when the estimates are revised. Revenues
and the estimated total costs or efforts are subject to revision as the contract progresses. Provisions for estimated losses, if any,
on incomplete contracts are recorded in the period in which such losses become probable based on the estimated efforts or costs to complete
the contract.
The billing schedules agreed with customers include
periodic performance based billing and / or milestone based progress billings. Revenues in excess of billing are classified as unbilled
revenue while billing in excess of revenues are classified as contract liabilities (which we refer to as unearned revenues).
In arrangements for software development and related
services and maintenance services, by applying the revenue recognition criteria for each distinct performance obligation, the arrangements
with customers generally meet the criteria for considering software development and related services as distinct performance obligations.
For allocating the transaction price, the Group measures the revenue in respect of each performance obligation of a contract at its relative
standalone selling price. The price that is regularly charged for an item when sold separately is the best evidence of its standalone
selling price. In cases where the Group is unable to determine the standalone selling price, the Group uses the expected cost plus margin
approach in estimating the standalone selling price. For software development and related services, the performance obligations are satisfied
as and when the services are rendered since the customer generally obtains control of the work as it progresses.
Certain cloud and infrastructure services contracts
include multiple elements which may be subject to other specific accounting guidance, such as leasing guidance. These contracts are accounted
in accordance with such specific accounting guidance. In such arrangements where the Group is able to determine that hardware and services
are distinct performance obligations, it allocates the consideration to these performance obligations on a relative standalone selling
price basis. In the absence of standalone selling price, the Group uses the expected cost-plus margin approach in estimating the standalone
selling price. When such arrangements are considered as a single performance obligation, revenue is recognized over the period and measure
of progress is determined based on promise in the contract.
Revenue from licenses where the customer obtains a
“right to use” the licenses is recognized at the time the license are made available to the customer. Revenue from licenses
where the customer obtains a “right to access” is recognized over the access period.
Arrangements to deliver software products
generally have three elements: license, implementation and Annual Technical Services (ATS). When implementation services are
provided in conjunction with the licensing arrangement and the license and implementation have been identified as two distinct
separate performance obligations, the transaction price for such contracts are allocated to each performance obligation of the
contract based on their relative standalone selling prices. In the absence of standalone selling price for implementation, the Group
uses the expected cost plus margin approach in estimating the standalone selling price. Where the license is required to be
substantially customized as part of the implementation service the entire arrangement fee for license and implementation is
considered to be a single performance obligation and the revenue is recognized using the percentage-of-completion method as the
implementation is performed. Revenue from client training, support and other services arising due to the sale of software products
is recognized as the performance obligations are satisfied. ATS revenue is recognized ratably on a straight line basis over the
period in which the services are rendered.
Contracts with customers includes subcontractor services
or third-party vendor equipment or software in certain integrated services arrangements. In these types of arrangements, revenue from
sales of third-party vendor products or services is recorded net of costs when the Group is acting as an agent between the customer and
the vendor, and gross when the Group is the principal for the transaction. In doing so, the Group first evaluates whether it obtains control
of the specified goods or services before they are transferred to the customer. The Group considers whether it is primarily responsible
for fulfilling the promise to provide the specified goods or services, inventory risk, pricing discretion and other factors to determine
whether it controls the specified goods or services and therefore, is acting as a principal or an agent.
A contract modification is a change in the scope or
price or both of a contract that is approved by the parties to the contract. A contract modification that results in the addition of distinct
performance obligations are accounted for either as a separate contract if the additional services are priced at the standalone selling
price or as a termination of the existing contract and creation of a new contract if they are not priced at the standalone selling price.
If the modification does not result in a distinct performance obligation, it is accounted for as part of the existing contract on a cumulative
catch-up basis.
The incremental costs of obtaining a contract (i.e.,
costs that would not have been incurred if the contract had not been obtained) are recognized as an asset if the Group expects to recover
them.
Certain eligible, nonrecurring costs (e.g. set-up or
transition or transformation costs) that do not represent a separate performance obligation are recognized as an asset when such costs
(a) relate directly to the contract; (b) generate or enhance resources of the Group that will be used in satisfying the performance obligation
in the future; and (c) are expected to be recovered.
