Infosys Technologies Limited: Report For The Second Quarter Ended September 30, 2000

INFOSYS TECHNOLOGIES LIMITED
Report for the second quarter ended September 30, 2000

At a glance – Indian GAAP
Rs. in crores, except per share data

Quarter ended Half-year ended Year ended
September 30 September 30 March 31,2000
2000 1999 2000 1999
For the period
Total revenue 465.67 217.88 836.32 401.94 921.46
Export revenue 441.26 205.07 792.32 373.69 869.70
Operating profit (PBIDT) 196.00 85.93 348.75 163.86 378.88
Profit after tax (PAT) from ordinary activities 154.01 65.71 275.31 126.32 285.95
PBIDT as a percentage of total revenue 42.09% 39.44% 41.70% 40.77% 41.12%
PAT (from ordinary activities) as a percentage
of total revenue 33.07% 30.16% 32.92% 31.43% 31.03%
Earnings per share (from ordinary activities)* 23.28 9.93 41.62 19.10 43.23
Dividend per share NA NA 2.50 1.50 4.50
Dividend amount NA NA 16.54 9.92 29.76
Capital investment 114.01 38.56 199.85 59.76 159.87
At the end of the period
Total assets 1,094.04 687.68 833.30
Fixed assets – net 365.19 140.42 207.34
Cash and equivalents 535.90 453.80 508.37
Working capital 683.12 546.51 612.13
Total debt – – –
Net worth 1,094.04 687.68 833.30
Equity 33.08 33.07 33.08
Market capitalization 48,695.68 23,589.06 59,338.17
Note:
Market capitalization is calculated by considering the Indian market price for shares outstanding at the period / year end outstanding
at the period / year end
* EPS figures have been calculated for the period and have not been annualized.
2
Letter to the shareholders
Dear shareholders:
We are pleased to report on another strong quarter. Under Indian GAAP, revenues grew by 113.7% over Q2FY2000
while net profits witnessed an increase of 134.4%. Net of separations, we added nearly 1500 employees in the
quarter – highlighting the continued vigorous growth in our business. A key driver of this performance is the
de-risked nature of the Infosys business model. Prudent risk management policies, strong processes to monitor
various risk factors, and a focus on diversification continue to guide our business strategy. Our strong relationships
with Fortune 1000 corporations, our in-depth understanding of their decision cycles, and our track record of customer
satisfaction enabled us to maintain topline predictability while ceaselessly improving overall revenue productivity.
As transformation partners to traditional economy corporations, we help them build next-generation information
infrastructure for the new economy. These engagements constitute the bulk of our e-business revenues, which, at
31.4% of total revenues, continue to be a high-growth segment of our business. Further, with a view to capitalizing
on the unprecedented opportunities offered by the present day environment, we continued to build expertise in
high-potential technology areas such as wireless, broadband and optical networking.
The quarter saw a strategic alliance with Microsoft Corporation to jointly deliver e-business solutions to help companies
migrate to the new economy. Our client base continues to increase – we partnered with 27 new clients during the
quarter. These included Eastman Chemicals, one of the top 10 global suppliers of custom-manufactured chemicals;
Fritz companies, a specialist in global integrated logistics; ABB Alstom, global specialist in energy and transport
infrastructure; Publix Supermarkets, one of the largest supermarket chains in the US; SignalSoft, a leading platform
and applications developer of Wireless Location Services (R); Last Mile Solutions, a spread spectrum wireless solutions
provider; NightFire Software, a leading e-infrastructure software provider for broadband service fulfillment; and
Riverstone Networks, a leading manufacturer of switches and routers. We also continued to build long-term symbiotic
partnerships – evidenced by our repeat business rate of 84.5% in the quarter.
Our endeavor to have access to cutting-edge technologies and business models led us to make three strategic investments
in the quarter. We invested in Vienna-based Alpha Thinx Mobile Phone Services, which hosts interactive services for
mobile users across Europe; in Singapore-based M-Commerce Ventures, a wireless-focussed fund promoted by the
Economic Development Board, Singapore; and in Asia Net Media, which intends to build a synergistic network of
companies that leverage under-exploited offline brands in media and entertainment by delivering them online.
We continued to globalize our operations – our software development center in London became operational during
the quarter, as did our marketing offices in Hong Kong and Sydney. Our Infosys City facility in Bangalore is nearing
completion and we continue to build capacity in our other development centers in India and abroad.
We inducted Professor Jitendra Vir Singh, Vice Dean, International Academic Affairs, The Wharton School, University
of Pennsylvania, onto the board of directors. On your behalf, we welcome him on board and also extend our appreciation
to our fellow Infoscions who contributed to yet another successful quarter in our history.
Nandan M. Nilekani N. R. Narayana Murthy

Bangalore Managing Director, President and Chairman and
October 10, 2000 Chief Operating Officer Chief Executive Officer
3
Auditors’ report to the members of Infosys Technologies Limited
We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at September 30, 2000
and the Profit and Loss Account of the Company for the half-year and quarter ended on that date, annexed thereto,
and report that:
1 As required by the Manufacturing and Other Companies (Auditor’s Report) Order, 1988, issued by the Company
Law Board in terms of Section 227(4A) of the Companies Act, 1956, we enclose in the Annexure a statement on
the matters specified in paragraphs 4 and 5 of the said Order.
2 Further to our comments in the Annexure referred to in paragraph 1 above:
(a) we have obtained all the information and explanations which to the best of our knowledge and belief were
necessary for the purpose of our audit;
(b) in our opinion proper books of account as required by law have been kept by the Company so far as appears
from our examination of these books;
(c) the Balance Sheet and Profit and Loss Account dealt with by this report are in agreement with the books of
account;
(d) in our opinion, the Balance Sheet and Profit and Loss Account dealt with by this report are prepared in
compliance with the accounting standards referred to in Section 211(3C) of the Companies Act, 1956, to the
extent applicable;
(e) in our opinion and to the best of our information and according to the explanations given to us, the said
accounts give the information required by the Companies Act, 1956, in the manner so required and give a
true and fair view:
(i) in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2000; and
(ii) in the case of the Profit and Loss Account, of the profit for the half-year and quarter ended on that date.
3 We have also examined the attached Cash Flow Statement of the Company for the half-year and quarter ended
September 30, 2000. The Statement has been prepared by the Company in accordance with the requirements of
Clause 32 of the listing agreements entered into with the Stock Exchanges.
for Bharat S Raut & Co.

Chartered Accountants
Bangalore Balaji Swaminathan

October 10, 2000 Partner
4
Balance sheet as at
in Rs.
Sep 30, 2000 Sep 30, 1999 Mar 31, 2000
SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share capital 33,07,58,335 33,06,95,500 33,07,55,000
Reserves and surplus 1060,95,95,077 654,61,29,197 800,22,73,248
1094,03,53,412 687,68,24,697 833,30,28,248
APPLICATION OF FUNDS
FIXED ASSETS
Gross block 435,74,18,072 201,20,83,575 284,03,05,143
Less : Depreciation 175,13,71,312 102,07,57,018 133,65,20,594
Net block 260,60,46,760 99,13,26,557 150,37,84,549
Add : Capital work-in-progress 104,58,25,080 41,28,99,285 56,96,03,505
365,18,71,840 140,42,25,842 207,33,88,054
INVESTMENTS 45,73,06,737 75,48,469 13,83,48,469
CURRENT ASSETS, LOANS AND ADVANCES

Sundry debtors 243,05,68,746 133,47,09,804 136,17,81,253
Cash and bank balances 424,28,92,315 377,68,71,030 431,79,35,730
Loans and advances 288,54,93,594 164,28,14,672 210,12,77,161
955,89,54,655 675,43,95,506 778,09,94,144
Less : Current liabilities 150,82,14,077 58,78,14,181 67,15,06,459
Provisions 121,95,65,743 70,15,30,939 98,81,95,960
NET CURRENT ASSETS 683,11,74,835 546,50,50,386 612,12,91,725
1094,03,53,412 687,68,24,697 833,30,28,248
This is the Balance sheet
referred to in our report
of even date.
Balaji Swaminathan N. R. Narayana Murthy Nandan M. Nilekani Deepak M. Satwalekar Prof. Marti G. Subrahmanyam
Partner Chairman and Managing Director, President Director Director
Chief Executive Officer and Chief Operating Officer
S. Gopalakrishnan K. Dinesh S. D. Shibulal T. V. Mohandas Pai
Deputy Managing Director Director Director Director and
Chief Financial Officer
Bangalore Phaneesh Murthy Srinath Batni V. Viswanathan
October 10, 2000 Director Director Company Secretary
5
Profit and loss account for the
in Rs.
Sep 30, 2000 Sep 30, 1999 Sep 30, 2000 Sep 30, 1999 Mar 31, 2000
INCOME
Software development services and products
Overseas 441,25,85,913 205,07,22,424 792,31,64,336 373,69,33,425 869,69,80,931
Domestic 4,83,71,864 3,22,64,605 9,30,93,590 4,87,60,599 12,62,56,042
Other income 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068
EXPENDITURE
Software development expenses 226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578
Administration and other expenses 43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282
Provision for contingencies – – – 3,33,00,000 3,33,00,000
Provision for e-inventing
the Company – 3,50,00,000 – 3,50,00,000 3,50,00,000
269,67,55,268 131,94,98,892 487,56,72,483 238,08,19,145 542,58,34,860
Operating profit (PBIDT) 195,99,90,126 85,93,06,572 348,74,80,592 163,86,06,559 378,88,13,208
Interest – – – – –
Depreciation 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389
Profit before tax and
extraordinary items 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819
Provision for tax
– earlier periods – 17,00,000 1,40,00,000 17,00,000 24,00,000
– current period 17,75,00,000 9,33,00,000 30,06,00,000 17,33,00,000 39,46,00,000
Profit after tax before
Effect of extraordinary item
– provision no longer required – – – – 7,56,70,846
Extraordinary income (net of tax) – – 5,49,44,000 – –
Net profit after tax and
AMOUNT AVAILABLE
FOR APPROPRIATION 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
Dividend
Interim 16,53,78,418 9,92,08,200 16,53,78,418 9,92,08,200 9,92,08,200
Final – – – – 19,84,18,210
Dividend Tax 3,63,83,252 1,09,12,902 3,63,83,252 1,09,12,902 3,27,38,905
Amount transferred – general reserve – – – – 260,47,91,350
Balance in
Profit & Loss Account 133,83,60,909 54,69,61,701 260,63,23,658 115,30,43,539 –
154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
This is the Profit & Loss Account referred
to in our report of even date.

6
Schedules to the profit and loss account for the
in Rs.
OTHER INCOME
Interest received on deposits
with banks and others 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106
(Tax deducted at source Rs. 42,26,973;
Rs. 37,61,871; Rs. 1,11,29,180; Rs. 52,48,295;
Rs. 1,67,51,195 respectively)
Sale of special import licenses 6,77,431 1,29,96,393 6,77,431 1,29,96,393 2,02,31,549
Profit on sale of fixed assets – 4,16,230 – 4,63,777 8,73,015
Miscellaneous income 70,50,359 7,08,917 94,17,211 30,76,486 41,00,350
Exchange differences * 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
* arising on translation of foreign currency deposits maintained abroad includes a realized gain of Rs. 3,53,92,000 during the quarter ended September 30,
2000. (Prior periods/year: Rs. Nil)
SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including
overseas staff expenses 158,42,78,274 73,71,21,957 290,01,81,382 132,43,61,020 307,54,46,295
Staff welfare 1,73,06,377 1,01,02,147 3,24,11,865 1,97,02,371 4,93,07,308
Contribution to provident
and other funds 7,43,79,574 4,04,04,539 16,93,51,595 6,09,67,314 22,08,36,923
Foreign travel expenses 35,90,06,400 19,44,34,563 66,11,53,479 37,35,69,658 84,09,02,293
Consumables 1,04,12,879 47,39,041 1,95,07,075 1,06,07,532 2,70,06,251
Cost of software packages
for own use 12,25,78,520 6,00,62,634 19,79,84,826 9,28,54,660 16,53,57,382
for banking product 49,60,448 24,53,002 1,33,11,277 40,65,059 2,84,48,397
Computer maintenance 1,23,01,888 61,45,308 2,71,11,288 1,00,78,359 3,27,43,350
Communication expenses 5,24,77,651 5,64,28,375 9,94,83,388 9,47,60,089 17,31,23,718
Consultancy charges 1,85,64,421 79,52,464 2,98,55,683 1,40,86,504 2,85,50,034
Provision for post-sales client support 82,28,718 1,09,23,398 80,48,558 1,75,96,154 2,09,62,627
226,44,95,150 113,07,67,428 415,84,00,416 202,26,48,720 466,26,84,578
ADMINISTRATION AND OTHER EXPENSES
Travelling and conveyance 4,97,87,265 1,64,00,037 7,70,39,464 2,71,78,379 7,68,26,394
Rent 3,68,42,809 2,37,09,030 6,95,37,037 4,42,39,431 10,34,93,593
Telephone charges 3,59,58,729 1,07,93,680 6,50,89,763 2,45,99,217 5,93,95,252
Professional charges 3,86,42,679 1,69,66,773 6,42,07,750 2,94,93,829 7,55,68,079
Office maintenance 2,94,09,238 97,79,872 5,67,21,754 1,81,88,757 5,81,01,381
Brand building 3,92,19,123 – 5,01,77,269 – 99,17,816
Provision for bad & doubtful debts 4,51,07,005 70,23,453 4,91,94,461 1,90,43,237 94,03,099
Power and fuel 2,51,75,524 1,00,90,670 4,58,26,006 2,01,08,110 5,01,41,466
Printing and stationery 1,10,57,396 70,99,944 3,61,24,297 1,53,91,827 2,76,70,902
Donations 1,70,01,694 1,01,86,367 3,28,09,063 1,41,86,367 3,49,27,871
Advertisements 1,75,71,241 68,68,674 2,88,75,539 1,12,36,927 2,12,41,343
Marketing expenses 1,75,21,259 53,93,530 2,28,51,535 1,30,53,262 3,14,93,837
Repairs to building 58,28,166 13,87,841 1,40,82,937 40,04,836 1,13,44,232
Insurance charges 72,76,793 49,72,795 1,25,66,191 90,30,631 2,41,35,289
Rates and taxes 62,78,668 37,24,887 98,42,999 57,43,646 1,03,80,848
Postage and courier 47,28,893 25,29,800 96,06,851 61,99,736 1,37,56,638
Commission charges 67,61,132 – 90,25,721 34,84,800 64,70,454
Books and periodicals 50,60,324 8,34,026 89,14,545 21,48,750 77,13,886
Repairs to plant and machinery 39,97,679 27,39,781 73,83,941 41,49,262 84,12,905
Research grants 25,00,000 25,00,000 50,00,000 25,00,000 1,03,00,000
Managerial remuneration 24,00,000 6,00,000 48,00,000 12,00,000 48,17,800
Bad debts written off 27,70,254 – 27,70,254 – 1,59,20,938
Bank charges and commission 3,94,040 8,08,085 9,24,343 17,62,932 42,21,668
Bad loans and advances written off – 3,46,577 – 3,46,577 3,13,050
Auditor’s remuneration
– audit fees 4,47,000 4,67,500 8,93,250 8,92,500 17,85,000
– certification charges – – – – 2,00,000
– other services – – – – 4,50,000
– out-of-pocket expenses 50,000 50,000 1,00,000 1,00,000 2,00,000
Other miscellaneous expenses 2,04,73,207 84,58,142 3,29,07,097 1,15,87,412 1,62,46,541
43,22,60,118 15,37,31,464 71,72,72,067 28,98,70,425 69,48,50,282
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1. Significant accounting policies and notes on accounts
Company overview
Infosys Technologies Limited (“Infosys” or “the Company”) is a publicly held company providing information technology
(“IT”) solutions principally to Fortune 1000 and emerging new economy companies. Infosys’ range of services includes
IT consulting, IT architecture, application development, e-commerce and Internet consulting, and software maintenance.
In addition, the Company develops and markets certain software products. Headquartered in Bangalore, India, Infosys
has 17 state-of-the-art offshore software development facilities located throughout India that enables it to provide
high quality, cost-effective services to clients in a resource-constrained environment. The Company also maintains
offices in North America, Europe and Asia.
1.1 Significant accounting policies
1.1.1 Basis of preparation of financial statements
The financial statements are prepared under the historical cost convention, in accordance with Indian Generally
Accepted Accounting Principles (“GAAP”) comprising the accounting standards issued by the Institute of Chartered
Accountants of India and the provisions of the Companies Act, 1956, as adopted consistently by the Company. All
income and expenditure having a material bearing on the financial statements are recognized on the accrual basis.
The preparation of the financial statements in conformity with GAAP requires that the management of the
Company (“Management”) make estimates and assumptions that affect the reported amounts of revenue and
expenses of the period, reported balances of assets and liabilities and disclosures relating to contingent assets and
liabilities as of the date of the financial statements. Examples of such estimates include expected contract costs to
be incurred to complete software development, provision for doubtful debts, future obligations under employee
retirement benefit plans and the useful lives of fixed assets. Actual results could differ from those estimates.
1.1.2 Revenue recognition
Revenue from software development on time-and-materials contracts is recognized based on software developed
and billed to clients as per the terms of specific contracts. On fixed-price contracts, revenue is recognized based
on milestones achieved as specified in the contracts on the percentage-of-completion basis. Revenue from
rendering Annual Technical Services (“ATS”) is recognized proportionately over the period in which services
are rendered. Revenue from the sale of licenses for the use of software applications is recognized on transfer of
the title in the user license. Interest on deployment of surplus funds is recognized using the time-proportion
method, based on interest rates implicit in the transaction. Dividend income is recognized when the right to
receive dividend is established. Revenue from the sale of special import licences is recognized when the licences
are transferred.
1.1.3 Expenditure
The cost of software purchased for use in software development and services is charged to revenue in the year
the software is acquired. Project costs in the nature of salaries, travel and other expenses incurred on fixed price
contracts, where milestones are yet to be reached are classified as “Costs in excess of billings” in the balance
sheet. Provisions are made for all known losses and liabilities. Provisions are made for future unforeseeable
factors that may affect the profit on fixed-price software development contracts. The leave encashment liability
of the Company is provided on the basis of an actuarial valuation. Provisions are made towards likely expenses
for providing post-sales client support on fixed-price contracts.
1.1.4 Fixed assets
Fixed assets are stated at cost, after reducing accumulated depreciation until the date of the balance sheet.
Direct costs are capitalized until the assets are ready for use and include financing costs relating to any specific
borrowing attributable to the acquisition of the fixed assets.
1.1.5 Capital work-in-progress
Advances paid to acquire fixed assets and the cost of assets not put to use before the period-end, are disclosed
under capital work-in-progress.
1.1.6 Depreciation
Depreciation on fixed assets is determined using the straight-line method based on useful lives of assets as
estimated by Management. Depreciation for assets purchased/sold during the period is proportionately charged.
8
Individual assets acquired for less than Rs. 5,000 are entirely depreciated in the year of acquisition. Management
estimates the useful lives for the various fixed assets as follows:
Buildings 15 years
Plant and machinery 5 years
Computer equipment 2-5 years
Furniture and fixtures 5 years
Vehicles 5 years
1.1.7 Retirement benefits to employees
1.1.7a Gratuity
In accordance with the Payment of Gratuity Act, 1972, Infosys provides for gratuity, a defined benefit retirement
plan (the “Gratuity Plan”) covering all employees. The Gratuity plan provides a lump sum payment to vested
employees at retirement, death or termination of employment, of an amount based on the respective employee’s
salary and the years of employment with the Company.
The Company established the Infosys Technologies Limited Employees’ Gratuity Fund Trust (the “Trust”) in
1997, until which the Company made contributions to a gratuity plan managed by the Life Insurance
Corporation of India. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation,
based upon which, the Company contributes to the Trust. Trustees administer the contributions made to the
Trust. The funds contributed to the Trust are invested in specific designated securities as mandated by law
and generally comprise central and state government bonds and debt instruments of government-owned
corporations.
1.1.7b Superannuation
Apart from being covered under the Gratuity Plan described above, the senior officers of Infosys are also
participants of a defined contribution plan. The Company makes monthly contributions to the superannuation
plan (the “Plan”) based on a specified percentage of each covered employee’s salary. The Company has no
further obligations under the Plan beyond its monthly contributions.
1.1.7c Provident fund
In addition to the above benefits, all employees receive benefits from a provident fund, which is a defined
contribution plan. Both the employee and the Company make monthly contributions to this provident fund
plan equal to a specified percentage of the covered employee’s salary.
Infosys established a Provident Fund Trust in 1996 to which a part of the contributions are made each
month. Prior thereto, the Company made contributions to the provident fund plan administered by the
Government of India. The remainders of the contributions are made to the Government administered provident
fund. The Company has no further obligations under the provident fund plan beyond its monthly
contributions.
1.1.8 Research and development
Revenue expenditure incurred on research and development is charged off as incurred. Capital expenditure
incurred on research and development is depreciated over the estimated useful lives of the related assets.
1.1.9 Foreign currency transactions
Sales made to overseas clients and collections deposited in foreign currency bank accounts are recorded at the
exchange rate as of the date of the respective transactions. Expenditure in foreign currency is accounted at the
exchange rate prevalent when such expenditure is incurred. Disbursements made out of foreign currency bank
accounts are reported at a rate that approximates the actual monthly rate. Exchange differences are recorded
when the amount actually received on sales or actually paid when expenditure is incurred is converted into
Indian Rupee. The exchange differences arising on foreign currency transactions are recognized as income or
expense in the period in which they arise.
Fixed assets purchased at overseas offices are recorded at cost, based on the exchange rate as of the date of
purchase. The charge for depreciation is determined as per the Company’s accounting policy.
Current assets and current liabilities denominated in foreign currency are translated at the exchange rate prevalent
at the date of the balance sheet. The resulting difference is also recorded in the profit and loss account. In the
case of forward contracts, the difference between the forward rate and the exchange rate on the date of the
transaction is recognized as income or expense over the life of the contract.
9
1.1.10 Investments
Investments are classified as current investments or long-term investments. Current investments are carried at
the lower of cost and fair value. Cost for overseas investments comprises the Indian Rupee value of the
consideration paid for the investment. Provisions are recorded for any decline in the carrying value as of the
balance sheet date.
Long-term investments are carried at cost and provisions recorded to recognize any decline, other than temporary,
in the carrying value of such investment.
1.1.11 Investment in subsidiary
The investment in the subsidiary is accounted on the cost method, whereby, the investment is carried at cost
and the Company recognizes only dividends received from the subsidiary as income in the profit and loss
account. Provisions are recorded to recognize any decline, other than temporary, in the carrying value of the
investment.
1.1.12 Income tax
Provision is made for income tax annually based on the tax liability computed after considering tax allowances
and exemptions. Provisions are recorded as considered appropriate for matters under appeal due to disallowances
or for other reasons.
1.2 Notes on accounts

