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Annual General Meeting © Infosys Technologies Limited 2002-2003 Financial Performance 2002 - 2003 V. Balakrishnan Company Secretary and Vice President - Finance
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 This presentation may contain certain forward looking statements. The company may not achieve results as expressed or implied by such forward looking statements. Actual results could differ materially from those expressed or implied in such forward looking statements due to a number of factors including those discussed under the head "Risk factors" in the company's filings with the United States Securities and Exchange Commission. Do not place undue reliance on these forward looking statements. This presentation contains references to findings of various reports available in the public domain. The company makes no representation as to their accuracy or that the company subscribes to those findings. They are provided only by way of information.
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Highlights »Achieved a revenue growth of 38% ( in $ terms ) as against our guidance of 18% in April 2002 »92 clients added during the year »Net addition of 4,618 employees during the year »Progeon achieved break-even in Q4 »Dividend Payout at 20% ( Rs. 27 per share – 540% on par value of Rs. 5 ) as compared to 17% in the previous year
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 1,379 1,809 The year at a glance 2,604 3,623 Income (Rs.cr) 39% 2,552 3,544 Export Income (Rs.cr) Gross Profit (Rs.cr) 39% 200220032002200320022003 31%
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 The year at a glance 1,038 1,272 Operating Profit (Rs.cr) 943 1,159 PBT (Rs.cr) 808 958 PAT (Rs.cr) 23% 19% 200220032002200320022003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 The year at a glance 53% 50% Gross Profit (%) Operating Profit (%) PAT (%) 40% 35% 31% 26% 200220032002200320022003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 The most challenging year Continued pricing pressure In $ terms FY99FY00FY01 FY02FY03 Revenue growth (%) 77.068.2103.4 31.737.6 of which Volume growth (%) 50.349.662.034.2 42.6 Price growth (%) 26.718.641.4(2.5) (5.0)
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 The most challenging year Stronger rupee FY 2002FY 2003 Re - USD rate as at 31 st March48.7947.53
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 The most challenging year »SARS and Iraq war »Weak US economic environment »Increased competition from global players
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We responded to the challenge… Strong volume growth and Increased utilization FY 99FY 00FY 01FY 02FY 03 Increase in billed person months Onsite 2,4505,2447,8424,748 12,596 Offshore 5,7075,00613,61816,796 17,893 Total 8,15710,25021,46021,544 30,489 Change in billed person months (%) Onsite 63.082.767.724.4 52.1 Offshore 42.826.356.644.6 32.8 Total47.340.460.237.738.8 Utilization rates Including trainees (%)78.472.967.470.177.6 Excluding trainees (%)88.279.478.372.982.2
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We responded to the challenge… Moved to a higher variable compensation structure FY 2002FY 2003Growth % Revenues ( Rs. crore )2,6043,62339% Total Employee Cost ( Rs. crore )1,1181,677 Total Man-months ( Nos. )1,24,352 1,54,304 Average Per-Capita Cost ( Rs. )89,896 1,08,690 21%
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We responded to the challenge… Spent more on sales and marketing infrastructure FY 2002FY 2003 Marketing offices (Nos.)2830 Employees (Nos.)143280 Brand Building (Rs. cr)1329 Brand Building exp/Revenue (%)0.5%0.8% Total Sales & Marketing cost4.99% 7.37% (as a % to revenue)
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We responded to the challenge… Tight control on General & Administration expenditure FY 2002FY 2003 Total General & Administration cost8.12% 7.46% (as a % to revenue) Total No. of Employees10,738 15,356 G&A Personnel874 1,069 % to Total Employees8.13% 6.96%
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We responded to the challenge… Started actively hedging the net forex receivables ($ mn) FY 2002FY 2003 Forward foreign exchange contracts outstanding as at March 312 88
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003...and delivered on our promise As per US GAAP - 2002-03 0.32 0.38 - 0.39 (Guidance Vs Performance) 0.33 - 0.34 0.40 - 0.41
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Strategic investments »Provided for Rs. 23.77 crore towards strategic investments during the year »The provision was based on the review of their financial condition as also the business environment in which they operate Rs. cr Cumulative investments up to March 31, 200379.31 Cumulative billings up to March 31, 2003208.23 Less: Provisions / write-off of investments(46.11) Less: Accounts receivables provided for / written-off(10.64) Net benefit151.48
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Acquisitions Acquired IPRs worth Rs. 42.12 crore during the year Rs. cr Banking Business Unit Treasury Management Product16.97 Signature Display Software0.65 Sub-Total17.62 Engineering Service and Consulting Practice AUTOLAY Product24.50 Grand total42.12
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Revenue segmentation
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Geographic segments 2001-2002 2002-2003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Business segments 2001-20022002-2003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Vertical domains 2001-20022002-2003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Project segmentation 2001-20022002-2003
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Onsite - offshore segmentation 2001-20022002-2003
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Annual General Meeting © Infosys Technologies Limited 2002-2003 De - risking
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Client concentration FY 2001FY 2002FY 2003 Active clients273 293 345 Clients added 122116 92 % of revenue from top client7.3%6.1% 5.8% % of revenue from top 5 clients26.0%24.1% 23.4% % of revenue from top 10 clients39.2%39.4% 37.3% Clients accounting for >5% of revenue322 Million dollar clients8083 115 5-million dollar clients1925 41 10-million dollar clients1116 16 20-million dollar clients36 9 Million dollar clients / total clients 29.3%28.3% 33.3% Repeat Business (%) 87.0% 88.0%92.0%
