Consolidated financial statements

Independent Auditors’ Report

To The Members Of Infosys Limited

Report on the Audit of the Consolidated Financial Statements

Opinion

We have audited the accompanying consolidated financial statements of Infosys Limited (“the Company”) and its subsidiaries (the Company and its subsidiaries together referred to as “the Group”), which comprise the Consolidated Balance Sheet as at March 31, 2019, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows for the year ended on that date, and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as “the consolidated financial statements”).

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid consolidated financial statements give the information required by the Companies Act, 2013 (the “Act”) in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended (“Ind AS”) and other accounting principles generally accepted in India, of the consolidated state of affairs of the Group as at March 31, 2019, the consolidated profit, consolidated total comprehensive income, consolidated changes in equity and its consolidated cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the consolidated financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Group in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the independence requirements that are relevant to our audit of the consolidated financial statements under the provisions of the Act and the Rules made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI’s Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the consolidated financial statements.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Sr. No.

Key Audit Matter

1

Accuracy of recognition, measurement,presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 “Revenue from Contracts with Customers” (new revenue accounting standard)

The application of the new revenue accounting standard involves certain key judgements relating to identification of distinct performance obligations, determination of transaction price of the identified performance obligations, the appropriateness of the basis used to measure revenue recognized over a period. Additionally, new revenue accounting standard contains disclosures which involves collation of information in respect of disaggregated revenue and periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.

Refer to Notes 1.5a and 2.16 to the Consolidated Financial Statements

Auditor’s Response

Principal Audit Procedures

We assessed the Group’s process to identify the impact of adoption of the new revenue accounting standard.

Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows :

  • Evaluated the design of internal controls relating to implementation of the new revenue accounting standard.
  • Selected a sample of continuing and new contracts, and tested the operating effectiveness of the internal control, relating to identification of the distinct performance obligations and determination of transaction price. We carried out a combination of procedures involving enquiry and observation, reperformance and inspection of evidence in respect of operation of these controls.
  • Tested the relevant information technology systems’ access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard.
  • Selected a sample of continuing and new contracts and performed the following procedures :
    • Read, analysed and identified the distinct performance obligations in these contracts.
    • Compared these performance obligations with that identified and recorded by the Group.
    • Samples in respect of revenue recorded for time and material contracts were tested using a combination of approved time sheets including customer acceptances, subsequent invoicing and historical trend of collections and disputes.
    • In respect of samples relating to fixed-price contracts, progress towards satisfaction of performance obligation used to compute recorded revenue was verified with actual and estimated efforts from the time recording and budgeting systems. We also tested the access and change management controls relating to these systems.
    • Sample of revenues disaggregated by type and service offerings was tested with the performance obligations specified in the underlying contracts.
    • Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings.
    • We reviewed the collation of information and the logic of the report generated from the budgeting system used to prepare the disclosure relating to the periods over which the remaining performance obligations will be satisfied subsequent to the balance sheet date.

2

Key Audit Matter

Accuracy of revenues and onerous obligations in respect of fixed-price contracts involves critical estimates

Estimated effort is a critical estimate to determine revenues and liability for onerous obligations. This estimate has a high inherent uncertainty as it requires consideration of progress of the contract, efforts incurred till date and efforts required to complete the remaining contract performance obligations.

Refer to Notes 1.5a and 2.16 to the Consolidated Financial Statements.

Auditor’s Response

Principal Audit Procedures

Our audit approach was a combination of test of internal controls and substantive procedures which included the following :

  • Evaluated the design of internal controls relating to recording of efforts incurred and estimation of efforts required to complete the performance obligations.
  • Tested the access and application controls pertaining to time recording, allocation and budgeting systems which prevents unauthorised changes to recording of efforts incurred.
  • Selected a sample of contracts and through inspection of evidence of performance of these controls, tested the operating effectiveness of the internal controls relating to efforts incurred and estimated.

Auditor’s Response

  • Selected a sample of contracts and performed a retrospective review of efforts incurred with estimated efforts to identify significant variations and verify whether those variations have been considered in estimating the remaining efforts to complete the contract.
  • Reviewed a sample of contracts with unbilled revenues to identify possible delays in achieving milestones, which require change in estimated efforts to complete the remaining performance obligations.
  • Performed analytical procedures and test of details for reasonableness of incurred and estimated efforts.

3

Key Audit Matter

Evaluation of uncertain tax positions

The Group has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes.

Refer to Notes 1.5b, 2.15 and 2.22 to the Consolidated Financial Statements

Auditor’s Response

Principal Audit Procedures

Obtained details of completed tax assessments and demands for the year ended March 31, 2019 from management. We involved our internal experts to challenge the management’s underlying assumptions in estimating the tax provision and the possible outcome of the disputes. Our internal experts also considered legal precedence and other rulings in evaluating management’s position on these uncertain tax positions. Additionally, we considered the effect of new information in respect of uncertain tax positions as at April 1, 2018 to evaluate whether any change was required to management’s position on these uncertainties.

4

Key Audit Matter

Recoverability of Indirect tax receivables

As at March 31, 2019, non-current assets in respect of withholding tax and others includes Cenvat recoverable amounting to 523 crores which are pending adjudication.

Refer to Note 2.9 to the Consolidated Financial Statements.

Auditor’s Response

Principal Audit Procedures

We have involved our internal experts to review the nature of the amounts recoverable, the sustainability and the likelihood of recoverability upon final resolution.

Information Other than the Consolidated Financial Statements and Auditor’s Report Thereon

The Company’s Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Management Discussion and Analysis, Board’s Report including Annexures to Board’s Report, Business responsibility report, Corporate Governance and Shareholder’s Information, but does not include the consolidated financial statements and our auditor’s report thereon

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained during the course of our audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Management’s Responsibility for the Consolidated Financial Statements

The Company’s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance, consolidated total comprehensive income, consolidated changes in equity and consolidated cash flows of the Group in accordance with the Ind AS and other accounting principles generally accepted in India . The respective Board of Directors of the companies included in the Group are responsible for maintenance of the adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Group and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the respective Board of Directors of the companies included in the Group are responsible for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative but to do so.

The respective Board of Directors of the companies included in the Group are also responsible for overseeing the financial reporting process of the Group.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also :

  • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
  • Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company and its subsidiary companies which are companies incorporated in India, has adequate internal financial controls system in place and the operating effectiveness of such controls.
  • Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
  • Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the ability of the Group to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to continue as a going concern.
  • Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
  • Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the audit of the financial statements of such entities included in the consolidated financial statements.

Materiality is the magnitude of misstatements in the consolidated financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1.

As required by Section 143(3) of the Act, based on our audit we report that :

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit of the aforesaid consolidated financial statements.

b) In our opinion, proper books of account as required by law relating to preparation of the aforesaid consolidated financial statements have been kept so far as it appears from our examination of those books.

c) The Consolidated Balance Sheet, the Consolidated Statement of Profit and Loss (including Other Comprehensive Income), Consolidated Statement of Changes in Equity and the Consolidated Statement of Cash Flows dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of preparation of the consolidated financial statements.

d) In our opinion, the aforesaid consolidated financial statements comply with the Ind AS specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.

e) On the basis of the written representations received from the directors of the Company as on March 31, 2019 taken on record by the Board of Directors of the Company and its subsidiaries incorporated in India and the reports of the statutory auditors of its subsidiary companies incorporated in India, none of the directors of the Group companies incorporated in India is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting and the operating effectiveness of such controls, refer to our separate Report in “Annexure A” which is based on the auditor’s reports of the Company and its subsidiary companies incorporated in India. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the internal financial control over financial reporting of those companies, for reasons stated therein.

g) With respect to the other matters to be included in the Auditor’s Report in accordance with the requirements of section 197(16) of the Act, as amended :

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters to be included in the Auditor’s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us :

  • The consolidated financial statements disclose impact of pending litigations on the consolidated financial position of the Group.
  • Provision has been made in the consolidated financial statements, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long term contracts including derivative contracts.
  • There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company and its subsidiary companies incorporated in India.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm Registration number : 117366W/W-100018)

Bengaluru,

April 12, 2019

Sd/-

P.R. Ramesh

Partner

(Membership number : 70928)

Annexure “A” to the Independent Auditor’s Report

(Referred to in paragraph 1 (f) under ‘Report on Other Legal and Regulatory Requirements’ section of our report to the Members of Infosys Limited of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (“the Act”)

In conjunction with our audit of the consolidated financial statements of the Company as of and for the year ended March 31, 2019, we have audited the internal financial controls over financial reporting of INFOSYS LIMITED (hereinafter referred to as “Company”) and its subsidiary companies, which are companies incorporated in India, as of that date.

Management’s Responsibility for Internal Financial Controls

The Board of Directors of the Company and its subsidiary companies, which are companies incorporated in India, are responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective Companies considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India (“ the ICAI”). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.

Auditor’s Responsibility

Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Company and its subsidiary companies, which are companies incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing, prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting of the Company and its subsidiary companies, which are companies incorporated in India.

Meaning of Internal Financial Controls Over Financial Reporting

A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the Company and its subsidiary companies, which are companies incorporated in India, have, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the respective companies considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For DELOITTE HASKINS & SELLS LLP

Chartered Accountants

(Firm Registration number : 117366W/W-100018)

Bengaluru,

April 12, 2019

Sd/-

P.R. Ramesh

Partner

(Membership number : 70928)

Consolidated Balance Sheet

in crore

Particulars

Note no.