The previous period’s figures have been recast / restated, wherever necessary, to conform to the current period’s
classification.
1.2.1 Capital commitments and contingent liabilities
a. The estimated amount of contracts remaining to be executed on capital account, and not provided
for (net of advances) is Rs. 121,56,43,540 as at September 30, 2000. The amount of such contracts
as at September 30, 1999 was Rs. 61,66,53,437 and as at March 31, 2000 was Rs. 80,31,29,007.
b. The Company has outstanding guarantees and counter guarantees of Rs. 6,51,30,000 as at
September 30, 2000, to various banks, in respect of the guarantees given by the banks in favor of
various government authorities and a customer. The guarantees and counter guarantees
outstanding as at September 30, 1999 were Rs.1,58,84,263 and as at March 31, 2000 were
Rs. 5,26,30,000.
c. Claims against the Company, not acknowledged as debts, amounted to Rs. 8,75,532 as at
September 30, 2000. Such claims, as at September 30, 1999 were Rs. 17,91,814 and as at
March 31, 2000 were Rs. 32,89,661.
1.2.2 Quantitative details
The Company is 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.
1.2.3 Managerial remuneration paid to the chairman, managing director and whole-time directors
in Rs.
Three months ended Six months ended Year ended
September 30, September 30, March 31,
2000 1999 2000 1999 2000
Salary 43,77,541 9,73,800 66,42,509 19,47,600 38,00,059
Contribution to provident
fund and other funds 4,87,061 3,09,780 8,70,466 6,19,560 12,08,855
Perquisites 10,88,801 6,32,970 18,28,674 15,78,369 37,32,482
* includes the remuneration paid to three directors who were co-opted into the board on May 27, 2000.
10
1.2.4 Managerial remuneration paid to non-whole-time directors
in Rs.
2000 1999 2000 1999 2000
Commission – – – – 48,17,800
Sitting fees 25,000 4,000 1,37,000 44,000 92,000
Reimbursement of expenses 2,94,513 2,25,891 4,98,674 4,56,605 10,13,703
1.2.5 Imports on CIF basis

in Rs.
2000 1999 2000 1999 2000
Capital goods 26,43,63,022 7,75,09,947 43,20,09,442 15,38,94,938 37,47,31,691
Software packages 30,54,632 1,67,09 ,821 92,38,916 2,08,06,798 2,54,95,652
1.2.6 Expenditure in foreign currency (on the payments basis)

in Rs.
2000 1999 2000 1999 2000
Travel expenses 27,94,50,302 14,18,36,600 45,64,90,402 31,35,70,860 70,29,13,532
Professional charges 3,08,42,822 58,93,140 3,80,49,742 1,20,76,246 4,51,95,637
Other expenditure incurred overseas
for software development 116,22,63,533 58,00,33,181 197,01,42,528 92,16,15,097 221,74,57,133
1.2.7 Earnings in foreign exchange (on the receipts basis)

in Rs.
2000 1999 2000 1999 2000
Income from software development
services and products 431,24,42,409 182,51,55,780 735,52,73,359 348,81,42,974 833,29,73,465
Interest received on deposits
with banks 5,19,94,463 4,31,26,392 10,69,20,563 8,55,70,358 18,42,65,368
1.2.8 Depreciation on assets costing less than Rs. 5,000 each

During the six months ended September 30, 2000, the Company charged depreciation at 100% in respect of
assets costing less than Rs. 5,000 each, amounting to Rs. 10,04,17,795 (Rs. 2,27,08,905). For the three months
ended September 30, 2000 the charge is Rs. 6,63,81,667 (Rs. 1,50,93,874) and for the previous year March 31,
2000 is Rs. 13,21,59,074.
1.2.9 Exchange differences
in Rs.
2000 1999 2000 1999 2000
Gains on the translation of
Foreign currency deposits 6,14,29,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
Net realized and unrealized
exchange gains – others 13,21,48,664 5,24,43,677 17,31,28,032 8,86,41,299 8,76,31,024
Total net realized and
unrealized gains 19,35,78,085 6,89,00,000 34,41,25,433 18,64,00,000 18,69,58,099
11
The gains on the translation of foreign currency deposits are separately disclosed under “Other income” in the
financial statements. Net realized and unrealized exchange gains have been included in “Income from software
development services and products – overseas”, except for an amount of Rs. 3,53,92,000 relating to the translation
gains realized on repatriation of certain ADS proceeds, which is also classified in the financial statements as
“Other income”.
1.2.10 Research and development expenditure
in Rs.
2000 1999 2000 1999 2000
Capital 48,26,181 – 68,28,231 – 15,27,500
Revenue 4,00,76,886 2,26,17,590 7,16,59,376 3,88,51,990 8,07,35,940
Total research and
development expenses 4,49,03,067 2,26,17,590 7,84,87,607 3,88,51,990 8,22,63,440
1.2.11 Provision for contingencies

The Company had instituted a contingency plan effective October 1, 1998 and made a total provision of
Rs. 9,99,00,000 to meet any possible disruption in client support due to the Year 2000 impact on the technology
and communication infrastructure provided to the Company by its vendors. For the year ended March 31,
2000, Rs. 2,42,29,154 was spent towards the Year 2000 transition effort, which was set off against the provision
and the remainder of Rs. 7,56,70,846 was written back to the profit and loss account.
1.2.12 Provision for e-inventing the Company
The Company made a provision of Rs. 3,50,00,000 for the quarter ended September 30, 1999 towards
e-inventing the Company. Until March 31, 2000 the Company had incurred Rs. 3,10,99,023 towards e-inventing
Infosys, which was set off against the provision earlier made. The remainder of Rs. 39,00,977 was incurred and
set off against this provision during the first quarter of the current year.
1.2.13 Unearned revenue
Unearned revenue as of September 30, 2000 amounting to Rs. 73,48,39,451 (previous period Rs. 27,75,55,705
and previous year Rs. 17,56,71,963) primarily consists of client billings on fixed-price, fixed-time-frame contracts
for which the related costs have not yet been incurred.
1.2.14 Dues to small-scale industrial undertakings
As of September 30, 2000, the Company had no outstanding dues to small-scale industrial undertakings (previous
period Rs. nil; previous year Rs. nil).
1.2.15 Balance of unutilized money raised by issue of American Depositary Shares
During the year ended March 31, 1999, Infosys made an Initial Public Offering of American Depositary Shares
(“ADS”), of US$70,380,000, equivalent to Rs. 296,86,00,000. The issue expenses amounted to Rs. 19,68,00,000
and the amount utilized for capital investments until date is Rs. 277,18,00,000. The unutilized money as on
September 30, 1999 was Rs. 140,99,00,000, which was maintained in foreign currency deposit accounts with
various banks outside India.
1.2.16 Stock option plans
The Company currently has three stock option plans. These are summarized below.
1994 Stock Option Plan (“the 1994 Plan”)
As of September 30, 2000, 3,34,200 options to acquire 3,34,200 shares were outstanding with the employees
under the 1994 Plan. These options were granted at an exercise price of Rs. 50 per option. In addition to the
above, the number of shares earlier issued to employees subject to lock-in-period is 16,94,600 shares.
The Company’s 1998 Stock Option Plan (“the 1998 Plan”) provides for the grant of non-statutory stock options
and incentive stock options to employees. The establishment of the 1998 Plan was approved by the Board of
Directors in December 1997 and by the Company’s shareholders in January 1998. The Government of India
12
approved the 1998 Plan, subject to a limit of 14,70,000 equity shares representing 29,40,000 ADSs to be
issued under the plan. A total of 16,00,000 equity shares corresponding to 32,00,000 ADSs are currently
reserved for issue pursuant to the 1998 Plan. These options may be issued at an exercise price that is not less
than 90% of the fair market value of the underlying equity share on the date of the grant. The 1998 Plan will
terminate in January 2008, unless terminated earlier. All options under the 1998 Plan are exercisable for ADSs
representing equity shares. A committee of the Board of Directors administers the 1998 Plan.
Number of options granted, Three months ended Six months ended Year ended
exercised and forfeited September 30, September 30, March 31,
2000 1999 2000 1999 2000
Options outstanding,
beginning of period/year 8,23,366 4,19,000 6,89,500 4,19,000 4,19,000
Granted 85,300 – 2,32,000 – 2,94,300
Exercised Nil – 1,334 – 23,800
Forfeited 37,200 – 48,700 – –
end of period/year 8,71,466 4,19,000 8,71,466 4,19,000 6,89,500
Weighted average US$83.40 US$17.00 US$83.40 US$17.00 US$58.53
Exercise price (Rs. 3,837) (Rs. 741) (Rs. 3,837) (Rs. 741) (Rs. 2,552)
In fiscal 2000, the Company instituted the 1999 Plan. The shareholders and the Board of Directors approved
the 1999 Plan in June 1999. The 1999 Plan provides for the issue of 66,00,000 equity shares to the employees.
The 1999 Plan is administered by a Compensation Committee comprising a maximum of seven members, the
majority of whom are independent directors on the Board of Directors. Under the 1999 Plan, options will be
issued to employees at an exercise price, which shall not be less than the Fair Market Value. Fair Market Value
is the closing price of the Company’s shares in the stock exchange where there is the highest trading volume on
a given date and if the shares are not traded on that day, the closing price on the next trading day. Under the
1999 Plan, options may be issued to employees at exercise prices that are less than Fair Market Value only if
specifically approved by the members of the Company in a general meeting.
Number of options granted, Three months ended Six months ended Year ended
exercised and forfeited September 30, September 30, March 31,
2000 1999 2000 1999 2000
beginning of period/year 16,41,850 – 10,06,800 – –
Granted 2,95,450 – 9,54,100 – 10,14,500
Exercised – – - – –
Forfeited 54,300 – 77,900 – 7,700
end of period/year 18,83,000 – 18,83,000 – 10,06,800
Weighted average exercise price Rs. 5,343 N.A. Rs. 5,343 N.A. Rs. 4,268
1.2.17 Proforma disclosures relating to the Employee Stock Option Plans (“ESOPs”)
The Securities and Exchange Board of India (SEBI) recently issued the (Employee Stock Option Scheme and
Employee Stock Purchase Scheme) Guidelines, 1999 which is applicable to all stock option schemes established
after June 19, 1999. In accordance with these guidelines, the excess of the market price of the underlying
equity shares as of the date of the grant of the options over the exercise price of the options, including up-front
payments, if any is to be recognized and amortized on a straight line basis over the vesting period. All options
under the 1998 and 1999 stock option plans have been issued at fair market value, hence there are no
compensation costs.
The Company’s 1994 stock option plan was established prior to the SEBI guidelines on stock options.
Had the stock compensation costs for this stock option plan been determined as per the guidelines issued by
SEBI, the Company’s reported net profit would have been reduced to the proforma amounts indicated below.
13
in Rs.
2000 1999 2000 1999 2000
Net profit :
– As reported 154,01,22,579 65,70,82,803 280,80,85,328 126,31,64,641 293,51,56,665
– Adjusted proforma 148,20,22,829 60,09,10,486 269,34,93,331 115,34,29,790 271,34,60,717
1.2.18 Provision for taxation

The Company’s profits from export activities are deductible from taxable income. Moreover, most of Infosys’
operations are conducted through 100% Export Oriented Units (“EOU”), which are entitled to a tax holiday for
a period of ten years from the date of commencement of operations. The provision for taxation includes taxes
payable in respect of domestic income and income arising from the Company’s overseas operations. The
Government of India has recently amended the tax incentive available to companies operating through export
oriented units. The period of tax exemption available to such companies has been restricted to 10 consecutive
years commencing from the fiscal year in which the unit commences software development or March 31, 2000,
whichever is earlier. Additionally, export related tax deductions apart from the 100% EOU scheme earlier
described are being phased out over a period of five years ending fiscal 2004.
1.2.19 Cash and bank balances
The cash and bank balances include interest accrued but not due on fixed deposits amounting to Rs. 1,44,56,954
for the six month period ended September 30, 2000 (previous period Rs. 23,63,996 and previous year
Rs. 94,92,514).
1.2.20 Loans and advances
“Advances recoverable in cash or kind or for value to be received” mainly comprises prepaid travel and per-
diem expenses and advances to vendors for current assets.
Deposits with financial institutions and a body corporate comprise:
in Rs.
Six months ended Six months ended Year ended
September 30, 2000 September 30, 1999 March 31, 2000
Deposits with financial institutions:
Housing Development Finance
Corporation Limited 10,16,06,063 25,47,68,334 25,50,19,994
ICICI Limited 50,84,73,016 25,32,64,877 25,75,52,742
Deposits with body corporate:
G E Capital Services India Limited 50,60,63,986 25,31,29,726 25,32,29,129
The above amounts include interest accrued but not due amounting to Rs. 1,61,10,876 (corresponding previous
period Rs. 1,11,30,744 and previous year Rs. 1,58,01,863).
The financial institutions and the body corporate have AAA rating from Credit Rating and Information Services
of India Limited (“CRISIL”).
Mr. Deepak M Satwalekar, Director, is the Managing Director of HDFC. Mr. N R Narayana Murthy, Chairman
and CEO, and Professor Marti G. Subrahmanyam, Director, are also directors in ICICI Limited. Except as
directors in these financial institutions, these persons have no direct interest in these transactions.
1.2.21 Current liabilities
Sundry creditors for other liabilities represent mainly the retention amounts payable to the vendors, and amounts
accrued for various other operational expenses.
1.2.22 Fixed assets
The Company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the
terms of these agreements, the Company has the option to purchase the properties outright at the expiry of the
lease period. The Company has already paid 99% of the value of the properties at the time of entering into the
lease-cum-sale agreements. These amounts are disclosed as “Land – leasehold” under “Fixed assets” in the
financial statements.
14
1.2.23 Transfer of intellectual property rights
During the first quarter of the current fiscal, the Company transferred its intellectual property rights in Onscan
–a web-focussed wireless-enabled notification product, to Onscan Inc., USA, a company incubated by Infosys
as part of its ongoing effort to encourage and promote budding entrepreneurs among its employees. The
product was transferred for a gross consideration of Rs. 8,93,40,000 (US$2 million), received as equity, preferred
voting and preferred non-voting securities in Onscan Inc. The income arising out of the transfer of Rs. 5,49,44,000
(net of tax) is disclosed as an extraordinary item.
1.2.24 Investments
Alpha Thinx Mobile Phone Services AG, Austria
During the current quarter, the Company invested Rs. 2,20,98,608 (equivalent to 555,800) and acquired
27,790 bearer shares of nominal value 1 each, at an issue price of 20 per share in Alpha Thinx Mobile Phone
Services AG (“Alpha Thinx”), a Vienna-based company. Alpha Thinx operates in the wireless Internet space and
plans to host interactive services for mobile users across Europe.
Asia Net Media BVI Ltd., the British Virgin Islands
During the current quarter, the Company invested Rs. 6,84,75,000 (equivalent to US$1,500,000) and acquired
3,00,00,000 Ordinary Shares of par value US$0.01 each, at an issue price of US$0.05 per Ordinary Share in
Asia Net Media BVI Limited (“Asia Net”). Asia Net intends to leverage under-exploited offline brands in media
and entertainment by delivering them through online channels and to establish a synergistic network of companies
in this space.
CiDRA Corporation, USA
During the first quarter of the current fiscal the Company made a strategic investment of Rs. 13,40,08,660
comprising 33,333 fully paid Series D Convertible Preferred Stock, par value of US$0.01 each, at US$90 each
in CiDRA Corporation, USA. CiDRA Corporation is a developer of photonic devices for high-precision wavelength
management and control for next-generation optical networks.
M-Commerce Ventures Pte. Ltd., Singapore
During the period, the Company agreed to invest Singapore $(“S$”) 1,000,000 in M-Commerce Ventures Pte.
Ltd. (“MCV”), a Singapore based venture fund. As at September 30, 2000, the Company made an investment of
Rs. 50,36,000 (equivalent to S$200,000), and acquired 20 capital units in MCV. Each unit in MCV represents
one ordinary share of S$1 each, issued at par, and nine redeemable preference shares at a par value of S$1 each,
with a premium of S$1,110 per redeemable preference share. MCV is promoted by the Economic Development
Board, Singapore and intends to focus on companies offering mobile portals, personal information management
and messaging, bandwidth optimization and other key enablers of m-commerce.
1.2.25 Segment reporting
The Company’s operations predominantly relate to providing IT services, which is delivered to globally located
customers.
The accounting principles that have been consistently used to record revenue, expenditure, assets and liabilities
in the individual segments are as set out in the note on significant accounting policies.
While the primary segment reporting is already set out in detail in the Company’s balance sheet, statement of
profit and loss and the various schedules and notes thereto, the secondary disclosures are as follows:
in Rs.
2000 1999 2000 1999 2000
North America 348,68,10,776 167,18,09,460 625,81,64,972 310,82,51,725 713,27,33,054
Europe 80,94,58,817 30,84,40,362 142,00,38,934 58,76,58,900 129,09,73,822
Rest of the world 25,97,02,570 11,09,73,267 51,21,11,714 19,98,18,838 52,40,04,100
India 10,07,73,231 8,75,82,375 17,28,37,455 12,36,96,241 26,69,37,092
Total 465,67,45,394 217,88,05,464 836,31,53,075 401,94,25,704 921,46,48,068
Certain expenses such as personnel costs, communication, depreciation on plant and machinery, etc., which
form a significant component of total expenses, are not specifically allocable to these geographical segments as
15
the underlying services are used inter-changeably between reportable segments. Management believes that it is
not practicable to provide segment disclosures relating to segment costs and expenses, and consequently segment
profits or losses, since a realistic allocation can not be made.
Moreover the fixed assets used in the Company’s business or the liabilities contracted are not identifiable to any
particular reportable segment as the fixed assets and services can be used interchangeably among segments.
Consequently, management believes that it is not practicable to provide segment disclosures relating to total
assets since a meaningful analysis based on the available data among the various geographic segments is not
possible.
1.2.26 Related party transactions
The Company entered into related party transactions during the half-year with Yantra Corporation, USA, the
subsidiary of the Company and key management personnel.
The transactions with Yantra comprise sales of Rs. 10,37,00,336 during the six months ended
September 30, 2000. The corresponding amounts for the six months ended September 30, 1999 and the year
ended March 31, 2000 were Rs. 4,80,87,782 and Rs. 11,40,18,372 respectively. The outstanding dues from
the subsidiary as set out in schedule 5, Sundry Debtors, to the financial statements.
Key management personnel are non-director officers of the Company, who have the authority and responsibility
for planning, directing and controlling the activities of the Company. The loans and advances receivable from
non-director officers is stated in schedule 7, Loans and advances, to the financial statements.
1.2.27 Provisions for doubtful debts
The Company normally provides for all debtor dues outstanding for 180 days or longer after considering its
historical experience, the individual creditworthiness of the debtors and the current economic environment. In
the second quarter of fiscal 2001, the Company provided for doubtful debts of Rs. 3,64,00,351 for dues from
two of its customers although these dues were less than 180 days old, as the amounts were considered doubtful
of recovery. Management continues pursuing the parties for recovery of the dues, in part or full.
16
Statement of cash flows
in Rs.
Sep 30,2000 Sep 30,1999 Sep 30,2000 Sep 30,1999 Mar 31, 2000
Cash flows from operations
Profit before tax 171,76,22,579 75,20,82,803 306,77,41,328 143,81,64,641 325,64,85,819
Other income (18,80,59,827) (8,16,96,895) (33,68,00,507) (21,71,95,024) (36,62,06,181)
Loss (profit) on sale of fixed assets 8,720 (4,16,230) 53,829 (4,63,777) (8,73,015)
Increase (decrease) in provision
for contingencies – – – 3,33,00,000 (6,66,00,000)
Increase (decrease) in provision
for e-inventing the Company – 3,50,00,000 (39,00,977) 3,50,00,000 39,00,977
Depreciation, depletion and amortization 24,23,67,547 10,72,23,769 41,97,39,264 20,04,41,918 53,23,27,389
Decrease (increase) in sundry debtors (14,65,76,914) (26,71,34,722) (106,87,87,493) (48,95,21,379) (51,65,92,828)
Decrease (increase) in loans and advances (5,07,48,178) (8,30,09,030) (13,17,94,697) (17,73,97,884) (41,49,70,588)
Increase (decrease) in current
liabilities and provisions 34,84,56,392 4,17,59,020 76,19,16,176 17,70,67,854 42,26,37,450
Income taxes paid (23,58,99,316) (10,92,26,480) (32,25,31,791) (13,84,37,481) (35,53,53,877)
Net cash from operations 168,71,71,003 39,45,82,235 238,56,35,132 86,09,58,868 249,47,55,146
Cash flows from financing
Proceeds from conversion of options – – 10,01,506 – 1,76,25,277
Expenses relating to issue of
American Depositary Shares – (3,26,400) – (2,05,30,090) (2,35,06,514)
Expenses relating to issue of
ADS linked stock options – – – – (1,01,93,113)
Dividends paid (including dividend tax) – – (22,02,44,213) (8,91,36,007) (19,92,57,109)
Net cash used for financing – (3,26,400) (21,92,42,707) (10,96,66,097) (21,53,31,459)
Cash flows from investing
Income from investments 9,12,38,406 6,52,40,572 16,58,03,106 11,94,36,323 26,68,79,106
Proceeds of sale of fixed assets 1,87,023 4,20,448 2,37,761 5,71,709 10,20,400
Purchase of fixed assets (114,01,44,667) (38,55,70,016) (199,85,14,640) (59,76,16,481) (159,87,03,617)
Other long-term investments (9,56,09,608) – (22,96,18,268) – (13,08,00,000)
Net cash used for investing (114,43,28,846) (31,99,08,996) (206,20,92,041) (47,76,08,449) (146,16,04,111)
Effect of exchange differences on translation of
foreign currency deposit maintained abroad 9,68,21,421 1,64,56,323 17,09,97,401 9,77,58,701 9,93,27,075
Total increase (decrease) in cash and
cash equivalents during the period 63,96,63,578 9,08,03,162 27,52,97,785 37,14,43,023 91,71,46,651
Cash and cash equivalents at the
beginning of the period 471,93,71,802 444,72,30,805 508,37,37,595 416,65,90,944 416,65,90,944
Cash and cash equivalents
at the end of the period 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595
Note: During the half-year ended September 30, 2000, the Company transferred intellectual property rights in Onscan – a web-focussed wireless-
enabled notification product, to Onscan Inc., USA, a company incubated by Infosys as part of its ongoing effort to encourage and promote entrepreneurs
amongst its employees. The product was transferred for a gross consideration of Rs. 8.93 crore (US$2 million) received as equity, preferred voting and
preferred non-voting securities in Onscan Inc. and accordingly, is not considered in this statement of cash flows.
This is the cash flow statement referred