Capitalized contract costs relating to upfront payments
to customers are amortized to revenue and other capitalized costs are amortized to expenses over the respective contract life on a systematic
basis consistent with the transfer of goods or services to customer to which the asset relates. Capitalized costs are monitored regularly
for impairment. Impairment losses are recorded when present value of projected remaining operating cash flows is not sufficient to recover
the carrying amount of the capitalized costs.
The Group presents revenues net of indirect taxes in
its Consolidated Statement of Profit and Loss.
Revenue from operation for the three months ended June
30, 2024 and June 30, 2023 are as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenue from software services |
37,496 |
35,735 |
| Revenue from products and platforms |
1,819 |
2,198 |
| Total revenue from operations |
39,315 |
37,933 |
Products & platforms
The Group also derives revenues from the sale of products
and platforms like Finacle – core banking solution, Edge Suite of products, Panaya platform, Stater digital platform and Infosys
McCamish – insurance platform.
Disaggregated revenue information
Revenue disaggregation by business segments has been
included in segment information (Refer to Note 2.24). The table below presents disaggregated revenues from contracts with customers
by geography and contract type. The Group believes that this disaggregation best depicts how the nature, amount, timing and uncertainty
of revenues and cash flows are affected by industry, market and other economic factors.
For the three months ended June 30, 2024 and June 30,
2023:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Revenues by Geography* |
|
|
| North America |
23,143 |
23,084 |
| Europe |
11,186 |
10,148 |
| India |
1,227 |
1,020 |
| Rest of the world |
3,759 |
3,681 |
| Total |
39,315 |
37,933 |
* Geographical revenue is based on the
domicile of customer
The percentage of revenue from fixed-price contracts
for the three months ended June 30, 2024 and June 30, 2023 is 54% and 52%, respectively.
Trade Receivables and Contract Balances
The timing of revenue recognition, billings and cash
collections results in receivables, unbilled revenue, and unearned revenue on the Group’s Consolidated Balance Sheet. Amounts are
billed as work progresses in accordance with agreed-upon contractual terms, either at periodic intervals (e.g., monthly or quarterly)
or upon achievement of contractual milestones.
The Group’s receivables are rights to consideration
that are unconditional. Unbilled revenues comprising revenues in excess of billings from time and material contracts and fixed price maintenance
contracts are classified as financial asset when the right to consideration is unconditional and is due only after a passage of time.
Invoicing to the clients for other fixed price contracts
is based on milestones as defined in the contract and therefore the timing of revenue recognition is different from the timing of invoicing
to the customers. Therefore unbilled revenues for other fixed price contracts (contract asset) are classified as non-financial asset because
the right to consideration is dependent on completion of contractual milestones.
Invoicing in excess of earnings are classified as unearned
revenue.
Trade receivables and unbilled revenues are presented
net of impairment in the consolidated Balance Sheet.
2.18 OTHER INCOME, NET
Accounting policy
Other income is comprised primarily of interest income,
dividend income, gain/loss on investment and exchange gain/loss on forward and options contracts and on translation of foreign currency
assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right
to receive payment is established.
Foreign currency
Accounting policy
Functional currency
The functional currency of Infosys, its Indian subsidiaries
and controlled trusts is the Indian rupee. The functional currencies for foreign subsidiaries are their respective local currencies. These
financial statements are presented in Indian rupees (rounded off to crore; one crore equals ten million).
Transactions and translations
Foreign-currency denominated monetary assets and liabilities
are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting
from such translations are recognized in the Condensed Consolidated Statement of Profit and Loss and reported within exchange gains/ (losses)
on translation of assets and liabilities, net, except when deferred in Other Comprehensive Income as qualifying cash flow hedges. Non-monetary
assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent
at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and
measured at historical cost are translated at the exchange rate prevalent at the date of transaction. The related revenue and expense
are recognized using the same exchange rate.
Transaction gains or losses realized upon settlement
of foreign currency transactions are included in determining net profit for the period in which the transaction is settled. Revenue, expense
and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in
effect on the date of the transaction.