As at March 31,

2019

2018

Assets

Non-current assets

Property, plant and equipment

2.2

11,479

10,116

Capital work-in-progress

1,388

1,606

Goodwill

2.3.1

3,540

2,211

Other intangible assets

2.3.2

691

247

Investment in associate

2.23

Financial assets

Investments

2.4

4,634

5,756

Loans

2.5

19

36

Other financial assets

2.6

312

284

Deferred tax assets (net)

2.15

1,372

1,282

Income tax assets (net)

2.15

6,320

6,070

Other non-current assets

2.9

2,105

2,265

Total non-current assets

31,860

29,873

Current assets

Financial assets

Investments

2.4

6,627

6,407

Trade receivables

2.7

14,827

13,142

Cash and cash equivalents

2.8

19,568

19,818

Loans

2.5

241

239

Other financial assets

2.6

5,505

6,684

Income tax assets (net)

2.15

423

Other current assets

2.9

5,687

1,667

52,878

47,957

Assets held for sale

2.1.2

2,060

Total current assets

52,878

50,017

Total assets

84,738

79,890

Equity and Liabilities

Equity

Equity share capital

2.11

2,170

1,088

Other equity

62,778

63,835

Total equity attributable to equity holders of the Company

64,948

64,923

Non-controlling interests

58

1

Total equity

65,006

64,924

Liabilities

Non-current liabilities

Financial liabilities

Other financial liabilities

2.12

147

61

Deferred tax liabilities (net)

2.15

672

541

Other non-current liabilities

2.13

275

259

Total non-current liabilities

1,094

861

Current liabilities

Financial liabilities

Trade payables

1,655

694

Other financial liabilities

2.12

10,452

6,946

Other current liabilities

2.13

4,388

3,606

Provisions

2.14

576

492

Income tax liabilities (net)

2.15

1,567

2,043

18,638

13,781

Liabilities directly associated with assets held for sale

2.1.2

324

Total current liabilities

18,638

14,105

Total equity and liabilities

84,738

79,890

The accompanying notes form an integral part of the Consolidated financial statements.

As per our report of even date attached

for Deloitte Haskins & Sells LLP

Chartered Accountants

for and on behalf of the Board of Directors of Infosys Limited

Firm’s Registration number :

117366W/ W-100018

P.R. Ramesh

Partner

Membership number : 70928

Nandan M. Nilekani

Chairman

Salil Parekh

Chief Executive Officer

and Managing Director

U.B. Pravin Rao

Chief Operating Officer

and Whole-time Director

Bengaluru

April 12, 2019

D. Sundaram

Director

Nilanjan Roy

Chief Financial Officer

A.G.S. Manikantha

Company Secretary

Consolidated Statement of Profit and Loss

in crore, except equity share and per equity share data

Particulars

Note no.

Year ended March 31,

2019

2018

Revenue from operations

2.16

82,675

70,522

Other income, net

2.17

2,882

3,311

Total income

85,557

73,833

Expenses

Employee benefit expenses

2.18

45,315

38,893

Cost of technical sub-contractors

6,033

4,297

Travel expenses

2,433

1,995

Cost of software packages and others

2.18

2,553

1,870

Communication expenses

471

489

Consultancy and professional charges

1,324

1,043

Depreciation and amortization expenses

2.2 & 2.3.2

2,011

1,863

Other expenses

2.18

3,655

2,924

Reduction in the fair value of the disposal group held for sale

2.1.2

270

118

Adjustment in respect of excess of carrying amount over recoverable amount on reclassification from ‘Held for Sale’

2.1.2

451

Total expenses

64,516

53,492

Profit before non-controlling interests / share in net profit / (loss) of associate

21,041

20,341

Share in net profit / (loss) of associate, including impairment

2.23

(71)

Profit before tax

21,041

20,270

Tax expense

Current tax

2.15

5,727

4,581

Deferred tax

2.15

(96)

(340)

Profit for the year

15,410

16,029

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Remeasurement of the net defined benefit liability / asset, net

2.20 & 2.15

(22)

55

Equity instruments through other comprehensive income, net

2.4 & 2.15

70

7

48

62

Items that will be reclassified subsequently to profit or loss

Fair value changes on derivatives designated as cash flow hedge, net

2.10 & 2.15

21

(39)

Exchange differences on translation of foreign operations

63

321

Fair value changes on investments, net

2.4 & 2.15

2

(1)

86

281

Total other comprehensive income / (loss), net of tax

134

343

Total comprehensive income for the year

15,544

16,372

Profit attributable to

Owners of the Company

15,404

16,029

Non-controlling interests

6

15,410

16,029

Total comprehensive income attributable to

Owners of the Company

15,538

16,372

Non-controlling interests

6

15,544

16,372

Earnings per equity share

Equity shares of par value 5 each

Basic ()

35.44

35.53

Diluted ()

35.38

35.50

Weighted average equity shares used in computing earnings per equity share

2.21

Basic

434,71,30,157

451,06,64,644

Diluted

435,34,20,772

451,51,47,740

The accompanying notes form an integral part of the Consolidated financial statements.

As per our report of even date attached

for Deloitte Haskins & Sells LLP

Chartered Accountants

for and on behalf of the Board of Directors of Infosys Limited

Firm’s Registration number :

117366W/ W-100018

P.R. Ramesh

Partner

Membership number : 70928

Nandan M. Nilekani

Chairman

Salil Parekh

Chief Executive Officer

and Managing Director

U.B. Pravin Rao

Chief Operating Officer

and Whole-time Director

Bengaluru

April 12, 2019

D. Sundaram

Director

Nilanjan Roy

Chief Financial Officer

A.G.S. Manikantha

Company Secretary

Consolidated Statement of Changes in Equity for the year ended March 31, 2018

in crore

Particulars

Equity share capital (2)

Other equity

Total equity attributable to equity holders of the Company

Non-controlling interest

Total equity

Reserves and surplus

Other comprehensive income

Securities premium

Retained earnings

Capital reserve

General reserve

Share

options outstanding account

Special Economic Zone Re-investment Reserve(3)

Other reserves(4)

Capital redemption reserve

Equity instruments through other comprehensive income

Exchange differences on translating the financial statements of a foreign operation

Effective portion of cash flow hedges

Other items of other comprehensive income / (loss)

Balance as at April 1, 2017

1,144

2,216

52,882

54

12,135

120

5

(5)

458

39

(66)

68,982

68,982

Changes in equity for the year ended March 31, 2018

Profit for the year

16,029

16,029

16,029

Remeasurement of the net defined benefit liability / asset(1) (Refer to Notes 2.20.1 and 2.15)

55

55

55

Equity instruments through other comprehensive income(1)
(Refer to Note 2.4)

7

7

7

Fair value changes on derivatives designated as cash flow hedge(1)
(Refer to Note 2.10)

(39)

(39)

(39)

Exchange differences on translation of foreign operations

321

321

321

Fair value changes on investments(1)
(Refer to Note 2.4)

(1)

(1)

(1)

Total comprehensive income for the year

16,029

7

321

(39)

54

16,372

16,372

Exercise of stock options
(Refer to Note 2.11)

67

2

(69)

Dividends (including dividend distribution tax)

(7,469)

(7,469)

(7,469)

Non-controlling interests

1

1

Transfer to general reserve

(1,382)

1,382

Amount paid upon buyback
(Refer to Note 2.11 )

(56)

(2,206)

(10,738)

(13,000)

(13,000)

Amount transferred to capital redemption reserve upon buyback
(Refer to Note 2.11)

(56)

56

Transaction costs related to buyback(1) (Refer to Note 2.11 )

(46)

(46)

(46)

Transferred to Special Economic Zone Re-investment Reserve

(2,200)

2,200

Transferred from Special Economic Zone Re-investment Reserve on utilization

617

(617)

Share issued on exercise of stock options
(Refer to Note 2.11)

5

5

5

Share-based payments to employees
(Refer to Note 2.11)

79

79

79

Balance as at March 31, 2018

1,088

36

58,477

54

2,725

130

1,583

5

56

2

779

(12)

64,923

1

64,924

Consolidated Statement of Changes in Equity for the year ended March 31, 2019

in crore

Particulars

Equity share capital (2)

Other equity

Total equity attributable to equity holders of the Company

Non-controlling interest

Total equity

Reserves and surplus

Other comprehensive income

Securities premium

Retained earnings

Capital reserve

General reserve

Share options outstanding account

Special Economic Zone Re-investment Reserve(3)

Other reserves(4)

Capital redemption reserve

Equity instruments through other comprehensive income

Exchange differences on translating the financial statements of a foreign operation

Effective portion of cash flow hedges

Other items of other comprehensive income / (loss)

Balance as at April 1, 2018

1,088

36

58,477

54

2,725

130

1,583

5

56

2

779

(12)

64,923

1

64,924

Changes in equity for the year ended March 31, 2019

Profit for the year

15,404

15,404

6

15,410

Remeasurement of the net defined benefit liability / asset(1) (Refer to Notes 2.20.1 and 2.15)

(22)

(22)

(22)

Equity instruments through other comprehensive income(1)
(Refer to Note 2.4)

70

70

70

Fair value changes on derivatives designated as cash flow hedge(1)
(Refer to Note 2.10)

21

21

21

Exchange differences on translation of foreign operations

63

63

63

Fair value changes on investments(1)
(Refer to Note 2.4)

2

2

2

Total Comprehensive income for the year

15,404

70

63

21

(20)

15,538

6

15,544

Share-based payments to employees
(Refer to Note 2.11)

197

197

197

Increase in Equity share capital on account of bonus issue
(Refer to Note 2.11)

1,088

1,088

1,088

Shares issued on exercise of employee stock options after bonus issue
(Refer to Note 2.11)

6

6

6

Buyback of equity shares (Refer to Notes 2.11 and 2.12)

(6)

(1,994)

(2,000)

(2,000)

Transaction costs relating to buyback(1) (Refer to Note 2.11)

(12)

(12)

(12)

Amount transferred to capital redemption reserve upon buyback
(Refer to Note 2.11)

(5)

5

Amounts utilized for bonus issue
(Refer to Note 2.11)

(1,088)

(1,088)

(1,088)

Exercise of stock options
(Refer to Note 2.11)

99

(99)

Transfer on account of options not exercised

1

(1)

Income tax benefit arising on exercise of stock options

8

8

8

Amount transferred to other reserves

(1)

1

Dividends (including dividend distribution tax)

(13,712)

(13,712)

(13,712)

Non-controlling interests on acquisition of subsidiary
(Refer to Note 2.11)

51

51

Transfer to general reserve

(1,615)

1,615

Transferred to Special Economic Zone Re-investment reserve

(2,417)

2,417

Transferred from Special Economic Zone Re-investment reserve on utilization

1,430

(1,430)

Balance as at March 31, 2019

2,170

149

57,566

54

1,242

227

2,570

6

61

72

842

21

(32)

64,948

58

65,006

(1) Net of tax

(2) Net of treasury shares

(3) The Special Economic Zone Re-investment Reserve has been created out of the profit of eligible SEZ units in terms of the provisions of Section 10AA(1)(ii) of Income-tax Act,1961. The reserve should be utilized by the Group for acquiring new plant and machinery for the purpose of its business in the terms of the Section 10AA(2) of the Income-tax Act, 1961.

