Directors' report (Contd.)

8. Branding

The Infosys brand is one of the most important intangible assets that we own. As part of the journey towards building a globally respected brand, we recently unveiled our new corporate strategy of 'Building Tomorrow's Enterprise', to position Infosys as a next generation global consulting and IT services company.

During the fiscal year, our brand has been recognized by leading publications and independent industry bodies. We were :

Industry analysts rated us as a leader in reports across our key services and markets. The offerings for which we were rated highly include application outsourcing, infrastructure management, Oracle and SAP service providers, comprehensive finance and accounting, business process outsourcing, and for the FinacleTM core banking solution.

We saw a substantial increase in the number of visitors to our website and continued to add to the million-plus visitors to our blogs on business and technology-related topics during the year. Our employees contributed and published several thought leadership articles across various industry forums and publications. We leveraged social media platforms and engaged with our stakeholders and investors on YouTube, SlideShare, Twitter and Facebook.

Leading global publications commended us on our leadership, talent and performance. We continued to have a leadership presence at premier industry events like Oracle® Open World and Sapphire. Our annual client event, Confluence, in the U.S. and Europe were well attended, and highly appreciated. At the World Economic Forum in Davos, Switzerland, our lunch panel discussion witnessed a full audience and the evening get-together hosted by us was attended by some of the most influential and powerful global business leaders.

9. Awards and recognition

In 2010, as in previous years, awards and recognition marked our accomplishments in various fields. We were :

10. Capital expenditure

During the year, we capitalized Rupee Symbol1,017 crore excluding Rupee Symbol3 crore, which was due to the movement in land from leasehold to freehold to our gross block. This comprises of Rupee Symbol251 crore for investment in computer equipment. The balance of Rupee Symbol764 crore was due to infrastructure investment along with Rupee Symbol2 crore on vehicles. We invested Rupee Symbol225 crore to acquire 267 acres of land in Bangalore, Delhi and Mangalore.

During the previous year, we capitalized Rupee Symbol787 crore to our gross block. This comprised of Rupee Symbol140 crore for investment in computer equipment. The balance of Rupee Symbol646 crore was due to infrastructure investment along with Rupee Symbol1 crore on vehicles. We invested Rupee Symbol43 crore to acquire 161 acres of land in Hyderabad, Mysore and Mangalore.

11. Liquidity

We continue to be debt-free, and maintain sufficient cash to meet our strategic objectives. We clearly understand that the liquidity in the Balance Sheet has to balance between earning adequate returns and the need to cover financial and business risks. Liquidity also enables us to make a rapid shift in direction, should the market so demand. During fiscal 2011, internal cash flows have more than adequately covered working capital requirements, capital expenditure, investment in subsidiaries and dividend payments. As at March 31, 2011, we had liquid assets of Rupee Symbol15,284 crore as against Rupee Symbol14,794 crore at the previous year-end.

These funds have been invested in deposits with banks, highly rated financial institutions, certificates of deposits and liquid mutual funds.

12. Increase in share capital

During the year, we issued 3,26,367 shares on the exercise of stock options under the 1998 and 1999 Employee Stock Option Plans. As a result of this, the outstanding issued, subscribed and paid-up equity shares increased from 57,38,25,192 to 57,41,51,559 shares as at March 31, 2011.

13. Appropriations


Our policy is to pay dividend of up to 30% of the consolidated net profit after tax of the group.

In October 2010, we paid an interim dividend of Rupee Symbol10/- per share and a 30th year special dividend of Rupee Symbol30/- per share. We recommended a final dividend of Rupee Symbol20/- per share (par value of Rupee Symbol5/- each), making in all Rupee Symbol60/- per share as dividend for the year.

The total dividend amount paid out is Rupee Symbol3,445 crore, as against Rupee Symbol1,434 crore in the previous year. Dividend (including dividend tax) excluding 30th year special dividend as a percentage of consolidated profit after tax is 29.3% as compared to 26.9% in the previous year.

The register of members and share transfer books will remain closed from May 28, 2011 to June 11, 2011 (both days inclusive). Our Annual General Meeting has been scheduled to be held on June 11, 2011.