The translation of financial statements of the foreign
subsidiaries to the presentation currency is performed for assets and liabilities using the exchange rate in effect at the Balance Sheet
date and for revenue, expense and cash-flow items using the average exchange rate for the respective periods. The gains or losses resulting
from such translation are included in currency translation reserves under other components of equity. When a subsidiary is disposed off,
in full, the relevant amount is transferred to net profit in the Condensed Consolidated Statement of Profit and Loss. However when a change
in the parent's ownership does not result in loss of control of a subsidiary, such changes are recorded through equity.
Other Comprehensive Income, net of taxes includes translation
differences on non-monetary financial assets measured at fair value at the reporting date, such as equities classified as financial instruments
and measured at fair value through other comprehensive income (FVOCI).
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the exchange rate in effect
at the Balance Sheet date.
Government grant
The Group recognizes government grants only when there
is reasonable assurance that the conditions attached to them shall be complied with, and the grants will be received. Government grants
related to assets are treated as deferred income and are recognized in net profit in the Consolidated Statement of Profit and Loss on
a systematic and rational basis over the useful life of the asset. Government grants related to revenue are recognized on a systematic
basis in net profit in the Consolidated Statement of Profit and Loss over the periods necessary to match them with the related costs which
they are intended to compensate.
Other income for the three months ended June 30, 2024
and June 30, 2023 is as follows:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Interest income on financial assets carried at amortized cost |
|
|
| Tax free bonds and Government bonds |
30 |
34 |
| Deposit with Bank and others |
307 |
240 |
| Interest income on financial assets carried at fair value through other comprehensive income |
|
|
| Non-convertible debentures, commercial paper, certificates of deposit and government securities |
328 |
243 |
| Income on investments carried at fair value through profit or loss |
|
|
| Gain / (loss) on liquid mutual funds and other investments |
108 |
52 |
| Exchange gains / (losses) on forward and options contracts |
34 |
134 |
| Exchange gains / (losses) on translation of other assets and liabilities |
3 |
(137) |
| Miscellaneous income, net |
28 |
(5) |
| Total other income |
838 |
561 |
2.19 EXPENSES
Accounting policy
Gratuity and Pensions
The Group provides for gratuity, a defined benefit
retirement plan ('the Gratuity Plan') covering eligible employees majorly of Infosys and its Indian subsidiaries. The Gratuity Plan provides
a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective
employee's salary and the tenure of employment with the Group. The Company contributes Gratuity liabilities to the Infosys Limited Employees'
Gratuity Fund Trust (the Trust). In case of Infosys BPM and EdgeVerve, contributions are made to the Infosys BPM Employees' Gratuity Fund
Trust and EdgeVerve Systems Limited Employees' Gratuity Fund Trust, respectively. Trustees administer contributions made to the Trusts
and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by Indian law.
The Group operates defined benefit pension plan in
certain overseas jurisdictions, in accordance with the local laws. These plans are managed by third party fund managers. The plans provide
for periodic payouts after retirement and/or for a lumpsum payment as set out in rules of each fund and includes death and disability
benefits. The defined benefit plans require contributions which are based on a percentage of salary that varies depending on the age of
the respective employees.
Liabilities with regard to these defined benefit plans
are determined by actuarial valuation, performed by an external actuary, at each Balance Sheet date using the projected unit credit method.
These defined benefit plans expose the Group to actuarial risks, such as longevity risk, interest rate risk and market risk.
The Group recognizes the net obligation of a defined
benefit plan in its Balance Sheet as an asset or liability. Gains and losses through re-measurements of the net defined benefit liability
/ (asset) are recognized in other comprehensive income and are not reclassified to profit or loss in subsequent periods. The actual return
of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation
is recognized in other comprehensive income. The effect of any plan amendments is recognized in net profit in the Consolidated Statement
of Profit and Loss.
Provident fund
Eligible employees of Infosys receive benefits from
a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident
fund plan equal to a specified percentage of the covered employee's salary. The Company contributes a portion to the Infosys Limited Employees'
Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed
to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being
administered by the Government of India. The Company has an obligation to make good the shortfall, if any, between the return from the
investments of the trust and the notified interest rate.