(4) Under the Swiss Code of Obligation, a few subsidiaries of Infosys Lodestone are required to appropriate a certain percentage of the annual profit to legal reserve, which may be used only to cover losses or for measures designed to sustain the Company through difficult times, to prevent unemployment or to mitigate its consequences.

The accompanying notes form an integral part of the Consolidated financial statements.

As per our report of even date attached

for Deloitte Haskins & Sells LLP

Chartered Accountants

for and on behalf of the Board of Directors of Infosys Limited

Firm’s Registration number :

117366W/ W-100018

P.R. Ramesh

Partner

Membership number : 70928

Nandan M. Nilekani

Chairman

Salil Parekh

Chief Executive Officer

and Managing Director

U.B. Pravin Rao

Chief Operating Officer

and Whole-time Director

Bengaluru

April 12, 2019

D. Sundaram

Director

Nilanjan Roy

Chief Financial Officer

A.G.S. Manikantha

Company Secretary

Consolidated Statement of Cash Flows

Accounting policy

Cash flows are reported using the indirect method, whereby profit for the year is adjusted for the effects of transactions of a non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the Group are segregated. The Group considers all highly liquid investments that are readily convertible to known amounts of cash to be cash equivalents.

in crore

Particulars

Note no.

Year ended March 31,

2019

2018

Cash flows from operating activities

Profit for the year

15,410

16,029

Adjustments to reconcile net profit to net cash provided by operating activities

Income tax expense

2.15

5,631

4,241

Depreciation and amortization

2.2 & 2.3.2

2,011

1,863

Interest and dividend income

(2,052)

(2,360)

Impairment loss recognized / (reversed) under expected credit loss model

239

34

Exchange differences on translation of assets and liabilities

66

16

Reduction in the fair value of the disposal group held for sale

2.1.2

270

118

Adjustment in respect of excess of carrying amount over recoverable amount on reclassification from ‘Held for Sale’

2.1.2

451

Share in net profit / (loss) of associate, including impairment

71

Stock compensation expense

2.11

202

84

Other adjustments

(102)

(133)

Changes in assets and liabilities

Trade receivables and unbilled revenue

(2,881)

(1,523)

Loans, other financial assets and other assets

(700)

(186)

Trade payables

916

328

Other financial liabilities, other liabilities and provisions

2,212

1,465

Cash generated from operations

21,673

20,047

Income taxes paid

(6,832)

(6,829)

Net cash generated by operating activities

14,841

13,218

Cash flows from investing activities

Expenditure on property, plant and equipment

(2,445)

(1,998)

Loans to employees

14

28

Deposits placed with corporation

(24)

(130)

Interest and dividend received

1,557

1,768

Payment towards acquisition of business, net of cash acquired

(550)

(33)

Payment of contingent consideration pertaining to acquisition of business

(18)

(27)

Advance payment towards acquisition of business

(206)

Escrow and other deposits pertaining to buyback

2.6

(257)

Payments to acquire investments

Preference and equity securities

(21)

(23)

Tax-free bonds and government bonds

(17)

(2)

Liquid mutual funds and fixed maturity plan securities

(78,355)

(62,063)

Non-convertible debentures

(160)

(104)

Certificates of deposit

(2,393)

(6,653)

Government securities

(838)

Commercial paper

(491)

(291)

Others

(19)

(23)

Proceeds on sale of financial assets

Tax-free bonds and government bonds

1

15

Non-convertible debentures

738

100

Government securities

123

Others

300

Certificates of deposit

5,540

9,690

Liquid mutual funds and fixed maturity plan securities

76,821

64,163

Preference and equity securities

115

35

Others

10

Net cash from / (used in) investing activities

(575)

4,452

Cash flows from financing activities

Payment of dividends (including dividend distribution tax)

(13,705)

(7,464)

Shares issued on exercise of employee stock options

6

5

Buyback of equity shares including transaction cost

(813)

(13,046)

Net cash used in financing activities

(14,512)

(20,505)

Net increase / (decrease) in cash and cash equivalents

(246)

(2,835)

Cash and cash equivalents at the beginning of the year

2.8

19,871

22,625

Effect of exchange rate changes on cash and cash equivalents

(57)

81

Cash and cash equivalents at the end of the year

2.8

19,568

19,871

Supplementary information

Restricted cash balance

2.8

358

533

The accompanying notes form an integral part of the Consolidated financial statements.

As per our report of even date attached

for Deloitte Haskins & Sells LLP

Chartered Accountants

for and on behalf of the Board of Directors of Infosys Limited

Firm’s Registration number :

117366W/ W-100018

P.R. Ramesh

Partner

Membership number : 70928

Nandan M. Nilekani

Chairman

Salil Parekh

Chief Executive Officer

and Managing Director

U.B. Pravin Rao

Chief Operating Officer

and Whole-time Director

Bengaluru

April 12, 2019

D. Sundaram

Director

Nilanjan Roy

Chief Financial Officer

A.G.S. Manikantha

Company Secretary

Overview and notes to the consolidated financial statements

1. Overview

1.1 Company overview

Infosys Limited (“the Company” or Infosys) is a leading provider of consulting, technology, outsourcing and next-generation digital services, enabling clients to execute strategies for their digital transformation. The strategic objective of Infosys is to build a sustainable organization that remains relevant to the agenda of clients, while creating growth opportunities for employees and generating profitable returns for investors. The strategy of the Company is to be a navigator for our clients as they ideate, plan and execute their journey to a digital future.

Infosys, together with its subsidiaries and controlled trusts, is hereinafter referred to as “the Group”.

The Company is a public limited company incorporated and domiciled in India and has its registered office at Electronics City, Hosur Road, Bengaluru 560100, Karnataka, India. The Company has its primary listings on the BSE Limited and National Stock Exchange of India Limited. The Company’s American Depositary Shares (ADSs) representing equity shares are listed on the New York Stock Exchange (NYSE).

Further, the Company’s ADSs were also listed on Euronext London and Euronext Paris. On July 5, 2018, the Company voluntarily delisted its ADSs from the said exchanges due to low average daily trading volume of its ADSs on these exchanges.

The Group’s consolidated financial statements are approved for issue by the Company’s Board of Directors on April 12, 2019.

1.2 Basis of preparation of financial statements

These consolidated financial statements are prepared in accordance with Indian Accounting Standards (Ind AS), under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (“the Act”) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and relevant amendment rules issued thereafter.

Accounting policies have been consistently applied except where a newly-issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

As the year-end figures are taken from the source and rounded to the nearest digits, the figures reported for the previous quarters might not always add up to the year-end figures reported in this statement.

1.3 Basis of consolidation

Infosys consolidates entities which it owns or controls. The consolidated financial statements comprise the financial statements of the Company, its controlled trusts and its subsidiaries, as disclosed in Note 2.23. Control exists when the parent has power over the entity, is exposed, or has rights, to variable returns from its involvement with the entity and has the ability to affect those returns by using its power over the entity. Power is demonstrated through existing rights that give the ability to direct relevant activities, those which significantly affect the entity’s returns. Subsidiaries are consolidated from the date control commences until the date control ceases.

The financial statements of the Group companies are consolidated on a line-by-line basis and intra-group balances and transactions including unrealized gain / loss from such transactions are eliminated upon consolidation. These financial statements are prepared by applying uniform accounting policies in use at the Group. Non-controlling interests which represent part of the net profit or loss and net assets of subsidiaries that are not, directly or indirectly, owned or controlled by the Company, are excluded.

1.4 Use of estimates and judgments

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgements and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. Application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.5. Accounting estimates could change from period to period. Actual results could differ from those estimates. Appropriate changes in estimates are made as the Management becomes aware of changes in circumstances surrounding the estimates. Changes in estimates are reflected in the financial statements of the period in which changes are made and, if material, their effects are disclosed in the notes to the Consolidated financial statements.

1.5 Critical accounting estimates

a. Revenue recognition

The Group uses the percentage-of-completion method in accounting for its fixed-price contracts. Use of the percentage-of-completion method requires the Group to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity.

Further, the Group uses significant judgments while determining the transaction price allocated to performance obligations using the expected cost plus margin approach.

Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

b. Income taxes

The Company’s two major tax jurisdictions are India and the US, though the Company also files tax returns in other overseas jurisdictions. Significant judgments are involved in determining the provision for income taxes, including the amount expected to be paid / recovered for uncertain tax positions. Also, refer to Notes 2.15 and 2.22.