to in our report of even date.
17
Reconciliation of balance sheet items with cash flow items
in Rs.
Sep 30, 2000 Sep 30, 1999 Sep 30, 2000 Sep 30, 1999 March 31, 2000
1. Loans and advances
As per Balance sheet 288,54,93,594 164,28,14,672 288,54,93,594 164,28,14,672 210,12,77,161
Less : Deposits with financial institutions/
body corporate, included in cash equivalents (111,61,43,065) (76,11,62,937) (111,61,43,065) (76,11,62,937) (76,58,01,865)
Advance income taxes considered separately (84,61,76,889) (32,78,45,496) (84,61,76,889) (32,78,45,496) (54,40,96,353)
Balance considered for preparing
the cash flow statement 92,31,73,640 55,38,06,239 92,31,73,640 55,38,06,239 79,13,78,943
2. Additions to fixed assets
Add : Closing capital work-in-progress 104,58,25,080 41,28,99,285 104,58,25,080 41,28,99,285 56,96,03,505
Less : Opening capital work-in-progress (53,04,58,784) (14,21,61,438) (56,96,03,505) (14,88,35,800) (14,88,35,800)
3. Cash and cash equivalents
Add : Deposits with financial institutions/
body corporate (as per 1 above) 111,61,43,065 76,11,62,937 111,61,43,065 76,11,62,937 76,58,01,865
Balance considered for preparing the
cash flow statement 535,90,35,380 453,80,33,967 535,90,35,380 453,80,33,967 508,37,37,595
4. Income taxes paid
As per Profit and Loss Account 17,75,00,000 9,50,00,000 31,46,00,000 17,50,00,000 39,70,00,000
Add : Provision for tax on sale of
intellectual property rights – – 3,43,96,000 – –
Decrease (increase) in balance in
provision for taxes account (15,70,48,745) (9,50,05,897) (32,85,44,745) (17,33,27,793) (39,46,62,254)
Increase (decrease) in balance in
advance income tax account 21,54,48,061 10,92,32,377 30,20,80,536 13,67,65,274 35,30,16,131
5. Other income
As per Profit and Loss Account 19,57,87,617 9,58,18,435 34,68,95,149 23,37,31,680 39,14,11,095
Less : Income from operating activities (77,27,790) (1,37,05,310) (1,00,94,642) (1,60,72,879) (2,43,31,899)
Profit on sale of fixed asset considered separately – (4,16,230) – (4,63,777) (8,73,015)
6. Current liabilities and provisions
Less : Provision for taxation considered separately (95,45,64,487) (40,46,85,281) (95,45,64,487) (40,46,85,281) (62,60,19,742)
Provision for dividend considered separately (16,53,78,418) (9,92,08,200) (16,53,78,418) (9,92,08,200) (19,84,18,210)
Provision for dividend tax considered separately (3,63,83,252) (1,09,12,902) (3,63,83,252) (1,09,12,902) (2,18,26,003)
Provision for contingencies – (9,99,00,000) – (9,99,00,000) –
Provision for e-inventing the company – (3,50,00,000) – (3,50,00,000) (39,00,977)
This is the cash flow statement referred to

in our report of even date.

Chief Executive Officer Chief Operating Officer
18
At a glance – US GAAP
US$ in millions, except as otherwise stated
September 30 September 30 March 31,2000
2000 1999 2000 1999
For the period
Revenues 97.94 47.94 178.20 87.67 203.44
Export revenues 96.87 47.20 176.12 86.53 200.54
Operating income 32.20 14.62 58.60 26.92 60.50
Net income 32.78 14.72 59.61 28.03 61.34
Operating income as a percentage
of total revenues 32.88% 30.48% 32.89% 30.71% 29.74%
Net income as a percentage of total revenues 33.48% 30.70% 33.46% 31.97% 30.15%
Basic earnings per share $0.50 $0.22 $0.90 $0.42 $0.93
Dividend declared per equity share NA NA $0.05 $0.03 $0.10
Capital investments 22.99 8.72 41.14 12.97 35.93
At the end of the period
Total assets 279.89 181.22 219.28
Property, plant and equipment – net 79.37 32.22 47.55
Cash and cash equivalents 116.48 104.13 116.60
Working capital 146.05 123.27 137.94
Total debt – – –
Stockholders’ equity 243.38 162.25 198.14
Common stock 8.59 8.59 8.59
Market capitalization 10,583.72 5,412.82 13,609.67
Note:
Market capitalization is calculated by considering the Indian market price for the shares outstanding at the period/year-end.
19
United States
Securities and Exchange Commission
Washington, DC 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
For the quarter ended September 30, 2000
Commission File Number 333-72195
INFOSYS TECHNOLOGIES LIMITED

(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Bangalore, Karnataka, India

(Jurisdiction of incorporation or organization)
Electronics City, Hosur Road,

Bangalore, Karnataka
India 561 229
+91-80-852-0261
(Address of principal executive offices)
Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ...........x........... Form 40-F .......................
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby
furnishing the information to the Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of
1934.
Yes .................................... No ...........x.......................
If “Yes” is marked, indicate below the file number assigned to registrant in connection with
Rule 12g 3-2(b).
Not applicable.
20
Currency of presentation and certain defined terms
Unless the context otherwise requires, references herein to the “company” or to “Infosys” are to Infosys Technologies
Limited, a limited liability company organized under the laws of the Republic of India. References to “U.S.” or “United
States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic
of India. Yantra Corporation, a Delaware Corporation (“Yantra”), in which the company holds a minority interest, is
considered a subsidiary of the company for purposes of Indian GAAP. “Infosys” is a registered trademark of the
company in India and the United States. All other trademarks or tradenames used in this Quarterly Report on Form
6-K (“Quarterly Report”) are the property of their respective owners.
In this Quarterly Report, references to “$” or “Dollars” or “U.S. Dollars” are to the legal currency of the United States,
references to “ ” or “Euro” are to the legal currency of the European Union and references to “Rs.” or “Rupees” or
“Indian Rupees” are to the legal currency of India. The company’s financial statements are presented in Indian Rupees
and translated into U.S. Dollars and are prepared in accordance with United States generally accepted accounting
principles (“U.S. GAAP”). References to “Indian GAAP” are to Indian generally accepted accounting principles. Except
as otherwise specified, financial information is presented in Dollars. References to a particular “fiscal” year are to the
company’s fiscal year ended March 31 of such year.
Unless otherwise specified herein, financial information has been converted into Dollars at the noon buying rate in
New York City for cable transfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank
(the “Noon Buying Rate”) as of September 30, 2000, which was Rs. 46.06 per $1.00. For the convenience of the
reader, this Quarterly Report contains translations of certain Indian rupee amounts into U.S. Dollars which should
not be construed as a representation that such Indian Rupee or U.S. Dollar amounts referred to herein could have
been, or could be, converted to U.S. Dollars or Indian Rupees, as the case may be, at any particular rate, the rates
stated below, or at all. Any discrepancies in any table between totals and sums of the amounts listed are due to
rounding.
Forward-looking statements may prove inaccurate
In addition to historical information, this quarterly report contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that
might cause such differences include but are not limited to, those discussed in the section entitled “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Readers are
cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only
as of the date hereof. In addition, readers should carefully review the other information in this quarterly report and in
the company’s periodic reports and other documents filed with the Securities and Exchange Commission (“SEC”)
from time to time.
21
Part I – Financial information
Item 1. Financial statements

Balance sheets as of
Sep 30, 2000 Sep 30, 1999 Mar 31, 2000
(Unaudited) (Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $116,475,448 $104,131,114 $116,599,486
Trade accounts receivable, net of allowances 52,826,967 30,626,659 31,233,515
Prepaid expenses and other current assets 13,255,567 7,482,365 11,256,295
Total current assets 182,557,982 142,240,138 159,089,296
Property, plant and equipment – net 79,371,264 32,221,795 47,554,772
Deferred income taxes 2,877,129 1,350,849 2,566,266
Investments 8,270,443 177,938 3,177,938
Other assets 6,809,063 5,225,443 6,894,598
Total assets $279,885,881 $181,216,163 $219,282,870
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable $44,587 $52,663 $976,840
Client deposits 2,061,910 88,642 425,724
Other accrued liabilities 16,076,816 10,694,035 13,835,635
Income taxes payable 2,355,740 1,763,189 1,878,977
Unearned revenue 15,971,299 6,368,878 4,029,173
Total current liabilities 36,510,352 18,967,407 21,146,349
STOCKHOLDERS’ EQUITY
Common stock, $0.16 par value; 100,000,000 equity
shares authorized, Issued and outstanding – 66,151,367,
66,138,800 and 66,150,700 as of September 30, 2000,
September 30, 1999 and March 31, 2000 8,593,585 8,592,137 8,593,510
Additional paid-in-capital 121,529,268 121,403,339 121,506,726
Accumulated other comprehensive income (26,112,795) (14,033,267) (14,137,933)
Deferred stock compensation (15,047,221) (20,173,346) (17,598,813)
Retained earnings 154,412,692 66,459,893 99,773,031
Total stockholders’ equity 243,375,529 162,248,756 198,136,521
Total liabilities and stockholders’ equity $279,885,881 $181,216,163 $219,282,870
See accompanying notes to financial statements
22
Statements of income
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
REVENUES
Revenues $97,939,050 $47,941,680 $178,196,883 $87,670,580 $203,443,754
Cost of revenues 50,198,315 26,103,672 92,160,476 46,723,936 111,080,546
Gross profit 47,740,735 21,838,008 86,036,407 40,946,644 92,363,208
Operating expenses
Selling and marketing expenses 4,994,025 1,665,122 9,191,540 4,154,480 9,643,970
General and administrative expenses 9,274,568 4,264,873 15,691,481 7,327,571 17,102,550
Amortization of stock compensation
expense 1,275,796 1,293,002 2,551,592 2,543,102 5,117,635
Total operating expenses 15,544,389 7,222,997 27,434,613 14,025,153 31,864,155
Operating income 32,196,346 14,615,011 58,601,794 26,921,491 60,499,053
Other income, net 4,292,181 2,205,581 7,695,238 5,416,282 9,038,792
Income before income taxes 36,488,527 16,820,592 66,297,032 32,337,773 69,537,845
Provision for income taxes 3,706,641 2,100,081 6,683,473 4,306,383 8,193,317
Net income $32,781,886 $14,720,511 $59,613,559 $28,031,390 $61,344,528
Earnings per equity share
Basic $0.50 $0.22 $0.90 $0.42 $0.93
Diluted $0.49 $0.22 $0.89 $0.42 $0.93
Weighted equity shares used in computing
earnings per equity share
Basic 65,941,034 65,671,534 65,959,151 65,680,100 65,659,625
Diluted 66,912,722 65,671,534 67,097,321 65,680,100 65,863,990
23
24
Statements of stockholders’ equity
(Information as of and for the six months ended September 30, 2000 and September 30, 1999 is unaudited)
in $ except share numbers
Common Stock Additional Comprehensive Accumulated Deferred Loan to Retained Total
Shares Amount paid-in income other stock Trust income stockholders’
capital Comprehensive compensation equity
income
Balance as of
March 31, 1998 64,068,800 $4,545,811 $24,415,920 $(7,042,229) $(7,831,445) $(936,365) $27,994,268 $41,145,960
Stock split – 3,800,949 – – – – (3,800,949) -
Cash dividends declared – – – – – – (3,152,863) (3,152,863)
Common stock issued 2,070,000 245,377 70,134,623 – – – – 70,380,000
ADR issue expenses (4,108,924) (4,108,924)
Compensation related to
stock option grants – – 30,407,892 – (30,407,892) – – –
Amortization of compensation
related to stock option grants – – – – 16,552,538 – – 16,552,538
Comprehensive income
Net income available for
common stockholders – – – $17,446,088 – – – 17,446,088 17,446,088
Other comprehensive income
Translation adjustment – – – (2,058,433) (2,058,433) – – – (2,058,433)
Comprehensive income – – – $15,387,655 – – – – –
Adjustment on de-consolidation
of subsidiary – – – – – – 2,468,831 2,468,831
Repayment of loan to trust – – – – – 936,365 – 936,365
Balance as of
March 31, 1999 66,138,800 8,592,137 120,849,511 (9,100,662) (21,686,799) – 40,955,375 139,609,562
Common stock issued – – (475,821) – – – – (475,821)
Cash dividends declared – – – – – (2,526,872) (2,526,872)
Compensation related to
stock option grants – – 1,029,649 – (1,029,649) – – –
Balance as of
September 30, 1999 66,138,800 $8,592,137 $121,403,339 $(14,033,267) $(20,173,346) – $66,459,893 $162,248,756
Statements of stockholders’ equity (contd.)
(Information as of and for the six months ended September 30, 2000 and September 30, 1999 is unaudited)
in $ except share numbers
Common Stock Additional Comprehensive Accumulated Deferred Loan to Retained Total
Shares Amount paid-in income other stock Trust income stockholders’
capital Comprehensive compensation equity
income
Balance as of
September 30, 1999 66,138,800 $8,592,137 $121,403,339 $(14,033,267) $(20,173,346) – $66,459,893 $162,248,756
Common stock issued 11,900 1,373 881,310 – – – – 882,683
ADR issue expenses (777,923) (777,923)
Net income available
for common stockholders – – – $33,313,138 – – – 33,313,138 33,313,138
Translation adjustment – – – (104,666) (104,666) – – – (104,666)
Balance as of
March 31, 2000 66,150,700 8,593,510 121,506,726 (14,137,933) (17,598,813) – 99,773,031 198,136,521
Cash dividends – – – – – – (4,973,898) (4,973,898)
Common stock issued 667 75 22,542 – – – – 22,617
Balance as of
September 30, 2000 66,151,367 $8,593,585 $121,529,268 $(26,112,795) $(15,047,221) – $154,412,692 $243,375,529
25
Statement of cash flows
Six months ended Year ended
Sep 30, 2000 Sep 30, 1999 March 31, 2000
(Unaudited) (Unaudited) (Audited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $59,613,559 $28,031,390 $61,344,528
Adjustments to reconcile net income to net cash
provided by operating activities
Loss/(gain) on sale of property, plant and equipment 1,199 (10,749) (20,153)
Depreciation 9,316,317 4,641,216 12,268,169
Deferred tax expense/(benefit) (310,863) 364,526 (850,891)
Amortization of deferred stock compensation expense 2,551,592 2,543,102 5,117,635
Changes in assets and liabilities
Trade accounts receivable (21,593,452) (10,569,981) (11,176,837)
Prepaid expenses and other current assets (910,657) (1,747,042) (2,390,039)
Income taxes 476,763 807,392 923,180
Accounts payable (932,253) (22,642) 901,535
Client deposits 1,636,186 70,122 407,204
Unearned revenue 11,942,126 1,770,266 (569,439)
Other accrued liabilities 2,212,335 2,294,235 5,435,835
Net cash provided by operating activities 64,002,852 28,171,835 71,390,727
CASH FLOWS FROM INVESTING ACTIVITIES:

Expenditure on property, plant and equipment (41,139,302) (12,965,199) (35,926,030)
Proceeds from sale of property, plant and equipment 5,294 13,250 23,555
Loans to employees (1,003,080) (2,028,437) (6,828,525)
Purchase of investments (5,092,505) – (3,000,000)
Net cash used in investing activities (47,229,593) (14,980,386) (45,731,000)
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from issuance of equity shares 22,617 (475,821) 406,862
ADR issue expenses – – (777,923)
Payment of cash dividends (4,945,052) (2,526,872) (2,526,872)
Net cash used in financing activities (4,922,435) (3,002,693) (2,897,933)
Effect of exchange rate changes on cash (11,974,862) (4,932,605) (5,037,271)
Net increase in cash and cash equivalents during the period (124,038) 5,256,151 17,724,523
Cash and cash equivalents at the beginning of the period 116,599,486 98,874,963 98,874,963
Cash and cash equivalents at the end of the period $116,475,448 $104,131,114 $116,599,486
Supplementary information:
Cash paid towards taxes $6,206,710 $3,498,991 $7,270,137
26
Notes to financial statements as of and for the six months ended September 30, 2000
Item 1. Company overview and significant accounting policies
1.1 Company overview
Infosys Technologies Limited (the “company”) is a publicly held company providing information technology
(“IT”) solutions principally to Fortune 1000 and emerging new economy companies. Infosys’ range of services
includes IT consulting, IT architecture, application development, e-commerce and Internet consulting, and
software maintenance. In addition, the company develops and markets certain software products. Headquartered
in Bangalore, India, the company has 17 state-of-the-art offshore software development facilities located
throughout India that enable it to provide high quality, cost-effective services to clients in a resource-constrained
environment. The company also maintains offices throughout North America, Europe and Asia.
1.2 Basis of preparation of financial statements

The accompanying financial statements are prepared in accordance with US Generally Accepted Accounting
Principles (“GAAP”). All amounts are stated in US dollars, except as specified.
1.3 Principles of consolidation

The financial statements of the company were consolidated with the accounts of its wholly owned subsidiary,
Yantra Corporation (“Yantra”) during fiscal 1998. On October 20, 1998, the company’s voting control of Yantra
declined to approximately 47%. Accordingly, the company has followed the equity method of accounting for
Yantra in fiscal 1999. On June 14, 1999, Yantra sold Series C Convertible Preferred Stock in the amount of
US$15 million to unrelated existing and new investors, reducing the company’s voting control to approximately
25%. In July 2000, Yantra sold Series D Convertible Preferred Stock amounting to $40 million, to unrelated
existing and new investors, further reducing the company’s voting control to approximately 16%.
The company owns 63% of the outstanding common shares of Yantra but has no financial obligations or
commitments to Yantra and does not intend to provide Yantra with financial support. Accordingly, the company
recognized no losses of Yantra after October 20, 1998. The excess of the company’s previously recognized
losses over the basis of its investments in Yantra as of October 20, 1998 were credited to retained earnings.
Yantra was incorporated in the United States in fiscal 1996 for the development of software products in the
retail and distribution areas. All inter-company transactions between the company and Yantra are eliminated.
1.4 Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities on the date of the financial statements and the reported amounts of revenues and expenses during the
period. Examples of estimates include accounting for contract costs expected to be incurred to complete software
development, allowance for uncollectible accounts receivable, future obligations under employee benefit plans
and useful lives of property, plant and equipment. Actual results could differ from those estimates.
1.5 Revenue recognition

The company derives its revenues primarily from software services and also from the licensing of software
products. Revenue for time-and-material contracts is recognized as the related costs are incurred. Revenue
from fixed-price, fixed-time frame contracts is recognized upon the achievement of specified milestones identified
in the related contracts, in accordance with the percentage-of-completion method. Provisions for estimated
losses on uncompleted contracts are recorded in the period in which such losses become probable based on the
current contract estimates. The company provides its clients with a fixed period warranty for corrections of
errors and telephone support on all its fixed-price, fixed-time frame contracts. Costs associated with the support
services are accrued at the time related revenues are recorded.
Revenue from licensing of software products is recognized upon shipment of products and fulfillment of
acceptance terms, if any, provided that no significant vendor obligations remain and the collection of the
related receivable is probable. When the company receives advances for software products, such amounts are
reported as client deposits until all conditions for revenue recognition are met. Maintenance revenue is deferred
and recognized ratably over the term of the underlying maintenance agreement, generally 12 months. Revenue
27
from client training, support and other services arising due to the sale of software products is recognized as the
services are performed.
1.6 Cash and cash equivalents

The company considers all highly liquid investments with a remaining maturity at the date of purchase/ investment
of three months or less to be cash equivalents. Cash and cash equivalents consist of cash, cash on deposit with
banks, marketable securities and deposits with corporations.
1.7 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation. The company depreciates
property, plant and equipment over their estimated useful lives using the straight-line method. The estimated
useful lives of assets are as follows:
Buildings 15 years
Furniture and fixtures 5 years
Computer equipment 2-5 years
Plant and equipment 5 years
Vehicles 5 years
The cost of software purchased for use in software development and services is charged to the cost of revenues
at the time of acquisition. The amount of third party software expensed in the six months ended September
30, 2000 and September 30, 1999 and in fiscal 2000 was $4,391,188, $2,150,559 and $3,816,840 respectively.
Deposits paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date
and the cost of property, plant and equipment not put to use before such date are disclosed as “Capital work-in-
progress”.
1.8 Impairment of long-lived assets

The company evaluates the recoverability of its long-lived assets and certain identifiable intangibles, if any,
whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable.
Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets
exceeds the fair value of the assets. Assets to be disposed are reported at the lower of the carrying value or the
fair value less the cost to sell.
1.9 Research and development

Research and development costs are expensed as incurred. Software product development costs are expensed
as incurred until technological feasibility is achieved. Software product development costs incurred subsequent
to the achievement of technological feasibility are not significant and are expensed as incurred.
1.10 Foreign currency translation