In respect of Indian subsidiaries, eligible employees
receive benefits from a provident fund, which is a defined contribution plan. Both the eligible employee and the respective companies
make monthly contributions to this provident fund plan equal to a specified percentage of the covered employee's salary. Amounts collected
under the provident fund plan are deposited in a government administered provident fund. The Companies have no further obligation to the
plan beyond its monthly contributions.
Superannuation
Certain employees of Infosys, Infosys BPM and EdgeVerve
are participants in a defined contribution plan. The Group has no further obligations to the plan beyond its monthly contributions which
are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.
Compensated absences
The Group has a policy on compensated absences which
are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial
valuation performed by an external actuary at each Balance Sheet date using projected unit credit method on the additional amount expected
to be paid/availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated
absences is recognized in the period in which the absences occur.
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Employee benefit expenses |
|
|
| Salaries including bonus |
20,024 |
19,985 |
| Contribution to provident and other funds |
572 |
560 |
| Share based payments to employees (Refer to Note 2.12) |
211 |
146 |
| Staff welfare |
127 |
90 |
| |
20,934 |
20,781 |
| Cost of software packages and others |
|
|
| For own use |
588 |
489 |
| Third party items bought for service delivery to clients |
2,867 |
2,231 |
| |
3,455 |
2,720 |
| Other expenses |
|
|
| Repairs and maintenance |
334 |
324 |
| Power and fuel |
63 |
50 |
| Brand and marketing |
351 |
265 |
| Rates and taxes |
117 |
94 |
| Consumables |
49 |
44 |
| Insurance |
75 |
53 |
| Provision for post-sales client support and others |
(108) |
50 |
| Commission to non-whole time directors |
4 |
3 |
| Impairment loss recognized / (reversed) under expected credit loss model |
(3) |
91 |
| Contributions towards Corporate Social Responsibility |
171 |
70 |
| Others |
197 |
210 |
| |
1,250 |
1,254 |
2.20 Leases
Accounting Policy
The Group as a lessee
The Group’s lease asset classes primarily consist
of leases for land, buildings and computers. The Group assesses whether a contract contains a lease, at inception of a contract. A contract
is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange
for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the group assesses whether:
(1) the contract involves the use of an identified asset (2) the Group has substantially all of the economic benefits from use of the
asset through the period of the lease and (3) the Group has the right to direct the use of the asset.
At the date of commencement of the lease, the Group
recognizes a right-of-use asset (“ROU”) and a corresponding lease liability for all lease arrangements in which it is a lessee,
except for leases with a term of twelve months or less (short-term leases) and low value leases. For these short-term and low value leases,
the Group recognizes the lease payments as an operating expense on a straight-line basis over the term of the lease.
As a lessee, the Group determines the lease term as
the non-cancellable period of a lease adjusted with any option to extend or terminate the lease, if the use of such option is reasonably
certain. The Group makes an assessment on the expected lease term on a lease-by-lease basis and thereby assesses whether it is reasonably
certain that any options to extend or terminate the contract will be exercised. In evaluating the lease term, the Group considers factors
such as any significant leasehold improvements undertaken over the lease term, costs relating to the termination of the lease and the
importance of the underlying asset to Group’s operations taking into account the location of the underlying asset and the availability
of suitable alternatives. The lease term in future periods is reassessed to ensure that the lease term reflects the current economic circumstances.
Certain lease arrangements includes the options to
extend or terminate the lease before the end of the lease term. ROU assets and lease liabilities includes these options when it is reasonably
certain that they will be exercised.
The right-of-use assets are initially recognized at
cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date
of the lease plus any initial direct costs less any lease incentives. They are subsequently measured at cost less accumulated depreciation
and impairment losses.
Right-of-use assets are depreciated from the commencement
date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
Right-of-use assets are evaluated for recoverability
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment
testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual
asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the
recoverable amount is determined for the Cash Generating Unit (CGU) to which the asset belongs.
The lease liability is initially measured at amortized
cost at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease
or, if not readily determinable, using the incremental borrowing rates in the country of domicile of these leases. Lease liabilities are
remeasured with a corresponding adjustment to the related right-of-use asset if the Group changes its assessment if whether it will exercise
an extension or a termination option.
