Transcript Financial Performance – Year ended March 31, 2002

Financial Performance –
Year ended March 31, 2002
© Infosys Technologies Limited 2001-2002
This presentation may contain certain forward looking statements.
The company may not achieve results as expressed or implied by
such forward looking statements. Actual results could differ materially
from those expressed or implied in such forward looking statements
due to a number of factors including those discussed under the head
"Risk factors" in the company's filings with the United States
Securities and Exchange Commission. Do not place undue reliance
on these forward looking statements. This presentation contains
references to findings of various reports available in the public
domain. The company makes no representation as to their accuracy
or that the company subscribes to those findings. They are provided
only by way of information.
June 08, 2002
© Infosys Technologies Limited 2001-2002
Highlights
» Achieved revenue growth of 32.0% ( in $ terms) as against
our guidance of 30% in April 2001 despite a very
challenging environment
» Banking unit revenues grew by over 100% and crossed the
Rs.100 crore threshold
» 116 clients added during the year, of which, 62 were added
in the post September 11 period
» Total dividend of Rs. 20 per share (400% on par value of
Rs. 5) taking the payout to 17.0% as compared to 12.0% in
the previous year
June 08, 2002
© Infosys Technologies Limited 2001-2002
Highlights
» Board approves investment of up to US$ 5 million for foray
into Business Process Management (BPM)
» Separate company – Progeon Limited formed for the
BPM operations
» Citigroup to invest US$ 20 million in Progeon Limited
June 08, 2002
© Infosys Technologies Limited 2001-2002
The year at a glance
2,603.59
2,552.47
1,900.56
1,378.77
1,874.02
1,029.73
June 08, 2002
2001
2002
Income
2001
2002
Export Income
2001
2002
Gross Profit
(Rs.cr)
(Rs.cr)
(Rs.cr)
© Infosys Technologies Limited 2001-2002
The year at a glance
943.39
1,037.63
807.96
696.03
764.84
2001
June 08, 2002
623.32
2002
2001
2002
2001
2002
Operating Profit
PBT
PAT*
(Rs.cr)
(Rs.cr)
(Rs.cr)
* From ordinary activities
© Infosys Technologies Limited 2001-2002
Drivers of growth
In $ terms
Revenue growth (%)
Of which
Volume growth (%)
Price growth (%)
June 08, 2002
FY98
FY99
FY00
FY01
FY02
72.6
77.0
68.2
103.4
31.7
57.0
15.7
50.3
26.7
49.6
18.6
62.0
41.4
34.2
(2.5)
© Infosys Technologies Limited 2001-2002
We experienced intense pricing pressure during the year…
Per-capita revenue ($ p.m)
Onsite
Offshore
Blended
FY98
FY99
FY00
FY01
FY02
6,600
3,200
4,000
7,900
3,700
4,800
8,500
4,400
5,700
11,000
5,300
7,300
11,400
4,900
6,900
19.7
15.6
20.0
7.6
18.9
18.8
29.4
20.5
28.1
3.6
(7.5)
(5.5)
Change in per-capita revenue (%)
Onsite
Offshore
Blended
June 08, 2002
© Infosys Technologies Limited 2001-2002
… which was negated by higher volume growth.
FY98
Increase in billed person months
Onsite
1,638
Offshore
4,192
Total
5,830
Change in billed person months (%)
Onsite
72.8
Offshore
45.8
Total
51.1
June 08, 2002
FY99
FY00
FY01
FY02
2,450 5,244 7,842
4,748
5,707 5,006 13,618 16,796
8,157 10,250 21,460 21,544
63.0
42.8
47.3
82.7
26.3
40.4
67.7
56.6
60.2
24.4
44.6
37.7
© Infosys Technologies Limited 2001-2002
We improved our utilization…
FY 01 Q1 02
Utilization rates
Including trainees (%) 67.4
Excluding trainees (%) 78.3
June 08, 2002
69.5
73.2
Q2 02
Q3 02
Q4 02
FY02
68.8
72.7
69.6
72.7
72.4
72.9
70.1
72.9
© Infosys Technologies Limited 2001-2002
…and took various cost control measures.
