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© Infosys Technologies Limited 2006-07
Financial Performance 2006-07
V. BalakrishnanChief Financial Officer
© Infosys Technologies Limited 2006-07
Safe harbor
Certain statements made here concerning Infosys’ 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, 2007 and the Quarterly Reports on Form 6-K for the fiscal quarters ended June 30, 2006, September 30, 2006 and December 31,2006. 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.
© Infosys Technologies Limited 2006-07
Highlights
» Revenues of US $3 billion in Fiscal 2007
» Revenue growth of 44% in dollar terms and 46% in rupee terms as against our guidance of 28-30% in April 2006
» Recommended a final dividend of Rs. 6.50 per share (130% on par value of Rs. 5 per share) amounting to Rs. 371 crores. Including Interim dividend, the total dividend recommended for the year is Rs. 11.50 per share (230% on par value of
Rs. 5 per share) amounting to Rs. 649 crores
» Added 160 clients during the year
» Net addition of 19,526 employees
» Award for the best presented Annual Report for fiscal 2006 received from The Institute of Chartered Accountants of India (ICAI) for the 11th consecutive year
© Infosys Technologies Limited 2006-07
Sponsored Secondary ADS Program
» Completed sponsored secondary offering of ADS in Nov 2006 – size of USD 1.6 billion, the largest international equity offering from India at that time
» Included in NASDAQ Global Select Market in July 2006
» First Indian company to be added to the NASDAQ-100 Index and the only Indian company to be part of any major global indices
© Infosys Technologies Limited 2006-07
A great year – Growth exceeded our expectations
Guidance Actual
Revenue (Q1) Rs. Cr. 2,793 – 2,816 3,015
EPS 12.38 – 12.60 14.36
Revenue (Q2) Rs. Cr. 3,257 – 3,280 3,451
EPS 14.73 – 14.89 16.75
Revenue (Q3) Rs. Cr. 3,602 – 3,625 3,655
EPS 16.84 17.64
Revenue (Q4) Rs. Cr. 3,789 – 3,798 3,772
EPS 17.88 20.30
© Infosys Technologies Limited 2006-07
Revenue and profit grew faster…
9,521
13,893
2006 2007
Revenues (Rs. Cr.)
4,455
6,435
2006 2007
Gross profit (Rs. Cr.)
3,091
4,391
2006 2007
Operating profit (Rs. Cr.)
2,458
3,726
2006 2007
Net profit* (Rs. Cr.)
Based on consolidated Indian GAAP Financials* Net profit after tax and minority interest, before exceptional item and tax reversals
46%
44%
42%
52%
© Infosys Technologies Limited 2006-07
…While margins were maintained.
46.8
46.3
2006 2007
Gross profit (%)
32.5
31.6
2006 2007
Operating profit (%)
25.8
26.8
2006 2007
Net profit* (%)
* Net profit after tax and minority interest, before exceptional item and tax reversals
© Infosys Technologies Limited 2006-07
Business mix became richer….
Increased contribution from new services (% to total revenue)
2003 2004 2005 2006 2007
Package Implementation 11.0% 14.5% 15.2% 16.2% 17.5%
Testing 3.4% 5.3% 5.8% 5.9% 6.9%
Consulting 4.3% 3.7% 3.6% 3.5% 3.6%
Business Process Management
0.5% 1.6% 2.7% 4.0% 4.7%
Engineering Services 2.6% 2.2% 2.0% 1.8% 1.6%
Other services 7.8% 8.1% 8.4% 9.7% 9.4%
Total 29.6% 35.4% 37.7% 41.1% 43.7%
© Infosys Technologies Limited 2006-07
…resulting in higher revenue productivity.