In assessing the realizability of deferred income tax assets, the Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The Management considers the scheduled reversals of deferred income tax liabilities, 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 income tax assets are deductible, the Management believes that the Group will realize the benefits of those deductible differences. The amount of the deferred income 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.

c. Business combinations and intangible assets

Business combinations are accounted for using Ind AS 103, Business Combinations. Ind AS 103 requires the identifiable intangible assets and contingent consideration to be fair valued in order to ascertain the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. Significant estimates are required to be made in determining the value of contingent consideration and intangible assets. These valuations are conducted by independent valuation experts (refer to Notes 2.1 and 2.3).

d. Property, plant and equipment

Property, plant and equipment represent a significant proportion of the asset base of the Group. The charge in respect of periodic depreciation is derived after determining an estimate of an asset’s expected useful life and the expected residual value at the end of its life. The useful lives and residual values of Group’s assets are determined by the Management at the time the asset is acquired and reviewed periodically, including at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technology (refer to Note 2.2).

e. Impairment of goodwill

Goodwill is tested for impairment on an annual basis and whenever there is an indication that the recoverable amount of a cash generating unit (CGU) is less than its carrying amount based on a number of factors including operating results, business plans, future cash flows and economic conditions. The recoverable amount of CGUs is determined based on the higher of value-in-use and fair value less cost to sell. The goodwill impairment test is performed at the level of the CGU or groups of CGUs which are benefiting from the synergies of the acquisition and which represent the lowest level at which goodwill is monitored for internal management purposes.

Market-related information and estimates are used to determine the recoverable amount. Key assumptions on which the Management has based its determination of recoverable amount include estimated long-term growth rates, weighted average cost of capital and estimated operating margins. Cash flow projections take into account past experience and represent the Management’s best estimate about future developments (refer to Note 2.3).

f. Non-current assets and disposal group held for sale

Assets and liabilities of disposal groups held for sale are measured at the lower of carrying amount and fair value less costs to sell. The determination of fair value less costs to sell includes use of the Management estimates and assumptions. The fair value of the disposal groups have been estimated using valuation techniques including income and market approach, which includes unobservable inputs.

Non-current assets and the disposal group that ceases to be classified under ‘Held for Sale’ shall be measured at the lower of the carrying amount before the non-current asset and disposal group were classified under ‘Held for Sale’ adjusted for any depreciation / amortization and its recoverable amount at the date when the disposal group no longer meets the ‘Held for Sale’ criteria. Recoverable amounts of assets reclassified from ‘Held for Sale’ have been estimated using the Management’s assumptions which consist of significant unobservable inputs (refer to Note 2.1.2).

1.6 Recent accounting pronouncements

Ind AS 116, Leases : On March 30, 2019, the Ministry of Corporate Affairs has notified Ind AS 116, Leases. Ind AS 116 will replace the existing leases standard, Ind AS 17 Leases, and related interpretations. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract i.e., the lessee and the lessor. Ind AS 116 introduces a single lessee accounting model and requires a lessee to recognize assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Currently, operating lease expenses are charged to the Statement of Profit and Loss. The standard also contains enhanced disclosure requirements for lessees. Ind AS 116 substantially carries forward the lessor accounting requirements in Ind AS 17.

The effective date for the adoption of Ind AS 116 is annual periods beginning on or after April 1, 2019. The standard permits two possible methods of transition :

  • Full retrospective – Retrospectively to each prior period presented applying Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors
  • Modified retrospective – Retrospectively, with the cumulative effect of initially applying the standard recognized at the date of initial application

Under the modified retrospective approach, the lessee records the lease liability as the present value of the remaining lease payments, discounted at the incremental borrowing rate and the right of use asset either as :

  • Its carrying amount as if the standard had been applied since the commencement date, but discounted at the lessee’s incremental borrowing rate at the date of initial application, or
  • An amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments related to that lease recognized under Ind AS 17 immediately before the date of initial application.

Certain practical expedients are available under both
the methods.

On completion of evaluation of the effect of adoption of Ind AS 116, the Group is proposing to use the ‘Modified Retrospective Approach’ for transitioning to Ind AS 116, and take the cumulative adjustment to retained earnings, on the date of initial application (April 1, 2019). Accordingly, comparatives for the year ended March 31, 2019 will not be retrospectively adjusted. The Group has elected certain available practical expedients on transition.

The effect of adoption as on transition date would majorly result in an increase in right of use asset approximately by 2,300 crore, net investment in sub-lease approximately by 440 crore and an increase in lease liability approximately by 3,050 crore.

Ind AS 12, Appendix C, Uncertainty over Income Tax Treatments : On March 30, 2019, the Ministry of Corporate Affairs has notified Ind AS 12 Appendix C, Uncertainty over Income Tax Treatments, which is to be applied while performing the determination of taxable profit (or loss), tax bases, unused tax losses, unused tax credits and tax rates, when there is uncertainty over income tax treatments under Ind AS 12. According to the appendix, companies need to determine the probability of the relevant tax authority accepting each tax treatment, or group of tax treatments, that the companies have used or plan to use in their income tax filing which has to be considered to compute the most likely amount or the expected value of the tax treatment when determining taxable profit (tax loss), tax bases, unused tax losses, unused tax credits and tax rates.

The standard permits two possible methods of transition :

  • Full retrospective approach – Under this approach, Appendix C will be applied retrospectively to each prior reporting period presented in accordance with Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors, without using hindsight, and
  • Retrospectively with cumulative effect of initially applying Appendix C recognized by adjusting equity on initial application, without adjusting comparatives.

The effective date for the adoption of Ind AS 12 Appendix C is annual periods beginning on or after April 1, 2019. The Group will adopt the standard on April 1, 2019 and has decided to adjust the cumulative effect in equity on the date of initial application i.e. April 1, 2019 without adjusting comparatives.

The effect on adoption of Ind AS 12 Appendix C would be insignificant in the consolidated financial statements.

Amendment to Ind AS 12, Income taxes : On March 30, 2019, the Ministry of Corporate Affairs issued amendments to the guidance in Ind AS 12, Income Taxes, in connection with accounting for dividend distribution taxes.

The amendment clarifies that an entity shall recognize the income tax consequences of dividends in profit or loss, other comprehensive income or equity according to where the entity originally recognized those past transactions or events.

Effective date for application of this amendment is annual period beginning on or after April 1, 2019. The Group is currently evaluating the effect of this amendment on the consolidated financial statements.

Amendment to Ind AS 19 – Plan amendment, curtailment or settlement : On March 30, 2019, the Ministry of Corporate Affairs issued amendments to Ind AS 19, Employee Benefits, in connection with accounting for plan amendments, curtailments and settlements.

The amendments require an entity :

  • to use updated assumptions to determine current service cost and net interest for the remainder of the period after a plan amendment, curtailment or settlement; and
  • to recognize in profit or loss as part of past service cost, or a gain or loss on settlement, any reduction in a surplus, even if that surplus was not previously recognized because of the impact of the asset ceiling.

Effective date for application of this amendment is annual period beginning on or after 1 April 2019. The Group does not have any impact on account of this amendment.

2.1 Business combinations and disposal group held for sale

2.1.1 Business combinations

Accounting policy

Business combinations have been accounted for using the acquisition method under the provisions of Ind AS 103, Business Combinations.

The cost of an acquisition is measured at the fair value of the assets transferred, equity instruments issued and liabilities incurred or assumed at the date of acquisition, which is the date on which control is transferred to the Group. The cost of acquisition also includes the fair value of any contingent consideration. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair value on the date of acquisition.

The interest of non-controlling shareholders is initially measured either at fair value or at the non-controlling interests’ proportionate share of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity of subsidiaries.

Business combinations between entities under common control are accounted for at carrying value.

Transaction costs that the Group incurs in connection with a business combination such as finder’s fees, legal fees, due diligence fees, and other professional and consulting fees are expensed as incurred.

Brilliant Basics Holdings Limited

On September 8, 2017, Infosys acquired 100% voting interests in Brilliant Basics Holdings Limited, UK, (Brilliant Basics) a product design and customer experience innovator with experience in executing global programs. The business acquisition was conducted by entering into a share purchase agreement for a cash consideration of 29 crore, a contingent consideration of up to 20 crore and an additional consideration of up to 13 crore, referred to as retention bonus, payable to the employees of Brilliant Basics at each anniversary year over the next two years, subject to their continuous employment with the Group at each anniversary.

The payment of contingent consideration to sellers of Brilliant Basics is dependent upon the achievement of certain financial targets by Brilliant Basics over a period of three years ending on March 2020.

The fair value of contingent consideration is determined by discounting the estimated amount payable to the sellers of Brilliant Basics on the achievement of certain financial targets. The key inputs used in determination of the fair value of contingent consideration are the discount rate of 10% and the probabilities of achievement of the financial targets. The undiscounted value of contingent consideration as at March 31, 2019 is 14 crore.

The excess of the purchase consideration paid over the fair value of assets acquired has been attributed to goodwill.

The purchase price has been allocated based on the Management’s estimates and independent appraisal of fair values as follows :

in crore

Component

Acquiree’s carrying amount

Fair value adjustments

Purchase price allocated

Net assets(1)

1

1

Intangible assets – customer relationships

12

12

Deferred tax liabilities on intangible assets

(2)

(2)

1

10

11

Goodwill

35

Total purchase price

46

(1) Includes cash and cash equivalents acquired of 2 crore

The goodwill is not tax-deductible.

The gross amount of trade receivables acquired and its fair value is 3 crore and the amount has been substantially collected.

The fair value of each major class of consideration as at the acquisition date is as follows :

in crore

Component

Consideration settled

Cash paid

29

Fair value of contingent consideration

17

Total purchase price

46

The transaction costs of 2 crore related to the acquisition have been included in the Statement of Profit and Loss for the year ended March 31, 2018.