Lease liability and ROU asset have been separately
presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases for which the Group is a lessor is classified
as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the
lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
When the Group is an intermediate lessor, it accounts
for its interests in the head lease and the sublease separately. The sublease is classified as a finance or operating lease by reference
to the right-of-use asset arising from the head lease.
For operating leases, rental income is recognized on
a straight line basis over the term of the relevant lease.
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2024:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2024 |
605 |
3,298 |
17 |
2,632 |
6,552 |
| Additions* |
– |
273 |
3 |
284 |
560 |
| Deletions |
– |
– |
– |
(149) |
(149) |
| Depreciation |
(2) |
(181) |
(2) |
(248) |
(433) |
| Translation difference |
– |
(3) |
(1) |
(14) |
(18) |
| Balance as of June 30, 2024 |
603 |
3,387 |
17 |
2,505 |
6,512 |
* Net of adjustments on account of modifications.
Following are the changes in the carrying value of
right-of-use assets for the three months ended June 30, 2023:
(In crore)
| Particulars |
Category of ROU asset |
Total |
| |
Land |
Buildings |
Vehicles |
Computers |
|
| Balance as of April 1, 2023 |
623 |
3,896 |
15 |
2,348 |
6,882 |
| Additions* |
– |
244 |
2 |
557 |
803 |
| Deletions |
– |
(8) |
– |
(233) |
(241) |
| Depreciation |
(2) |
(184) |
(2) |
(192) |
(380) |
| Translation difference |
(4) |
(1) |
– |
(10) |
(15) |
| Balance as of June 30, 2023 |
617 |
3,947 |
15 |
2,470 |
7,049 |
* Net of adjustments on account of modifications
and lease incentives
The aggregate depreciation expense on ROU assets is
included under depreciation and amortization expense in the interim condensed Consolidated Statement of Profit and Loss.
The following is the break-up of current and non-current
lease liabilities as at June 30, 2024 and March 31, 2024:
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Current lease liabilities |
2,187 |
1,959 |
| Non-current lease liabilities |
6,174 |
6,400 |
| Total |
8,361 |
8,359 |
2.21 BASIC AND DILUTED SHARES USED IN COMPUTING
EARNINGS PER EQUITY SHARE
Accounting policy
Basic earnings per equity share is computed by dividing
the net profit attributable to the equity holders of the Group by the weighted average number of equity shares outstanding during the
period. Diluted earnings per equity share is computed by dividing the net profit attributable to the equity holders of the Group by the
weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number
of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares
are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the
outstanding equity shares). Dilutive potential equity shares are deemed converted as at the beginning of the period, unless issued at
a later date. Dilutive potential equity shares are determined independently for each period presented.
The number of equity shares and potentially dilutive
equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes
effected prior to the approval of the financial statements by the Board of Directors.
2.22 CONTINGENT LIABILITIES AND COMMITMENTS
Accounting policy
Contingent liability is a possible obligation arising
from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not
probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation
cannot be measured with sufficient reliability.
2.22.1 Contingent liability
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Contingent liabilities : |
|
|
| Claims against the Group, not acknowledged as debts(1) |
3,676 |
3,583 |
| [Amount paid to statutory authorities 6,135 crore (8,754 crore)] |
|
|
(1) As at June 30, 2024 and March
31, 2024, claims against the Group not acknowledged as debts in respect of income tax matters amounted to 2,854 crore and 2,794
crore, respectively.
The claims against the Group primarily represent demands
arising on completion of assessment proceedings under the Income Tax Act, 1961. These claims are on account of issues of disallowance
of expenditure towards software being held as capital in nature, payments made to Associated Enterprises held as liable for withholding
of taxes, among others. These matters are pending before various Income Tax Authorities and the Management including its tax advisors
expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Group's financial
position and results of operations.
Amount paid to statutory authorities against the tax
claims amounted to 6,122 crore and 8,743 crore as at June 30, 2024 and March 31, 2024, respectively.
2.22.2 McCamish Cybersecurity incident
In November 2023, certain systems of Infosys McCamish
Systems LLC (“McCamish”), a subsidiary of Infosys BPM Limited (a wholly owned subsidiary of Infosys Limited), were encrypted
by ransomware, resulting in the nonavailability of certain applications and systems. McCamish initiated its incident response and engaged
cybersecurity and other specialists to assist in its investigation of and response to the incident and remediation and restoration of
impacted applications and systems. By December 31, 2023, McCamish, with external specialists’ assistance, substantially remediated
and restored the affected applications and systems.