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Cash management
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 We have a strong and liquid Balance Sheet (Rs. crore) Mar 31, 2002%Mar 31, 2003% SOURCES OF FUNDS Share capital33.092 33.121 Reserves and surplus2,047.2298 2,827.5399 Total2,080.31100 2,860.65100 APPLICATION OF FUNDS Fixed assets718.2435 772.7227 Investments44.442 33.201 Deferred tax assets24.221 36.811 Sundry debtors336.7316 512.1418 Cash and equivalents1,026.9649 1,638.5158 Other current assets389.1319 570.5020 Current liabilities & provisions(459.41)(22) (703.23)(25) Total2,080.31100 2,860.65100 Continued to be a zero-debt company
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Our receivables are under control Days of sales receivable - 47 days Days of sales receivable - 52 days Age profile of accounts receivable 2002-2003 2001-2002
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Our cash flows are strong FY 2002 (Rs. Crore) FY 2003 (Rs. Crore) Operating cash flows820.96915.96 Financing cash flows(104.77)(151.97) Proceeds on exercise of stock options4.6013.52 Dividends paid(109.37)(165.49) Investing cash flows(280.23)(153.41) Purchases of fixed assets(322.74)(219.26) Proceeds on sale of fixed assets1.600.33 Long-term investments(10.32)(12.53) Interest income51.2378.05 Effect of exchange differences13.260.97 Net increase in cash and cash equivalents449.22611.55 Cash and cash equivalents, beginning of year577.741,026.96 Cash and cash equivalents, end of year1,026.961,638.51
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Our cash management policies »Financial policies »Maintain liquid assets at »25% of revenue and »40% of total assets »Earn »Return on capital – 2x cost of capital »Return on average invested capital – 3x cost of capital »Our current cost of capital is estimated to be 16.99% »Maintain sufficient cash in the Balance Sheet »To fund ongoing capex requirements to meet growth objectives »To fund operational expenses and other strategic initiatives for the next one year »To maintain business continuance in case of exigencies
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Cash management – How we performed DescriptionTargetFY 2001FY 2002FY 2003 ROCE (%)62.6%54.4%46.9% Times cost of Capital2.02.93.22.8 ROIC (%)105.4%83.1%79.9% Times cost of Capital3.05.04.84.7 Days sales outstanding60584752 Cash & equivalents / total assets40.0%41.6%49.4%57.3% Cash & equivalents / revenue25.0%30.4%39.4%45.2%
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Other performance indicators
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Other performance indicators 56.1% 46.6% 38.8% Return on Average Net Worth (RONW) (%) 62.6% 54.4% 46.9% Return on Capital Employed (ROCE) (%) 105.4% 83.1% 79.9% Return on Invested Capital (ROIC) (%) 200220032001200220032001200220032001
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Other performance indicators EPS from Ordinary Activities (Rs.) 111.29 146.40 173.22 Cash EPS (Rs.) Dividend Payout (%) 94.23 122.12 144.68 12.0% 17.0% 19.9% 200220032001200220032001200220032001
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Other performance indicators 210.05 314.31 431.84 Book Value (Rs.) 43.19 30.50 28.01 Price Earnings (Multiple) 68,547 62,737 68,259 Market Price / Adjusted IPO Price (%) 200220032001200220032001200220032001
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Strength of the invisibles FY 2001FY 2002FY 2003 Average age of employees (yrs)25.6726.6026.60 Education index28,72531,385 44,972 Brand value (Rs.cr)5,3767,257 7,488 EVA (Rs.cr)389510 538 Value added (Rs.cr)1,5632,239 3,043 HR value (Rs.cr)5,1239,539 10,417 Revenue from image enhancing clients (%)52%56%56%
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Progeon
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Performance highlights »Started operations on April 03, 2002 »Break-even in Q4 »539 employees »5 customers »Revenues of Rs. 20.85 crore for the year »Projected revenue of Rs. 76 crore to Rs. 85 crore for next fiscal
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Financial Highlights – US GAAP
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 753.81 545.05 Revenues (US$ million) 252.02 336.45 178.55 218.6 4 Gross Profit (US$ million) Operating Income (US$ million) 200220032002200320022003 38%22%34%
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 183.55 223.44 Operating Income (excl. stock comp) (US$ million) 164.47 194.8 7 169.4 7 199.67 Net Income (US$ million) Net Income (excl. stock comp) (US$ million) 200220032002200320022003 22%18%
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Investor services »Share transfers in physical form completed within 15 days »Investor grievances / correspondence attended to within a period of 10 days (except in cases constrained by disputes or legal impediments) »99.18% of the company’s shares are now held in electronic form »Pending share transfer related litigation -18 cases
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Community services »Grants Rs. 5.53 crore during the year to Infosys Foundation, a not-for-profit trust to support initiatives that benefit society at large. »Continued to adhere to the principles of the UN Global Compact Programme. »Infosys donated 1,490 computers to various institutions across India through its Computers @ Classrooms initiative launched since January 1999.
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Annual General Meeting June 14, 2003© Infosys Technologies Limited 2002-2003 Awards won during the year »Award for the best presented Annual Report for fiscal 2002 received from The Institute of Chartered Accountants of India. This award was received for the seventh consecutive year. »Asiamoney award for best investor relations in India for 2002. »Infosys was ranked number one in India in The Asset's survey on Best Corporate Governance.
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Annual General Meeting © Infosys Technologies Limited 2002-2003 Thank You
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