WongDoody Holding Company Inc

On May 22, 2018, Infosys acquired 100% voting interests in WongDoody Holding Company Inc. (WongDoody), a US-based, full-service creative and consumer insights agency. The business acquisition was conducted by entering into a share purchase agreement for a total consideration of up to US$ 75 million (approximately 514 crore on acquisition date), which includes a cash consideration of US$ 38 million (approximately 261 crore), a contingent consideration of up to US$ 28 million (approximately 192 crore on acquisition date) and an additional consideration of up to US$ 9 million (approximately 61 crore on acquisition date), referred to as retention bonus, payable to the employees of WongDoody over the next three years, subject to their continuous employment with the Group.

WongDoody, brings to Infosys its creative talent, and marketing and brand engagement expertise. Further, the acquisition is expected to strengthen Infosys’ creative, branding and customer experience capabilities to bring innovative thinking, talent and creativity to clients.

The purchase price has been allocated based on the Management’s estimates and independent appraisal of fair values as follows :

in crore

Component

Acquiree’s carrying amount

Fair value adjustments

Purchase price allocated

Net assets(1)

37

37

Intangible assets – customer relationships

132

132

Intangible assets – trade name

8

8

37

140

177

Goodwill

173

Total purchase price

350

(1) Includes cash and cash equivalents acquired of 51 crore

The goodwill is tax-deductible.

The fair value of each major class of consideration as at the acquisition date is as follows :

in crore

Component

Consideration settled

Cash consideration

261

Fair value of contingent consideration

89

Total purchase price

350

The gross amount of trade receivables acquired and its fair value is 12 crore and the amount has been fully collected.

The payment of contingent consideration to sellers of WongDoody is dependent upon the achievement of certain financial targets by WongDoody. At the acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 16% and the probabilities of achievement of the financial targets. The undiscounted value of contingent consideration as at March 31, 2019 is US$ 17 million ( 121 crore).

The transaction costs of 3 crore related to the acquisition have been included in the Statement of Profit and Loss for the year ended March 31, 2019.

Infosys Compaz Pte Ltd. (formerly Trusted Source Pte. Ltd)

On November 16, 2018, Infosys Consulting Pte Ltd. (a wholly-owned subsidiary of Infosys Limited) acquired 60% stake in Infosys Compaz Pte Ltd, a Singapore-based IT services company. The business acquisition was conducted by entering into a share purchase agreement for a total consideration of up to SGD 17 million (approximately 91 crore on acquisition date), which includes a cash consideration of SGD 10 million (approximately 54 crore) and a contingent consideration of up to SGD 7 million (approximately 37 crore on acquisition date).

The purchase price has been allocated based on the Management’s estimates and independent appraisal of fair values as follows :

in crore

Component

Acquiree’s carrying amount

Fair value adjustments

Purchase price allocated

Net assets(1)

92

92

Intangible assets – Customer contracts and relationships

44

44

Deferred tax liabilities on intangible assets

(7)

(7)

92

37

129

Non-controlling interests

(51)

Total purchase price

78

(1) Includes cash and cash equivalents acquired of 65 crore.

The fair value of each major class of consideration as at the acquisition date is as follows :

in crore

Component

Consideration settled

Cash consideration

54

Fair value of contingent consideration

24

Total purchase price

78

The gross amount of trade receivables acquired and its fair value is 50 crore and the amount has been substantially collected.

The payment of contingent consideration to sellers of Infosys Compaz Pte Ltd is dependent upon the achievement of certain revenue targets by Infosys Compaz Pte Ltd. At the acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 9% and the probabilities of achievement of the financial targets. The undiscounted value of contingent consideration as at March 31, 2019 is SGD 7 million ( 36 crore).

The transaction costs of 3 crore related to the acquisition have been included in the Statement of Profit and Loss for the year ended March 31, 2019.

Fluido Oy

On October 11, 2018, Infosys Consulting Pte Ltd. (a wholly-owned subsidiary of Infosys Limited) acquired 100% of voting interests in Fluido Oy (Fluido), a Nordic-based Salesforce advisor and consulting partner in cloud consulting, implementation and training services for a total consideration of up to € 65 million (approximately 560 crore), comprising cash a consideration of € 45 million (approximately 388 crore), a contingent consideration of up to € 12 million (approximately 103 crore) and retention payouts of up to € 8 million (approximately 69 crore), payable to the employees of Fluido over the next three years, subject to their continuous employment with the Group.

Fluido brings to Infosys the salesforce expertise, alongside an agile delivery process that simplifies and scales digital efforts across channels and touchpoints. Further, Fluido strengthens Infosys’ presence across the Nordic region with developed assets and client relationships. The excess of the purchase consideration paid over the fair value of assets acquired has been attributed to goodwill.

The purchase price has been allocated based on the Management’s estimates and independent appraisal of fair values as follows :

in crore

Component

Acquiree’s carrying amount

Fair value adjustments

Purchase price allocated

Net assets(1)

12

12

Intangible assets – Customer contracts and relationships

158

158

Intangible assets – Salesforce Relationships

62

62

Intangible assets – Brand

28

28

Deferred tax liabilities on intangible assets

(52)

(52)

12

196

208

Goodwill

240

Total purchase price

448

(1) Includes cash and cash equivalents acquired of 28 crore.

The goodwill is not tax-deductible.

The fair value of each major class of consideration as of the acquisition date is as follows :

in crore

Component

Consideration settled

Cash consideration

388

Fair value of contingent consideration

60

Total purchase price

448

The gross amount of trade receivables acquired and its fair value is 27 crore and the amount has been fully collected.

The payment of contingent consideration to the sellers of Fluido is dependent upon the achievement of certain financial targets by Fluido. At the acquisition date, the key inputs used in determination of the fair value of contingent consideration are the discount rate of 16% and the probabilities of achievement of the financial targets. The undiscounted value of contingent consideration as at March 31, 2019 was € 8 million ( 62 crore).

The transaction costs of 5 crore related to the acquisition have been included in the Consolidated Statement of Profit and Loss for the year ended March 31, 2019.

Hitachi Procurement Service Co. Ltd

On April 1, 2019, Infosys Consulting Pte Ltd. (a wholly-owned subsidiary of Infosys Limited) acquired 81% voting interests in Hitachi Procurement Service Co., Ltd., (HIPUS), Japan, a wholly-owned subsidiary of Hitachi Ltd, Japan for a total cash consideration of JPY 3.29 billion (approximately 206 crore) on fulfilment of closing conditions. The Company has paid an advance of JPY 3.29 billion (approximately 206 crore) to Hitachi towards cash consideration on March 29, 2019. HIPUS handles indirect materials - purchasing functions for the Hitachi Group.

As of April 12, 2019 (i.e., the date of adoption of financial statements by the Board of Directors), the Company is in the process of finalizing the accounting for acquisition of HIPUS, including allocation of purchase consideration to identifiable assets and liabilities.

Proposed acquisition

Stater N.V. : On March 28, 2019, Infosys Consulting Pte Ltd. (a wholly-owned subsidiary of Infosys Limited) entered into a definitive agreement to acquire 75% of the shareholding in Stater N.V., a wholly-owned subsidiary of ABN AMRO Bank N.V., the Netherlands, for a consideration including base purchase price of up to € 127.5 million (approximately 990 crore) and customary closing adjustments, subject to regulatory approvals and fulfilment of closing conditions.

2.1.2. Disposal group held for sale

Accounting policy

Non-current assets and disposal groups are classified under ‘Held for Sale’ if their carrying amount is intended to be recovered principally through sale rather than through continuing use. The condition for classification of ‘Held for Sale’ is met when the non-current asset or the disposal group is available for immediate sale and the same is highly probable of being completed within one year from the date of classification under ‘Held for Sale’. Non-current assets and disposal groups held for sale are measured at the lower of carrying amount and fair value less cost to sell. Non-current assets and disposal groups that cease to be classified under ‘Held for Sale’ shall be measured at the lower of the carrying amount before the non-current asset and the disposal group were classified under ‘Held for Sale’ adjusted for any depreciation / amortization and its recoverable amount at the date when the disposal group no longer meets the ‘Held for Sale’ criteria.

In the three months ended March 2018, the Company had initiated identification and evaluation of potential buyers for its subsidiaries, Kallidus and Skava (together referred to as “Skava”) and Panaya, collectively referred to as “the disposal group”. The disposal group was classified and presented separately as ‘Held for Sale’ and was carried at the lower of carrying value and fair value. Consequently, a reduction in the fair value of the disposal group held for sale amounting to 118 crore in respect of Panaya had been recognized in the Consolidated Statement of Profit and Loss for the year ended March 31, 2018. During the three months ended June 30, 2018, on remeasurement, including consideration of progress in negotiations on offers from prospective buyers for Panaya, the Company has recorded a reduction in the fair value of the disposal group held for sale amounting to 270 crore in respect of Panaya.

During the three months ended December 31, 2018, based on the evaluation of proposals received and progress of negotiations with potential buyers, the Company concluded that the disposal group does not meet the criteria for ‘Held for Sale’ classification because it is no longer highly probable that the sale would be consummated by March 31, 2019 (12 months from date of initial classification under ‘Held for Sale’). Accordingly, in accordance with Ind AS 105, Non current Assets held for Sale and Discontinued Operations, the assets and liabilities of Panaya and Skava have been included on a line-by-line basis in the consolidated financial statements for the year ended and as at March 31, 2019.

On reclassification from ‘Held for Sale’, the assets of Panaya and Skava have been remeasured at the lower of cost and recoverable amount resulting in recognition of an adjustment in respect of excess of carrying amount over recoverable amount on reclassification from ‘Held for Sale’ of 451 crore (comprising of 358 crore towards goodwill and 93 crore towards value of customer relationships) in respect of Skava in the Consolidated Statement of Profit and Loss for the year ended March 31, 2019.

