Notes to the abridged financial statements for the year ended March 31, 2011

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) Company 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 Brasil’), Infosys Public Services, Inc., U.S. (‘Infosys Public Services’) and Infosys Technologies (Shanghai) Company Limited (‘Infosys Shanghai’) is a leading global technology services corporation. 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.

(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 Indian rupees crore, except for per share data and as otherwise stated. Certain amounts that are required to be disclosed and do not appear due to rounding off 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 Rupee Symbol crore

Particulars

As at March 31,

2011

2010

Estimated amount of unexecuted capital contracts (net of advances and deposits)

742

267

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favour of various government authorities and others

3

3

Claims against the Company, not acknowledged as debts (1)

[Net of amount paid to statutory authorities Rupee Symbol469 crore (Rupee Symbol241 crore)]

271

28

in million

in Rupee Symbol crore

in million

in Rupee Symbolcrore

Forward contracts outstanding

In USD

500

2,230

228

1,024

In Euro

20

127

16

97

In GBP

10

72

7

48

In AUD

10

46

3

12

Options contracts outstanding

In USD

–

–

200

898

2,475

2,079
(1)

Claims against the Company not acknowledged as debts include demand from the Indian tax authorities for payment of additional tax of Rupee Symbol671 crore (Rupee Symbol214 crore), including interest of Rupee Symbol177 crore (Rupee Symbol39 crore) upon completion of their tax review for fiscal 2005, fiscal 2006 and fiscal 2007. 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 tax demand for fiscal 2007 also includes disallowance of portion of profit earned outside India from the STP units and disallowance of profits earned from SEZ units. The matter for fiscal 2005, 2006 and 2007 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.(Note 23.2.2 in the Notes of 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.

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

5. Related party transactions

List of related parties

Name of subsidiaries

Country

Holding as at March 31,

2011

2010

Infosys BPO

India

99.98%

99.98%

Infosys Australia

Australia

100%

100%

Infosys China (1)

China

100%

100%

Infosys Consulting

U.S.

100%

100%

Infosys Mexico (2)

Mexico

100%

100%

Infosys Sweden

Sweden

100%

100%

Infosys Shanghai (3)

China

100%

–

Infosys Brasil (4)

Brazil

100%

100%

Infosys Public Services, Inc.

U.S.

100%

100%

Infosys BPO s.r.o (5)

Czech Republic

99.98%

99.98%

Infosys BPO (Poland)
Sp.Z.o.o (5)

Poland

99.98%

99.98%

Infosys BPO (Thailand) Limited (5)

Thailand

–

99.98%

Infosys Consulting India Limited (6)

India

100%

100%

McCamish Systems LLC (5) (7)

U.S.

99.98%

99.98%
(1) During the year ended March 31, 2011, the Company made an additional investment of Rupee Symbol42 crore (US$ 9 million) in Infosys China, which is a wholly owned subsidiary. As of March 31, 2011, and March 31, 2010, the Company has invested an aggregate of Rupee Symbol107 crore (US$ 23 million) and Rupee Symbol65 crore (US$ 14 million) respectively, in the subsidiary.
(2) During the year ended March 31, 2011, the Company made an additional investment of Rupee Symbol14 crore (Mexican Peso 40 million) in Infosys Mexico, which is a wholly owned subsidiary. As of March 31, 2011, and March 31, 2010, the Company has invested an aggregate of Rupee Symbol54 crore (Mexican Peso 150 million) and Rupee Symbol40 crore (Mexican Peso 110 million) respectively, in the subsidiary.
(3) On February 21, 2011, the Company incorporated a wholly-owned subsidiary, Infosys Technologies (Shanghai) Company Limited and invested Rupee Symbol11 crore (US$ 3 million) in the subsidiary. As of March 31, 2011, the Company has invested an aggregate of Rupee Symbol11 crore (US$ 3 million) in the subsidiary.
(4) During the year ended March 31, 2011, the Company made an additional investment of Rupee Symbol10 crore (BRL 4 million) in the subsidiary. As of March 31, 2011, and March 31, 2010, the Company has invested an aggregate of Rupee Symbol38 crore (BRL 15 million) and Rupee Symbol28 crore (BRL 11 million) respectively, in the subsidiary
(5) 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. During the year ended March 31, 2011, Infosys BPO (Thailand) Limited was liquidated.
(6) During the year ended March 31, 2010, Infosys Consulting incorporated wholly-owned subsidiary, Infosys Consulting India Limited. As of March 31, 2011, and March 31, 2010, Infosys Consulting has invested an aggregate of Rupee Symbol1 crore in the subsidiary.
(7) During the year ended March 31, 2010, Infosys BPO acquired 100% of the voting interests in McCamish Systems LLC (McCamish), a business process solutions provider based in Atlanta, Georgia, in the United States. The business acquisition was conducted by entering into Membership Interest Purchase Agreement for a cash consideration of Rupee Symbol173 crore and a contingent consideration of Rupee Symbol67 crore. The acquisition was accounted as a business combination which resulted in goodwill of Rupee Symbol227 crore.

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

Details of amounts due to or due from as at March 31, 2011 and March 31, 2010 :

in Rupee Symbolcrore

Particulars

As at March 31,

2011

2010

Loans and advances

Infosys China

23

46

Infosys Brasil

9

–

Sundry debtors

Infosys China

39

19

Infosys Australia

5

7

Infosys Mexico

1

1

Infosys Consulting

24

26

Infosys Brasil

–

1

Infosys BPO (including subsidiaries)

3

2

Sundry creditors

Infosys China

32

18

Infosys Australia

–

20

Infosys BPO (including subsidiaries)

3

7

Infosys Consulting

17

43

Infosys Consulting India

1

1

Infosys Mexico

1

5

Infosys Sweden

1

1

Deposit taken for shared services

Infosys BPO

7

7

The details of the related party transactions entered into by the Company and maximum dues from subsidiaries for the year ended March 31, 2011 and March 31, 2010 are as follows :

in Rupee Symbolcrore

Particulars

Year ended March 31,

 
2011
2010

Capital transactions :

Financing transactions

Infosys Consulting

–

50

Infosys China

42

–

Infosys Shanghai

11

–

Infosys Mexico

14

18

Infosys Brasil

10

28

Infosys Public Services

–

24

Loans / Advances

Infosys Brasil

9

–

Infosys China

(23)

–

Revenue transactions :

Purchase of services

Infosys Australia

889

634

Infosys China

240

134

Infosys Consulting

353

378

Infosys Consulting India

5

–

Infosys Sweden

12

11

Infosys BPO (including subsidiaries)

17

3

Infosys Brasil

3

5

Infosys Mexico

49

45

Purchase of shared services including facilities and personnel

Infosys BPO (including subsidiaries)

114

53

Interest income

Infosys China

2

3

Sale of services

Infosys Australia

33

25

Infosys China

6

10

Infosys Consulting

73

25

Infosys BPO (including subsidiaries)

21

–

Sale of shared services including facilities and personnel

Infosys BPO (including subsidiaries)

78

71

Infosys Consulting

4

4

Maximum balances of loans and advances

Infosys Australia

81

51

Infosys China

48

48

Infosys Brasil

9

–

Infosys BPO (including subsidiaries)

–

4

Infosys Mexico

4

4

Infosys Consulting

35

35

During the year ended March 31, 2011, an amount of nil (Rupee Symbol34 crore for the year ended March 31, 2010) 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, 2011, an amount of Rupee Symbol12 crore (Rupee Symbol23 crore for the year ended March 31, 2010) has been granted to Infosys Science Foundation, a not-for-profit foundation, in which certain directors and officers of the Company are trustees.

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