Performance of Infosys for the Third Quarter
ended December 31, 2001
Nandan M. Nilekani
Managing Director, President
and Chief Operating Officer
10-January-2002
Safe Harbour
Certain statements in this release concerning our future growth prospects are
forward-looking statements which involve a number of risks and uncertainties that
could cause actual results to differ materially from those in such forward-looking
statements. The risks and uncertainties relating to these statements include, but are
not limited to, risks and uncertainties regarding fluctuations in earnings, our ability
to manage growth, intense competition in IT services including those factors which
may affect our cost advantage, wage increases in India, our ability to attract and
retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time
frame contracts, client concentration, restrictions on immigration, our ability to
manage our international operations, reduced demand for technology in our key
focus areas, disruptions in telecommunication networks, our ability to successfully
complete and integrate potential acquisitions, liability for damages on our service
contracts, the success of the companies in which Infosys has made strategic
investments, withdrawal of governmental fiscal incentives, political instability, legal
restrictions on raising capital or acquiring companies outside India, and
unauthorized use of our intellectual property and general economic conditions
affecting our industry. Additional risks that could affect our future operating results
are more fully described in our United States Securities and Exchange Commission
filings including our Annual Report on Form 20-F for the fiscal year ended
March 31, 2001 and quarterly report on Form 6-K for the quarters ended June 30 and
September 30, 2001. 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 statement that may be made from time to time by or on
behalf of the company.
Agenda

Financial Performance

Operational Performance

Client acquisition and significant projects undertaken

Human resources

Infrastructure

Outlook for the future
Financial Performance
The Quarter at a Glance (Indian GAAP)
660.81
537.07
Q3 01
648.35
529.24
Q3 02
Total income
(Rs.cr)
Q3 01
267.45
217.46
Q3 02
Exports
(Rs.cr)
Q3 01
Q3 02
Operating profit
(Rs.cr)
The Quarter at a Glance (Indian GAAP)
31.14
206.04
241.04
25.14
166.33
185.83
Q3 01
Q3 02
PBT
(Rs.cr)
Q3 01
Q3 02
PAT
(Rs.cr)
Q3 01
Q3 02
Basic EPS
(Rs)
Highlights

Q3 FY 02
Q2 FY 02
9 Months FY 02
23.0%
23.9%
45.7%
30.9%
43.7%
35.3%
33
28
87
85.7%
90.0%
90.2%
Indian GAAP