2.2 Property, plant and equipment

Accounting policy

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the Management. The Group 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(1)

22-25 years

Plant and machinery(1)(2)

5 years

Office equipment

5 years

Computer equipment(1)

3-5 years

Furniture and fixtures(1)

5 years

Vehicles(1)

5 years

Leasehold improvements

Over lease term

(1) Based on technical evaluation, the Management believes that the useful lives as given above best represent the period over which the Management expects to use these assets. Hence, the useful lives for these assets is different from the useful lives as prescribed under Part C of Schedule II of the Companies Act, 2013.

(2) Includes solar plant with a useful life of 20 years

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end.

Advances paid towards the acquisition of property, plant and equipment outstanding at each Balance Sheet date is classified as capital advances under other non-current assets and the cost of assets not ready to use before such date are disclosed under ‘Capital work-in-progress’. Subsequent expenditures relating to property, plant and equipment are capitalized only when it is probable that future economic benefits associated with these will flow to the Group and the cost of the item can be measured reliably. Repairs and maintenance costs are recognized in the Consolidated Statement of Profit and Loss when incurred. The cost and related accumulated depreciation are eliminated from the financial statements upon sale or retirement of the asset and the resultant gains or losses are recognized in the Consolidated Statement of Profit and Loss.

Impairment

Property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognized in the Consolidated Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Consolidated Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated depreciation) had no impairment loss been recognized for the asset in prior years.

The changes in the carrying value of property, plant and equipment for the year ended March 31, 2019 are as follows :

in crore

Particulars

Land –Freehold

Land – Leasehold

Buildings (1)

Plant and machinery

Office equipment

Computer equipment

Furniture & fixtures

Leasehold improvements

Vehicles

Total

Gross carrying value as at April 1, 2018

1,229

673

8,130

2,306

1,002

4,884

1,393

531

31

20,179

Additions

78

916

462

136

1,129

254

209

9

3,193

Additions Business combination

1

2

34

7

3

47

Deletions

(68)

(116)

(60)

(40)

(239)

(40)

(21)

(2)

(586)

Reclassified from assets held for sale (Refer to Note 2.1.2)

1

2

40

8

17

68

Translation difference

(4)

(1)

(1)

(2)

(2)

(10)

Gross carrying value as at March 31, 2019

1,307

605

8,926

2,709

1,101

5,846

1,620

739

38

22,891

Accumulated depreciation as at April 1, 2018

(31)

(2,719)

(1,597)

(719)

(3,632)

(1,017)

(330)

(18)

(10,063)

Depreciation

(5)

(313)

(293)

(125)

(766)

(185)

(89)

(6)

(1,782)

Accumulated depreciation on deletions

3

103

50

32

229

36

20

2

475

Reclassified from assets held for sale (Refer to Note 2.1.2)

(1)

(1)

(25)

(5)

(15)

(47)

Translation difference

2

2

1

5

Accumulated depreciation as at March 31, 2019

(33)

(2,927)

(1,841)

(813)

(4,192)

(1,170)

(414)

(22)

(11,412)

Carrying value as at April 1, 2018

1,229

642

5,411

709

283

1,252

376

201

13

10,116

Carrying value as at March 31, 2019

1,307

572

5,999

868

288

1,654

450

325

16

11,479

The changes in the carrying value of property, plant and equipment for the year ended March 31, 2018 were as follows :

in crore

Particulars

Land – Freehold

Land – Leasehold

Buildings (1)

Plant and machinery

Office equipment

Computer equipment

Furniture & fixtures

Leasehold improvements

Vehicles

Total

Gross carrying value as at April 1, 2017

1,095

671

7,279

2,048

922

4,540

1,277

469

31

18,332

Additions

134

2

789

264

86

471

130

74

5

1,955

Deletions

(1)

(8)

(8)

(109)

(10)

(12)

(5)

(153)

Reclassified as assets held for sale (Refer to Note 2.1.2)

(1)

(2)

(40)

(8)

(17)

(68)

Translation difference

63

3

4

22

4

17

113

Gross carrying value as at March 31, 2018

1,229

673

8,130

2,306

1,002

4,884

1,393

531

31

20,179

Accumulated depreciation as at April 1, 2017

(27)

(2,440)

(1,337)

(599)

(3,053)

(869)

(239)

(17)

(8,581)

Depreciation

(4)

(276)

(266)

(125)

(693)

(160)

(105)

(5)

(1,634)

Accumulated depreciation on deletions

7

6

107

9

11

4

144

Reclassified as assets held for sale (Refer to Note 2.1.2)

1

1

25

5

15

47

Translation difference

(3)

(2)

(2)

(18)

(2)

(12)

(39)

Accumulated depreciation as at March 31, 2018

(31)

(2,719)

(1,597)

(719)

(3,632)

(1,017)

(330)

(18)

(10,063)

Carrying value as at April 1, 2017

1,095

644

4,839

711

323

1,487

408

230

14

9,751

Carrying value as at March 31, 2018

1,229

642

5,411

709

283

1,252

376

201

13

10,116

(1) Buildings include 250 being the value of five shares of 50 each in Mittal Towers Premises Co-operative Society Limited.

Gross carrying value of leasehold land represents amounts paid under certain lease-cum-sale agreements to acquire land including agreements where the Group has an option to purchase or renew the properties on expiry of the lease period.

The aggregate depreciation has been included under depreciation and amortization expense in the Consolidated Statement of Profit and Loss.

2.3 Goodwill and other intangible assets

2.3.1 Goodwill

Accounting policy

Goodwill represents the cost of business acquisition in excess of the Group’s interest in the net fair value of identifiable assets, liabilities and contingent liabilities of the acquiree. When the net fair value of the identifiable assets, liabilities and contingent liabilities acquired exceeds the cost of business acquisition, the bargain purchase excess is recognized after reassessing the fair value of net assets acquired in the capital reserve. Goodwill is measured at cost less accumulated impairment losses.

Impairment

Goodwill is tested for impairment on an annual basis and whenever there is an indication that goodwill may be impaired, relying on a number of factors, including operating results, business plans and future cash flows. For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the Group’s cash generating units (CGUs) or groups of CGUs expected to benefit from the synergies arising from the business combination. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or group of assets. Impairment occurs when the carrying amount of a CGU, including the goodwill, exceeds the estimated recoverable amount of the CGU. The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. Value-in-use is the present value of future cash flows expected to be derived from the CGU.

Total impairment loss of a CGU is allocated first to reduce the carrying amount of goodwill allocated to the CGU and then to the other assets of the CGU pro-rata on the basis of the carrying amount of each asset in the CGU. An impairment loss on goodwill is recognized in net profit in the Consolidated Statement of Profit and Loss and is not reversed in the subsequent period.

A summary of changes in the carrying amount of goodwill is as follows :

in crore

Particulars

As at March 31,

2019

2018

Carrying value at the beginning

2,211

3,652

Goodwill on Brilliant Basics acquisition (Refer to Note 2.1.1)

35

Goodwill on WongDoody acquisition (Refer to Note 2.1.1)

173

Goodwill on Fluido Oy acquisition (Refer to Note 2.1.1)

240

Goodwill reclassified under assets held for sale
(Refer to Note 2.1.2)

(1,609)

Goodwill reclassified from assets held for sale, net of reduction in recoverable amount (Refer to Note 2.1.2)

863

Translation differences

53

133

Carrying value at the end

3,540

2,211

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to the CGU or groups of CGUs, which benefit from the synergies of the acquisition. The chief operating decision maker reviews the goodwill for any impairment at the operating segment level, which is represented through groups of CGUs.

During the three months ended June 30, 2018, the Group internally reorganized some of its business segments to deepen customer relationships, improve focus of sales investments and increase the Management oversight. Consequent to the internal reorganization, there were changes in the business segments based on ‘Management approach’ as defined under Ind AS 108, Operating Segments (refer to Note 2.24). Accordingly, the goodwill has been allocated to the new operating segments as at March 31, 2019.

The allocation of goodwill to operating segments as at March 31, 2019 is as follows :

in crore

Segment

As at March 31, 2019

Financial services

743

Retail

437

Communication

389

Energy, Utilities, Resources and Services

374

Manufacturing

239

2,182

Operating segments without significant goodwill

417

Total

2,599

Consequent to reclassification from ‘Held for Sale’ (refer to Note 2.1.2), goodwill pertaining to Panaya, Kallidus and Skava acquisitions are tested for impairment at the respective entity level which amounts to 941 crore as at March 31, 2019.

The allocation of goodwill to operating segments (prior to internal reorganization) as at March 31, 2018 was as follows :

in crore

Segment

As at March 31, 2018

Financial services

474

Manufacturing

252

Retail, Consumer packaged goods and Logistics

314

Life Sciences, Healthcare and Insurance

446

Energy & Utilities, Communication and Services

470

1,956

Operating segments without significant goodwill

255

Total

2,211

The recoverable amount of a CGU is the higher of its fair value less cost to sell and its value-in-use. The fair value of a CGU is determined based on the market capitalization. The value-in-use is determined based on specific calculations. These calculations use cash flow projections over a period of five years. An average of the range of each assumption used is mentioned below. As at March 31, 2019 and March 31, 2018, the estimated recoverable amount of the CGU exceeded its carrying amount. The key assumptions used for the calculations are as follows :

in %

Particulars

As at March 31,

2019

2018

Long-term growth rate

8-10

8-10

Operating margins

17-20

17-20

Discount rate

12.5

13.5

The above discount rate is based on the Weighted Average Cost of Capital (WACC) of the Company. The Management believes that any reasonable possible changes in the key assumptions would not cause the carrying amount to exceed the recoverable amount of the CGU.