The accompanying financial statements are reported in US dollars. The functional currency of the company is
the Indian rupee (“Rs.”). The translation of Rs. to US dollars is performed for balance sheet accounts using the
exchange rate in effect at the balance sheet date, and for revenue and expense accounts using a monthly average
exchange rate for the respective periods. The gains or losses resulting from such translation are reported as
“Other comprehensive income”, a separate component of stockholders’ equity. The method for translating
expenses of overseas operations depends upon the funds used. If the payment is made from a rupee denominated
bank account, the exchange rate prevailing on the date of the payment would apply. If the payment is made
from a foreign currency, i.e., non-rupee denominated account, the translation into rupees is performed at the
average monthly exchange rate.
1.11 Foreign currency transactions

The company enters into foreign exchange forward contracts to limit the effect of exchange rate changes on its
foreign currency receivables. Gains and losses on these contracts are recognized as income or expense in the
statements of income as incurred, over the life of the contract.
28
1.12 Earnings per share
In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 128, Earnings Per Share, basic
earnings per share are computed using the weighted average number of common shares outstanding during the
period. Diluted earnings per share is computed using the weighted average number of common and dilutive
common equivalent shares outstanding during the period, using the treasury stock method for options and
warrants, except where the result would be anti-dilutive.
1.13 Income taxes

Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying
amounts of existing assets and liabilities, and their respective tax bases and operating loss carry-forwards.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be recovered or settled. The effect of changes in
tax rates on deferred tax assets and liabilities is recognized as income in the period that includes the enactment
date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax
benefits of which future realization is uncertain.
1.14 Fair value of financial instruments

The carrying amounts reflected in the balance sheets for cash, cash equivalents, accounts receivable and accounts
payable approximate their respective fair values due to the short maturities of these instruments.
1.15 Concentration of risk

Financial instruments that potentially subject the company to concentrations of credit risk consist principally
of cash equivalents, trade accounts receivable and hedging instruments. By their nature, all such financial
instruments involve risk including the credit risk of non-performance by counterparties. In management’s
opinion, as of September 30, 2000, September 30, 1999 and March 31, 2000, there was no significant risk of
loss in the event of nonperformance of the counterparties to these financial instruments. Exposure to credit
risk is managed through credit approvals, establishing credit limits and monitoring procedures. The company’s
cash resources are invested with corporations, financial institutions and banks with high investment grade
credit ratings. Limitations are established by the company as to the maximum amount of cash that may be
invested with any such single entity.
1.16 Retirement benefits to employees

1.16.1 Gratuity
In accordance with Indian law, the company provides for gratuity, a defined benefit retirement plan (the “Gratuity
Plan”) covering all employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement
or termination of employment of an amount based on the respective employee’s salary and the years of
employment with the company. The company established the Infosys Technologies Limited Employees’ Group
Gratuity Fund Trust (the “Gratuity Fund Trust”) on April 1, 1997. Liabilities with regard to the Gratuity Plan
are determined by actuarial valuation, based upon which the company makes contributions to the Gratuity
Fund Trust. Trustees administer the contributions made to the Gratuity Fund Trust. The funds contributed to
the Gratuity Fund Trust are invested in specific securities as mandated by the law and generally consist of
federal and state government bonds and the debt instruments of government-owned corporations.
1.16.2 Superannuation
Apart from being covered under the Gratuity Plan described above, the senior officers of the company are also
participants in a defined contribution plan maintained by the company. The plan is termed the superannuation
plan (the “plan”) to which the company makes monthly contributions based on a specified percentage of each
covered employee’s salary. The company has no further obligations under the plan beyond its monthly
contributions.
1.16.3 Provident fund
In addition to the above benefits, all employees receive benefits from a provident fund, which is a defined
contribution plan. Both the employee and the company make monthly contributions to the plan, each equal to
12% of each covered employee’s salary. The company established a provident fund trust in August 1996, to
29
which a part of the contributions are made each month. The remainder of the contributions is made to the
Government’s provident fund. The company has no further obligations under provident fund beyond its monthly
contributions.
1.17 Investments
Investments where the company controls between 20% and 50% of the voting interest are accounted for using
the equity method. Investment securities in which the company controls less than 20% voting interest are
currently classified as “Available-for-sale securities”.
Investment securities designated as “available-for-sale” are carried at their fair value based on quoted market
prices, with unrealized gains and losses, net of deferred income taxes, reported as a separate component of
stockholders’ equity. Realized gains and losses and declines in value judged to be other than temporary on
available-for-sale securities are included in the statements of income. The cost of securities sold is based on the
specific identification method. Interest and dividend income is recognized when earned.
1.18 Stock-based compensation

The company uses the intrinsic value-based method of Accounting Principles Board (“APB”) Opinion No. 25,
Accounting for Stock Issued to Employees, to account for its employee stock-based compensation plan. The
company has therefore adopted the proforma disclosure provisions of SFAS No. 123, Accounting for Stock-
Based Compensation.
1.19 Dividends
Dividends are recognized on actual payment.
1.20 Notes to financial statements

1.20.1 Cash and cash equivalents
The cost and fair values for cash and cash equivalents as of September 30, 2000 and 1999 and March 31, 2000,
respectively are as follows:
As of As of As of
Cost and fair values
Cash and bank deposits $92,216,742 $86,665,237 $99,035,223
Deposits with corporations 24,258,706 17,465,877 17,564,263
$116,475,448 $104,131,114 $116,599,486
1.20.2 Trade accounts receivable

Trade accounts receivable, as of September 30, 2000 and 1999 and March 31, 2000, net of allowance for
doubtful accounts of $1,550,118, $724,337 and $507,487, respectively amounted to $52,826,967, $30,626,659
and $31,233,515, respectively. The age profile of trade accounts receivable is given below.
in %
As of As of As of
Period (in days) September 30, 2000 September 30, 1999 March 31, 2000
0 – 30 75.6 53.6 64.7
31 – 60 13.6 33.0 31.8
61 – 90 6.7 10.3 1.8
More than 90 4.1 3.1 1.7
100.0 100.0 100.0
Trade accounts receivable includes accounts receivable from Yantra amounting to $389,460, $243,926 and Nil
as of September 30, 2000 and 1999 and March 31, 2000, respectively.
30
1.20.3 Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following:
As of As of As of
Prepaid expenses $4,378,992 $2,291,132 $3,602,334
Rent deposits 1,995,378 1,594,247 1,798,738
Deposits with government organizations 527,971 334,066 721,476
Loans to employees 6,202,867 3,218,805 5,114,253
Costs in excess of billings 70,729 – –
Other advances 79,630 44,115 19,494
$13,255,567 $7,482,365 $11,256,295
Other advances represent advance payments to vendors for the supply of goods and rendering of services.
Deposits with government organizations relate principally to leased telephone lines and electricity supplies.
Costs in excess of billings represent costs incurred on fixed price contracts in respect of which milestones are
yet to be achieved.
1.20.4 Property, plant and equipment – net
Property, plant and equipment consist of the following:
As of As of As of
Land $6,507,118 $2,590,065 $4,833,786
Buildings 24,548,112 8,336,877 13,509,409
Furniture and fixtures 13,667,773 5,707,273 9,156,208
Computer equipment 32,139,230 21,312,132 25,742,780
Plant and equipment 17,816,936 8,192,230 11,871,138
Vehicles 26,723 31,306 31,292
Capital work-in-progress 22,730,386 9,474,515 13,064,301
117,436,278 55,644,398 78,208,914
Accumulated depreciation (38,065,104) (23,422,603) (30,654,142)
$79,371,264 $32,221,795 $47,554,772
Depreciation expense amounted $9,316,317, $4,641,216 and $12,268,169 for the six months ended
September 30, 2000 and September 30, 1999 and fiscal 2000, respectively.
1.20.5 Investments
The amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair values of available-
for-sale securities by major investment type and class of investment are as follows:
31
Amortized Gross unrealized Gross unrealized
cost Gross holding gains holding losses Fair value
As of September 30, 2000
M-Commerce Ventures Pte. Ltd.
– 20 units, each unit representing
1 Ordinary Share of S$1 each
at par and 9 Redeemable Preference
Shares of S$1 each at par, with a
premium of S$1,110 per
Redeemable Preference Share $112,235 – – $112,235
Asia Net Media BVI Limited
– 30,000,000 Ordinary Shares,
par value $0.01 each 1,500,000 – – 1,500,000
Alpha Thinx Mobile Services AG
– 27,790 Bearer Shares,
par value 1 each 480,300 – – 480,300
EC Cubed Inc. – 1,300,108
Series D Convertible Preferred Stock,
par value $0.0001 each 3,000,000 – – 3,000,000
CiDRA Corporation – 33,333
par value $0.01 each 2,999,970 – – 2,999,970
JASDIC Park Company – 480
Common Stock, par value ¥ 50,000 each 177,576 – – 177,576
Others 362 – – 362
$8,270,443 – – $8,270,443
As of September 30, 1999
Common Stock, par value ¥ 50,000 each $177,576 – – $177,576
Others 362 – – 362
$177,938 – – $177,938
As of March 31, 2000
EC Cubed Inc. – 1,300,108
par value $0.0001 each $3,000,000 – – $3,000,000
Common Stock, par value ¥ 50,000 each 177,576 – – 177,576
Others 362 – – 362
$3,177,938 – – $3,177,938
1.20.6 Other assets

Other assets mainly represent the non-current portion of loans to employees.
1.20.7 Related parties
The company grants loans to employees for acquiring assets such as property and cars. Such loans are repayable
over fixed periods ranging from 1 to 100 months. The rates at which the loans have been made to employees
vary between 0% to 4%. No loans have been made to employees in connection with equity issues. The loans are
generally secured by the assets acquired by the employees. As of September 30, 2000 and 1999 and
March 31, 2000, amounts receivable from officers amounting to $204,730, $421,608 and $309,835, respectively
are included in prepaid expenses and other current assets, and other assets in the accompanying balance
sheets.
32
The required repayments of loans by employees are as detailed below.
As of As of As of
2000 – $3,218,805 –
2001 $6,202,867 1,427,633 $5,114,252
2002 2,051,248 1,120,968 1,887,808
2003 1,415,237 726,489 1,383,397
2004 826,563 567,179 861,752
2005 640,456 – 696,581
Thereafter 1,875,559 1,383,174 2,065,061
Total $13,011,930 $8,444,248 $12,008,851
The estimated fair values of related party receivables amounted to $9,953,461, $7,924,089 and $8,959,996 as
of September 30, 2000, September 30, 1999 and March 31, 2000, respectively. These amounts were determined
using available market information and appropriate valuation methodologies. Considerable judgement is required
to develop these estimates of fair value. Consequently, these estimates are not necessarily indicative of the
amounts that the company could realize in the market.
1.20.8 Other accrued liabilities
Other accrued liabilities comprise the following:
As of As of As of
Accrued compensation to staff $8,603,416 $4,284,300 $7,747,965
Accrued dividends 94,718 2,582,829 65,872
Provision for post sales client support 1,374,475 1,189,182 1,265,849
Employee withholding taxes payable – – 1,530,832
Others 6,004,207 2,637,724 3,225,117
$16,076,816 $10,694,035 $13,835,635
1.20.9 Employee post-retirement benefits
1.20.9.1 Gratuity
The company recognized net costs in relation to the Gratuity Plan in the financial statements amounting to
$1,653,699, $735,483 and $4,474,274 for the six months ended September 30, 2000 and September 30, 1999
and fiscal 2000, respectively.
1.20.9.2 Superannuation
The company contributed $387,397, $112,612 and $244,248 to the superannuation plan in the six months
ended September 30, 2000 and 1999 and fiscal 2000, respectively.
1.20.9.3 Provident fund
The company contributed $1,010,547, $547,827 and $1,198,772 to the provident fund in the six months
ended September 30, 2000 and 1999 and fiscal 2000, respectively.
1.20.10 Preferred stock of Yantra
In September 1997, Yantra, sold 5,000,000 shares of Series A Convertible Preferred Stock, par value $0.01 per
share (“Series A Convertible Preferred”) at $0.75 per share for $3,750,000 in cash. The related offering costs of
$49,853 were offset against the proceeds of the issue. Of these, 2,000,000 shares were issued to the company
and 3,000,000 shares were issued to third party investors. The preferred stock issued to the company was
eliminated upon consolidation. Preferred stock issued to third party investors was reported in the balance sheet
as preferred stock of subsidiary.
In August 1998, Yantra, sold 4,800,000 shares of Series B Convertible Preferred Stock, par value $0.01 per
share (“Series B Convertible Preferred”) at $1.25 per share for $6,000,000 in cash to venture capitalists. The
related offering costs of $44,416 were offset against the proceeds of the issue. In connection with this sale,
Yantra issued warrants to purchase 810,811 shares of Series B-1 Convertible Preferred Stock, par value $0.01
per share (“Series B-1 Convertible Preferred”), at $0.01 per share for $8,108 in cash. Such warrants are
immediately exercisable and expire in seven years. The exercise price of the warrants is based upon the then
current market price of the Series B-1 Convertible Preferred at the time of exercise.
33
Holders of Series A Convertible Preferred vote with holders of common stock on an as-converted basis,
except as otherwise required by Delaware law. The Series A Convertible Preferred are convertible into common
stock at a 1:1 ratio (subject to certain adjustments): (i) automatically in the event of an initial public offering
with gross proceeds of $10,000,000 or more; or (ii) at any time at the holder’s option. The holders of Series A
Convertible Preferred are entitled to a 6% cumulative dividend ($0.045 per share) and to receive additional
dividends at the same rate of dividends, if any, declared and paid on the common stock, calculated on an as-
converted basis. Upon a liquidation or sale of Yantra, holders of the Series A Convertible Preferred are
entitled to a liquidation preference of $0.75 per share plus accrued and unpaid dividends; and any remaining
assets will be distributed to holders of the common stock. The Series A Convertible Preferred is redeemable
at the election of holders of 75% of the outstanding shares of Series A Convertible Preferred at any time after
September 29, 2004 at a redemption price of $0.75 per share plus accrued but unpaid dividends.
The holders of Series B and B-1 Convertible Preferred are entitled to similar rights, privileges and restrictions as
that of Series A Convertible Preferred.
In October 1998, Infosys sold 1,363,637 shares of Series A Convertible Preferred in Yantra, having a cost basis
of $879,042 to a third party investor for $1,500,000 thereby recognizing a gain of $620,958 and reducing its
voting interest in Yantra to approximately 47%. The company accounted for Yantra by the equity method.
Deconsolidation of Yantra has resulted in a credit to the company’s retained earnings of an amount of $2,468,831
representing the excess of Yantra’s losses previously recognized by the company, amounting to $4,445,903,
over the company’s residual investment basis in Yantra amounting to $1,977,072.
1.20.11 Stockholders’ equity
The company has only one class of capital stock referred to herein as equity shares. In fiscal 1999, the board
of directors authorized a two-for-one stock split of the company’s equity shares effected in the form of a stock
dividend. Also, in November 1999, the board of directors authorized a two-for-one stock split of the company’s
equity shares, whereby each issued and outstanding equity share, par value $0.32 each, was split into two
equity shares, par value $0.16 each. All references in the financial statements to number of shares, per share
amounts and market prices of the company’s equity shares have been retroactively restated to reflect the
stock splits.
1.20.12 Equity shares
1.20.12.1 Voting
Each holder of equity shares is entitled to one vote per share.
1.20.12.2 Dividends
Should the company declare and pay dividends, such dividends will be paid in Indian Rupees and pro rata
from the date of holding such shares. The company declared a cash dividend of $4,973,898 during the six
months ended September 30, 2000.
Indian law mandates that any dividend be declared out of distributable profits only after the transfer of up to
10% of net income computed in accordance with current regulations to a general reserve. Also, the remittance
of dividends outside India is governed by Indian law on foreign exchange. Such dividend payments are also
subject to applicable taxes.
1.20.12.3 Liquidation
In the event of any liquidation of the company, the holders of common stock shall be entitled to receive all of
the remaining assets of the company, after distribution of all preferential amounts, if any. Such amounts will be
in proportion to the number of shares of equity shares held by the stockholders.
1.20.12.4 Stock options
There are no voting, dividend or liquidation rights to the holders of warrants issued under the company’s stock
option plan.
34
1.20.13 Other income, net
Other income, net, consists of the following:
Sep 30, 2000 Sep 30, 1999 Mar 31, 2000
Interest income and others $3,892,440 $2,849,746 $5,729,653
Income from sale of special import licenses 15,084 301,166 426,407
Exchange gains 3,787,714 2,265,370 2,882,732
$7,695,238 $5,416,282 $9,038,792
1.20.14 Operating leases

The company has various operating leases for office buildings that are renewable on a periodic basis at its
option. Rental expense for operating leases in the six months ended September 30, 2000 and 1999 and in fiscal
2000 were $1,545,988, $1,025,112 and $2,387,334, respectively. The operating leases are cancelable at the
company’s option.
The company leases some of its office space under several non-cancelable operating leases for periods ranging
between three through ten years. The schedule of future minimum rental payments in respect of these leases is
set out below.
Year ending September 30,

2001 $1,270,307
2002 1,174,686
2003 1,201,407
2004 1,124,559
2005 636,333
Thereafter 1,173,233
$6,580,525
1.20.15 Research and development

General and administrative expenses in the accompanying statements of income include research and
development expenses of $1,623,703, $899,586 and $1,904,123 for the six months ended September 30, 2000
and 1999 and fiscal 2000, respectively.
1.20.16 Employees’ Stock Offer Plans (“ESOP”)
1994 Employees Stock Offer Plan (the “1994 Plan”): In September 1994, the company established the 1994
Plan which provided for the issuance of 6,000,000 warrants (as adjusted for the stock split effective June 1997,
December 1998 and December 1999) to eligible employees. The warrants were issued to an employee welfare
trust (the “Trust”) at Rs. 1 each and were purchased by the Trust using the proceeds of a loan obtained from the
company. The Trust holds the warrants and transfers them to eligible employees at Rs. 1 each. Each warrant
entitles the holder to purchase one of the company’s equity shares at a price of Rs. 100 per share. The warrants
and the equity shares received upon the exercise of warrants are subject to a five-year aggregate vesting period
from the date of issue of warrants to employees. The warrants expire upon the earlier of five years from the date
of issue or September 1999. The fair market value of each warrant is the market price of the underlying equity
shares on the date of the grant.
In 1997, in anticipation of a share dividend to be declared by the company, the Trust exercised all warrants held
by it and converted them into equity shares with the proceeds of a loan obtained from the company. In connection
with the warrant exercise and the share dividend, on an adjusted basis, 3,011,200 equity shares were issued to
employees of the company who exercised stock purchase rights and 2,988,800 equity shares were issued to the
Trust for future issuance to employees pursuant to the 1994 Plan. Following such exercise, there were no
longer any rights to purchase equity shares from the company in connection with the 1994 Plan. Only equity
shares held by the Trust remained for future issues to employees, subject to vesting provisions. The equity
shares acquired upon the exercise of the warrants vests 100% upon the completion of five years of service. The
warrant holders were entitled to exercise early, but the shares received are subject to the five-year vesting
period. As of September 30, 2000, the company’s outstanding equity shares included 558,800 equity shares
35
held by the Trust of which 334,200 equity shares were allotted to employees, subject to vesting provisions and
are included in the calculation of basic and diluted earnings per share. The remaining 224,600 equity shares
were not considered outstanding for purposes of calculating diluted earnings per share. The warrants allotted
and the underlying equity shares are not subject to any repurchase obligations by the company.
The company has elected to use the intrinsic value-based method of APB 25 to account for its employee stock-
based compensation plan. Accordingly, in the six months ended September 30, 2000 the company recorded
no deferred compensation and for the six months ended September 30, 1999 and for fiscal 2000, the company
recorded deferred compensation of $1,029,649 and $1,029,649, respectively for the difference, on the grant
date, between the exercise price and the fair value as determined by quoted market prices of the common stock
underlying the warrants. The deferred compensation is amortized on a straight-line basis over the vesting
period of the warrants/equity shares.
In fiscal 1999, the company declared a stock split of two equity shares for each equity share outstanding to all
its stockholders including participants in the 1994 Plan in the form of a stock dividend and consequently
recognized an accelerated compensation charge at the time of the stock dividend amounting to $12,906,962.
1998 Employees Stock Offer Plan (the “1998 Plan”)
The company’s 1998 Plan provides for the grant of non-statutory stock options and incentive stock options to
employees of the company. The establishment of the 1998 Plan was approved by the board of directors in
December 1997 and by the stockholders in January 1998. The Government of India has approved the 1998 Plan,
subject to a limit of 1,470,000 equity shares representing 2,940,000 American Depositary Shares (“ADS”) to be
issued under the 1998 Plan. Unless terminated sooner, the 1998 Plan will terminate automatically in January
2008. All options under the 1998 Plan will be exercisable for equity shares represented by ADSs. The board of
directors or a committee of the board may administer the 1998 Plan. All options under the 1998 Plan are
exercisable for equity shares represented by ADSs.
1999 Stock Offer Plan (the “1999 Plan”)
In fiscal 2000, the company instituted the 1999 Plan. The stockholders and the Board of Directors approved
the 1999 Plan in June 1999. The 1999 Plan provides for the issue of 6,600,000 equity shares to employees.
The 1999 Plan is administered by a Compensation Committee comprising a maximum of seven members, the
majority of whom are independent directors on the Board of Directors. Under the 1999 Plan, options will be
issued to employees at an exercise price, which shall not be less than the Fair Market Value (“FMV”). Under the
1999 Plan, options may also be issued to employees at exercise prices that are less than FMV only if specifically
approved by the members of the company in a general meeting.
The activity in the warrants/equity shares of the 1994, 1998 and 1999 Employees Stock Offer Plans in the six
months ended September 30, 2000 and 1999 and in fiscal 2000 is set out below.
36
Six months ended Six months ended Year ended
Shares Weighted Shares Weighted Shares Weighted
arising out of average arising out of average arising out of average
options exercise price options exercise price options exercise price
1994 Option plan:
Outstanding at the
beginning of the period 341,400 328,000 328,000
Granted – – 30,000 $1.15 30,000 $1.15
Forfeited (7,200) $1.15 (10,200) $1.15 (16,600) $1.15
Exercised – – – – – –
Outstanding at the
end of the period 334,200 347,800 341,400
Exercisable at the
end of the period 334,200 347,800 341,400
Weighted average fair
value of grants during
the period at less
than market price – $35.48 $35.48
1998 Option plan:
Outstanding at the
beginning of the period 344,750 213,000 213,000
Granted 116,000 $324.60 – – 147,150 $228.60
Forfeited (24,350) $124.80 – – (3,500) $34.00
Exercised (667) $34.00 – – (11,900) $34.00
Outstanding at the
end of the period 435,733 213,000 344,750
Exercisable at the
end of the period 435,733 213,000 344,750
Weighted average fair
value of grants
during the period $324.60 – $228.60
1999 Option plan:
Outstanding at the
beginning of the period 1,006,800 – – –
Granted 954,100 $144.36 – – 1,014,500 $99.12
Forfeited (77,900) $114.53 – – (7,700) $127.98
Exercised – – – – – –
Outstanding at the
end of the period 1,883,000 – 1,006,800
Exercisable at the
end of the period 1,883,000 – 1,006,800
Weighted average
fair value of grants
during the period $144.36 – $99.12
37
The following table summarizes information about stock options outstanding as of September 30, 2000:
Outstanding Exercisable
Range of Number of Weighted average Weighted average Number of Weighted average
exercise prices shares arising remaining exercise price shares arising exercise price
out of options contractual life out of options
$1.15 - $324.36 2,652,933 2.35 years $116.62 2,652,933 $116.62
1.20.17 Income taxes

The provision for income taxes comprises:
Six months ended Sep 30, Year ended
2000 1999 Mar 31, 2000
Current taxes
Domestic taxes $1,831,956 $1,182,557 $2,505,952
Foreign taxes 5,162,380 2,759,300 6,538,256
6,994,336 3,941,857 9,044,208
Domestic taxes (310,863) 364,526 (850,891)
Foreign taxes – – –
(310,863) 364,526 (850,891)
Aggregate taxes $6,683,473 $4,306,383 $8,193,317
The tax effects of significant temporary differences that resulted in deferred tax assets and liabilities and a
description of the financial statement items that created these differences are as follows:

2000 1999 March 31, 2000
Deferred tax assets:
Property, plant and equipment $2,835,241 $2,037,849 $2,480,883
Others 596,795 – 195,383
3,432,036 2,037,849 2,676,266
Less: Valuation allowance (554,907) (687,000) (110,000)
Net deferred tax assets $2,877,129 $1,350,849 $2,566,266
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not
that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax
assets is dependent upon the generation of future taxable income during the periods in which the temporary
differences become deductible. Management considers the scheduled reversal of the projected future taxable
income, and tax planning strategies in making this assessment. Based on the level of historical taxable income
and projections for future taxable income over the periods in which the deferred tax assets are deductible,
management believes that it is more likely than not the company will realize the benefits of those deductible
differences, net of the existing valuation differences at September 30, 2000. The amount of the deferred tax
assets considered realizable, however, could be reduced in the near term if estimates of future taxable income
during the carry forward period are reduced.
All deferred tax expenses (benefits) are allocated to the continuing operations of the company.
38
A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate
to the income before provision for income taxes is summarized below.