Variation in per-capita revenues (in US$ terms)
2003 2004 2005 2006 2007
Onsite (2.5)% (2.9)% 0.2% 0.3% 4.4%
Offshore (4.7)% (2.6)% 1.3% 0.8% 2.7%
Blended (0.8)% (5.0)% (1.0)% 0.7% 4.9%
© Infosys Technologies Limited 2006-07
We continued to leverage the Global Delivery Model
2006 2007
Effort mix (%)
Onsite 31.7 32.9Offshore 68.3 67.1
Total 100.0 100.0
Billed person months
Onsite 95,675 134,767
Offshore 206,579 274,989
Total 302,254 409,756Change in billed person months (%)
Onsite 32.1 40.9
Offshore 30.9 33.1
Total 31.3 35.6
Utilization rates
Including trainees (%) 71.0 69.1
Excluding trainees (%) 78.1 77.1
© Infosys Technologies Limited 2006-07
Wages increased during the year
2006 2007
Wage increase – Offshore 15% 15%
– Onsite 3% 3%
Onsite salaries (% to revenues) 32.9% 32.4%
Offshore salaries (% to revenues) 14.5% 15.6%
Variable salaries (Rs. Cr.) 427 599
Variable salary as a % of offshore salary 25.3% 24.9%
© Infosys Technologies Limited 2006-07
The G&A expenses were under control
2006 2007
General & Administration expenses (Rs. Cr.) 764 1,115
General & Administration cost / revenue (%) 8.0% 8.0%
G&A personnel 2,776 3,548
Total no. of employees 52,715 72,241
% to total employees 5.3% 4.9%
© Infosys Technologies Limited 2006-07
We continued to invest for growth
2006 2007
1) Sales & Marketing expenses (Rs. Cr.) 600 929
Selling & Marketing expenses / revenues (%) 6.3 6.7
Sales & Marketing employees (No.) 444 537
Marketing offices (No.) 37 43
2) R&D Expenses (Rs. Cr.) 102 167
3) Losses in subsidiaries :
China (17) (29)
Consulting (36) (111)
© Infosys Technologies Limited 2006-07
The currency moved favorably
2006 2007
Average rupee dollar rate
This Year 44.21 45.06
Previous Year 44.87 44.21
% change (1.5%) 1.9%
Period end rupee dollar rate
This Year 44.48 43.10
Previous Year 43.62 44.48
% change 2.0% (3.1%)
Forward contracts and options
outstanding as at March 31 ($ Mn) 350 470
Transaction & translation losses (Rs. Cr.) (8) (21)
Benefit due to hedging (Rs. Cr.) (69) 63
Net impact (Rs. Cr.) (77) 42
© Infosys Technologies Limited 2006-07
The end result
2006 % 2007 %
Income 9,521 100% 13,893 100%
Software development and BPM expenses 5,066 53% 7,458 54%
GROSS PROFIT 4,455 47% 6,435 46%
Selling and marketing expenses 600 6% 929 7%
General and administration expenses 764 8% 1,115 8%
Operating profit before interest and depreciation 3,091 32% 4,391 32%
Interest – – – –
Depreciation 437 5% 514 4%
Operating profit after interest, depreciation and amortization 2,654 28% 3,877 28%
Other income 139 1% 372 3%
Provision for investments 1 0% 2 0%
NET PROFIT BEFORE TAX 2,792 29% 4,247 31%
Provision for taxation 313 3% 386 3%
NET PROFIT AFTER TAX 2,479 26% 3,861 28%
Exceptional item – – 6 –
NET PROFIT AFTER TAX, EXCEPTIONAL
ITEM & BEFORE MINORITY INTEREST 2,479 26% 3,867 28%
Minority interest 21 – 11 –
NET PROFIT AFTER TAX, EXCEPTIONAL ITEM & MINORITY INTEREST 2,458 26% 3,856 28%
© Infosys Technologies Limited 2006-07
We have a Healthy Balance Sheet
Rs. Cr. 2007 % 2006 %
SOURCES OF FUNDS
Share capital 286 2 138 2
Reserves and surplus 10,969 97 6,828 97
Minority interest 4 1 68 1
Total 11,259 100 7,034 100
APPLICATION OF FUNDS
Fixed assets 3,771 33 2,226 32
Investments – – 2 –
Deferred tax assets 92 1 65 1
Sundry debtors 2,436 22 1,608 23
Cash & equivalents 6,073 54 4,709 66
Other current assets 1,037 9 770 11
Current liabilities (2,150) (19) (2,346) (33)
Total 11,259 100 7,034 100We continue to be a zero-debt company
© Infosys Technologies Limited 2006-07
2007
36.70%
2.10%2.70%
58.50%
2006
61.10%
4.40%3.20%
31.30%
We exercise tight control over receivables
Age profile of accounts receivable
0 – 30 31– 60 61 – 90 > 90
Days of sales receivable – 64 daysDays of sales receivable – 61 days
© Infosys Technologies Limited 2006-07
We continue to balance between liquidity and profitability
* Cash and cash equivalents include investments in liquid mutual funds
** Excluding Silver Jubilee special dividend in 2006
Target 2005 2006 2007
