© infosys technologies limited 2002-2003 performance of infosys for the second quarter ended...

© Infosys Technologies Limited 2002-2003

Performance of Infosys for the Second Quarter ended September 30, 2002

Nandan M. NilekaniChief Executive Officer, President and Managing Director


Safe HarbourSafe 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, 2002 and Quarter Report on Form 6-K for the quarter ended June 30, 2002. This filing is 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.

© Infosys Technologies Limited 2002-2003 Slide 3

AgendaAgenda

Financial Performance

Operational Performance

Client Acquisition & Expansion of Services

Human Resources

Capex and Infrastructure

Outlook for the Future

Summary


Financial Performance


HighlightsHighlights

Q2 FY 03 Q1 FY 03 H1 FY 03

Indian GAAP*

Y-O-Y Growth Income 35.3% 24.8% 30.2%

PAT from ord. Activities 12.0% 14.1% 13.0%

US GAAP**

Y-O-Y Growth

Revenues 32.2% 19.7% 26.1%

Net income 13.1% 9.2% 11.2%

New clients 18 23 41

Repeat business 94.9% 98.5% 96.2%

Headcount

Gross addition 2,065 7722,837

Net addition 1,806 5662,372

Period end headcount 13,110 11,30413,110

* Non-consolidated

** Consolidated


Highlights (Indian GAAP*-Quarterly)Highlights (Indian GAAP*-Quarterly)

(Rs. crore)

FY2003 FY2003 FY 2002 % growth overQ2 Q1 Q2 Q1 03 Q2 02

Income 879.57 764.62 650.13 15.03 35.29

S/w development expenses 424.49 377.39 306.95 12.48 38.29

Gross profit 455.08 387.23 343.18 17.52 32.61

S,G&A expenses 131.84 112.30 84.27 17.40 56.45

Operating profit 323.24 274.93 258.91 17.58 24.85

Depreciation 46.24 40.48 39.01 14.23 18.53

Operating profit after depreciation 277.00 234.45 219.90 18.15 25.97

Other income 17.53 24.90 14.66 (29.60) 19.58

Provision for investment 23.76 - - - -

PBT 270.77 259.35 234.56 4.40 15.44

Provision for tax 45.00 42.50 33.00 5.88 36.36

PAT from ordinary activities 225.77 216.85 201.56 4.11 12.01

* Non-consolidated


Highlights (Indian GAAP*-Half-yearly)Highlights (Indian GAAP*-Half-yearly)

(Rs. crore)

FY2003 % FY 2002 % GrowthH1 H1

Income 1,644.19 100.0 1,262.65 100.0 30.2

S/w development expenses 801.88 48.8 592.51 46.9 35.3

Gross profit 842.31 51.2 670.14 53.1 25.7

S,G&A expenses 244.14 14.8 170.71 13.5 43.0

Operating profit 598.17 36.4 499.43 39.6 19.8

Depreciation 86.71 5.3 74.49 5.9 16.4

Operating profit after depreciation 511.46 31.1 424.94 33.7 20.4

Other income 42.42 2.6 28.15 2.2 50.7

Provision for investments 23.76 1.5 - - -

PBT 530.12 32.2 453.09 35.9 17.0

Provision for tax 87.50 5.3 61.50 4.9 42.3

PAT from ordinary activities 442.62 26.9 391.59 31.0 13.0

* Non-consolidated


Balance Sheet Summary*Balance Sheet Summary*

(Rs. crore)

Sep 30, 2002 % Sep 30, 2001 %

LIABILITIES

Shareholders’ funds 2,443.32 100 1,742.48 100

Total liabilities 2,443.32 100 1,742.48 100

ASSETS Fixed assets 753.53 31 713.65 41Investments 33.20 1 44.44 3Deferred tax assets 33.58 1 18.64 1Current assets Cash & equivalents 1,289.34 53 714.84 41 Accounts receivables 458.25 19 343.60 20 Other current assets 567.67 23 336.11 19Less: Current liabilities (692.25) (28) (428.80) (25)Net current assets 1,623.01 67 965.75 55Total assets 2,443.32 100 1,742.48 100* Non-consolidated


Region wise Revenue (%)Region wise Revenue (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q2 Q1 Q2 H1 H1

North America 73.8 72.3 71.1 73.1 71.6

Europe 16.5 19.3 18.9 17.8 19.4

India 2.5 1.8 1.8 2.2 2.2

Rest of the world 7.2 6.6 8.1 6.9 6.8

Total 100.0 100.0 100.0 100.0 100.0


Operational Performance


Utilization RatesUtilization Rates

80.2%78.9%84.2%

78.1%

0.0%

100.0%

Q1 FY 2003 Q2 FY 2003

Q1 FY 2003 78.9% 80.2%

Q2 FY 2003 78.1% 84.2%

Including training Excluding training


Revenues by Project type (%)Revenues by Project type (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q2 Q1 Q2 H1 H1

Fixed Price 36.1 35.5 29.9 35.8 28.5

Time & Materials 63.9 64.5 70.1 64.2 71.5

Total 100.0 100.0 100.0 100.0 100.0


Onsite-Offshore Revenue split (%)Onsite-Offshore Revenue split (%)