2000 1999 Mar 31, 2000
Net income before taxes $66,297,032 $32,337,773 $69,537,845
Enacted tax rates in India 38.5% 38.5% 38.5%
Computed expected tax expense 25,524,357 12,450,043 26,772,070
Less: Tax effect due to non-taxable export income (25,226,339) (12,290,413) (24,019,942)
Others 911,820 217,339 (1,121,972)
Effect of tax rate change – 1,131,822 (29,771)
Effect of prior period tax adjustments 311,255 38,292 54,676
Provision for domestic income taxes 1,521,093 1,574,083 1,655,061
Effect of tax on foreign income 5,162,380 2,759,300 6,538,256
Aggregate taxes $6,683,473 $4,306,383 $8,193,317
The provision for foreign taxes is due to income taxes payable overseas, principally in the United States. The
company benefits from certain significant tax incentives provided to software firms under Indian tax laws.
These incentives presently include: (i) an exemption from payment of Indian corporate income taxes for a
period of ten consecutive years of operation of software development facilities designated as “Software Technology
Parks” (the “STP tax holiday”); and (ii) a tax deduction for profits derived from exporting computer software
(the “Export deduction”). All but one of the company’s software development facilities are located in designated
Software Technology Parks (“STP”). The Government of India has recently amended the tax incentives available
to companies set up in designated STPs. The period of the STP tax holiday available to such companies is
restricted to ten consecutive years beginning from the financial year, when the unit started producing computer
software or March 31, 2000, whichever is earlier. Additionally the export deduction will be phased out equally
over a period of five years starting from the fiscal 2001. The benefits of these tax incentive programs have
historically resulted in an effective tax rate for the company well below statutory rates.
1.20.18 Earnings per share
A reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share is
set out below.
2000 1999 Mar 31, 2000
Basic earnings per equity share – weighted average
number of common shares outstanding excluding
unallocated shares of ESOP 65,959,151 65,680,100 65,659,625
Effect of dilutive common equivalent shares –
stock options outstanding 1,138,170 – 204,365
Diluted earnings per equity share – weighted
average number of common shares and
common equivalent shares outstanding 67,097,321 65,680,100 65,863,990
1.20.19 Lines of credit

The company has a line of credit from its bankers for its working capital requirement of $1,086,720 bearing
interest at prime lending rates as applicable from time to time. The prime lending rate of interest as of September
30, 2000 was 15.8%. This line of credit is secured by inventories and accounts receivable. The line of credit
contains certain financial covenants and restrictions on indebtedness and is renewable every 12 months. As of
September 30, 2000, the company had no balance outstanding under this facility.
1.20.20 Financial instruments
Foreign exchange forward contracts
The company enters into foreign exchange forward contracts to offset the foreign currency risk arising from the
accounts receivable denominated in currencies other than the Indian rupee, primarily the US dollar. The
39
counter party to the company’s foreign currency forward contracts is generally a bank. Management believes
that the risks or economic consequences of non-performance by the counter party are not material to its
financial position or results of operations. There were no significant foreign exchange gains and losses on
foreign exchange forward contracts during the six months ended September 30, 2000 and 1999 and fiscal 2000.
There were no open foreign exchange forward contracts as of September 30, 2000, September 30, 1999 and
March 31, 2000, respectively.
1.20.21 Segment reporting
1.20.21.1 Revenue by geographic area
Sep 30, 2000 Sep 30, 1999 Mar 31, 2000
North America $133,191,257 $68,293,247 $158,723,649
Europe 31,540,046 13,607,735 30,064,939
India 2,080,597 1,116,200 2,912,091
Rest of the world 11,384,983 4,653,398 11,743,075
$178,196,883 $87,670,580 $203,443,754
SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information requires that an enterprise
report a measure of profit or loss and total assets for each reportable segment. Certain expenses such as personnel
costs, communication, depreciation on plant and machinery, etc., which form a significant component of total
expenses, are not specifically allocable to these geographic segments as the underlying services are used
interchangeably between reportable segments. Management believes that it is not practical to provide segment
disclosures relating to segment costs and expenses, and consequently segment profits or losses, since a realistic
allocation cannot be made. The fixed assets used in the company’s business are not identifiable to any particular
reportable segment and can be used interchangeably among segments. Consequently, management believes
that it is not practical to provide segment disclosures relating to total assets since a realistic analysis among the
various geographic segments is not possible.
1.20.21.2 Significant clients
No client accounted for more than 10% of the revenues in the six months ended September 30, 2000 and 1999
and fiscal 2000, respectively.
1.20.22 Commitments and contingencies
The company has outstanding performance guarantees for various statutory purposes totaling $1,415,562,
$364,485 and $1,207,110 as of September 30, 2000, September 30, 1999 and March 31, 2000, respectively.
These guarantees are generally provided to governmental agencies.
1.20.23 Litigation
The company is subject to legal proceedings and claims, which have arisen, in the ordinary course of its
business. These actions, when ultimately concluded and determined, will not, in the opinion of management,
have a material effect on the results of operations or the financial position of the company.
1.20.24 Non-monetary transaction
During the six months ended September 30, 2000, the company transferred certain Intellectual Property Rights
(“IPR”) that it had developed and owned in a product called OnScan to OnScan Inc. OnScan is a comprehensive
web-enabled wireless notification product. In exchange for the transfer, the company received consideration in
the form of securities including 100,000 Common Stock, par value $0.01 each, 100,000 Series A Voting
Convertible Preferred Stock, par value $0.0001 each and 4,400,000 Series A Nonvoting Convertible Preferred
Stock, par value $0.0001 each. Convertible Preferred Stock is convertible into Common Stock automatically
upon the closing of an Initial Public Offering by OnScan Inc.
As of September 30, 2000, the company’s controlling interest in OnScan Inc. was approximately 12%. The
transfer was recorded at historic cost and, accordingly, no gain was recognized on this transaction as of the date
of transfer of the IPR.
1.20.25 Recent accounting pronouncements
In December 1999, the SEC issued Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements,”
which provides guidance related to revenue recognition based on interpretations and practices followed by the
40
SEC. The company’s management believes that its revenue recognition policy is in compliance with SAB 101
and does not believe that adoption of this Staff Accounting Bulletin has had a material impact on the company’s
financial position or results of operations.
In June 1998, SFAS No. 133, “Accounting for Derivative Financial Instruments and for Hedging Activities,”
was issued which will be effective for the year ending March 31, 2001. This statement was amended by SFAS
No. 138 in June 2000 to further clarify SFAS No. 133. These statements establish accounting and reporting
standards requiring that every derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. These
statements also require that changes in the derivative’s fair value be recognized in earnings unless specific hedge
accounting criteria are met. SFAS 133 and SFAS 138 are not anticipated to have a significant impact on the
company’s financial position or results of operations when adopted, since the company currently does not
engage in hedging activities.
Item 2. Management discussion and analysis of financial conditions and results of

operations
Investors are cautioned that this discussion contains forward-looking statements that involve risks and
uncertainties. When used in this discussion, the words “anticipate”, “believe”, “estimate”, “intend”, “will” and
“expect” and other similar expressions as they relate to the company or its business are intended to identify
such forward-looking statements. The company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results,
performances or achievements could differ materially from those expressed or implied in such forward-looking
statements. Factors that could cause or contribute to such differences include those described under the heading
“Risk Factors” in the Prospectus filed with the SEC, the factors discussed in the Form 20-F filed with the SEC,
and those factors discussed elsewhere in this report. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their dates. The following discussion and analysis should be
read in conjunction with the company’s financial statements included herein and the notes thereto.
2.1 Overview
Infosys Technologies Limited (the “company”) is a publicly held company providing information technology
(“IT”) solutions to Fortune 1000 and emerging new economy companies. Infosys’ range of services includes IT
consulting, IT architecture, application development, e-commerce and Internet consulting, and software
maintenance. In addition, the company develops and markets certain software products. From fiscal 1995
through fiscal 2000, total revenue increased from $18.1 million to $203.4 million, the number of the company’s
software professionals worldwide increased from approximately 585 to approximately 4,625 and the number
of its India-based software development centers increased from two to seventeen. The company also
operationalized one global development center at Toronto, Canada in fiscal 2000 and another global development
center in the United Kingdom during the quarter ended September 30, 2000.
The company’s revenues are generated principally from software services provided either on a fixed-price,
fixed-time frame or a time-and-materials basis. Revenues from services provided on a time-and-materials basis
are recognized in the month that services are provided and related costs are incurred. Revenues from services
provided on a fixed-price, fixed-time frame basis are recognized upon the achievement of specified milestones
identified in the related contracts, in accordance with the percentage of completion method. Cost of completion
estimates are subject to periodic revisions. Although the company has revised its project completion estimates
from time to time, such revisions have not, to date, had a material adverse effect on the company’s operating
results or financial condition. Since the company bears the risk of cost overruns and inflation with respect to its
fixed-price, fixed-time frame projects, the company’s operating results could be adversely affected by inaccurate
estimates of contract completion costs and dates, including wage inflation rates and currency exchange rates
that may affect cost projections. The company also develops and markets certain software products, including
banking software that is licensed primarily to clients in Asia and Africa. Such software products represented
2.7% of total revenue during the three months ended September 30, 2000. The company derived 75.0% of its
total revenue from North America, 18.1% from Europe, 1.1% from India and 5.8% from the rest of the world
during the three months ended September 30, 2000.
During the three months ended September 30, 2000 and September 30, 1999, the company derived 31.4% and
10.3% of its total revenue, respectively, from internet and e-commerce projects. Due to shorter time-to-market
41
considerations, e-business projects necessitate higher interaction with clients. This results in a higher proportion
of services being performed at client sites. Services performed at a client site typically generate higher per capita
revenues, but lower gross margins, than the same quantum of services performed at the company’s own facilities.
Consequently, any increase in work at client sites can decrease gross margins of the company.
Cost of revenue consists, primarily, of salary and other compensation expenses, depreciation, data communication
expenses, computer maintenance, cost of software purchased for internal use, certain pre-opening expenses for
new software development centers, and foreign travel expenses. The company depreciates personal computers
and servers over two years and mainframe computers over three years. Third party software is expensed in the
period in which it is acquired.
The company assumes full project management responsibility for each project that it undertakes. Approximately
64% of the work on a project is performed at the company’s facilities in India, and the balance of the work is
performed at the client site. The proportion of work performed at company facilities and at client sites varies
from quarter to quarter. The company charges higher rates and incurs higher compensation expenses for work
performed at a client site. Services performed at a client site typically generate higher revenues per capita, but at
a lower gross margin, than the same quantum of services performed at company facilities in India. As a result,
total revenues, cost of revenues and gross profit in absolute terms, and as a percentage of revenue, fluctuate from
quarter to quarter based on the proportions of work performed offshore at company facilities and at client sites.
Revenue and gross profits are also affected by employee utilization rates. Utilization rates depend, among other
factors, on the number of employees enrolled for in-house training programs, particularly the 14-week classroom-
training course provided to new employees. Since a large percentage of new hires begin their training in the
second quarter, utilization rates have historically been lower in the second and third quarters of a fiscal year.
Selling and marketing expenses primarily consist of expenses relating to advertising, brand building, sales and
marketing office leasing, salaries of marketing personnel and travel. General and administrative expenses consist
of expenses relating to communications, finance and administration, legal and professional charges, management,
rent, salary and other compensation, travel and miscellaneous administrative costs.
Other income includes interest income and foreign currency exchange gains.
The company also intends to substantially expand its software development infrastructure in India. The company
had committed $26.4 million towards various capital acquisitions as of September 30, 2000. The company has
not yet made contractual commitments for the majority of its budgeted capital expenditure. The company
intends to spend an amount of approximately $32.6 million on various capital acquisitions for the rest of fiscal
2001 and intends to use its internal accruals to fund this expansion.
2.2 Results of operations

2.2.1 Three months ended September 30, 2000 compared to three months ended
September 30, 1999
Revenue. Total revenues were $97.9 million for the three months ended September 30, 2000, representing an
increase of 104.3% over total revenues of $47.9 million during the same period in the fiscal 2000. Revenues
continued to increase in all segments of the company’s services. Custom software development, re-engineering,
maintenance and software development through OSDCs formed a majority of the company’s revenues. The
increase in revenues was attributable, in part, to a substantial increase in business from certain existing clients
and from certain new clients, particularly in the insurance, banking and financial services, and telecommunications
industries. Net sales of Finacle™ and other products represented 2.7% of total revenues for the three months
ended September 30, 2000 as compared to 4.2% in the corresponding period in fiscal 2000. Revenue from
services represented 97.3% of total revenues for the three months ended September 30, 2000 as compared to
95.8% in the corresponding period in fiscal 2000. Revenue from fixed-price, fixed-time frame and time-and-
materials contracts represented 27.6% and 72.4%, respectively, of total revenues in the three months ended
September 30, 2000 as compared to 29.5% and 70.5%, respectively, in the three months ended
September 30, 1999. Revenue from North America and Europe represented 75.0% and 18.1%, respectively, of
total revenue for the three months ended September 30, 2000 as compared to 78.2% and 14.8%, respectively,
during the same period in fiscal 2000.
Cost of revenues. Cost of revenues was $50.2 million for the three months ended September 30, 2000,
representing an increase of 92.3% over the cost of revenues of $26.1 million for the same period in fiscal 2000.
Cost of revenues represented 51.3% and 54.4% of total revenues for the three months ended September 30,
42
2000 and September 30, 1999, respectively. This decrease in costs as a percentage of revenues was attributable
to an increase in blended billed rates to clients during the three months ended September 30, 2000 as compared
to the quarter ended September 30, 1999 as well as a decrease in data communication expenses which have
decreased to 1.2% of revenues as compared to 2.7% of revenues during the three months ended
September 30, 2000 and 1999, respectively. The decrease is partially offset by an increase in personnel costs
from annual salary increments effective April 1, 2000, increase in onsite living costs effective September 1, 2000
and increased personnel costs for new hires. Cost of revenues for services represented 51.4% and 55.0% of
revenues from services for the three months ended September 30, 2000 and September 30, 1999, respectively.
Cost of revenues for product sales represented 45.8% and 41.8% of revenues for product sales for the quarters
ended September 30, 2000 and September 30, 1999, respectively.
Gross profit. Gross profit was $47.7 million for the three months ended September 30, 2000 representing an
increase of 118.6% over gross profit of $21.8 million for the three months ended September 30, 1999. This
increase was attributable to a favorable business mix. As a percentage of total revenues, gross profit increased to
48.7% for the three months ended September 30, 2000 from 45.6% for the corresponding period in fiscal 2000.
This increase in gross margins was attributable to an increase in blended billed rates to clients during the three
months ended September 30, 2000 as compared to the quarter ended September 30, 1999 as well as a decrease
in data communication expenses which have decreased to 1.2% of revenues as compared to 2.7% of revenues
during the three months ended September 30, 2000 and 1999, respectively. The decrease is partially offset by
an increase in personnel costs from annual salary increments effective April 1, 2000, increases in onsite living
costs effective September 1, 2000 and increased personnel costs for new hires. Gross profit from services was
$46.3 million for the three months ended September 30, 2000, an increase of 123.7% over gross profit of
$20.7 million for the three months ended September 30, 1999. The gross profit from the sales of Finacle™
and other products was $1.4 million for the three months ended September 30, 2000, an increase of 27.3%
over gross profit of $1.1 million for the corresponding period in fiscal 2000. As a percentage of service revenues,
gross profit from services increased to 48.6% for the three months ended September 30, 2000 from 45.0% for
the three months ended September 30, 1999. Gross profit from product sales, as a percentage of product
revenues, was 54.2% for the three months ended September 30, 2000 as compared to a gross profit of 58.2%
for the corresponding period in fiscal 2000.
Selling and marketing expenses. Sales and marketing expenses were $5.0 million in the three months ended
September 30, 2000, an increase of 199.9% over sales and marketing expenses of $1.7 million in the three
months ended September 30, 1999. As a percentage of total revenues, sales and marketing expenses increased
to 5.1% in the three months ended September 30, 2000 from 3.5% for the three months ended
September 30, 1999 due to a general increase in the scale of operations, salaries of sales and marketing
personnel and an increase in brand building expenses which amounted to 0.9% of revenues for the three
months ended September 30, 2000 when compared to no sales and marketing expenses for the three months
ended September 30, 1999. The number of sales offices increased to 22 as of September 30, 2000, from 18
as of September 30, 1999. As of September 30, 2000, the number of sales and marketing personnel increased
to 87, up from 58 as of September 30, 1999.
General and administrative expenses. General and administrative expenses were $9.3 million for the three
months ended September 2000, representing an increase of 117.5% over general and administrative expenses
of $4.3 million for the three months ended September 30, 1999. General and administrative expenses were
9.5% and 8.9% of total revenues for the three months ended September 30, 2000 and 1999, respectively. This
increase in general and administrative expenses as a percentage of revenues was primarily attributable to an
increase in the provision for doubtful debts, which comprised 1.1% of revenues during the three-month period
ended September 30, 2000 as compared to 0.4% in the corresponding previous period. The increase in general
and administrative expenses is also partly due to a general increase in management, finance and administrative
costs.
Amortization of deferred stock compensation expense. Amortization of deferred stock compensation expense
was $1.3 million in each of the three months ended September 30, 2000 and 1999. Deferred stock compensation
expense reflects the continued amortization of compensation expense from stock purchase rights granted in
prior periods.
Operating income. Operating income was $32.2 million for the three months ended September 30, 2000, an
increase of 120.3% over the operating income of $14.6 million for the corresponding period in fiscal 2000. As
a percentage of revenues, operating income increased to 32.9% for the three months ended September 30,
2000 from 30.4% for the corresponding period in fiscal 2000.
43
Other income. Other income was $4.3 million for the three months ended September 30, 2000 as compared
to $2.2 million for the corresponding period in fiscal 2000. Other income during the three months ended
September 30, 2000 includes $2.1 million arising from exchange differences on translation of foreign currency
deposits, interest income of $2.0 million earned on proceeds from the issue of American Depositary Shares and
income of $15,000 from the sale of Special Import Licenses. Other income for the three months ended
September 30, 1999 includes $0.4 million from exchange differences on translation of foreign currency deposits,
interest income of $0.9 million earned on proceeds from the issue of American Depositary Shares and income
from the sale of Special Import Licenses of $0.3 million.
Provision for income taxes. Provision for income taxes was $3.7 million for the three months ended
September 30, 2000 as compared to $2.1 million for the corresponding period in fiscal 2000. The company’s
effective tax rate decreased to 10.2% for the three months ended September 30, 2000 as compared to 12.5%
for the corresponding period in fiscal 2000. The effective tax rate decreased as additional company operations
became eligible for Government of India sponsored tax holidays and tax exemptions.
Net income. Net income was $32.8 million for the three months ended September 30, 2000, an increase of
122.7% over net income of $14.7 million for the corresponding period in fiscal 2000. As a percentage of total
revenues, net income increased to 33.5% for the three months ended September 30, 2000 from 30.7% for the
corresponding period in fiscal 2000.
2.3 Liquidity and capital resources