Actions taken by McCamish included investigative analysis
conducted by a third-party cybersecurity firm to determine, among other things, whether and the extent to which company or customer data
was subject to unauthorized access or exfiltration. McCamish also engaged a third-party eDiscovery vendor in assessing the extent and
nature of such data. McCamish in coordination with its third-party eDiscovery vendor has identified corporate customers and individuals
whose information was subject to unauthorized access and exfiltration. McCamish processes personal data on behalf of its corporate customers.
McCamish may incur additional costs including indemnities or damages/claims, which are indeterminable at this time. See the section titled
“Legal proceedings” below for information on certain legal proceedings related to the McCamish cybersecurity incident.
2.22.3 Legal Proceedings
On March 6, 2024, a class action complaint was filed
in the U.S. District Court for the Northern District of Georgia against McCamish. The complaint arises out of the cybersecurity incident
at McCamish initially disclosed on November 3, 2023. The complaint was purportedly filed on behalf of all individuals within the United
States whose personally identifiable information was exposed to unauthorized third parties as a result of the incident. On May 6, 2024,
McCamish filed a motion to dismiss the complaint.
On May 15, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of some or all individuals
whose personally identifiable information was compromised in the incident.
On June 3, 2024, the plaintiffs in the two class actions
filed a motion to consolidate the two cases. On June 4, 2024, the Court consolidated the two class actions and closed the class action
that was filed on May 15, 2024.
On July 8, 2024, another class action complaint arising
out of the same incident was filed in the same court against McCamish. The complaint was purportedly filed on behalf of all individuals
residing in the United States whose private information was accessed and/or acquired by an unauthorized party as a result of the incident.
Apart from the foregoing actions, the Group is subject
to legal proceedings and claims which have arisen in the ordinary course of business. The Group’s management reasonably expects
that such ordinary course 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.
2.22.4 Commitments
(In crore)
| Particulars |
As at |
| |
June 30, 2024 |
March 31, 2024 |
| Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)(1) |
968 |
780 |
| Other commitments* |
72 |
79 |
| (1) | | Capital contracts primarily comprises of commitments for infrastructure facilities and computer
equipment. |
| * | | Uncalled capital pertaining to investments |
2.23 RELATED PARTY TRANSACTIONS
Refer to the Company's Annual Report for the year ended
March 31, 2024 for the full names and other details of the Company's subsidiaries and controlled trusts.
Changes in Subsidiaries
During the three months ended June 30, 2024, the following
are the changes in the subsidiaries:
| . | | Danske IT and Support Services India Private Limited renamed as IDUNN Information Technology
Private Limited |
| . | | On May 10, 2024 Infosys Ltd. acquired 100% of voting interests in InSemi Technology Services
Private Limited along with its subsidiary Elbrus Labs Private Limited |
Changes in key management personnel
The following are the changes in the key management
personnel:
Executive Officers:
| - | | Jayesh Sanghrajka (appointed as Chief Financial Officer effective April 1, 2024) |
Transaction with key management personnel:
The table below describes the compensation to key management
personnel which comprise directors and executive officers:
(In crore)
| Particulars |
Three months ended June 30, |
| |
2024 |
2023 |
| Salaries and other short term employee benefits to whole-time directors and executive officers (1)(2) |
28 |
32 |
| Commission and other benefits to non-executive/independent directors |
4 |
4 |
| Total |
32 |
36 |
| (1) | | Total employee stock compensation expense for the three months ended June 30, 2024 and
June 30, 2023 includes a charge of 18 crore and 20 crore, respectively,
towards key management personnel (Refer to Note 2.12). |
| (2) | | Does not include post-employment benefits and other long-term benefits based on actuarial
valuation as these are done for the Company as a whole. |
2.24 SEGMENT REPORTING
Ind AS 108, Operating segments, establishes standards
for the way that public business enterprises report information about operating segments and related disclosures about products and services,
geographic areas, and major customers. The Group's operations predominantly relate to providing end-to-end business solutions to enable
clients to enhance business performance. The Chief Operating Decision Maker (CODM) evaluates the Group's performance and allocates resources
based on an analysis of various performance indicators by business segments. Accordingly, information has been presented along business
segments. The accounting principles used in the preparation of the financial statements are consistently applied to record revenue and
expenditure in individual segments, and are as set out in the accounting policies.