Variable compensation
» Salary hike during the year linked to attainment of company
performance targets
Recruitment
» Just in time recruitment
» Recruitment based on business outlook
Non-revenue generating expenses
» Reduced non-sales support personnel recruitment during the
year
» Offshoring of onsite functions in non-revenue generating
activities
June 08, 2002
© Infosys Technologies Limited 2001-2002
…and took various cost control measures.
» Others
» Continuous rationalization of internal policies
» Re-negotiations with vendors
» Reduction in discretionary spending
» Vacating leased premises, etc.
» Cost cuts during the year aggregated 2.4% of revenues
(3.5% excluding increase in personnel cost in the US)
June 08, 2002
© Infosys Technologies Limited 2001-2002
The US personnel costs had increased…
Unanticipated increase in personnel costs in the US due to
significantly higher floor pay imposed upon H1B visa holders
» Additional cost of US$ 6.2 million (1.1% of revenue)
June 08, 2002
© Infosys Technologies Limited 2001-2002
…but still maintained our margins.
54.2%
53.0%
40.2%
2001
2002
Gross Profit
(%)
2001
39.9%
2002
Operating
Profit (%)
32.8%
31.0%
2001
2002
PAT* (%)
* From ordinary activities
June 08, 2002
© Infosys Technologies Limited 2001-2002
Our revenues are well-segmented
© Infosys Technologies Limited 2001-2002
Geographic segments
2000-2001
6.3%
1.4%
7.3%
2001-2002
2.0%
2.0%
7.3%
19.5%
19.5%
18.8%
73.5%
71.2%
71.2%
N.America
Europe
ROW
India
June 08, 2002
© Infosys Technologies Limited 2001-2002
Business segments
2000-2001
6.1%
2001-2002
2.5%
4.0%
4.0%
1.7%
5.4%
2.6%
2.9%
2.9%
40.0%
4.9%
5.4%
2.6%
32.0%
2.9%
32.0%
4.2%
4.2%
7.2%
9.8%
9.8%
9.3%
10.1%
10.1%
29.0%
25.4%
June 08, 2002
29.0%
Development
Maintenance
Re-engineering
Package implementation
Consulting
Testing
Engineering services
Other services
Products
© Infosys Technologies Limited 2001-2002
Vertical domains
2000-2001
2001-2002
17.1%
17.8%
13.6%
13.6%
17.4%
2.7%
2.7%
2.0%
2.2%
17.1%
14.2%
2.0%
16.3%
16.3%
1.4%
12.3%
9.1%
12.3%
19.5%
18.4%
June 08, 2002
15.6%
20.4%
Manufacturing
Insurance
Banking & financial services
Telecom
Retail
Energy & utilities
Transportation & logistics
Others
15.6%
20.4%
© Infosys Technologies Limited 2001-2002
Technology segments
2000-2001
2001-2002
8.3%
11.7%
11.7%
5.1%
2.6%
2.6%
44.6%
48.3%
48.3%
28.4%
23.0%
23.0%
14.4%
13.6%
14.4%
Distributed systems
Mainframe / mid-range
Internet
Proprietary telecom systems
Others
June 08, 2002
© Infosys Technologies Limited 2001-2002
Project segmentation
2000-2001
2001-2002
28.2%
71.8%
31.6%
31.6%
68.4%
68.4%
Fixed price
Time and material
June 08, 2002
© Infosys Technologies Limited 2001-2002
Onsite - offshore segmentation
2000-2001
2001-2002
51.5%
50.8%
50.8%
48.5%
49.2%
49.2%
Onsite
Offshore
June 08, 2002
© Infosys Technologies Limited 2001-2002
We continue to de-risk our business
© Infosys Technologies Limited 2001-2002
Client concentration
FY 2002
FY 2001
FY 2000
Active clients
293
Clients added
116
% of revenue from top client
6.1%
% of revenue from top 5 clients
24.1%
% of revenue from top 10 clients
39.4%
Clients accounting for >5% of revenue
2
Million dollar clients
83
5-million dollar clients
25
10-million dollar clients
16
20-million dollar clients
6
Million dollar clients/ total clients
28.3%
273
122
7.3%
26.0%
39.2%
3
80
19
11
3
29.3%
194
99
7.2%
30.2%
45.7%
4
42
10
4
21.6%
June 08, 2002
© Infosys Technologies Limited 2001-2002
Exposure to telecom
Category
% of telecom revenue
FY 02
FY 01
Service providers
Product companies
Equipment manufacturers
Others
Total
June 08, 2002
31.4
2.9
65.1
0.6
100.0
20.8
7.5
68.0
3.7
100.0
% of total revenue
FY 02
FY 01
4.9
0.4
10.2
0.1
15.6
3.8
1.4
12.6
0.6
18.4
© Infosys Technologies Limited 2001-2002
We have a strong and liquid balance sheet
(Rs. crore)
Mar 31, 2002
%
Mar 31, 2001
%
33.09
2,047.22
2,080.31
2
98
100
33.08
1,356.56
1,389.64
2
98
100
718.24
44.44
24.22