The growth of the company has been financed largely from cash generated from operations and, to a lesser
extent, from the proceeds of equity issues and borrowings. In 1993, the company raised approximately $4.4 million
in gross aggregate proceeds from its initial public offering of equity shares on Indian stock exchanges. In 1994,
the company raised an additional $7.7 million through private placements of its equity shares with foreign
institutional investors. In 1999, the company raised $66.3 million through the issue of American Depositary
Shares (ADSs). As of September 30, 2000, the company had $116.5 million in cash and cash equivalents,
$146.1 million in working capital and no outstanding bank borrowings. As of September 30, 2000, the company
also had an aggregate of $1.1 million in working capital lines of credit with two commercial banks.
Net cash provided by operating activities was $64.0 million and $28.2 million in the six months ended
September 30, 2000 and 1999, respectively. Net cash provided by operations consisted primarily of net income
offset, in part, by an increase in accounts receivable. Accounts receivable as a percentage of total revenues,
represented 14.8% and 17.5% as of September 30, 2000 and 1999, respectively. Further, the average days
outstanding of accounts receivable has increased in the 0-30 and greater than 90 day aging periods and
decreased in the 31-60 and 61-90 day aging periods. The company believes that this is due to improved
account collection practices. The company’s policy on accounts receivable includes a periodic review of its
accounts receivable, including a review of the age, amount, and quality of each account receivable; the
relationship with, size of, and history of the client; the quality of service delivered by the company to the
client and the current economic environment, to determine the classification of an account receivable. Should
the review so demand, the company will classify the accounts into secured and unsecured accounts, and
further subclassified between good or doubtful accounts. The company makes provisions for all accounts
receivable classified as unsecured or doubtful and for all accounts receivable that are outstanding more than
180 days. Prepaid expenses and other current assets increased by $1.9 million and $1.7 million during the six
months ended September 30, 2000 and 1999, respectively. The increases in both periods were primarily due
to increases in loans to employees.
Unearned revenue as of September 30, 2000 was $16.0 million compared to $6.4 million as of
September 30, 1999 and consists primarily of advance client billings on fixed-price, fixed-time frame contracts
for which related costs were not yet incurred. The proportion of fixed-price contracts under which the company
was entitled to bill clients in advance increased as of September 30, 2000 over the prior year.
Net cash used in investing activities was $47.2 million and $15.0 million in the six months ended September 30,
2000 and 1999, respectively. Net cash used in investing activities in the six months ended September 30, 2000
and 1999 consisted primarily of $41.1 million and $13.0 million, respectively, for property, plant and equipment.
Additionally, the company purchased units of common stock and convertible preferred stock of M-Commerce
Ventures Pte. Ltd. for an aggregate purchase price of US$0.1 million, common stock in Alpha Thinx Mobile
Phone Services AG for an aggregate purchase price of US$0.5 million and common stock in Asia Net Media
BVI Ltd., for an aggregate purchase price of US$1.5 million during the three months ended September 30, 2000.
44
Publicly traded Indian companies customarily pay dividends. The company paid cash dividends of $4.7 million
and $2.5 million in the six months ended September 30, 2000 and 1999, respectively. In fiscal 2000, the
company declared a dividend of $7.26 million, which was paid, partly in fiscal 2000.
As of September 30, 2000, the company had contractual commitments for capital expenditure of $21.2 million.
2.4 Reconciliation between the US and the Indian GAAP

There are material differences between the financial statements prepared in Indian and U.S. GAAP. The material
differences primarily attributable to provision for deferred taxes, accounting for stock-based compensation and
valuation of short-term investments, (which are marked to market and adjusted against retained earnings) and
the consolidation of accounts of subsidiary, as required by U.S. GAAP. Indian GAAP does not require a provision
for deferred taxes, amortization of deferred stock compensation, the consolidation of accounts of subsidiaries
and only requires a provision for diminution in the value of current investments.
Reconciliation of net income Three months ended Six months ended

Sept 30,2000 Sept 30,1999 Sep 30,2000 Sept 30,1999
Net profit as per Indian GAAP 33,865,614 $15,238,792 62,431,499 29,358,517
Adjustments:
Amortization of deferred stock compensation (1,275,796) (1,293,002) (2,551,592) (2,543,102)
Deferred income taxes 192,068 (28,400) (310,863) (364,326)
Provision for contingencies – – – 777,180
Provision for e-inventing the company – 803,121 (87,387) 803,121
Provision for retirement benefits to employees – – 741,000 –
Transfer of intellectual property rights – – (1,230,824) –
Net income as per US GAAP 32,781,886 14,720,511 59,613,559 28,031,390
2.5 Investments
2.5.1 Yantra Corporation
Prior to October 20, 1998, the company owned a majority of the voting stock of Yantra. As a result, all of
Yantra’s operating losses through October 20, 1998 were recognized in the company’s consolidated financial
statements. For fiscal 1998 and fiscal 1999, Yantra’s losses recognized in the company’s financial statements
were $1.6 million and $2.0 million, respectively. On October 20, 1998, the company sold a portion of
Yantra’s shares held by it, thereby reducing its interest to less than one-half of the voting stock of Yantra.
As of October 20, 1998, the company owned all of the outstanding common stock of Yantra, but had no
financial obligations or commitments to Yantra and did not intend to extend Yantra with any financial
support. Accordingly, Yantra’s results after October 20, 1998 were not recognized in the company’s financial
statements under U.S. GAAP. Yantra’s revenues were $1.3 million and $2.0 million for fiscal 1998 and for
the period ended October 20, 1998, respectively, while gross profits were $574,000 and $546,000,
respectively, for these same periods. Yantra’s revenues were 1.9% and 2.3% of the company’s revenues for
fiscal 1998 and for the period ended October 20, 1998, respectively. Its gross profits were 2.0% and 1.4%
of the company’s gross profits for these same periods. Yantra currently provides e-commerce operations
solutions through PureEcommerce™, a scalable web-based solution that facilitates real-time transaction
management across the extraprise. In June 1999, Yantra sold Series C Convertible Preferred Stock in the
amount of $15 million to unrelated existing and new investors, reducing the company’s voting control to
approximately 25%. In July 2000, Yantra sold Series D Convertible Preferred Stock amounting to
$40 million, to unrelated existing and new investors, further reducing the company’s voting control to
approximately 16%.
2.5.2 Other investments
During the three months ended September 30, 2000, the company committed to invest $0.6 million in
M-Commerce Ventures Pte. Ltd (“M-Commerce”), a Singapore venture fund corporation, equivalent to Singapore
Dollar (“S$”) 1,000,000 and purchase 100 units in the fund. The company made an investment of US$0.1 million
(equivalent to S$200,000) and acquired 20 units of M-Commerce, pursuant to a 20% capital call notice issued
by M-Commerce. Each unit represents one share of Common Stock of nominal value S$1 per share and 9
Shares of Redeemable Preferred Stock of nominal value S$1 at a premium of S$1,100 per share.
45
During the same period, the company also invested in Alpha Thinx Mobile Phone Services AG, (“Alpha Thinx”),
a company incorporated under Austrian Law by purchasing 27,790 shares of Common Stock of par value
1 per share for an aggregate investment of $480,300.
During the three months ended September 30, 2000 the company also invested in Asia Net Media BVI Ltd.,
(“Asia Net Media”), a British Virgin Islands registered corporation by purchasing 30 million shares of Common
Stock of Asia Net Media, par value $0.01 per share for an aggregate investment of $1,500,000.
2.6 Principles of currency translation

In the three months ended September 30, 2000, 95.9% of the company’s revenues were generated in U.S.
dollars and European currencies. A majority of the company’s expenses were incurred in rupees, and the
balance was incurred in U.S. dollars and European currencies. The functional currency of the company is
the Indian rupee. Revenues generated in foreign currencies are translated into Indian rupees using the exchange
rate prevailing on the dates revenues are recognized. Expenses of overseas operations incurred in foreign
currencies are translated into Indian rupees at either the monthly average exchange rate or the exchange rate
on the date the expense is incurred, depending on the source of payment. Assets and liabilities of foreign
branches held in foreign currency are translated into Indian rupees at the end of the applicable reporting
period. For U.S. GAAP reporting, the financial statements are translated into U.S. dollars using the average
monthly exchange rate for revenues and expenses and the period end rate for assets and liabilities. The gains
or losses from such translation are reported as “Other comprehensive income”, a separate component of
stockholders’ equity. The company expects that a majority of its revenues will continue to be generated in
U.S. dollars for the foreseeable future and that a significant portion of the company’s expenses, including
personnel costs as well as capital and operating expenditures, will continue to be denominated in rupees.
Consequently, the company’s results of operations will be adversely affected to the extent that the rupee
appreciates against the U.S. dollar.
2.7 Income tax matters

The company benefits from certain significant tax incentives provided to software firms under Indian tax laws.
These incentives presently include: (i) an exemption from payment of Indian corporate income taxes for a
period of ten consecutive years of operation of software development facilities designated as “Software Technology
Parks” (the “STP Tax Holiday”); and (ii) a tax deduction for profits derived from exporting computer software
(the “Export Deduction”). All but one of the company’s software development facilities are located in a designated
Software Technology Park (“STP”). The Government of India has recently amended the tax incentives available
to companies set up in designated STPs. The period of the STP tax holiday available to such companies is
restricted to 10 consecutive years beginning from the financial year when the unit started producing computer
software or March 31, 2000, whichever is earlier. Additionally, the export deduction will be phased out equally
over a period of five years starting from fiscal 2001. The benefits of these tax incentive programs have historically
resulted in an effective tax rate for the company well below statutory rates. There is no assurance that the
Government of India will continue to provide these incentives. The company pays corporate income tax in
foreign countries on income derived from operations in those countries.
2.8 Effects of inflation

The company’s most significant costs are salaries and related benefits for its employees. Competition in India
and the United States for IT professionals with the advanced technological skills necessary to perform the
services offered by the company have caused wages to increase at a rate greater than the general rate of inflation.
As with other IT service providers, the company must adequately anticipate wage increases and other cost
increases, particularly on its long-term contracts. Historically, the company’s wage costs in India have been
significantly lower than prevailing wage costs in the United States for comparably-skilled employees, although
wage costs in India are presently increasing at a faster rate than in the United States. There can be no assurance
that the company will be able to recover cost increases through increases in the prices that it charges for its
services in the United States.
2.9 Year 2000 compliance

The company has evaluated each of its IT services and software products and believes that each is substantially
Year 2000 compliant. The company believes that its internal systems are substantially Year 2000 compliant. As
46
of the date of this Quarterly Report, the company has not experienced any material Year 2000 related problems.
However, there can be no assurance that modifications and upgrades made to its internal systems will be able
to anticipate all of the problems resulting from the actual impact of the Year 2000 problem. There can also be
no assurance that the company may not face any problems in the future.
2.10 Accounting pronouncements

In December 1999, the SEC issued Staff Accounting Bulletin 101, “Revenue Recognition in Financial Statements,”
which provides guidance related to revenue recognition based on interpretations and practices followed by the
SEC. The company’s management believes that its revenue recognition policy is in compliance with SAB 101
and does not believe that adoption of this Staff Accounting Bulletin has had a material impact on the company’s
financial position or results of operations.
In June 1998, SFAS No. 133, “Accounting for Derivative Financial Instruments and for Hedging Activities,”
was issued which will be effective for the year ending March 31, 2001. This statement was amended by SFAS
No. 138 in June 2000 to further clarify SFAS No. 133. These statements establish accounting and reporting
standards requiring that every derivative instrument, including certain derivative instruments embedded in
other contracts, be recorded in the balance sheet as either an asset or liability measured at its fair value. These
statements also require that changes in the derivative’s fair value be recognized in earnings unless specific hedge
accounting criteria are met. SFAS 133 and SFAS 138 are not anticipated to have a significant impact on the
company’s financial position or results of operations when adopted, since the company currently does not
engage in hedging activities.
2.11 Risk factors

