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Performance of Infosys for the Third Quarter ended December 31, 2001

Performance of Infosys for the Third Quarter ended December 31, 2001. Nandan M. Nilekani Managing Director , President and Chief Operating Officer. 10-January-2002. Safe Harbour.

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Performance of Infosys for the Third Quarter ended December 31, 2001

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  1. Performance of Infosys for the Third Quarter ended December 31, 2001 Nandan M. Nilekani Managing Director, President and Chief Operating Officer 10-January-2002

  2. Safe Harbour Certain statements in this release concerning our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2001 and quarterly report on Form 6-K for the quarters ended June 30 and September 30, 2001. These filings are available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company.

  3. Agenda • Financial Performance • Operational Performance • Client acquisition and significant projects undertaken • Human resources • Infrastructure • Outlook for the future

  4. Financial Performance

  5. The Quarter at a Glance (Indian GAAP) 23% 23% 23% 660.81 648.35 267.45 537.07 529.24 217.46 Q3 01 Q3 02 Q3 01 Q3 02 Q3 02 Q3 01 Total income (Rs.cr) Exports (Rs.cr) Operating profit (Rs.cr)

  6. The Quarter at a Glance (Indian GAAP) 24% 24% 31.14 30% 206.04 241.04 25.14 166.33 185.83 Q3 02 Q3 01 Q3 02 Q3 01 Q3 02 Q3 01 PBT (Rs.cr) PAT (Rs.cr) Basic EPS (Rs)

  7. Highlights Q3 FY 02 Q2 FY 02 9 Months FY 02 • Indian GAAP • Y-O-Y Growth • Income 23.0% 45.7% 43.7% • PAT from ord. activities 23.9% 30.9% 35.3% • New clients 33 28 87 • Repeat business 85.7% 90.0% 90.2% • Headcount • Gross addition 219 833 1367 • Net addition 109 607 832 • Period end headcount 10,663 10,554 10,663

  8. Highlights (Indian GAAP) (Rs.cr) FY2002 FY2002 FY2001 % growth over Q3 Q2 Q3 Q2 02 Q3 01 Income 660.81 650.13 537.07 1.6 23.0 S/w development expenses 309.50 306.95 250.14 0.8 23.7 Gross profit 351.31 343.18 286.93 2.4 22.4 S,G&A expenses 83.86 84.26 69.47 (0.5) 20.7 Operating profit 267.45 258.92 217.46 3.3 23.0 Depreciation 41.34 39.02 33.02 5.9 25.2 Operating profit after depreciation 226.11 219.90 184.44 2.8 22.6 Other income 14.93 14.66 14.47 1.8 3.2 Provision for investments - - (13.08) - - PBT 241.04 234.56 185.83 2.8 29.7 Provision for tax 35.00 33.00 19.50 6.1 79.5 PAT from ordinary activities 206.04 201.56 166.33 2.2 23.9

  9. Highlights (Indian GAAP) (Rs.cr) FY2002 % FY2001 % Growth 9 Months 9 Months Income 1923.46 100.0 1338.70 100.0 43.7 S/w development expenses 902.01 46.9 625.57 46.7 44.2 Gross profit 1021.45 53.1 713.13 53.3 43.2 S,G&A expenses 254.57 13.2 181.61 13.6 40.2 Operating profit 766.88 39.6 531.52 39.7 44.3 Depreciation 115.83 6.0 74.99 5.6 54.5 Operating profit after depreciation 651.05 33.8 456.53 34.1 42.6 Other income 43.08 2.2 49.16 3.7 (12.4) Provision for investments - - (13.08) (1.0) - PBT 694.13 36.1 492.61 36.8 40.9 Provision for tax 96.50 5.0 50.96 3.8 89.4 PAT from ordinary activities 597.63 31.1 441.65 33.0 35.3 Extraordinary items - - 5.49 0.4 - Net profit after ext. items 597.63 31.1 447.14 33.4 33.7

  10. Balance Sheet Summary (Rs.cr) Dec 31, 01 % Dec 31, 00 % LIABILITIES Shareholders’ funds 1,949.93 100 1,261.09 100 Total liabilities 1,949.93 100 1,261.09 100 ASSETS Fixed assets 725.29 37 457.23 36 Investments 44.44 2 36.33 3 Deferred tax assets 22.33 1 - - Current assets Cash & equivalents 866.35 45 517.75 41 Accounts receivables 310.53 16 303.96 24 Other current assets 377.79 19 202.72 16 Less: Current liabilities (396.80)(20)(256.90)(20) Net current assets 1,157.87 60 767.53 61 Total assets 1,949.93 100 1,261.09 100

  11. Region wise Revenue (%) FY2002 FY2002 FY2001 FY2002 FY2001 LTM LTM Q3 Q2 Q3 9 Months 9 Months Dec 01 Dec 00 North America 70.9% 71.1% 73.6% 71.4% 74.3% 71.4% 74.9% Europe 19.4% 18.9% 18.8% 19.4% 18.1% 19.6% 17.7% India 1.9% 1.8% 1.5% 2.1% 1.3% 2.0% 1.4% Rest of the world 7.8% 8.2% 6.1% 7.1% 6.3% 7.0% 6.0% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% LTM – Last Twelve Months