Y-O-Y Growth


Income
PAT from ord. activities

New clients

Repeat business

Headcount

Gross addition
219
833
1367

Net addition
109
607
832

Period end headcount
10,663
10,554
10,663
Highlights (Indian GAAP)
(Rs.cr)
FY2002
Q3
FY2002
Q2
FY2001
Q3
Income
660.81
650.13
537.07
1.6
23.0
S/w development expenses
309.50
306.95
250.14
0.8
23.7
Gross profit
351.31
343.18
286.93
2.4
22.4
S,G&A expenses
83.86
84.26
69.47
(0.5)
20.7
Operating profit
267.45
258.92
217.46
3.3
23.0
41.34
39.02
33.02
5.9
25.2
226.11
219.90
184.44
2.8
22.6
14.93
14.66
14.47
1.8
3.2
-
-
(13.08)
-
-
241.04
234.56
185.83
2.8
29.7
35.00
33.00
19.50
6.1
79.5
206.04
201.56
166.33
2.2
23.9
Depreciation
Operating profit after
depreciation
Other income
Provision for investments
PBT
Provision for tax
PAT from ordinary activities
% growth over
Q2 02
Q3 01
Highlights (Indian GAAP)
(Rs.cr)
% Growth
FY2002
9 Months
%
FY2001
9 Months
1923.46
100.0
1338.70
100.0
43.7
902.01
46.9
625.57
46.7
44.2
1021.45
53.1
713.13
53.3
43.2
S,G&A expenses
254.57
13.2
181.61
13.6
40.2
Operating profit
766.88
39.6
531.52
39.7
44.3
Depreciation
115.83
6.0
74.99
5.6
54.5
Operating profit after
depreciation
651.05
33.8
456.53
34.1
42.6
43.08
2.2
49.16
3.7
(12.4)
-
-
(13.08)
(1.0)
-
694.13
36.1
492.61
36.8
40.9
96.50
5.0
50.96
3.8
89.4
597.63
31.1
441.65
33.0
35.3
-
-
5.49
0.4
-
597.63
31.1
447.14
33.4
33.7
Income
S/w development expenses
Gross profit
Other income
Provision for investments
PBT
Provision for tax
PAT from ordinary activities
Extraordinary items
Net profit after ext. items
Balance Sheet Summary
(Rs.cr)
Dec 31, 01
%
Dec 31, 00
%
Shareholders’ funds
1,949.93
100
1,261.09
100
Total liabilities
1,949.93
100
1,261.09
100
Fixed assets
725.29
37
457.23
36
Investments
44.44
2
36.33
3
Deferred tax assets
22.33
1
-
-
Cash & equivalents
866.35
45
517.75
41
Accounts receivables
310.53
16
303.96
24
Other current assets
377.79
19
202.72
16
Less: Current liabilities
(396.80)
(20)
(256.90)
(20)
Net current assets
1,157.87
60
767.53
61
Total assets
1,949.93
100
1,261.09
100
LIABILITIES
ASSETS
Current assets
Region wise Revenue (%)
FY2002
Q3
FY2002
Q2
North America
70.9%
71.1%
73.6%
71.4%
Europe
19.4%
18.9%
18.8%
India
1.9%
1.8%
Rest of
the world
7.8%
100.0%
Total
FY2001
FY2002
FY2001
Q3 9 Months 9 Months
LTM
Dec 01
LTM
Dec 00
74.3%
71.4%
74.9%
19.4%
18.1%
19.6%
17.7%
1.5%
2.1%
1.3%
2.0%
1.4%
8.2%
6.1%
7.1%
6.3%
7.0%
6.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
LTM – Last Twelve Months
Operational Performance
Highlights

Software revenues in US dollar terms grew by 0.2% for the
current quarter as compared to the quarter ended
September 30, 2001. Revenue growth comprised volume
growth of 3.4% offset by a price decline of 3.2%
Utilization Rates
80.0
70.0
69.6
68.8
72.7
72.7
60.0
50.0
40.0
30.0
20.0
10.0
0.0
Including trainees
Excluding trainees
Q2 FY 2002
68.8
72.7
Q3 FY 2002
69.6
72.7
Q2 FY 2002
Q3 FY 2002
Revenues by Project type
FY2002
Q3
FY2002
Q2
Fixed Price
35.1%
29.9%
29.4%
30.7%
Time & Materials
64.9%
70.1%
70.6%
100.0%
100.0%
100.0%
Total
FY2001
FY2002 FY 2001
Q3 9 Months 9 Months
LTM
Dec 01
LTM
Dec 00
28.0%
30.2%
28.9%
69.3%
72.0%
69.8%
71.1%
100.0%
100.0%
100.0%
100.0%
LTM – Last Twelve Months
Onsite-Offshore Revenue split
FY2002
Q3
FY2002
Q2
FY2001
Q3
FY2002
9 Months
FY2001
9 Months
LTM
Dec 01
LTM
Dec 00
Onsite
49.9%
50.3%
51.4%
50.3%
52.8%
49.8%
52.2%
Offshore
50.1%
49.7%
48.6%
49.7%
47.2%
50.2%
47.8%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
Total
LTM – Last Twelve Months
Customer Concentration
FY2002
Q3
FY2002
Q2
FY2001
Q3
FY2002
9 Months
FY2001
9 Months
5.5%
6.4%
7.7%
6.2%
7.5%
Top 5 client contribution
to revenues
24.1%
25.3%
28.1%
24.6%
25.9%
Top 10 client contribution
to revenues
38.3%
39.7%
42.5%
39.7%
38.5%
Million dollar clients*
90
84
77
90
77
Five million dollar clients*
24
22
15
24
15
Ten million dollar clients*
13
14
6
13
6
Top client contribution
to revenues
LTM – Last Twelve Months
Diversifying Customer Risk
293
270
299
240
210
180
150
120
90
60
30
28
33
Q2 FY 2002
Q3 FY 2002
0
New Customers
Active Clients
Accounts Receivables
Year
AR
(mn$)
% of
Revenue
DSO
Dec 31, 2001
64.51
12.1
44
Dec 31, 2000
65.10
17.0
62
Mar 31, 2001
64.94
15.9
58
Client Acquisition and
Significant Projects Undertaken
Software Services