2.3.2 Other intangible assets

Accounting policy

Intangible assets are stated at cost less accumulated amortization and impairment. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. The estimated useful life of an identifiable intangible asset is based on a number of factors, including the effects of obsolescence, demand, competition, and other economic factors (such as the stability of the industry, and known technological advances). Amortization methods and useful lives are reviewed periodically including at each financial year end.

Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the Group has an intention and ability to complete and use or sell the software and the costs can be measured reliably. The costs which can be capitalized include the cost of material, direct labour, overhead costs that are directly attributable to preparing the asset for its intended use.

Impairment

Intangible assets are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for the CGU to which the asset belongs.

If such assets are considered to be impaired, the impairment to be recognized in the Consolidated Statement of Profit and Loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the Consolidated Statement of Profit and Loss if there has been a change in the estimates used to determine the recoverable amount. The carrying amount of the asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of any accumulated amortization) had no impairment loss been recognized for the asset in prior years.

The changes in the carrying value of acquired intangible assets for the year ended March 31, 2019 are as follows :

in crore

Particulars

Customer -related

Software -related

Sub-contracting rights -related

Intellectual property rights -related

Land use rights -related

Brand or trademark -related

Others

Total

Gross carrying value as
at April 1, 2018

445

19

73

26

27

590

Reclassified from assets held for sale (Refer to Note 2.1.2)

157

388

1

37

583

Additions / adjustments

9

9

Acquisition through business combination (Refer to Note 2.1.1)

334

36

62

432

Deletions / adjustments during the period

Translation difference

1

25

(6)

20

Gross carrying value as at March 31, 2019

937

441

1

73

99

83

1,634

Accumulated amortization as at April 1, 2018

(289)

(19)

(10)

(12)

(13)

(343)

Reclassified from assets held for sale (Refer to Note 2.1.2)

(56)

(182)

(1)

(21)

(260)

Amortization expense

(112)

(90)

(2)

(10)

(15)

(229)

Reduction in value
(Refer to Note 2.1.2)

(93)

(93)

Deletion / adjustments during the period

Translation differences

(7)

(11)

1

(1)

(18)

Accumulated amortization as at March 31, 2019

(557)

(302)

(1)

(11)

(44)

(28)

(943)

Carrying value as at April 1, 2018

156

63

14

14

247

Carrying value as at
March 31, 2019

380

139

62

55

55

691

Estimated useful life (in years)

1-10

3-8

50

5-10

3-5

Estimated remaining useful life
(in years)

0-7

1

43

2-8

2-3

The changes in the carrying value of acquired intangible assets for the year ended March 31, 2018 were as follows :

in crore

Particulars

Customer -related

Software -related

Sub-contracting rights -related

Intellectual property rights -related

Land use rights -related

Brand or trademark -related

Others

Total

Gross carrying value as at
April 1, 2017

750

405

21

1

66

90

62

1,395

Acquisition through business combination (Refer to Note 2.1.1)

12

12

Deletions / retirals during the period

(172)

(21)

(29)

(35)

(257)

Reclassified under assets held for sale (Refer to Note 2.1.2)

(157)

(388)

(1)

(37)

(583)

Translation difference

12

2

7

2

23

Gross carrying value as at
March 31, 2018

445

19

73

26

27

590

Accumulated amortization as at April 1, 2017

(382)

(121)

(21)

(1)

(7)

(49)

(38)

(619)

Amortization expense

(127)

(79)

(1)

(12)

(10)

(229)

Deletion / retirals during the period

172

21

29

35

257

Reclassified under assets held for sale (Refer to Note 2.1.2)

56

182

1

21

260

Translation differences

(8)

(1)

(2)

(1)

(12)

Accumulated amortization as at March 31, 2018

(289)

(19)

(10)

(12)

(13)

(343)

Carrying value as at April 1, 2017

368

284

59

41

24

776

Carrying value as at
March 31, 2018

156

63

14

14

247

Estimated useful life (in years)

2-10

50

5

5

Estimated remaining useful life
(in years)

1-5

43

3

3

The amortization expense has been included under depreciation and amortization expense in the Consolidated Statement of Profit and Loss.

Research and development expenditure

Research and development expense recognized in net profit in the Consolidated Statement of Profit and Loss for the years ended March 31, 2019 and March 31, 2018 was 769 crore and 748 crore, respectively.

2.4 Investments

in crore

Particulars

As at March 31,

2019

2018

Non-current

Unquoted

Investments carried at fair value through other comprehensive income (Refer to Note 2.4.1)

Preference securities

89

116

Equity instruments

11

22

100

138

Investments carried at fair value through profit and loss (Refer to Note 2.4.1)

Convertible promissory note

12

Preference securities

23

Others

16

66

39

78

Quoted

Investments carried at amortized cost (Refer to Note 2.4.2)

Tax-free bonds

1,893

1,896

1,893

1,896

Investments carried at fair value through profit and loss (Refer to Note 2.4.3)

Fixed maturity plan securities

458

429

458

429

Investments carried at fair value through other comprehensive income (Refer to Note 2.4.4)

Non-convertible debentures

1,420

3,215

Government securities

724

2,144

3,215

Total non-current investments

4,634

5,756

Current

Unquoted

Investments carried at fair value through profit or loss (Refer to Note 2.4.3)

Liquid mutual fund units

1,786

81

1,786

81

Investments carried at fair value through other comprehensive income

Commercial paper (Refer to Note 2.4.4)

495

293

Certificates of deposit (Refer to Note 2.4.4)

2,482

5,269

2,977

5,562

Quoted

Investment carried at amortized cost (Refer to Note 2.4.2)

Government bonds

18

1

18

1

Investments carried at fair value through other comprehensive income (Refer to Note 2.4.4)

Non-convertible debentures

1,846

763

1,846

763

Total current investments

6,627

6,407

Total investments

11,261

12,163

Aggregate amount of quoted investments

6,359

6,304

Market value of quoted investments (including interest accrued)

6,573

6,568

Aggregate amount of unquoted investments

4,902

5,859

Aggregate amount of impairment made for non-current unquoted investments (including investment in associate)

71

Investments carried at amortized cost

1,911

1,897

Investments carried at fair value through other comprehensive income

7,067

9,678

Investments carried at fair value through profit or loss

2,283

588

Note : Uncalled capital commitments outstanding as at March 31, 2019 and March 31, 2018 was 86 crore and 81 crore, respectively.

Refer to Note 2.10 for accounting policy on financial Instruments.

The details of amounts recorded in other comprehensive income during the years ended March 31, 2019 and March 31, 2018 are as follows :

in crore

Year ended March 31, 2019

Year ended March 31, 2018

Gross

Tax

Net

Gross

Tax

Net

Net gain / (loss) on

Non-convertible debentures

1

1

(13)

2

(11)

Certificates of deposit

(5)

2

(3)

16

(6)

10

Government securities

5

(1)

4

Equity and preference securities

63

7

70

4

3

7

Method of fair valuation :

in crore

Class of investment

Method

Fair value as at March 31,

2019

2018

Liquid mutual fund units

Quoted price

1,786

81

Fixed maturity plan securities

Market observable inputs

458

429

Tax-free bonds and government bonds

Quoted price and market observable inputs

2,125

2,151

Non-convertible debentures

Quoted price and market observable inputs

3,266

3,978

Government securities

Quoted price and market observable inputs

724

Commercial papers

Market observable inputs

495

293

Certificate of deposits

Market observable inputs

2,482

5,269

Unquoted equity and preference securities – carried at fair value through other comprehensive income

Discounted cash flows method, Market multiples method, Option pricing model, etc.

100

138

Unquoted equity and preference securities - carried at fair value through profit and loss

Discounted cash flows method, Market multiples method, Option pricing model, etc.

23

Unquoted convertible promissory note

Discounted cash flows method, Market multiples method, Option pricing model, etc.

12

Others

Discounted cash flows method, Market multiples method, Option pricing model, etc.

16

66

Total

11,475

12,417

Note : Certain quoted investments are classified as Level 2 in the absence of active market for such investments.

2.4.1 Details of investments

The details of investments in preference, equity and other instruments at March 31, 2019 and March 31, 2018 are as follows :

in crore, except otherwise stated

Particulars

As at March 31,

2019

2018

Preference securities

Airviz Inc.

3

6

2,82,279 (2,82,279) Series A Preferred Stock, fully paid up, par value USD 0.001 each

Whoop Inc

14

20

16,48,352 (16,48,352) Series B Preferred Stock, fully paid up, par value USD 0.0001 each

CloudEndure Ltd.

26

25,59,290 (25,59,290) Series B Preferred Shares, fully paid up, par value ILS 0.01 each

Nivetti Systems Private Limited

10

10

2,28,501 (2,28,501) Preferred Stock, fully paid up, par value 1 each

Waterline Data Science, Inc

25

23

39,33,910 (39,33,910) Series B Preferred Shares, fully paid up, par value USD 0.00001 each

13,35,707 (Nil) Series C Preferred Shares, fully paid up, par value USD 0.00001 each

Trifacta Inc.

27

21

11,80,358 (11,80,358) Series C-1 Preferred Stock

Tidalscale

23

36,74,269 (Nil) Series B Preferred Stock

Ideaforge

10

10

5,402 (5,402) Series A compulsorily convertible cumulative Preference shares of 10 each, fully paid up

Total investment in preference securities

112

116

Equity instruments

Merasport Technologies Private Limited

2,420 (2,420) equity shares at 8,052 each, fully paid up, par value 10 each

Global Innovation and Technology Alliance

1

1

15,000 (15,000) equity shares at 1,000 each, fully paid up, par value 1,000 each

Unsilo A/S

10

21

69,894 (69,894) equity shares, fully paid up, par value DKK 1 each

Ideaforge

100 (100) equity shares at 10, fully paid up

Total investment in equity instruments

11

22

Others

Stellaris Venture Partners India

16

7

Vertex Ventures US Fund L.L.P

59

Total investment in others

16

66

Convertible promissory note

Tidalscale(1)

12

Total investment in convertible promissory note

12

Total

139

216

(1) During the quarter ended September 30, 2018; Investment in convertible promissory note of Tidalscale was converted into Series B Preferred Stock.