2.11.1 Management of growth
The company has experienced significant growth in recent periods. The company’s revenues in the three
months ended September 30, 2000 grew by 104.3% over the three months ended September 30, 1999. As
of September 30, 2000, the company employed approximately 6,940 software professionals worldwide with
17 software development facilities in India as compared to approximately 4,120 with 11 facilities as of
September 30, 1999. The company’s growth is expected to place significant demands on its management
and other resources and will require it to continue to develop and improve its operational, financial and
other internal controls, both in India and elsewhere. In particular, continued growth increases the challenges
involved in: recruiting and retaining sufficient skilled technical, marketing and management personnel;
providing adequate training and supervision to maintain the company’s high quality standards; and preserving
the company’s culture and values and its entrepreneurial environment. The company’s inability to manage its
growth effectively could have a material adverse effect on the quality of the company’s services and projects,
its ability to attract clients as well as skilled personnel, its business prospects, and its results of operations
and financial condition.
2.11.2 Potential fluctuations in future operating results
Historically, the company’s operating results have fluctuated, and may continue to fluctuate in future, depending
on a number of factors, including: the size, timing and profitability of significant projects; the proportion of
services that are performed at client sites rather than at the company’s offshore facilities; the accuracy of estimates
of resources and time required to complete ongoing projects, particularly projects performed under fixed-
price, fixed-time frame contracts; a change in the mix of services provided to its clients or in the relative
proportion of services and product revenues; the timing of tax holidays and other Government of India incentives;
the effect of seasonal hiring patterns and the time required to train and productively utilize new employees; the
size and timing of facilities expansion; unanticipated increases in wage rates; the company’s success in expanding
its sales and marketing programs; currency exchange rate fluctuations and other general economic factors. A
high percentage of the company’s operating expenses, particularly personnel and facilities, are fixed in advance
of any particular quarter. As a result, unanticipated variations in the number and timing of the company’s
projects or in employee utilization rates may cause significant variations in operating results in any particular
quarter. The company believes that period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance. Due to all of the foregoing
factors, it is possible that in some future quarter the company’s operating results may be below the expectations
of public market analysts and investors. In such event, the market price of the company’s equity shares and
ADSs are likely to be materially adversely affected.
47
2.11.3 Risks related to investments in Indian securities
The company is incorporated in India and substantially all of its assets, and a substantial majority of its employees
are located in India. Consequently, the company’s performance may be affected by changes in exchange rates
and controls, interest rates, Government of India policies, including taxation policy, as well as political, social
and economic developments affecting India.
Political and economic environment. During the past decade and particularly since 1991, the Government
of India has pursued policies of economic liberalization, including significant relaxation of restrictions on
the private sector. Nevertheless, the role of the Indian central and state Governments in the Indian economy
as producers, consumers and regulators has remained significant. Additionally, since 1996, the Government
of India has changed three times. The current Government of India, formed in October 1999, has announced
policies and taken initiatives that support the continuation of the economic liberalization policies pursued
by previous governments and has, in addition, set up a special IT task force to promote the IT industry.
However, the speed of economic liberalization could change, and specific laws and policies affecting IT
companies, foreign investment, currency exchange rates and other matters affecting investment in the
company’s securities could change as well. Further, there can be no assurance that the liberalization policies
will continue in the future. A significant change in the Government of India’s economic liberalization and
deregulation policies could adversely affect business and economic conditions in India generally and the
company’s business in particular. South Asia has from time to time experienced instances of civil unrest and
hostilities among neighboring countries. Events of this nature in the future could influence the Indian economy
and could have a material adverse effect on the market for securities of Indian companies and on the business
of the company.
In recent years, financial turmoil in certain Asian countries, Russia and elsewhere in the world have affected
market prices in the world’s securities markets, including the United States and Indian markets. Events of this
nature could cause decreases in the securities prices on United States and Indian stock exchanges, including
the market prices of the company’s equity shares and ADSs.
Government of India incentives and regulation.
The company benefits from a variety of incentives given to software firms in India, such as relief from import
duties on hardware, a tax exemption for income derived from software exports, and tax holidays and infrastructure
support for companies, such as Infosys, operating in specially designated “Software Technology Parks”. There
can be no assurance that these incentives will continue in future. Further, there is a risk that changes in tax rates
or laws affecting foreign investment, currency exchange rates or other regulations will render the Government
of India’s regulatory scheme less favorable to the company and could adversely affect the market price of the
company’s equity shares and its ADSs. Should the regulations and incentives promulgated by the Government
of India become less favorable to the company, the company’s results of operations and financial condition
could be adversely affected.
Restrictions on foreign investment.
Foreign investment in Indian securities is generally regulated by the Foreign Exchange Management Act, 1999.
In certain emerging markets, including India, Global Depositary Shares and ADSs may trade at a discount or
premium, as the case may be, to the underlying shares, in part because of restrictions on foreign ownership of
the underlying shares. In addition, under current Indian laws and regulations, the Depositary cannot accept
deposits of outstanding equity shares and issue ADRs evidencing ADSs representing such equity shares. Therefore,
a holder of ADSs who surrenders ADSs and withdraws equity shares is not permitted subsequently to deposit
such equity shares and obtain ADSs nor would a holder to whom such equity shares are transferred be permitted
to deposit such equity shares. This inability to convert equity shares into ADSs increases the probability that the
price of the ADSs will not trade on par with the price of the equity shares as quoted on the Indian stock
exchanges. Holders who seek to sell in India any equity shares withdrawn from the depositary facility and to
convert the rupee proceeds from such sale into foreign currency and repatriate such foreign currency from
India will have to obtain Reserve Bank of India (“RBI”) approval for each such transaction. Further, under
current Indian regulations and practice, the approval of the RBI is required for the sale of equity shares underlying
ADSs by a non-resident of India to a resident of India as well as for renunciation of rights to a resident of India.
There can be no assurance that any such approval can be obtained.
Exchange rate fluctuations.
The exchange rate between the rupee and the U.S. dollar has changed substantially in recent years and may
48
fluctuate substantially in the future. During the five-year period from March 31, 1995 through March 31, 2000,
the value of the rupee against the U.S. dollar declined by approximately 38.9%. For the six months ended
September 30, 2000 and for fiscal 2000 and 1999, the company’s U.S. dollar-denominated revenues represented
89.8%, 88.3% and 88.1%, respectively, of total revenues. The company expects that a majority of its revenues
will continue to be generated in U.S. dollars for the foreseeable future and that a significant portion of the
company’s expenses, including personnel costs as well as capital and operating expenditures, will continue to
be denominated in rupees. Consequently, the company’s results of operations will be adversely affected to the
extent the rupee appreciates against the U.S. dollar. The company has in the past sought to reduce the effect of
exchange rate fluctuations on operating results by purchasing foreign exchange forward contracts to cover a
portion of outstanding accounts receivable on a need basis. These contracts typically mature within three
months, must be settled on the day of maturity and may be cancelled subject to the payment of any gains or
losses in the difference between the contract exchange rate and the market exchange rate on the date of
cancellation. The company uses these instruments only as a hedging mechanism and not for speculative purposes.
As of September 30, 2000, the company had no outstanding forward contracts and is currently not actively
hedging against exchange rate fluctuations. There can be no assurance that the company will purchase contracts
adequate to insulate itself from foreign exchange currency risks or that any such contracts will perform adequately
as a hedging mechanism. Devaluation of the rupee will result in foreign currency translation losses. For example,
for the six months ended September 30, 2000 and for fiscal 2000 and fiscal 1999, the company’s foreign
currency translation losses were approximately $12.0 million, $5.0 million and $2.1 million, respectively.
Fluctuations in the exchange rate between the rupee and the U.S. dollar also will affect the U.S. dollar conversion
by the Depositary of any cash dividends paid in rupees on the equity shares represented by the ADSs. In
addition, fluctuations in the exchange rate between the Indian rupee and the U.S. dollar will affect the U.S.
dollar equivalent of the Indian rupee price of equity shares on the Indian Stock Exchanges and, as a result, are
likely to affect the market prices of the ADSs in the United States, and vice versa. Such fluctuations will also
affect the dollar value of the proceeds a holder would receive upon the sale in India of any equity shares
withdrawn from the Depositary under the Depositary Agreement. There can be no assurance that holders will
be able to convert rupee proceeds into U.S. dollars or any other currency or with respect to the rate at which
any such conversion could occur.
2.11.4 Substantial investment in new facilities
As of September 30, 2000, the company had contractual commitments of $26.4 million for capital expenditure
and has budgeted for significant expansion of infrastructure in the near future. Since such an expansion will
significantly increase the company’s fixed costs, the company’s results of operations will be materially adversely
affected if the company is unable to grow its business proportionately. Although the company has successfully
developed new facilities in the past, there can be no assurance that the company will not encounter cost
overruns or project delays in connection with any or all of the new facilities. Furthermore, there can be no
assurance that future financing for additional facilities, whether within India or elsewhere, would be available
on attractive terms or at all.
2.11.5 Restrictions on US immigration
The company’s professionals who work on-site at client facilities in the United States on temporary and extended
assignments are typically required to obtain visas. As of September 30, 2000, substantially all of the company’s
personnel in the United States were working pursuant to H-1B visas (860 persons) or L-1 visas (271 persons).
Although there is no limit to new L-1 petitions, there is a limit to the number of new H-1B petitions that the
United States Immigration and Naturalization Service may approve in any government fiscal year. In years in
which this limit is reached, the company may be unable to obtain the H-1B visas necessary to bring its critical
Indian IT professionals to the United States on an extended basis. This limit was reached in March 2000 by the
U.S. Government for its fiscal year ended September 30, 2000 and in May 1999 for the fiscal year ended
September 30, 1999. While the company anticipated that such limit would be reached prior to the end of the
US government’s fiscal year and made efforts to plan accordingly, there can be no assurance that the company
will continue to be able to obtain a sufficient number of H-1B visas. Changes in existing U.S. immigration laws
that make it more difficult for the company to obtain H-1B and L-1 visas could impair the company’s ability to
compete for and provide services to clients and could have a material adverse effect on the company’s results of
operations and financial condition.
2.11.6 Risks related to international operations
49
While most of the company’s software development facilities are currently located in India, the company intends
to develop new software development facilities in other regions, including potentially South-East Asia, Latin
America and Europe. The company has not yet made substantial contractual commitments to develop such
new software development facilities, and there can be no assurance that the company will not significantly alter
or reduce its proposed expansion plans. The company’s lack of experience with facilities outside of India
subject the company to further risk with regard to foreign regulation and overseas facilities management.
Increasing the number of software development facilities and the scope of operations outside of India subjects
the company to a number of risks, including, among other things, difficulties relating to administering its
business globally, managing foreign operations, currency exchange rate fluctuations, restrictions against the
repatriation of earnings, export requirements and restrictions, and multiple and possibly overlapping tax
structures. Such developments could have a material adverse effect on the company’s business, results of
2.11.7 Dependence on skilled personnel; risks of wage inflation
The company’s ability to execute project engagements and to obtain new clients depends, in large part, on
its ability to attract, train, motivate and retain highly skilled IT professionals, particularly project managers,
software engineers and other senior technical personnel. An inability to hire and retain additional qualified
personnel will impair the company’s ability to bid for or obtain new projects and to continue to expand its
business. The company believes that there is significant competition for IT professionals with the skills
necessary to perform the services offered by the company. There can be no assurance that the company
will be able to assimilate and manage new IT professionals effectively. Any increase in the attrition rates
experienced by the company, particularly the rate of attrition of experienced software engineers and project
managers, would adversely affect the company’s results of operations and financial condition. There can
be no assurance that the company will be successful in recruiting and retaining a sufficient number of
replacement IT professionals with the requisite skills to replace those IT professionals who leave. Further,
there can be no assurance that the company will be able to redeploy and retrain its IT professionals to
keep pace with continuing changes in IT, evolving standards and changing client preferences. Historically,
the company’s wage costs in India have been significantly lower than wage costs in the United States for
comparably skilled IT professionals. However, wage costs in India are presently increasing at a faster rate
than those in the United States. In the long-term, wage increases may have an adverse effect on the
company’s profit margins unless the company is able to continue increasing the efficiency and productivity
of its professionals.
2.11.8 Client concentration
The company has derived, and believes that it will continue to derive, a significant portion of its revenues
from a limited number of large corporate clients. For the three months ended September 30, 2000 and for
fiscal 2000 and 1999, the company’s largest client accounted for 7.7%, 7.2% and 6.4%, respectively, of
the company’s total revenues and its five largest clients accounted for 24.9%, 30.2% and 28.4%, respectively,
of the company’s total revenues. The volume of work performed for specific clients is likely to vary from
year to year, particularly since the company is usually not the exclusive outside software service provider
for its clients. Thus, a major client in one year may not provide the same level of revenues in a subsequent
year. The loss of any large client could have a material adverse effect on the company’s results of operations
and financial condition. Since many of the contracted projects are critical to the operations of its clients’
businesses, any failure to meet client expectations could result in a cancellation or non-renewal of a
contract. However, there are a number of factors other than the company’s performance that could cause
the loss of a client and that may not be predictable. For example, in 1995, the company chose to reduce
significantly the services provided to its then-largest client rather than accept the price reductions and
increased company resources sought by the client. In other circumstances, the company reduced significantly
the services provided to its client when the client either changed its outsourcing strategy by moving more
work in-house and reducing the number of its vendors, or replaced its existing software with packaged
software supported by the licensor. There can be no assurance that the same circumstances may not arise
in future.
2.11.9 Fixed-price, fixed-time frame contracts
As a core element of its business strategy, the company continues to offer a significant portion of its services on
a fixed-price, fixed-time frame basis, rather than on a time-and-materials basis. Although the company uses
specified software engineering processes and its past project experience to reduce the risks associated with
50
estimating, planning and performing fixed-price, fixed-time frame projects, the company bears the risk of cost
overruns, completion delays and wage inflation in connection with these projects. The company’s failure to
estimate accurately the resources and time required for a project, future rates of wage inflation and currency
exchange rates or its failure to complete its contractual obligations within the time frame committed could have
a material adverse effect on the company’s results of operations and financial condition.
2.11.10 Infrastructure and potential disruption in telecommunications
A significant element of the company’s business strategy is to continue to leverage its various software development
centers in Bangalore, Bhubaneswar, Chennai, Mangalore, Pune, Hyderabad, Mohali and Mysore, India and to
expand the number of such centers in India as well as outside India. The company believes that the use of a
strategically located network of software development centers will provide the company with cost advantages,
the ability to attract highly skilled personnel in various regions, the ability to service clients on a regional and
global basis, and the ability to provide 24-hour service to its clients. Pursuant to its service delivery model, the
company must maintain active voice and data communication between its main offices in Bangalore, the offices
of its clients, and its other software development facilities. Although the company maintains redundant software
development facilities and satellite communications links, any significant loss of the company’s ability to transmit
voice and data through satellite and telephone communications would have a material adverse effect on the
company’s results of operations and financial condition.
2.11.11 Decreased demand for Year 2000 services
Year 2000 conversion projects represented 0%, 6.3% and 19.8% of the company’s total revenue for the three
months ended September 30, 2000 and for fiscal 2000 and 1999, respectively. The high demand for these
time-sensitive projects resulted in pricing and margins that were favorable to the company. There is no assurance
that the company will be successful in generating additional business from its Year 2000 clients for other
services, that the company will be successful in replacing Year 2000 conversion projects with other projects as
the Year 2000 business declines or that margins from any such future projects will be comparable to those
obtained from Year 2000 conversion projects. There is an additional risk that the company may be unable to
retrain and redeploy IT professionals who were assigned to Year 2000 conversion projects involving legacy
computer systems after such projects are completed. Furthermore, since Year 2000 conversion projects are
now essentially completed, there is a likelihood of increased competition for other types of projects from firms
formerly dependent on Year 2000 business.
2.11.12 Competition
The market for IT services is highly competitive. Competitors include IT services companies, large international
accounting firms and their consulting affiliates, systems consulting and integration firms, temporary employment
agencies, other technology companies and client in-house MIS departments. Competitors include international
firms as well as national, regional and local firms located in the United States, Europe and India. The company
expects that future competition will increasingly include firms with operations in other countries, potentially
including countries with lower personnel costs than those prevailing in India. Historically, one of the company’s
key competitive advantages has been a cost advantage relative to service providers in the United States and
Europe. Since wage costs in India are presently increasing at a faster rate than those in the United States, the
company’s ability to compete effectively will become increasingly dependent on its reputation, the quality of its
services, and its expertise in specific markets. Many of the company’s competitors have significantly greater
financial, technical and marketing resources and generate greater revenue than the company, and there can be
no assurance that the company will be able to compete successfully with such competitors and will not lose
existing clients to such competitors. The company believes that its ability to compete also depends in part on a
number of factors outside its control, including the ability of its competitors to attract, train, motivate and
retain highly skilled IT professionals, the price at which its competitors offer comparable services, and the
extent of its competitors’ responsiveness to client needs.
2.11.13 Dependence on key personnel
The company’s success depends to a significant degree upon continued contributions of members of the company’s
senior management and other key research and development and sales and marketing personnel. The company
generally does not enter into employment agreements with its senior management and other key personnel that
provide for substantial restrictions on such persons leaving the company. The loss of any of such persons could
have a material adverse effect on the company’s business, financial condition and results of operations.
51
2.11.14 Potential liability to clients; risk of exceeding insurance coverage
Many of the company’s contracts involve projects that are critical to the operations of its clients’ businesses and
provide benefits that may be difficult to quantify. Any failure in a client’s system could result in a claim for
substantial damages against the company, regardless of the company’s responsibility for such failure. Although
the company attempts to limit its contractual liability for damages arising from negligent acts, errors, mistakes
or omissions in rendering its services, there can be no assurance the limitations of liability set forth in its service
contracts will be enforceable in all instances or will otherwise protect the company from liability for damages.
The company maintains general liability insurance coverage, including coverage for errors or omissions; however,
there can be no assurance that such coverage will continue to be available on reasonable terms or will be
available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage
as to any future claim. The successful assertion of one or more large claims against the company that exceed
available insurance coverage or changes in the company’s insurance policies, including premium increases or
the imposition of large deductible or co-insurance requirements, could adversely affect the company’s results of
2.11.15 Risks associated with possible acquisitions
The company intends to evaluate potential acquisitions on an ongoing basis. As of the date of this Quarterly
Report, however, the company has no understanding, commitment or agreement with respect to any material
future acquisition. Since the company has not made any acquisitions in the past, there can be no assurance
that the company will be able to identify suitable acquisition candidates available for sale at reasonable
prices, consummate any acquisition, or successfully integrate any acquired business into the company’s
operations. Further, acquisitions may involve a number of special risks, including diversion of management’s
attention, failure to retain key acquired personnel and clients, unanticipated events or circumstances, legal
liabilities and amortization of acquired intangible assets, some or all of which could have a material adverse
effect on the company’s results of operations and financial condition. Under Indian law, except in certain
limited circumstances, the company may not make any acquisition of, or investment in, a non-Indian company
without RBI and, in most cases, Government of India approval. Even if the company does encounter an
attractive acquisition candidate, there can be no assurance that RBI and, if required, Government of India
approval can be obtained.
2.11.16 Risks associated with strategic investments
The company has made, and continues to make, strategic investments in various companies. However, there
can be no assurance that the company will be successful in its investments and will benefit from such investments.
The loss of any of such investments could have a material adverse effect on the company’s business, financial
condition and results of operations.
2.11.17 Risks associated with incubation
The company incubates employee ideas that it expects to be commercially viable. The company may incur
significant expenditures until the successful commercialization of these ideas. The company may also hold
equity in these incubation ventures in return for transfers of intellectual property rights related to incubated
ideas. However, there can be no assurance that the company will be successful in incubating ideas, will be
successful in commercializing such ideas, or will benefit from such incubation ventures. The failure of any of
such incubation ventures could have a material adverse effect on the company’s reputation, business, financial
condition and results of operations.
2.11.18 Risks related to software product sales
The company derived 2.7%, 2.6% and 3.2% of its total revenue from the sale of software products in the three
months ended September 30, 2000, fiscal 2000 and fiscal 1999, respectively. The development of the company’s
software products requires significant investments. The markets for the company’s primary software product
are competitive and currently located in developing countries, and there can be no assurance that such a
product will continue to be commercially successful. In addition, there can be no assurance that any new
products developed by the company will be commercially successful or that the costs of developing such new
products will be recouped. A decrease in the company’s product revenues or margins could adversely affect the
company’s results of operations and financial condition. Additionally, software product revenues typically occur
in periods subsequent to the periods in which the costs are incurred for development of such products. There
can be no assurance that such delayed revenues will not cause periodic fluctuations of the company’s results of
52
2.11.19 Restrictions on exercise of preemptive rights by ADS holders
Under the Indian Companies Act, 1956 (“Indian Companies Act”), a company incorporated in India must offer
its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares to
maintain their existing ownership percentages prior to the issuance of any new equity shares, unless such
preemptive rights have been waived by three-fourths of the company’s shareholders. U.S. holders of ADSs may
be unable to exercise preemptive rights for equity shares underlying ADSs unless a registration statement under
the Securities Act of 1933, as amended (the “Securities Act”), is effective with respect to such rights or an
exemption from the registration requirements of the Securities Act is available. The company’s decision to file a
registration statement will depend on the costs and potential liabilities associated with any such registration
statement as well as the perceived benefits of enabling the holders of ADSs to exercise their preemptive rights
and any other factors the company considers appropriate at the time. No assurance can be given that the
company would file a registration statement under these circumstances. If the company issues any such securities
in the future, such securities may be issued to the Depositary, which may sell such securities for the benefit of
the holders of the ADSs. There can be no assurance as to the value, if any, the Depositary would receive upon
the sale of such securities. To the extent that holders of ADSs are unable to exercise preemptive rights granted
in respect of the equity shares represented by their ADSs, their proportional interests in the company would be
reduced.
2.11.20 Intellectual property rights
The company relies upon a combination of non-disclosure and other contractual arrangements and copyright,
trade secrets and trademark laws to protect its proprietary rights. Ownership of software and associated
deliverables created for clients is generally retained by or assigned to the client, and the company does not
retain an interest in such software and deliverables. The company also develops foundation and application
software products, or software “tools”, which are licensed to clients and remain the property of the company.
The company has obtained registration of INFOSYS as a trademark in India and the United States, and does not
have any patents or registered copyrights in the United States. The company currently requires its IT professionals
to enter into non-disclosure and assignment of rights agreements to limit use of, access to, and distribution of
its proprietary information. There can be no assurance that the steps taken by the company in this regard will
be adequate to deter misappropriation of proprietary information or that the company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual property rights.
Although the company believes that its services and products do not infringe upon the intellectual property
rights of others, there can be no assurance that such a claim will not be asserted against the company in the
future. Assertion of such claims against the company could result in litigation, and there can be no assurance
that the company would be able to prevail in such litigation or be able to obtain a license for the use of any
infringed intellectual property from a third party on commercially reasonable terms. There can be no assurance
that the company will be able to protect such licenses from infringement or misuse, or prevent infringement
claims against the company in connection with its licensing efforts. The company expects that the risk of
infringement claims against the company will increase if more of the company’s competitors are able to obtain
patents for software products and processes. Any such claims, regardless of their outcome, could result in
substantial cost to the company and divert management’s attention from the company’s operations. Any
infringement claim or litigation against the company could, therefore, have a material adverse effect on the
company’s results of operations and financial condition.
2.11.21 Control by principal shareholders, officers and directors; anti-takeover provisions
The company’s officers and directors, together with members of their immediate families, in the aggregate,
beneficially own approximately 25.2% of the company’s issued equity shares. As a result, such persons, acting
together, will likely still have the ability to exercise significant control over most matters requiring approval by
the shareholders of the company, including the election and removal of directors and significant corporate
transactions. Such control by the company’s officers and directors could delay, defer or prevent a change in
control of the company, impede a merger, consolidation, takeover or other business combination involving the
company, or discourage a potential acquiror from making a tender offer or otherwise attempting to obtain
control of the company.
The Indian Companies Act and the company’s Articles of Association (the “Articles”) require that: (i) at least
two-thirds of the company’s directors shall serve for a specified term and shall be subject to re-election by the
company’s shareholders at the expiration of such terms; and (ii) at least one-third of the company’s directors
who are subject to re-election shall be up for re-election at each annual meeting of the company’s shareholders.
53
In addition, the company’s Articles provide that Mr. N. R. Narayana Murthy, one of the company’s principal
founders and its Chairman of the Board and Chief Executive Officer, shall serve as the company’s Chairman of
the Board and shall not be subject to re-election as long as he and his relatives, own at least 5% of the company’s
outstanding equity securities. Furthermore, any amendment to the company’s Articles would require the
affirmative vote of three-fourths of the company’s shareholders. Finally, foreign investment in Indian companies
is highly regulated. These provisions could delay, defer or prevent a change in control of the company, impede
a business combination involving the company or discourage a potential acquiror from attempting to obtain
control of the company.
Item 3. Quantitative and qualitative disclosure about market risk

3.1 Foreign currency market risk
This information is set forth under the caption “Exchange rate fluctuations” under item 2.11.3, Risks related to
Investments in Indian securities, above, and is incorporated herein by reference.
Part II – Other information

Item 1. Legal proceedings
The company, its directors, senior executive officers and affiliates are not currently a party to any material legal
proceedings.
Item 2. Changes in securities and use of proceeds

As of September 30, 2000, the net proceeds of the company’s ADS offering in March 1999 were completely
deployed as capital expenditures incurred in the construction of the company’s software development facilities
in Pune, Mangalore, Bhubaneshwar and construction of Infosys Park, Phase I & II, adjacent to the company’s
headquarters in Electronics City, Bangalore.
Item 3. Default upon senior securities

None
Item 4. Submission of matters to a vote of security holders

None
Item 5. Other information

The Board in its meeting held on October 10, 2000, appointed Professor Jitendra Vir Singh, as an Additional
Director of the company effective October 10, 2000, pursuant to Section 260 of the Companies Act, 1956. He
will hold office until the date of the next Annual General Meeting, when his appointment, as a non-executive
director will be placed for the approval of the members.
Professor Jitendra Vir Singh is the Vice Dean, International Academic Affairs at the Wharton School, University
of Pennsylvania, since 1998. Earlier, Professor Singh was Director of the Emerging Economies Program at
Wharton from 1996-98. From 1991-1995, he was Research Director, Entrepreneurship at the Sol C. Snider
Entrepreneurial Center at Wharton. Professor Singh has been a faculty member at Wharton since 1987 prior to
which, he was at the University of Toronto, Canada where he was an Associate Professor in the (now) Rotman
School of Business. Professor Singh received his Ph.D. from Stanford Business School in 1983. In 1991, he
received an M.A. (h.c.) from University of Pennsylvania. His earliest education was in natural and mathematical
sciences and he received his B.Sc. from Lucknow University in India in 1972. Professor Singh received his MBA
from the Indian Institute of Management, Ahmedabad, India in 1975.
Professor Singh serves as advisor for several high technology startup firms, including, San Francisco based
Esurance, an integrated online insurance company and Seattle based vCustomer, which, provides online customer
support to e-Commerce firms. He is also on the advisory board of EurIndia, a London based marketing accelerator
for small Indian software companies and other high tech firms in India and the US. Professor Singh has published
several papers in leading management journals and currently serves on the editorial boards of Asia Pacific
Journal of Management, Strategic Management Journal and Organization Science. He has edited two books –
Organizational Evolution: New Directions (Sage Publications, 1990), and Evolutionary Dynamics of Organizations
(co-authored with Joel Baum, Oxford University Press, 1994).
54
Item 6. Exhibits and reports
Infosys filed no reports in Form 8-K during the quarter ended September 30, 2000.
EXHIBIT INDEX
Exhibit Number Description of Document
19.1 Infosys Quarterly report to the shareholders for the quarter ended September 30, 2000.
27.1 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly organized.
Dated: October 18, 2000. INFOSYS TECHNOLOGIES LIMITED
By: /s/ Narayana N. R. Murthy
Narayana N. R. Murthy,
Chairman and Chief Executive Officer
/s/ Nandan M. Nilekani
Nandan M. Nilekani,
Managing Director, President and
Chief Operating Officer
55
Shareholder information
1. Listing on stock exchanges Bangalore Stock Exchange Ltd.
in India at Stock Exchange Towers, No. 51, 1st Cross, J.C. Road,
Bangalore – 560 027, India.
Tel.: 91-80-299 5234, Fax: 91-80-299 5242
The Stock Exchange, Mumbai
Phiroze Jeejeebhoy Towers, Dalal Street,
Mumbai – 400 001, India.
Tel.: 91-22-265 5581, Fax: 91-22-265 8121
National Stock Exchange of India Ltd.
Trade World, Senapati Bapat Marg, Lower Parel,
Tel.: 91-22-497 2950, Fax: 91-22-491 4275 / 85
2. Listing fees Paid for all the above stock exchanges for 2000-2001.
3. Listing on stock exchanges NASDAQ National Market in the United States
outside India 33 Whitehall Street, New York, NY-1004-4087
Tel.: (212) 709-2400, Fax: (212) 709-2496
4. Registered office Electronics City, Hosur Road, Bangalore – 561 229, India.
Tel.: 91-80-852 0261, Fax: 91-80-852 0362
Homepage: www.infy.com
5. Stock market data relating to shares listed in India
a. The company’s market capitalization is included in the computation of the BSE-30 Sensitive Index (Sensex), the
BSE Dollex and S&P CNX NIFTY Index.
b. Monthly high and low quotations as well as the volume of shares traded at Mumbai, National and Bangalore Stock
Exchanges for the three-month period ended September 30, 2000 are:
BSE NSE BgSE

High Low Volume High Low Volume High Low Volume
Rs. Rs. Nos. Rs. Rs. Nos. Rs. Rs. Nos.
July 8,815 6,401 91,78,299 8,812 6,355 88,47,755 8,790 6,400 44,147
August 8,617 6,255 1,00,98,169 8,603 6,256 1,26,23,716 8,500 6,230 64,163
September 8,930 6,950 1,40,65,483 8,949 6,975 1,33,52,783 8,998 6,985 74,460
Total 3,33,41,951 3,48,24,254 1,82,770
% of volume traded to average
shares outstanding for the period 52.04%** 54.35%** 0.29%**
** The number of shares outstanding is 6,40,68,800. The equity shares underlying the American Depositary Shares
(ADSs) have been excluded for the purpose of this calculation.
6. Par value of equity shares Rs. 5 each fully paid-up
7. Share transfers in physical form Karvy Consultants Limited
and other communication regarding Registrars and Share Transfer Agents
share certificates, dividends, T.K.N. Complex, No. 51/2, Vanivilas Road,
change of address, etc., in India Opp. National College, Basavanagudi,
may be addressed to Bangalore – 560 004, India.
Tel.: 91-80-662 1184/92/93, Fax: 91-80-662 1169
E-mail: [email protected]
8. Share transfer system
Shares sent for physical transfer are generally registered and returned within a period of 15 days from the date of receipt,
if the documents are clear in all respects. The share transfer committee of the company meets as often as required.
The total number of shares transferred in physical form during the three-month period ended September 30, 2000 was
2,620 (previous year – 2,87,568). 100.00% of transfers (previous year – 99.79%) were completed within 15 days.
56
Three-month period ended September 30,
2000 1999
Transfer No. of No. of No. of No. of
period transferees (folios) shares % transferees (folios) shares %
in days New Existing New Existing
01 - 10 3 1 2,620 100.00 25 12 2,86,168 99.51
11 - 15 0 0 0 0.00 6 0 800 0.28
16 - 20 0 0 0 0.00 2 0 200 0.07
* 21 and above 0 0 0 0.00 1 2 400 0.14
3 1 2,620 100.00 34 14 2,87,568 100.00
* Delays beyond 21 days were due to compliance with legal requirements
9. Investors’ services – complaints received during
Three-month period ended September 30,