ROCE (%) 51.4% 44.9% 45.7%
Times cost of capital 2.0 3.8 3.5 3.1
ROIC (%) 123.6% 94.0% 89.1%
Times cost of capital 3.0 9.1 7.3 6.0
Days sales outstanding 60 67 61 64
Cash & cash equivalents / total assets *
40.0% 54.4% 64.7% 50.6%
Cash & cash equivalents / revenue *
25.0% 41.6% 49.4% 43.0%
Dividend % (% to net profits)** Upto 20% 18.5 19.4 19.9
© Infosys Technologies Limited 2006-07
Our revenues are well diversified
FY 00
21%
23%15%
11%
30%
FY 07
20%37%
10%
19% 14%
FY 00
78%
6%1%15%
Revenue by Industry Vertical
Insurance, Banking & Financial ServicesManufacturingTelecomRetailOthers
Revenue by Geography
North AmericaEuropeIndiaRest of the World
FY 07
63%
9%2%
26%
© Infosys Technologies Limited 2006-07
The power of the intangibles
2005 2006 2007
Average age of employees (years) 26.0 26.0 26.0
Education index 100,351 148,499 203,270
Women employees / total employees (%) 24.9% 27.6% 30.9%
Attrition (%) 9.7 11.2 13.7
HR value (Rs. Cr.) 28,334 46,637 57,452
Brand value (Rs. Cr.) 14,153 22,915 31,617
EVA (Rs. Cr.) 1,132 1,540 2,122
Value added (Rs. Cr.) 6,053 8,030 11,879
R&D expenditure (Rs. Cr.) 74 102 167
R&D expenditure / revenue (%) 1.08 1.07 1.20
© Infosys Technologies Limited 2006-07
Performance of subsidiaries
Infosys BPO Limited
Formed Apr 2002
Investment (Rs. Cr.) 637
Holding (%) – Mar 2007 98.92
Shares Buyback in FY 2007– Citicorp– IBPO employees
87,50,000
2,11,909
FY07 Revenue (Rs. Cr.) 662
FY07 PAT (Rs. Cr.) 152
FY07 PAT % 22.9
Y-o-Y Growth Revenue % 74.7
Y-o-Y Growth PAT % 63.4
Employees as of March 31, 2007 11,226
© Infosys Technologies Limited 2006-07
Performance of subsidiaries
Infosys Technologies (Australia) Pty Limited
Acquired Jan 2004
Investment (Rs. Cr.) 66
Holding (%) – Mar 2007 100.00
FY07 Revenue (Rs. Cr.) 446
FY07 PAT (Rs. Cr.) 71
FY07 PAT % 15.9
Y-o-Y Growth Revenue % 39
Y-o-Y Growth PAT % 294
Employees as of March 31, 2007 306
© Infosys Technologies Limited 2006-07
Performance of subsidiaries
Infosys Technologies (China) Co. Limited Formed Oct 2003Investment (Rs.Cr.) 46Holding (%) – Mar 2007 100.00FY07 Revenue (Rs.Cr.) 60FY07 PAT (Rs.Cr.) (29)Employees 669
© Infosys Technologies Limited 2006-07
Performance of subsidiaries
Infosys Consulting Inc.,
Formed Apr 2004
Investment (Rs.Cr.) 90
Holding (%) – Mar 2007 100.00
FY07 Revenue (Rs.Cr.) 213
FY07 PAT (Rs.Cr.) (111)
Employees 209
© Infosys Technologies Limited 2006-07
Financial statements - US GAAP
© Infosys Technologies Limited 2006-07
Financial highlights
2,152
3,090
2006 2007
Revenues
908
1,313
2006 2007
Gross profit
599
852
2006 2007
Operating income
555850
2006 2007
Net income
44%
45%
42%
53%
( US$ Million )
© Infosys Technologies Limited 2006-07
Financial highlights
42.2
42.5
2006 2007
Gross profit (%)
27.8
27.6
2006 2007
Operating income (%)
25.8
27.5
2006 2007
Net income (%)
© Infosys Technologies Limited 2006-07
RISK MANAGEMENT
© Infosys Technologies Limited 2006-07
Infosys’ unified view of the Risk Universe
- Regulatory dynamics - Contractual compliance - IP management - Contractual exposures - Data security management - Litigation/violation response
- Operations planning - Complex execution management - Execution excellence - Contingency planning - Systems & processes
- Talent supply management - Scalability of infrastructure - Talent development - Deployment efficiency - Career Value Management
- Vendor selection - Supply-chain management - Vendor exposure - Customer exposure - Credit management - Customer concentration
- Geopolitical change - Industry & market dynamics - Technical innovation - Access to capital - Competition intensity - Market selection
- Planning effectiveness - Service differentiation - Growth engines - Brand and reputation - Leadership - Execution of strategy
Strategy
Industry
Counter-party
Resources
Operations
Compliance
Info
rmati
on fo
r dec
isio
n-m
akin
g
© Infosys Technologies Limited 2006-07 © Infosys Technologies Limited 2005-06
Thank You
© Infosys Technologies Limited 2006-07