Business segments of the Group are primarily enterprises
in Financial Services and Insurance, enterprises in Manufacturing, enterprises in Retail, Consumer Packaged Goods and Logistics, enterprises
in the Energy, Utilities, Resources and Services, enterprises in Communication, Telecom OEM and Media, enterprises in Hi-Tech, enterprises
in Life Sciences and Healthcare and all other segments. The Financial services reportable segments has been aggregated to include the
Financial Services operating segment and Finacle operating segment because of the similarity of the economic characteristics. All other
segments represent the operating segments of businesses in India, Japan, China, Infosys Public Services & other enterprises in Public
Services.
Revenue and identifiable operating expenses in relation
to segments are categorized based on items that are individually identifiable to that segment. Revenue for 'all other segments' represents
revenue generated by Infosys Public services and revenue generated from customers located in India, Japan and China and other enterprises
in Public services. Allocated expenses of segments include expenses incurred for rendering services from the Group's offshore software
development centers and on-site expenses, which are categorized in relation to the associated efforts of the segment. Certain expenses
such as depreciation and amortization, which form a significant component of total expenses, are not specifically allocable to specific
segments as the underlying assets are used interchangeably. The Management believes that it is not practical to provide segment disclosures
relating to those costs and expenses, and accordingly these expenses are separately disclosed as "unallocated" and adjusted
against the total income of the Group.
Assets and liabilities used in the Group's business
are not identified to any of the reportable segments, as these are used interchangeably between segments. The Management believes that
it is currently not practicable to provide segment disclosures relating to total assets and liabilities since a meaningful segregation
of the available data is onerous.
Business segment revenue information is collated based
on individual customers invoiced or in relation to which the revenue is otherwise recognized.
Disclosure of revenue by geographic locations is given
in note 2.17 Revenue from operations.
Business Segments
Three months ended June 30, 2024 and June 30, 2023:
(In crore)
|
Particulars
|
Financial Services (1) |
Retail (2) |
Communication (3) |
Energy, Utilities, Resources and Services |
Manufacturing |
Hi-Tech |
Life Sciences (4) |
All other segments (5) |
Total |
| Revenue from operations |
10,816 |
5,428 |
4,744 |
5,220 |
5,778 |
3,147 |
2,866 |
1,316 |
39,315 |
| |
10,661 |
5,513 |
4,441 |
4,889 |
5,350 |
3,056 |
2,749 |
1,274 |
37,933 |
| Identifiable operating expenses |
6,088 |
2,697 |
3,114 |
2,715 |
3,783 |
1,783 |
1,757 |
751 |
22,688 |
| |
6,147 |
2,869 |
2,640 |
2,690 |
3,523 |
1,743 |
1,593 |
819 |
22,024 |
| Allocated expenses |
2,116 |
980 |
834 |
948 |
989 |
550 |
498 |
275 |
7,190 |
| |
1,969 |
1,015 |
817 |
909 |
855 |
511 |
454 |
315 |
6,845 |
| Segment operating income |
2,612 |
1,751 |
796 |
1,557 |
1,006 |
814 |
611 |
290 |
9,437 |
| |
2,545 |
1,629 |
984 |
1,290 |
972 |
802 |
702 |
140 |
9,064 |
| Unallocable expenses |
|
|
|
|
|
|
|
|
1,149 |
| |
|
|
|
|
|
|
|
|
1,173 |
| Other income, net (Refer to Note 2.18) |
|
|
|
|
|
|
|
|
838 |
| |
|
|
|
|
|
|
|
|
561 |
| Finance cost |
|
|
|
|
|
|
|
|
105 |
| |
|
|
|
|
|
|
|
|
90 |
| Profit before tax |
|
|
|
|
|
|
|
|
9,021 |
| |
|
|
|
|
|
|
|
|
8,362 |
| Income tax expense |
|
|
|
|
|
|
|
|
2,647 |
| |
|
|
|
|
|
|
|
|
2,417 |
| Net Profit |
|
|
|
|
|
|
|
|
6,374 |
| |
|
|
|
|
|
|
|
|
5,945 |
| Depreciation and amortization |
|
|
|
|
|
|
|
|
1,149 |
| |
|
|
|
|
|
|
|
|
1,173 |
| Non-cash expenses other than depreciation and amortization |
|
|
|
|
|
|
|
|
– |
|
|
|
|
|
|
|
|
|
– |
| (1) | | Financial Services include enterprises in Financial Services and Insurance |
| (2) | | Retail includes enterprises in Retail, Consumer Packaged Goods and Logistics |
| (3) | | Communication includes enterprises in Communication, Telecom OEM and Media |
| (4) | | Life Sciences includes enterprises in Life sciences and Health care |
| (5) | | Others include operating segments of businesses in India, Japan, China, Infosys Public
Services & other enterprises in Public Services |
Significant clients
No client individually accounted for more than 10%
of the revenues for the three months ended June 30, 2024 and June 30, 2023, respectively.