Nature of complaints 2000 1999
Received Attended to Received Attended to
1. Non-receipt of share certificates 0 0 0 0
2. Non-receipt of bonus shares 2 2 22 22
3. Letters from Stock Exchanges, SEBI, etc. 0 0 0 0
4. Non-receipt of dividend 22 22 16 16
24 24 38 38
The company has attended to most of the investors’ grievances/correspondence within a period of 10 days from
the date of receipt of the same, during the three-month period ended September 30, 2000 except in cases of
disputes or legal impediments.
10. Legal proceedings
The company is responding to various petitions, relating to the title to its shares, filed by certain parties. These
are unlikely to have a significant effect on the affairs of the company.
11. Distribution of shareholding as on September 30
2000 1999
No. of equity No. of % of No. of % of No. of % of No. of % of
shares held share- share- shares share- share- share- shares share-
holders holders holding holders holders holding
1 – 100 53,505 81.46 7,42,468 1.16 6,864 44.92 4,21,642 0.66
1 – 200 2,446 3.72 4,21,787 0.66 2,060 13.48 7,92,106 1.24
1 – 500 3,097 4.71 10,94,882 1.71 2,626 17.18 19,70,820 3.08
501 – 1000 2,701 4.11 20,06,191 3.13 2,051 13.42 31,02,220 4.84
1001 – 5000 3,032 4.62 64,39,382 10.05 1,297 8.49 52,52,610 8.20
5001 – 10000 363 0.55 25,97,345 4.05 153 1.00 22,01,626 3.44
10001 and above 542 0.83 5,01,18,322 78.23 231 1.51 4,97,09,866 7.58
Shares in transit in NSDL – – 6,48,423 1.01 – – 6,17,910 0.96
65,686 100.00 6,40,68,800 100.00 15,282 100.00 6,40,68,800 100.00
Equity shares underlying 1* 20,82,567 1* 20,70,000
American Depositary Shares
Total 65,687 6,61,51,367 15,283 6,61,38,800
* Held by beneficial owners outside India.
# Shares have been restated consequent to the 2-for-1 stock-split in February 2000.
57
12. Categories of shareholders as on September 30
2000 1999
Category No. of Voting No. of shares No. of Voting No. of shares
shareholders strength (%) held shareholders strength (%) held
Individuals 61,943 25.55 1,69,02,158 14,272 25.18 1,66,54,480
Companies 2,679 2.30 15,18,671 646 1.37 9,08,042
FIIs 346 25.27 1,67,16,870 154 25.58 1,69,18,686
OCBs and NRIs 499 0.75 4,93,441 88 0.74 4,89,816
Founders and their families 23 29.24 1,93,45,960 18 29.58 1,95,64,200
Mutual Funds, Banks, FIs 196 12.76 84,43,277 104 13.48 89,15,666
Shares in transit in NSDL – 0.98 6,48,423 – 0.94 6,17,910
Equity shares underlying
American Depositary Shares 1* 3.15 20,82,567 1* 3.13 20,70,000
Total 65,687 100.00 6,61,51,367 15,283 100.00 6,61,38,800
* Held by beneficial owners outside India.
13. Shares under lock-in
Employees Stock Offer Plan (ESOP) 1994
Details of shares of par value of Rs. 5 each held by employees under the Employee Stock Offer Plan (ESOP) 1994
subject to lock-in are given below. These shares are also included in the categories of shareholders given in (12)
above.
No. of shares subject to lock-in as on September 30,
2000 1999
Period of lock-in No. of shares No. of employees No. of shares No. of employees
4-5 years – – 7,90,400 1,052
3-4 years 7,63,000 1,006 5,04,800 342
2-3 years 4,89,200 335 2,06,400 152
1-2 years 1,95,200 147 2,61,200 106
0-1 years 2,47,200 103 2,14,200 75
As on September 30, 2000, 547 employees hold rights to 3,34,200 shares of par value of Rs. 5 each which are
subject to a lock-in of 3-4 years. Currently, 1,573 employees hold shares under the 1994 Stock Offer Plan. Shares
subject to lock-in held by the employees will be transferred back to the ITL Employees Welfare Trust if such
employees leave the services of the company before the vesting period. As on September 30, 2000, the ITL
Employees Welfare Trust holds 2,24,600 shares of par value of Rs. 5 each. The 1994 Stock Offer Plan has since
been terminated.
The company established the 1998 Stock Offer Plan which provides for the grant of non-statutory stock options
and incentive stock options to the employees of the company. This plan was approved by the board of directors in
December 1997 and by the shareholders in January 1998. The Government of India has approved the 1998 plan,
subject to a limit of 14,70,000 equity shares of par value of Rs. 5 each representing 29,40,000 ADSs to be issued
under the plan. During the three-month period ended September 30, 2000, options were granted to 52 employees
to acquire 85,300 ADSs corresponding to 42,650 equity shares of par value of Rs. 5 each. During the three-month
period ended September 30, 2000, there was no exercise of stock options. As on September 30, 2000, 170
employees hold options to acquire 8,71,466 ADSs corresponding to 4,35,733 equity shares of par value of Rs. 5
each. Details of the number of ADSs options granted and exercised are given below.
58
No. of options granted and exercised
Granted Exercised
No. of ADSs options No. of Balance ADSs
Period employees (Net) employees ADSs Options
Year ended March 31, 1999 33 4,04,200 19 24,734 3,79,466
Year ended March 31, 2000 67 2,73,500 – – 2,73,500
Quarter ended June 30, 2000 56 1,33,200 – _ 1,33,200
Quarter ended September 30, 2000 53 85,300 – – 85,300
Total 8,96,200 24,734 8,71,466
The 1999 plan was approved by the board of directors and the shareholders in June 1999 and was instituted in
fiscal 2000. The plan provides for the issue of 66,00,000 equity shares of par value of Rs. 5 each to the employees.
During the three-month period ended September 30, 2000, options were granted to 2,226 employees to acquire
2,95,450 equity shares of par value of Rs. 5 each. As on September 30, 2000, 7,107 employees hold options to
acquire 18,83,000 shares of par value of Rs. 5 each. Details of options held by employees under the Employee
Stock Offer Plan (ESOP) 1999 are given below.
No. of options granted and forfeited
Granted Forfeited Balance
No. of No. of No. of No. of
Period employees options employees options
Year ended March 31, 2000 1,228 10,14,500 52 40,600 9,73,900
Quarter ended June 30, 2000 4,227 6,58,650 258 39,850 6,18,800
Quarter ended September 30, 2000 2,226 2,95,450 23 5,150 2,90,300
Total 19,68,600 85,600 18,83,000
14. Dematerialization of shares and liquidity

Your company was the first in India to pay a one-time custodial fee of Rs. 44.43 lakh to National Securities
Depositary Limited (NSDL). Consequently, the company’s shareholders do not have to pay depositary
participants, the custodial fee charged by the NSDL on their holding. Over 97% of the company’s shares are
now held in electronic form.
15. Financial calendar (tentative and subject to change)
Interim dividend payment November 2000
Financial reporting for the third quarter ending December 31, 2000 January 9, 2001
Financial results for the year ending March 31, 2001 April 11, 2001
Annual General Meeting for the year ending March 31, 2001 May 2001
16. Investors’ correspondence in India Any queries relating to the financial statements
may be addressed to: of the company may be addressed to:
The Company Secretary, Mr. T. V. Mohandas Pai,
Investors’ Service Cell, Director (F&A) and CFO,
Infosys Technologies Ltd., Infosys Technologies Ltd.,
Electronics City, Hosur Road, Electronics City, Hosur Road,
Bangalore – 561 229, India. Bangalore – 561 229, India.
Tel.: 91-80-852 1518, Fax: 91-80-852 0362 Tel.: 91-80-852 0396, Fax: 91-80-852 0362
(e-mail address: [email protected]) (e-mail address: [email protected])
17. Reuters code
– INFY.BO (BSE) Bridge code – IN;INF (BSE) Bloomberg code – INFO IN (BSE)
– INFY.NS (NSE) – IN;INFN (NSE) – NINFO IN (NSE)
– INFY.O (NASDAQ) – US;INFY (NASDAQ)
59
18. Stock market data relating to American Depositary Shares (ADSs)
a. ADS listed at NASDAQ National Market in the United States
b. Ratio of ADS to equity shares 2 ADS for one equity share
c. ADS symbol INFY
d. The American Depositary Shares issued under the ADS program of the company were listed on the
NASDAQ National Market in the United States on March 11, 1999. The monthly high and low quotations
as well as the volume of ADSs traded at the NASDAQ National Market for the three-month period ended
September 30, 2000 are:
High Low Volume
$ Rs. $ Rs. Nos.
July 186.94 16,776 120.00 10,769 25,33,000
August 169.13 15,475 96.50 8,830 37,00,100
September 164.00 15,091 121.00 11,134 20,45,300
Total 82,78,400
% of volume traded to total float 198.75%*
* 2 ADS = 1 equity share
$ has been converted into Indian rupees at the monthly closing rates
e. Premium of American Depositary Shares over the shares traded on the Indian stock exchanges
The ADS price quoted below is in Indian rupees and has been converted into $at the monthly closing rates.
* 2 ADS = 1 equity share (Source: Bloomberg)
60
f. Investor correspondence in P. R. Ganapathy
the US may be addressed to Infosys Technologies Limited
Investor Relations Officer 34760, Campus Drive,
Fremont CA 94555, USA.
Tel.: (510) 742-3030, Mobile: (510) 872-4412,
Fax: (510) 742-2930, E-mail: [email protected]
g. Name and address of the Deutsche Bank A.G.

depositary bank Corporate Trust and Agency Services
4 Albany Street
New York, NY 10006, USA.
Tel.: (212) 250-8500, Fax: (212) 250-5644.
Corporate Trust and Agency Services
Deutsche Bank A.G.
1 st Floor, Kodak House
222, Dr. D. N. Road.
Fort, Mumbai – 400 001, India.
Tel.: 91-22-207 3262, Fax: 91-22-207 9614
i. Name and address of the ICICI Limited
custodian in India ICICI Towers
Bandra Kurla Complex
Tel.: 91-22-653 1414, Fax: 91-22-653 1164/65.
61
Segment information
Rs. in lakhs
Quarter ended Sep 30, Half-year ended Sep 30, Year ended
2000 1999 2000 1999 March 31, 2000
Revenue by Geographical segments
North America 34,868.11 16,718.10 62,581.65 31,082.52 71,327.35
Europe 8,094.59 3,084.40 14,200.39 5,876.59 12,909.74
Rest of the World 2,597.03 1,109.73 5,121.12 1,998.19 5,240.03
India 1,007.72 875.82 1,728.37 1,236.95 2,669.36
46,567.45 21,788.05 83,631.53 40,194.25 92,146.48
Business segments
Branded services – 2,096.91 – 4,243.18 5,895.00
Products 1,205.70 875.41 2,063.27 1,132.33 2,290.12
Software development and maintenance 43,403.87 17,857.55 78,099.30 32,481.43 80,047.26
Treasury 1,957.88 958.18 3,468.96 2,337.31 3,914.10
46,567.45 21,788.05 83,631.53 40,194.25 92,146.48
Note : Exchange differences arising on translation of foreign currency deposits kept abroad has been included under treasury.
62
Ratio analysis
2000 1999 2000 1999 2000
Ratios – Financial performance
Export revenue / total revenue (%) 94.76 94.12 94.74 92.97 94.38
Domestic revenue / total revenue (%) 1.04 1.48 1.11 1.21 1.37
Other income / total revenue (%) 4.20 4.40 4.15 5.82 4.25
Employee costs / total revenue (%) 35.99 36.15 37.09 34.96 36.31
Administration expenses / total revenue (%) 9.28 7.06 8.58 7.21 7.54
Operating expenses / total revenue (%) 57.91 60.56 58.30 59.23 58.88
Depreciation / total revenue (%) 5.20 4.92 5.02 4.99 5.78
Tax / total revenue (%) 3.81 4.36 3.76 4.35 4.31
Tax / PBT (%) 10.33 12.63 10.26 12.17 12.19
EBIDTA / total revenue (%) 42.09 39.44 41.70 40.77 41.12
PAT from ordinary activities / total revenue (%) 33.07 30.16 32.92 31.43 31.03
PAT from ordinary activities / average net worth (%) (LTM) 48.82 45.62 48.82 45.62 40.63
ROCE (PBIT/Average capital employed) (%) (LTM) 54.85 52.48 54.85 52.48 46.27
Return on invested capital (%)(LTM) 104.97 101.48 104.97 101.48 111.68
Capital output ratio (LTM) 1.47 1.48 1.47 1.48 1.31
Invested capital output ratio (LTM) 3.30 3.43 3.30 3.43 3.82
Ratios – Balance sheet
Debt-Equity ratio – – – – –
Debtors turnover (Days)* 55 64 55 64 56
Current ratio 3.50 5.24 3.50 5.24 4.69
Cash and equivalents / total assets (%) 48.98 65.99 48.98 65.99 61.00
Cash and equivalents / total revenue (%) (LTM) 39.53 65.22 39.53 65.22 55.17
Depreciation / average gross block (%) (LTM) 23.60 26.06 23.60 26.06 23.50
Technology investment / total revenue (%) (LTM) 6.17 6.71 6.17 6.71 5.86
Ratios – Growth**
Export revenue (%) 115 74 112 74 74
Total revenue (%) 114 81 108 84 80
Operating expenses (%) 104 68 105 64 69
Operating profit (%) 128 104 113 122 98
Net profit (from ordinary activities) (%) 134 131 118 143 115
Per-share data (Period End)
Earnings per share from ordinary activities (Rs.) 23.28 9.93 41.62 19.10 43.23
Earnings per share (including extraordinary items) (Rs.) 23.28 9.93 42.45 19.10 44.37
Cash earnings per share from ordinary activities (Rs.) 26.95 11.55 47.96 22.13 51.27
Cash earnings per share (including extraordinary items) (Rs.) 26.95 11.55 48.79 22.13 52.42
Book value (Rs.) 165.38 103.96 165.38 103.94 125.97
Price / earning (LTM) 111.96 113.89 111.96 113.89 207.50
Price / cash earnings (LTM) 95.46 94.09 95.46 94.09 174.96
Price / book value 44.51 34.31 44.51 34.31 71.21
EPS growth (%) 134.39 131.39 117.96 142.59 115.07
PE / EPS Growth 0.83 0.87 0.95 0.80 1.80
Dividend per share 2.50 1.50 2.50 1.50 4.50
* Annualized.
** Denotes growth compared with figures of the corresponding period in the previous year.
Note: The ratio calculations are based on Indian GAAP and have been adjusted for Stock split.
LTM- Last twelve months
63
Infosys Technologies Limited
United States Australia India
Addison Melbourne Bangalore Chennai Mohali (Chandigarh)
15305 Level 7, 505 Plot No. 44 & 97A 1st & 2nd Floor B 100, Phase VIII
Dallas Parkway Suite St Kilda Road Electronics City Alexander Square, Industrial Area, SAS Nagar
100 Addison, TX 75001 Melbourne Hosur Road 35 Sardar Patel Road, Mohali–160 059, Punjab
Tel.: (972) 770-0450 Victoria 3004 Bangalore–561 229 Guindy, Chennai–600 035 Tel.: (0172) 254191/ 92/ 94
Fax: (972) 770-0490 Tel.: 61 3 9868 1607 Tel.: (080) 8520261 Tel.: (044) 2300031- 40 Fax: (0172) 254193
Fax: 61 3 9868 1652 Fax: (080) 8520362 Fax: (044) 2300091
Bellevue Mumbai
10900 NE 4th St. Reddy Building Archbishop Arokia No.85, Mittal Towers ‘C’
Belgium
#2300 Bellevue K-310, 1st Main Swamy Bldg. 8th Floor, Nariman Point
Brussels 5th Block, Koramangala 145, Santhome High Road
WA 98004 Mumbai–400 021
Dreve Richelle 161 Bangalore–560 095 Mylapore (Santhome)
Tel.: (425) 990 1028 Tel.: (022) 2846490
Building N 1410 Waterloo Tel.: (080) 5530392 Chennai–600 004
Fax: (425) 990 1029 Fax: (022) 2846489
Brussels Fax: (080) 5530391 Tel.: (044) 4612021
Tel.: 322-352-8743 Fax: (044) 4956958
Cranford Fax: 322-352-8889 Mysore
Pavithra Complex
20 Commerce Drive SJCE-STEP
#1, 27th Main, 2nd Cross No.138, Sholinganallur
Cranford, NJ 07016 Sree Jayachamarajendra of
Canada 1st Stage, BTM Layout Old Mahabalipuram Road
Tel.: (908) 497 1710 College Engg., Science and
Bangalore–560 068 Chennai–600 119
Fax: (908) 497 1770 Toronto Tel.: (080) 6681755 Technology
Tel.: (044) 4964304
3300 Bloor Street Entrepreneurs Park
Fax: (080) 6680181
Fremont West Centre Tower Mysore–570 006
Hyderabad
34760 Campus Drive 11th Floor Suite 3140 Infosys Towers Tel.: (0821) 500389/ 90
I Floor, Q3 A1
Fremont, CA 94555 Ontario M8X 2X3 No. 27, Bannerghatta Road Fax: (0821) 500391
Cyber Towers
Tel.: (510) 742 3000 Tel.: (416) 207-3311 3rd Phase, J. P. Nagar HI-TEC City, Madhapur
Fax: (510) 742 3090 Fax: (416) 207-2087 Bangalore–560 076 New Delhi
Hyderabad–500 033
Tel.: (080) 6658667 Tel.: (040) 3100242/ 44-49 K30, Green Park Main
Marietta Germany Fax: (080) 6658676 Behind Green Park Market
Fax: (040) 3100243
1950 Spectrum Circle New Delhi–110 066
#400, Marietta Frankfurt N-403, Manipal Centre Tel.: (011) 6514829-30
TOPAS 2 Dickenson Road Mangalore
GA 30067 Fax: (011) 6853366
Mergenthalerallee Bangalore–560 042 #16/403
Tel.: (770) 857 4428
79-8, 65760 Tel.: (080) 5592082 Star of Bombay Complex
Fax: (770) 857 2258 Pune
Eschborn/Frankfurt Fax: (080) 5588065 3rd Floor, Kankanady
Mangalore–575 002 3rd Floor, 321/A/3
Newport Beach Tel.: 49 6196 9202115 TPS III, Shankar Seth Road
Fax: 49 6196 9202320 Bhubaneswar Tel.: (0824) 439401-07/
4590 MacArthur Mahatma Phule Peth
Plot #N-1/70, Nayapalli 434401-06
Suite 500 Pune–411 042
Adjoining Planetarium on Fax: (0824) 439430
Newport Beach Japan Tel.: (0212) 647420/21
CA 92660 NH5, Post RRL Kottara Cross Fax: (0212) 648226
Tokyo Kulur Ferry Road
Tel.: (949) 475 0196 Bhubaneswar–751 013
4F Madre Matsuda Bldg. Mangalore–575 006 Plot # 1
Fax: (949) 475 0198 Tel.: (0674) 584068-71
4-13, Kioi-Cho, Chiyoda-Ku Tel.: (0824) 451485-88 Infotech Park MIDC
Fax: (0674) 583991
Tokyo 102-0094 Fax: (0824) 451484 Hinjewadi, Taluka Mulshi
Oakbrook Terrace Tel.: 81 3-3234-3597 Pune–411027
Plot No.E/4
One Tower Lane Fax: 81 3-3239-3300 Tel.: (02139) 32801-03
Infosys City, Chandaka
#1700 Fax: (02139) 32832
Bhubaneswar–751 014
Oakbrook Terrace
IL 60181 Sweden
Tel.: (630) 573 6050 Stockholm
Stureplan 4C, 4tr
Bankers
Fax: (630) 573 6051
114 35, Stockholm ICICI Bank Ltd.
Hongkong and Shanghai
Visit Infosys at
Quincy Tel.: 44-7932-004640
Banking Corporation Ltd. www.infy.com
Two Adams Place
Bank of America
Quincy, MA 02169 UK
Tel.: (781) 356 3100 Send e-mail to
Milton Keynes Company secretary
Fax: (781) 356 3150
Suite 415, Premier Suites
[email protected]
Troy V. Viswanathan
Exchange House
100 Liberty Center 494, Midsummer Boulevard Call us at
#200 West Big Beaver Auditors
MK9 2EA within the U.S.
Troy, MI 48084 Bharat S Raut and Co.
Tel.: 44-1908 255 778 1-800-ITL INFO
Tel.: (248) 524 0320 Fax: 44-1908 608 279 Chartered Accountants
Fax: (248) 524 0321 Independent auditors outside the U.S.
(US GAAP) 91-80-8520261

KPMG
64

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Infosys Technologies Limited: Report For The Second Quarter Ended September 30, 2000

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INFOSYS TECHNOLOGIES LIMITED

Report for the second quarter ended September 30, 2000

Rs. in crores, except per share data

Nandan M. Nilekani N. R. Narayana Murthy

for Bharat S Raut & Co.

Bangalore Balaji Swaminathan

CURRENT ASSETS, LOANS AND ADVANCES

for Bharat S Raut & Co.

1.2 Notes on accounts

1.2.5 Imports on CIF basis

1.2.6 Expenditure in foreign currency (on the payments basis)

1.2.7 Earnings in foreign exchange (on the receipts basis)

1.2.8 Depreciation on assets costing less than Rs. 5,000 each

1.2.11 Provision for contingencies

1.2.18 Provision for taxation

This is the cash flow statement referred

This is the cash flow statement referred to

for Bharat S Raut & Co.

Commission File Number 333-72195

INFOSYS TECHNOLOGIES LIMITED

Bangalore, Karnataka, India

Electronics City, Hosur Road,

Item 1. Financial statements

CASH FLOWS FROM INVESTING ACTIVITIES:

CASH FLOWS FROM FINANCING ACTIVITIES:

See accompanying notes to financial statements

1.2 Basis of preparation of financial statements

1.3 Principles of consolidation

1.4 Use of estimates

1.5 Revenue recognition

1.6 Cash and cash equivalents

1.7 Property, plant and equipment

1.8 Impairment of long-lived assets

1.9 Research and development

1.10 Foreign currency translation

1.11 Foreign currency transactions

1.13 Income taxes

1.14 Fair value of financial instruments

1.15 Concentration of risk

1.16 Retirement benefits to employees

1.18 Stock-based compensation

1.20 Notes to financial statements

1.20.2 Trade accounts receivable

1.20.6 Other assets

1.20.14 Operating leases

Year ending September 30,

1.20.15 Research and development

1.20.17 Income taxes

Six months ended Sep 30, Year ended

Six months ended Sep 30, Year ended

1.20.19 Lines of credit

Item 2. Management discussion and analysis of financial conditions and results of

2.2 Results of operations

2.3 Liquidity and capital resources

2.4 Reconciliation between the US and the Indian GAAP

Reconciliation of net income Three months ended Six months ended

2.6 Principles of currency translation

2.7 Income tax matters

2.8 Effects of inflation