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)

% %
23 660.81 23 648.35 %
23 267.45
537.07 529.24 217.46

Q3 01 Q3 02 Q3 01 Q3 02 Q3 01 Q3 02

Total income Exports Operating profit

(Rs.cr) (Rs.cr) (Rs.cr)
The Quarter at a Glance (Indian GAAP)

%
31.14
24

24
206.04
%
30

241.04 25.14
166.33
185.83

Q3 01 Q3 02 Q3 01 Q3 02 Q3 01 Q3 02

PBT PAT Basic EPS

(Rs.cr) (Rs.cr) (Rs)
Highlights

Q3 FY 02 Q2 FY 02 9 Months FY 02
 Indian GAAP
 Y-O-Y Growth

Income 23.0% 45.7% 43.7%
 PAT from ord. activities 23.9% 30.9% 35.3%

 New clients 33 28 87

 Repeat business 85.7% 90.0% 90.2%

 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 FY2002 FY2001 % growth over
Q3 Q2 Q3 Q2 02 Q3 01

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
Depreciation 41.34 39.02 33.02 5.9 25.2
Operating profit after
depreciation 226.11 219.90 184.44 2.8 22.6
Other income 14.93 14.66 14.47 1.8 3.2
Provision for investments - - (13.08) - -
PBT 241.04 234.56 185.83 2.8 29.7
Provision for tax 35.00 33.00 19.50 6.1 79.5
PAT from ordinary activities 206.04 201.56 166.33 2.2 23.9
Highlights (Indian GAAP)
(Rs.cr)
FY2002 % FY2001 % Growth
9 Months 9 Months
Income 1923.46 100.0 1338.70 100.0 43.7
S/w development expenses 902.01 46.9 625.57 46.7 44.2
Gross profit 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
Other income 43.08 2.2 49.16 3.7 (12.4)
Provision for investments - - (13.08) (1.0) -
PBT 694.13 36.1 492.61 36.8 40.9
Provision for tax 96.50 5.0 50.96 3.8 89.4
PAT from ordinary activities 597.63 31.1 441.65 33.0 35.3
Extraordinary items - - 5.49 0.4 -
Net profit after ext. items 597.63 31.1 447.14 33.4 33.7
Balance Sheet Summary
(Rs.cr)
Dec 31, 01 % Dec 31, 00 %
LIABILITIES
Shareholders’ funds 1,949.93 100 1,261.09 100
Total liabilities 1,949.93 100 1,261.09 100

ASSETS
Fixed assets 725.29 37 457.23 36
Investments 44.44 2 36.33 3
Deferred tax assets 22.33 1 - -
Current assets
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
Region wise Revenue (%)

FY2002 FY2002 FY2001 FY2002 FY2001 LTM LTM

Q3 Q2 Q3 9 Months 9 Months Dec 01 Dec 00

North America 70.9% 71.1% 73.6% 71.4% 74.3% 71.4% 74.9%

Europe 19.4% 18.9% 18.8% 19.4% 18.1% 19.6% 17.7%

India 1.9% 1.8% 1.5% 2.1% 1.3% 2.0% 1.4%

Rest of
the world 7.8% 8.2% 6.1% 7.1% 6.3% 7.0% 6.0%

Total 100.0% 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 72.7 72.7

68.8 69.6
70.0
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 FY2002 FY2001 FY2002 FY 2001 LTM LTM

Q3 Q2 Q3 9 Months 9 Months Dec 01 Dec 00

Fixed Price 35.1% 29.9% 29.4% 30.7% 28.0% 30.2% 28.9%

Time & Materials 64.9% 70.1% 70.6% 69.3% 72.0% 69.8% 71.1%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

LTM – Last Twelve Months

Onsite-Offshore Revenue split

FY2002 FY2002 FY2001 FY2002 FY2001 LTM LTM

Q3 Q2 Q3 9 Months 9 Months Dec 01 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%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

LTM – Last Twelve Months

Customer Concentration

FY2002 FY2002 FY2001 FY2002

FY2001
Q3 Q2 Q3 9 Months
9 Months

Top client contribution

to revenues 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
LTM – Last Twelve Months
Five million dollar clients* 24 22 15 24
15

Ten million dollar clients* 13 14 6 13

Diversifying Customer Risk

270
293 299
240
210
180
150
120
90
60
28 33
30
0

Q2 FY 2002 Q3 FY 2002
New Customers Active Clients
Accounts Receivables

Year AR % of DSO
(mn$) Revenue

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