336.73
1,026.96
389.13
(459.41)
2,080.31
35
2
1
16
49
19
(22)
100
557.66
34.12
302.37
577.74
237.60
(319.85)
1,389.64
40
2
22
42
17
(23)
100
SOURCES OF FUNDS
Share capital
Reserves and surplus
Total
APPLICATION OF FUNDS
Fixed assets
Investments
Deferred tax assets
Sundry debtors
Cash and equivalents
Other current assets
Current liabilities & provisions
Total
Continued to be a zero-debt company
June 08, 2002
© Infosys Technologies Limited 2001-2002
Our receivables are under control
2001-2002
2000-2001
0.5%
0.5%
2.5%
1.7%
30.0%
26.6%
2.5%
1.7%
26.6%
69.0%
69.2%
Days of sales receivable – 58 days
Days of sales receivable - 47 days
69.2%
Age profile of accounts receivable
0-30
June 08, 2002
31-60
61-90
>90
© Infosys Technologies Limited 2001-2002
We continue to invest for the future
» Hired 1,548 people with a net addition of 907 for the year
» Sales force strengthened with an addition of 39 people during
the year
» New sales offices opened in Netherlands, Singapore and
Switzerland
» Capex of Rs. 322.74 crore during the year of which
Rs. 67.40 crore was spent on technological infrastructure
June 08, 2002
© Infosys Technologies Limited 2001-2002
Our cash flows are strong…
(Rs. crore)
Operating cash flows
 Financing cash flows
Proceeds on exercise of stock options
Dividends paid
 Investing cash flows
Purchases of fixed assets
Proceeds on sale of fixed assets
Long-term investments
Interest income
 Effect of exchange differences
 Net increase in cash and cash equivalents
 Cash and cash equivalents, beginning of year
 Cash and cash equivalents, end of year
June 08, 2002
FY 2002
FY 2001
820.96
(104.77)
4.60
(109.37)
(280.23)
(322.74)
1.60
(10.32)
51.23
13.26
449.22
577.74
1,026.96
540.32
(39.82)
2.38
(42.20)
(451.30)
(463.35)
0.23
(26.65)
38.47
20.17
69.37
508.37
577.74
© Infosys Technologies Limited 2001-2002
…despite heavy investment in capex.
463.35
322.74
5.9
6.2
2001
2002
160.65
112.89
2001
2002
Capital Investment
(Rs.cr)
June 08, 2002
2001
2002
Depreciation
(Rs.cr)
Depreciation /
Revenues (%)
© Infosys Technologies Limited 2001-2002
Cash Management
© Infosys Technologies Limited 2001-2002
Our cash management policies
» Financial policies
» Maintain liquid assets at
» 25% of revenue and
» 40% of total assets
» Earn
» Return on capital - 2x cost of capital
» Return on average invested capital – 3x cost of capital
» Our current cost of capital is estimated to be 17.17%
» Maintain sufficient cash in the balance sheet
» To fund ongoing capex requirements to meet growth objectives
» To fund operational expenses and other strategic initiatives for
the next one year
» To maintain business continuance in case of exigencies
June 08, 2002
© Infosys Technologies Limited 2001-2002
Cash management – How we performed
Target
FY 2002
FY 2001
FY 2000
ROCE (%)
Times cost of capital
2.0
ROIC (%)
Times cost of capital
3.0
Operating cash flows / revenues 30.0%
Days sales outstanding
60
Cash & equivalents / total assets 40.0%
Cash & equivalents / revenue
25.0%
54.4%
3.2
83.1%
4.8
31.5%
47
49.4%
39.4%
62.6%
2.9
105.4%
5.0
28.4%
58
41.6%
30.4%
46.3%
2.0
111.6%
5.0
28.3%
56
61.0%
57.6%
June 08, 2002
© Infosys Technologies Limited 2001-2002
Other Performance Indicators
© Infosys Technologies Limited 2001-2002
Other performance indicators
111.6% 105.4%
83.1%
62.6%
56.1%
40.6%
46.6%
54.4%
46.3%
2000 2001 2002
2000 2001 2002
Return on Average
Net Worth (RONW) (%)
Return on Capital
Employed (ROCE) (%)
June 08, 2002
2000 2001 2002
Return on Invested Capital
(ROIC) (%)
© Infosys Technologies Limited 2001-2002
Other performance indicators
3.66
3.34
2.79
1.71
1.25
1.50
78.5% 79.8% 83.9%
2000 2001
2002
Capital Output
Ratio
June 08, 2002
2000 2001
2002
Invested Capital
Output Ratio
2000
2001
2002
Value Added /
Total Revenue (%)
© Infosys Technologies Limited 2001-2002
Other performance indicators
146.4
122.12
111.29
94.23
51.28
43.23
11.6%
2000
2001
2002
EPS from Ordinary Activities
(Rs.)