2.25 FUNCTION WISE CLASSIFICATION OF CONDENSED CONSOLIDATED
STATEMENT OF PROFIT AND LOSS
(In crore)
| Particulars |
Note No. |
Three months ended June 30, |
| |
|
2024 |
2023 |
| Revenue from operations |
2.17 |
39,315 |
37,933 |
| Cost of Sales |
|
27,177 |
26,382 |
| Gross profit |
|
12,138 |
11,551 |
| Operating expenses |
|
|
|
| Selling and marketing expenses |
|
1,937 |
1,783 |
| General and administration expenses |
|
1,913 |
1,877 |
| Total operating expenses |
|
3,850 |
3,660 |
| Operating profit |
|
8,288 |
7,891 |
| Other income, net |
2.18 |
838 |
561 |
| Finance cost |
|
105 |
90 |
| Profit before tax |
|
9,021 |
8,362 |
| Tax expense: |
|
|
|
| Current tax |
2.16 |
2,998 |
2,307 |
| Deferred tax |
2.16 |
(351) |
110 |
| Profit for the period |
|
6,374 |
5,945 |
| Other comprehensive income |
|
|
|
| Items that will not be reclassified subsequently to profit or loss |
|
|
|
| Remeasurement of the net defined benefit liability/asset, net |
|
20 |
87 |
| Equity instruments through other comprehensive income, net |
|
14 |
1 |
| |
|
34 |
88 |
| Items that will be reclassified subsequently to profit or loss |
|
|
|
| Fair value changes on derivatives designated as cash flow hedge, net |
|
(3) |
6 |
| Exchange differences on translation of foreign operations, net |
|
(104) |
15 |
| Fair value changes on investments, net |
|
40 |
75 |
| |
|
(67) |
96 |
| Total other comprehensive income / (loss), net of tax |
|
(33) |
184 |
| Total comprehensive income for the period |
|
6,341 |
6,129 |
| Profit attributable to: |
|
|
|
| Owners of the Company |
|
6,368 |
5,945 |
| Non-controlling interests |
|
6 |
– |
| |
|
6,374 |
5,945 |
| Total comprehensive income attributable to: |
|
|
|
| Owners of the Company |
|
6,337 |
6,132 |
| Non-controlling interests |
|
4 |
(3) |
| |
|
6,341 |
6,129 |
for and on behalf of the Board of Directors of Infosys Limited
|
|
Nandan M. Nilekani
Chairman |
Salil Parekh
Chief Executive Officer and Managing Director |
Bobby Parikh
Director |
| DIN: 00041245 |
DIN: 01876159
|
DIN: 00019437 |
|
Jayesh Sanghrajka
Chief Financial Officer |
A.G.S. Manikantha
Company Secretary |
|
|
Membership No. A21918 |
|
|
Bengaluru
July 18, 2024
|
Infosys (NYSE:INFY)
過去 株価チャート
から 6 2024 まで 7 2024
Infosys (NYSE:INFY)
過去 株価チャート
から 7 2023 まで 7 2024