Transfer to reserves

We propose to transfer Rupee Symbol645 crore (10% of the net profit for the year) to the general reserve. An amount of Rupee Symbol15,591 crore is proposed to be retained in the Profit and Loss account.

14. Corporate governance

We continue to be a pioneer in benchmarking our corporate governance policies with the best in the world. Our efforts are widely recognized by investors in India and overseas. We have undergone the corporate governance audit by ICRA and Credit Rating Information Services of India Limited (CRISIL). ICRA has rated our corporate governance practices at CGR 1. CRISIL has assigned CRISIL GVC Level 1 rating to us.

We have complied with the recommendations of the Narayana Murthy Committee on Corporate Governance constituted by the Securities and Exchange Board of India (SEBI). For fiscal year 2011, the compliance report is provided in the Corporate governance section of the Annual Report. The auditors' certificate on compliance with the mandatory recommendations of the committee is provided in the Annexure to the directors' report section.

We have documented our internal policies on corporate governance. In line with the committee's recommendations, the Management's Discussion and Analysis of the financial position of the Company is provided in this Annual Report.

During the year, we continued to fully comply with the U.S. Sarbanes-Oxley Act of 2002. Several aspects of the Act, such as the Whistleblower Policy and Code of Conduct, have been incorporated in our Company policy. Our Code of Conduct was updated to make it relevant and responsive to the changing needs of our business.

15. Conservation of energy, research and development, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under Sub-section (1)(e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are provided in the Annexure to the directors' report section.

16. Particulars of employees

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the directors' report. However, having regard to the provisions of Section 219 (1)(b)(iv) of the Companies Act, 1956, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the registered office of the Company. The same will also be published on our website

17. Directors' responsibility statement as required under Section 217 (2AA) of the Companies Act, 1956

The financial statements are prepared in accordance with the accounting standards issued by the Institute of Chartered Accountants of India and the requirements of the Companies Act, 1956, to the extent applicable to us; and guidelines issued by SEBI on the historical cost convention; as a going concern and on the accrual basis. There are no material departures from prescribed accounting standards in the adoption of the accounting standards.

The Board of Directors accepts responsibility for the integrity and objectivity of these financial statements. The accounting policies used in the preparation of the financial statements have been consistently applied except as otherwise stated in the notes accompanying the respective tables. The estimates and judgments related to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present our state of affairs and profits for the year.

We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.

18. Directors

The Board inducted R. Seshasayee and Ravi Venkatesan to the Board. We seek your support in confirming their appointment as directors liable to retire by rotation.

In accordance with the retirement policy for the Company's Board of Directors ('the Board'), Claude Smadja, Independent Director, retired from the Board effective August 30, 2010. We place on record our deep sense of appreciation for the services rendered by Claude Smadja during his tenure as a Board member.

As per Article 122 of the Articles of Association, K. Dinesh, Srinath Batni, Sridar A. Iyengar, Deepak M. Satwalekar and Dr. Omkar Goswami retire by rotation in the forthcoming Annual General Meeting. All of them, being eligible, seek re-appointment, except K. Dinesh.

K. Dinesh has expressed his intention not to seek re-appointment. The Members of the Board place on record their deep sense of appreciation for the services rendered by K. Dinesh during his tenure as Member of the Board and Head of Quality, Information Systems and the Communication Design Group.

T. V. Mohandas Pai has resigned as Member of the Board and has requested the Board to relieve him of the responsibilities post the Company's Annual General Meeting on June 11, 2011.

The Board of Directors considered and accepted the resignation of T. V. Mohandas Pai. The resignation is effective June 11, 2011, post the Company's Annual General Meeting. The Members of the Board have placed on record their deep sense of appreciation for the services rendered by T. V. Mohandas Pai during his tenure as Member of the Board, and Director and Head – Administration, Education & Research, Finacle, Human Resources Development, and Infosys Leadership Institute.

19. Auditors

The auditors, B S R & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if re-appointed.

20. Fixed deposits

We have not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding as of the Balance Sheet date.