June 08, 2002
2000
2001
2002
Cash EPS* (Rs.)
2000
12.0%17.0%
2001
2002
Dividend Payout (%)
© Infosys Technologies Limited 2001-2002
Other performance indicators
151,076
314.31
210.05
68,547
62,737
207.48
125.97
43.19 30.50
2000 2001 2002
Book Value (Rs.)
June 08, 2002
2000 2001 2002
Price Earnings (x)
2000 2001 2002
Market Price /
Adjusted IPO Price (%)
© Infosys Technologies Limited 2001-2002
Strength of the invisibles
Brand value (Rs.cr)
EVA (Rs.cr)
Value added (Rs.cr)
HR value (Rs.cr)
Education index
Average age of employees
Revenue from image enhancing
clients (%)
June 08, 2002
FY 2002
FY 2001
FY 2000
7,256
510
2,239
9,539
31,385
26.60
5,376
389
1,563
5,123
28,725
25.67
5,246
129
723
2,237
15,544
26.14
56%
52%
47%
© Infosys Technologies Limited 2001-2002
Financial Highlights
US GAAP
© Infosys Technologies Limited 2001-2002
545.05
413.85
255.02
200.24
178.55
137.51
2001
June 08, 2002
2002
2001
2002
2001
2002
Revenues
Gross Profit
Operating Income
(US$ million)
(US$ million)
(US$ million)
© Infosys Technologies Limited 2001-2002
183.55
142.59
137.0
3
131.95
2001
169.47
164.4
7
2002
Operating Income
2001
2002
Net Income
2001
2002
Net Income
(excl. stock comp)
(excl. stock comp)
(US$ million)
June 08, 2002
© Infosys Technologies Limited 2001-2002
Investor services
» Share transfers in physical form completed within 15 days
» Investor grievances / correspondence attended to within a
period of 10 days (Except in cases constrained by disputes
or legal impediments)
» 99.05% of the company’s shares are now held in electronic
form
» Pending share transfer related litigation - 18 cases
June 08, 2002
© Infosys Technologies Limited 2001-2002
Community services
» Grants of Rs.3.75 crore during the year to Infosys
Foundation, a not-for-profit trust to support initiatives that
benefit society at large
» Continued the social programs initiated in 1999 – Catch
Them Young, Rural Reach and Train The Trainer
» Infosys has donated 1,185 computers to 435 institutions
across India through its Computers @ Classrooms
initiative launched in January 1999
June 08, 2002
© Infosys Technologies Limited 2001-2002
Awards won during the year
» The Institute of Chartered Accountants of India award for
best presented annual report in 2001 for the seventh
successive year
» The Institute of Company Secretaries of India National
Award for excellence in corporate governance
» Asiamoney award for best investor relations in India for
2001
» Corporate Citizenship Award by The Economics Times of
India
» Ranked No.1 in the CG Watch 2002, the CLSA study on
corporate governance practices in emerging markets
June 08, 2002
© Infosys Technologies Limited 2001-2002
Thank You
www.infosys.com
© Infosys Technologies Limited 2001-2002