Client acquisitions during the quarter was 33 as compared to 28 in
the previous quarter

Established new alliances with world leaders in various domains
including manufacturing, retail and financial services

To help SunAmerica transform its legacy Policy Administration
System to a new web-based architecture

Creating a roadmap and an implementation plan for an Enterprise
Portal for a banking, insurance and asset management leader in
Europe that is one of the largest global financial conglomerates

Clients added in the retail segment include Target Corporation,
America’s fourth largest general merchandise retailer
Software Services

Won an engagement from the largest independent supplier of heating,
ventilating, air conditioning and refrigeration equipment in the US

Assisting the European operations of a leading Fortune 500
electronics and hi-technology products manufacturer in developing
an end-to-end solution for its executive level reporting

The Hertsmere Borough Council of National Health Service, UK was
added to the client portfolio with a business consulting engagement

Infosys is the only Indian company to be included in the UK
Government’s single-window Services Catalogue (S-Cat) aimed at
government departments who wish to purchase IT services

Signed up with a Fortune 500 company that is a world leader among
air express delivery carriers
Software Services

Chosen to work with Texas Instruments, the world leader in real-time
technologies

Successfully designed, developed and deployed an online insurance
loyalty portal for a large Fortune 100 insurance company in Japan

Successfully implemented a web-based online funds transfer
application for an insurance industry major

Partnered with Aizawa Koatsu Concrete KK, to develop new
applications including logistics management and sales and
purchase systems
Banking Products
TM

Infosys’ core banking solution, Finacle was implemented in
Cosmos Cooperative Bank, one of India’s oldest banks, and ABN
India

Entered into an agreement with ICICI to offer India’s first end-to-end
financial fulfilment product, enabling online financial transactions
between enterprises

Forged a strategic partnership with Accenture, Nigeria, for delivery
of services and solutions
Human Resources
Human Resources

Total employees strength at 10,663 as on December 31, 2001, up
from 9,831 as on March 31, 2001 and 8,910 as on December 31, 2000

Net addition of 109 employees during the quarter as compared to
607 during the quarter ended September 30, 2001

151 lateral employees joined during the quarter

9,361 software professionals as on December 31, 2001, up from
8,656 as on March 31, 2001 and 7,824 as on December 31, 2000
Infrastructure
Infrastructure

Capital expenditure of Rs. 53.05 cr was incurred during
the quarter

As of December 31, 2001, the company had 22,39,500 sq. ft of
space capable of accommodating 11,350 professionals and
13,00,000 sq. ft under construction including the Infosys
Leadership Institute
Outlook for the Future
Indian GAAP


Quarter ending March 31, 2002

Income from software development services and products expected
to be between Rs. 636 cr and Rs. 660 cr

Earnings per share expected to be between Rs. 30.00 and
Rs. 32.00
Fiscal year ending March 31, 2002

Income from software development services and products expected
to be between Rs. 2,560 cr and Rs. 2,584 cr

Earnings per share expected to be between Rs. 120.00 and
Rs. 122.00
Summary
Summary

Reported a comfortable quarter

Pricing pressure continues

Business environment remains challenging

Effective cost management

Established new alliances with world leaders in various domains

Prepared to seize business opportunities
Thank You