Notes to the abridged financial statements for the year ended March 31, 2010

1. Company overview

Infosys Technologies Limited (‘Infosys’ or ‘the Company’) along with its majority-owned and controlled subsidiary, Infosys BPO Limited (‘Infosys BPO’) and wholly-owned and controlled subsidiaries, Infosys Technologies (Australia) Pty Limited (‘Infosys Australia’), Infosys Technologies (China) Co. Limited (‘Infosys China’), Infosys Consulting Inc (‘Infosys Consulting’), Infosys Technologies S. de R. L. de C. V. (‘Infosys Mexico’), Infosys Technologies (Sweden) AB. (‘Infosys Sweden’), Infosys Tecnologia DO Brasil LTDA. (‘Infosys Brazil’) and Infosys Public Services Inc, USA (‘Infosys Public Services’) is a leading global technology services company. The Company provides end-to-end business solutions that leverage cutting-edge technology, thereby enabling clients to enhance business performance. The Company provides solutions that span the entire software lifecycle encompassing technical consulting, design, development, re-engineering, maintenance, systems integration, package evaluation and implementation, testing and infrastructure management services. In addition, the Company offers software products for the banking industry.

(Refer to Note 23 in the Notes to Accounts of the annual standalone financial statements).

2. Notes on accounts

Amounts in the abridged financial statements are presented in Rupees crore, except for per share data and as otherwise stated. Certain amounts do not appear due to rounding off, and are detailed in Note 11. All exact amounts are stated with the suffix ‘/-’. One crore equals 10 million.

The previous year figures have been regrouped / reclassified, wherever necessary, to conform to the current presentation.

(Note 23.2 in the Notes to Accounts of the annual standalone financial statements).

3. Capital commitments and contingent liabilities

in Rs. crore
Particulars
As at March 31,
 
2010
2009
Estimated amount of unexecuted capital contracts
(net of advances and deposits)
  267   344
Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favor of various government authorities and others   3   3
Claims against the Company, not acknowledged as debts (1)
[Net of amount paid to statutory authorities Rs. 241 crore (Rs. 200 crore)]
  28   3
  in million in Rs. crore in million in Rs. crore
Forward contracts outstanding        
In USD 228 1,024 245 1,243
In Euro 16 97 20 135
In GBP 7 48 15 109
In AUD 3 12
Options contracts outstanding        
In USD 200 898 173 877
(1) Claims against the Company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rs. 214 crore (Rs. 197 crore), including interest of Rs. 39 crore (Rs. 43 crore) upon completion of their tax review for fiscal 2005 and fiscal 2006. The tax demands are mainly on account of disallowance of a portion of the deduction claimed by the Company under Section 10A of the Income Tax Act. The deductible amount is determined by the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. The matter for fiscal 2005 and fiscal 2006 is pending before the Commissioner of Income Tax (Appeals) Bangalore.

The Company is contesting the demands and the Management, including its tax advisors, believes that its position will likely be upheld in the appellate process. No tax expense has been accrued in the financial statements for the tax demand raised. The Management believes that the ultimate outcome of this proceeding will not have a material adverse effect on the Company's financial position and results of operations.

(Refer to Note 23.2.2 in the Notes to Accounts of the annual standalone financial statements).


4. Quantitative details

The Company is primarily engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 3, 4C and 4D of part II of Schedule VI to the Companies Act, 1956.

(Refer to Note 23.2.3 in the Notes to Accounts of the annual standalone financial statements).

5. Related party transactions

The list of related party transactions is as follows:

Name of subsidiaries
Country
Holding, as at March 31,
  2010 2009
Infosys BPO India 99.98% 99.98%
Infosys Australia Australia 100% 100%
Infosys China China 100% 100%
Infosys Consulting (1) USA 100% 100%
Infosys Mexico (2) Mexico 100% 100%
Infosys Sweden(3) Sweden 100%
Infosys Brazil(4) Brazil 100%
Infosys Public Services Inc(5) USA 100%
Infosys BPO s. r. o(6) Czech Republic 99.98% 99.98%
Infosys BPO (Poland) Sp.Z.o.o(6) Poland 99.98% 99.98%
Infosys BPO (Thailand) Limited(6) Thailand 99.98% 99.98%
Mainstream Software Pty Limited(7) Australia 100% 100%
Infosys Consulting India Limited(8) India 100%
McCamish Systems LLC(9) USA 99.98%
(1) During the year ended March 31, 2010 the Company made an additional investment of Rs. 50 crore (US $10 million) in Infosys Consulting, which is a wholly-owned subsidiary. As of March 31, 2010 and March 31, 2009, the Company has invested an aggregate of Rs. 243 crore (US $55 million) and Rs. 193 crore (US $45 million), respectively in the subsidiary.
(2) During the year ended March 31, 2010 the Company made an additional investment of Rs. 18 crore (Mexican Peso 50 million) in Infosys Mexico, which is a wholly-owned subsidiary. As of March 31, 2010 and March 31, 2009, the Company has invested an aggregate of Rs. 40 crore (Mexican Peso 110 million) and Rs. 22 crore (Mexican Peso 60 million), respectively in the subsidiary.
(3) During the year ended March 31, 2009, the Company incorporated wholly-owned subsidiary, Infosys Technologies (Sweden) AB, which was capitalized on July 8, 2009.
(4) On August 7, 2009, the Company incorporated wholly-owned subsidiary, Infosys Tecnologia DO Brasil LTDA. As of March 31, 2010 the Company has invested an aggregate of Rs. 28 crore (BRL 11 million) in the subsidiary.
(5) On October 9, 2009, the Company incorporated wholly-owned subsidiary, Infosys Public Services Inc. As of March 31, 2010, the Company invested Rs. 24 crore
(US $5 million) in the subsidiary.
(6) Infosys BPO s.r.o, Infosys BPO (Poland) Sp.Z.o.o, Infosys BPO (Thailand) Limited and McCamish Systems LLC are wholly-owned subsidiaries of Infosys BPO.
(7) Mainstream Software Pty Limited is a wholly-owned subsidiary of Infosys Australia.
(8) On August 19, 2009, Infosys Consulting Inc incorporated a wholly-owned subsidiary, Infosys Consulting India Limited. As of March 31, 2010, Infosys Consulting has invested Rs. 1 crore in the subsidiary.
(9) On December 4, 2009, Infosys BPO acquired 100% of the voting interests in McCamish Systems LLC (McCamish), a business process solutions provider based in Atlanta, Georgia, in the U.S. The business acquisition was conducted by entering into Membership Interest Purchase Agreement for a cash consideration of Rs. 173 crore and a contingent consideration of Rs. 67 crore. The acquisition was completed during the year and accounted as a business combination which resulted in goodwill of Rs. 227 crore.


Infosys guarantees the performance of certain contracts entered into by its subsidiaries.

The details of amounts due to or due from as at March 31, 2010 and March 31, 2009 are as follows :

in Rs. crore
Particulars
As at March 31,
2010 2009
Loans and advances
Infosys China 46 51
Sundry debtors
Infosys China 19
Infosys Australia 7 4
Infosys Mexico 1 1
Infosys Consulting 26
Infosys Brazil 1
Infosys BPO (Including subsidiaries) 2
Sundry creditors
Infosys China 18 4
Infosys Australia 20 16
Infosys BPO (Including subsidiaries) 7 1
Infosys Consulting 43
Infosys Consulting India 1
Infosys Mexico 5
Infosys Sweden 1
Deposit taken for shared services
Infosys BPO 7 3


The details of the related party transactions entered into by the Company and maximum dues from subsidiaries for the years ended March 31, 2010 and March 31, 2009 are as follows :

in Rs. crore
Particulars
Year ended March 31,
2010 2009
Capital transactions :
Financing transactions
Infosys Consulting 50 22
Infosys China 19
Infosys Mexico 18
Infosys Brazil 28
Infosys Public Services 24
Loans / Advances
Infosys China 10
Revenue transactions :
Purchase of services
Infosys Australia 634 471
Infosys China 134 81
Infosys Consulting 378 275
Infosys Sweden 11
Infosys BPO (Including subsidiaries) 3 1
Infosys Brazil 5
Infosys Mexico 45 33
Purchase of shared services including facilities and personnel
Infosys BPO (Including subsidiaries) 53 32
Interest income
Infosys China 3 3
Sale of services
Infosys Australia 25 10
Infosys China 10 2
Infosys Consulting 25 4
Infosys BPO (Including subsidiaries) 1
Sale of shared services including facilities and personnel
Infosys BPO (Including subsidiaries) 71 53
Infosys Consulting 4 3
Maximum balances of loans and advances
Infosys Australia 51 35
Infosys China 48 51
Infosys BPO (Including subsidiaries) 4
Infosys Mexico 4 4
Infosys Consulting 35 26

During the year ended March 31, 2010, an amount of Rs. 34 crore (Rs. 20 crore for the year ended March 31, 2009) was donated to Infosys Foundation, a not-for-profit foundation, in which certain directors of the Company are trustees.

During the year ended March 31, 2010, an amount of Rs. 23 crore (Rs. 15 crore for the year ended March 31, 2009) has been granted to Infosys Science Foundation, a not-for-profit foundation, in which certain directors and officers of the Company are trustees.

(Refer to Note 23.2.7 in the Notes to of the annual standalone financial statements).