  12. Operational Performance

  13. Highlights • Software revenues in US dollar terms grew by 0.2% for the current quarter as compared to the quarter ended September 30, 2001. Revenue growth comprised volume growth of 3.4% offset by a price decline of 3.2%

  14. Utilization Rates

  15. Revenues by Project type FY2002 FY2002 FY2001 FY2002 FY 2001 LTM LTM Q3 Q2 Q3 9 Months 9 Months Dec 01 Dec 00 Fixed Price 35.1% 29.9% 29.4% 30.7% 28.0% 30.2% 28.9% Time & Materials 64.9% 70.1% 70.6% 69.3% 72.0% 69.8% 71.1% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% LTM – Last Twelve Months

  16. Onsite-Offshore Revenue split FY2002 FY2002 FY2001 FY2002 FY2001 LTM LTM Q3 Q2 Q3 9 Months 9 Months Dec 01 Dec 00 Onsite 49.9% 50.3% 51.4% 50.3% 52.8% 49.8% 52.2% Offshore 50.1% 49.7% 48.6% 49.7% 47.2% 50.2% 47.8% Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% LTM – Last Twelve Months

  17. Customer Concentration FY2002 FY2002 FY2001 FY2002 FY2001 Q3 Q2 Q3 9 Months 9 Months Top client contribution to revenues 5.5% 6.4% 7.7% 6.2% 7.5% Top 5 client contribution to revenues 24.1% 25.3% 28.1% 24.6% 25.9% Top 10 client contribution to revenues 38.3% 39.7% 42.5% 39.7% 38.5% Million dollar clients* 90 84 77 90 77 Five million dollar clients* 24 22 15 24 15 Ten million dollar clients* 13 14 6 13 6 LTM – Last Twelve Months

  18. Diversifying Customer Risk

  19. Accounts Receivables Year AR % of DSO (mn$) Revenue Dec 31, 2001 64.51 12.1 44 Dec 31, 2000 65.10 17.0 62 Mar 31, 2001 64.94 15.9 58

  20. Client Acquisition and Significant Projects Undertaken

  21. Software Services • Client acquisitions during the quarter was 33 as compared to 28 in the previous quarter • Established new alliances with world leaders in various domains including manufacturing, retail and financial services • To help SunAmerica transform its legacy Policy Administration System to a new web-based architecture • Creating a roadmap and an implementation plan for an Enterprise Portal for a banking, insurance and asset management leader in Europe that is one of the largest global financial conglomerates • Clients added in the retail segment include Target Corporation, America’s fourth largest general merchandise retailer

  22. Software Services • Won an engagement from the largest independent supplier of heating, ventilating, air conditioning and refrigeration equipment in the US • Assisting the European operations of a leading Fortune 500 electronics and hi-technology products manufacturer in developing an end-to-end solution for its executive level reporting • The Hertsmere Borough Council of National Health Service, UK was added to the client portfolio with a business consulting engagement • Infosys is the only Indian company to be included in the UK Government’s single-window Services Catalogue (S-Cat) aimed at government departments who wish to purchase IT services • Signed up with a Fortune 500 company that is a world leader among air express delivery carriers

  23. Software Services • Chosen to work with Texas Instruments, the world leader in real-time technologies • Successfully designed, developed and deployed an online insurance loyalty portal for a large Fortune 100 insurance company in Japan • Successfully implemented a web-based online funds transfer application for an insurance industry major • Partnered with Aizawa Koatsu Concrete KK, to develop new applications including logistics management and sales and purchase systems

  24. Banking Products • Infosys’ core banking solution, FinacleTMwas implemented in Cosmos Cooperative Bank, one of India’s oldest banks, and ABN India • Entered into an agreement with ICICI to offer India’s first end-to-end financial fulfilment product, enabling online financial transactions between enterprises • Forged a strategic partnership with Accenture, Nigeria, for delivery of services and solutions

  25. Human Resources

  26. Human Resources • Total employees strength at 10,663 as on December 31, 2001, up from 9,831 as on March 31, 2001 and 8,910 as on December 31, 2000 • Net addition of 109 employees during the quarter as compared to 607 during the quarter ended September 30, 2001 • 151 lateral employees joined during the quarter • 9,361 software professionals as on December 31, 2001, up from 8,656 as on March 31, 2001 and 7,824 as on December 31, 2000

  27. Infrastructure

  28. Infrastructure • Capital expenditure of Rs. 53.05 cr was incurred during the quarter • As of December 31, 2001, the company had 22,39,500 sq. ft of space capable of accommodating 11,350 professionals and 13,00,000 sq. ft under construction including the Infosys Leadership Institute

  29. Outlook for the Future

  30. Indian GAAP • Quarter ending March 31, 2002 • Income from software development services and products expected to be between Rs. 636 cr and Rs. 660 cr • Earnings per share expected to be between Rs. 30.00 and Rs. 32.00 • Fiscal year ending March 31, 2002 • Income from software development services and products expected to be between Rs. 2,560 cr and Rs. 2,584 cr • Earnings per share expected to be between Rs. 120.00 and Rs. 122.00

  31. Summary

  32. Summary • Reported a comfortable quarter • Pricing pressure continues • Business environment remains challenging • Effective cost management • Established new alliances with world leaders in various domains • Prepared to seize business opportunities

  33. Thank You

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