FY2003 FY2003 FY2002 FY 2003 FY 2002

Q2 Q1 Q2 H1 H1

Onsite 54.6 52.7 50.3 53.7 50.4

Offshore 45.4 47.3 49.7 46.3 49.6

Total 100.0 100.0 100.0 100.0 100.0


Customer ConcentrationCustomer Concentration

FY2003 FY2003 FY2002Q2 Q1 Q2

Top client contribution to revenues 5.9% 5.8% 6.4%

Top 5 client contribution to revenues 24.0% 23.6% 25.3%

Top 10 client contribution to revenues 37.9% 39.1% 39.7%

Million dollar clients* 92 83 84

Five million dollar clients* 28 28 22

Ten million dollar clients* 15 14 14

Twenty million dollar clients 5 6 5

Thirty million dollar clients 2 2 2

*LTM


Sep 30, 2002

5.9%

23.4%

68.8%

1.9%

0-30 31-60 61-90 >90

Sep 30, 2001

0.7%

74.9%

17.2%

7.2%

0-30 31-60 61-90 >90

AGE PROFILE

Accounts ReceivableAccounts Receivable

Sep 30, 2002 Sep 30, 2001

Days Sales Outstanding (LTM) 56 52


Other HighlightsOther Highlights

Software revenues in US dollar terms grew by 16.1% for the

quarter as compared to the quarter ended June 30, 2002.

Revenue growth comprised a volume growth of 11.7% and a

price growth of 4.4%, as compared to the quarter ended June

30, 2002


Client Acquisition & Expansion of Services


Client Acquisition & Expansion of ServicesClient Acquisition & Expansion of Services

Client acquisitions during the quarter were 18

Assisted companies in financial services sector to re-engineer systems

and processes using cutting-edge technology

Re-engineering the cash management application for a large financial

services enabler in the US

Helping one of the five largest asset management institutions in

Switzerland to re-engineer systems and framework for cost rationalisation

and other business benefits

New client wins include The Security Benefit Group of Companies, one of

the leading providers of retirement products and services in the US



Hi-tech companies are increasingly discovering the benefits of IT

management to improve supply chain efficiencies

Assisting one of the world’s leading hi-tech companies, to streamline

global order fulfilment and production though an improved supply chain

management system

Aided a worldwide leader in software, services and internet

technologies to benchmark its product performance and recommended

areas for improvement for the next generation of content management

products

New clients include Arrow Electronics, one of the world’s largest

distributors of electronic components and computer products and Cerebrus

Solutions, provider of fraud management solutions for wireless operators



Strengthened presence in the manufacturing sector

Helping Porsche AG, the world leader in designing and manufacturing of sports cars, to streamline and optimise its engineering business processes

Chosen by Commonwealth Industries, an aluminium manufacturer in the US, to help streamline business and IT processes as well as design and rollout its ERP system

Wins in retail sector Partnered with a global leader in the personal expressions industry to

enhance productivity and supply chain efficiency by leveraging wireless technologies

Developed and deployed a purchase order management system for a leader in the retain industry in the US in shifting from store-based purchasing to centralised purchasing

Chosen by Vcommerce, a leading supply chain execution solutions provider, to develop a new platform product supporting many-to-many relationships between buyers and suppliers



Health and Medical care sectorContinued to deepen its relationship with a leading biomedical

organisation in the US by implementing earlier recommendations of developing mission-critical business applications and defining the enterprise technology architecture.

Helping one of the largest Health Maintenance Organisations in the US to conceptualize and develop an e-enabled online application



Consultancy Services

Defined next steps to improve operations and support expansion plans of the

corporate finance division of one of the top three banks in Australia

Created a divisional Balanced Scorecard for the human resources and

customer facing units of the fifth largest ocean transportation company in

the world to help them achieve a strategic objective roadmap

Designed and planned the implementation of a new IT organisational model

for a Fortune 100 financial services company


Banking ProductsBanking Products

Strengthened its leading position in Nigeria through an alliance with

Kakawa Discount, who will leverage Infosys’ FinacleTM Core Banking

and BankAwayTM Retail and Corporate to derive business advantage

UTI Bank became the first client to sign up for the Infosys Loan

Origination System built on Finacle CRM infrastructure

First Bank of Nigeria, the largest commercial bank in West Africa,

signed up for Infosys’ banking units with a mandate to take Finacle to

over 50% of its 300 branches.


Human Resources


Human ResourcesHuman Resources

Total employee strength at 13,110 as on September 30, 2002, up from 11,304

as on June 30, 2002

Net addition of 1,806 employees during the quarter as compared to 566 during

the quarter ended June 30, 2002

Gross addition of employees during the quarter was 2,065, out of which 328

were laterals

11,892 software professionals as on September 30, 2002, up from 9,944 as on

June 30, 2002

Of these software professionals, 514 belong to the Banking Business Unit


Capex and Infrastructure


Capex and InfrastructureCapex and Infrastructure

Capital expenditure of Rs. 44.02 cr was incurred during the quarter

As of September 30, 2002, the company had 30,02,350 sq. ft of space capable of accommodating 14,600 professionals and 5,91,400 sq. ft under completion


Outlook for the Future


Indian GAAPIndian GAAP

Guidance increased for revenue and EPS

Quarter ending Dec 31, 2002

Income from software development services and products is projected to be between Rs. 890 cr to Rs. 904 cr

Earnings per share is expected to be between Rs. 37 and Rs. 38

Fiscal year ending March 31, 2003

Income from software development services and products is projected to be between Rs. 3,433 cr to Rs. 3,467 cr

Earnings per share is expected to be between Rs. 142 to Rs. 145


Summary


SummarySummary

Increased guidance for Fiscal 2003

Robust growth in an uncertain environment

Declared an interim dividend of 250%

Improved utilization rates during the quarter

Margins maintained despite higher onsite revenues

Continued investment in marketing

Adequate provisions made on investments due to challenging market conditions and the state of the industry in which the investee companies operate

Economic environment continues to be challenging


Thank You

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