2.4.2 Details of investments in tax-free bonds and government bonds

The balances held in tax-free bonds as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face value

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

7.04% Indian Railway Finance Corporation Limited Bonds 03MAR2026

10,00,000

470

50

470

50

7.16% Power Finance Corporation Limited Bonds 17JUL2025

10,00,000

1,000

105

1,000

106

7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023

1,000

20,00,000

201

20,00,000

201

7.28% Indian Railway Finance Corporation Limited Bonds 21DEC2030

1,000

4,22,800

42

4,22,800

42

7.28% National Highways Authority of India Limited Bonds 18SEP2030

10,00,000

3,300

342

3,300

343

7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028

1,000

21,00,000

210

21,00,000

211

7.35% National Highways Authority of India Limited Bonds 11JAN2031

1,000

5,71,396

57

5,71,396

57

7.93% Rural Electrification Corporation Limited Bonds 27MAR2022

1,000

2,00,000

21

2,00,000

21

8.00% Indian Railway Finance Corporation Limited Bonds 23FEB2022

1,000

1,50,000

15

1,50,000

15

8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027

1,000

5,00,000

52

5,00,000

52

8.20% Power Finance Corporation Limited Bonds 01FEB2022

1,000

5,00,000

50

5,00,000

50

8.26% India Infrastructure Finance Company Limited Bonds 23AUG2028

10,00,000

1,000

100

1,000

100

8.30% National Highways Authority of India Limited Bonds 25JAN2027

1,000

5,00,000

53

5,00,000

53

8.35% National Highways Authority of India Limited Bonds 22NOV2023

10,00,000

1,500

150

1,500

150

8.46% India Infrastructure Finance Company Limited Bonds 30AUG2028

10,00,000

2,000

200

2,000

200

8.46% Power Finance Corporation Limited Bonds 30AUG2028

10,00,000

1,500

150

1,500

150

8.48% India Infrastructure Finance Company Limited Bonds 05SEP2028

10,00,000

450

45

450

45

8.54% Power Finance Corporation Limited Bonds 16NOV2028

1,000

5,00,000

50

5,00,000

50

Total investments in tax-free bonds

74,55,416

1,893

74,55,416

1,896

The balances held in government bonds as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face Value PHP

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

Treasury Notes Philippines Govt. 29MAY2019

100

45,000

6

Treasury Notes PIBL1217E082 MAT DATE 09 May 2018

100

1,00,000

1

Treasury Notes Philippines Govt. 17APRIL2019

100

90,000

12

Total investments in government bonds

1,35,000

18

1,00,000

1

2.4.3 Details of investments in liquid mutual fund units and fixed maturity plans

The balances held in liquid mutual fund units as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

Aditya Birla Sun Liquid Fund – Growth-Direct Plan

13,32,847

40

16,31,554

45

Aditya Birla Sun Life Corporate Bond Fund – Growth – Direct Plan

1,96,00,407

141

Aditya Birla Sun Life Money Manager Fund – Growth – Direct Plan

79,75,385

201

BSL Cash Manager – Growth

1,11,344

5

HDFC Money Market Fund – Direct Plan – Growth Option

7,72,637

303

HDFC Liquid fund-Direct Plan growth option

68,035

25

ICICI Prudential Liquid – Direct plan – Growth

13,65,687

36

ICICI Prudential Savings Fund – Direct Plan-Growth

83,40,260

301

IDFC Corporate Bond – Fund Direct Plan

13,14,84,437

169

Kotak Money Market Fund – Direct Plan – Growth Option

9,73,751

301

SBI Premier Liquid Fund – Direct Plan – Growth

10,25,678

300

Total investments in liquid mutual fund units

17,16,84,781

1,786

29,97,241

81

The balances held in fixed maturity plans as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

Aditya Birla Sun Life Fixed Term Plan – Series OD 1145 Days – GR Direct

6,00,00,000

70

6,00,00,000

65

Aditya Birla Sun Life Fixed Term Plan – Series OE 1153 Days – GR Direct

2,50,00,000

29

2,50,00,000

27

HDFC FMP 1155D Feb 2017 – Direct Growth – Series 37

3,80,00,000

44

3,80,00,000

41

HDFC FMP 1169D Feb 2017– Direct – Quarterly Dividend – Series 37

4,50,00,000

45

4,50,00,000

45

ICICI FMP Series 80 – 1194 D Plan F Div

5,50,00,000

63

5,50,00,000

59

ICICI Prudential Fixed Maturity Plan Series 80 – 1187 Days Plan G Direct Plan

4,20,00,000

49

4,20,00,000

45

ICICI Prudential Fixed Maturity Plan Series 80 – 1253 Days Plan J Direct Plan

3,00,00,000

35

3,00,00,000

32

IDFC Fixed Term Plan Series 129 Direct Plan – Growth 1147 Days

1,00,00,000

12

1,00,00,000

11

IDFC Fixed Term Plan Series 131 Direct Plan – Growth 1139 Days

1,50,00,000

17

1,50,00,000

16

Kotak FMP Series 199 Direct – Growth

3,50,00,000

40

3,50,00,000

37

Reliance Fixed Horizon Fund – XXXII Series 8 – Dividend Plan

5,00,00,000

54

5,00,00,000

51

Total investments in fixed maturity plan securities

40,50,00,000

458

40,50,00,000

429

2.4.4 Details of investments in non-convertible debentures, government securities, certificates of deposit and commercial paper

The balances held in non-convertible debenture units as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face value

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

7.48% Housing Development Finance Corporation Ltd 18NOV2019

1,00,00,000

50

51

50

51

7.58% LIC Housing Finance Ltd 28FEB2020

10,00,000

1,000

101

1,000

101

7.58% LIC Housing Finance Ltd 11JUN2020

10,00,000

500

51

500

52

7.59% LIC Housing Finance Ltd 14OCT2021

10,00,000

3,000

306

3,000

306

7.75% LIC Housing Finance Ltd 27AUG2021

10,00,000

1,250

127

1,250

129

7.78% Housing Development Finance Corporation Ltd 24MAR2020

1,00,00,000

100

100

100

99

7.79% LIC Housing Finance Ltd 19JUN2020

10,00,000

500

53

500

53

7.80% Housing Development Finance Corporation Ltd 11NOV2019

1,00,00,000

150

154

150

153

7.81% LIC Housing Finance Ltd 27APR2020

10,00,000

2,000

214

2,000

214

7.95% Housing Development Finance Corporation Ltd 23SEP2019

1,00,00,000

50

52

50

53

8.02% LIC Housing Finance Ltd 18FEB2020

10,00,000

500

51

500

50

8.26% Housing Development Finance Corporation Ltd 12AUG2019

1,00,00,000

100

105

100

105

8.34% Housing Development Finance Corporation Ltd 06MAR2019

1,00,00,000

200

215

8.37% LIC Housing Finance Ltd 03OCT2019

10,00,000

2,000

216

2,000

216

8.37% LIC Housing Finance Ltd 10MAY2021

10,00,000

500

54

500

54

8.46% Housing Development Finance Corporation Ltd 11MAR2019

1,00,00,000

50

54

8.47% LIC Housing Finance Ltd 21JAN2020

10,00,000

500

51

500

51

8.49% Housing Development Finance Corporation Ltd 27APR2020

5,00,000

900

49

900

49

8.50% Housing Development Finance Corporation Ltd 31AUG2020

1,00,00,000

100

105

100

108

8.54% IDFC Bank Ltd 30MAY2018

10,00,000

1,500

194

8.59% Housing Development Finance Corporation Ltd 14JUN2019

1,00,00,000

50

51

50

51

8.60% LIC Housing Finance Ltd 22JUL2020

10,00,000

1,000

107

1,000

107

8.60% LIC Housing Finance Ltd 29JUL2020

10,00,000

1,750

186

1,750

188

8.61% LIC Housing Finance Ltd 11DEC2019

10,00,000

1,000

103

1,000

104

8.66% IDFC Bank Ltd 25JUN2018

10,00,000

1,520

196

8.66% IDFC Bank Ltd 27DEC2018

10,00,000

400

52

8.72% Housing Development Finance Corporation Ltd 15APR2019

1,00,00,000

75

75

75

76

8.75% Housing Development Finance Corporation Ltd 13JAN2020

5,00,000

5,000

256

5,000

256

8.75% LIC Housing Finance Ltd 14JAN2020

10,00,000

1,070

110

1,070

112

8.75% LIC Housing Finance Ltd 21DEC2020

10,00,000

1,000

101

1,000

102

8.80% LIC Housing Finance Ltd 24Dec2020

10,00,000

650

67

8.97% LIC Housing Finance Ltd 29OCT2019

10,00,000

500

52

500

52

9.45% Housing Development Finance Corporation Ltd 21AUG2019

10,00,000

3,000

318

3,000

323

9.65% Housing Development Finance Corporation Ltd 19JAN2019

10,00,000

500

52

Total investments in non-convertible debentures

28,295

3,266

31,815

3,978

The balances held in government securities as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face value

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

7.17% Government of India 8JAN2028

10,000

6,75,000

672

7.95% Government of India 28AUG2032

10,000

50,000

52

Total investments in government securities

7,25,000

724

The balances held in certificates of deposit as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face value

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

Axis Bank

1,00,000

90,000

872

2,08,000

1,985

HDFC Bank

1,00,000

15,000

147

ICICI Bank

1,00,000

75,000

738

1,26,000

1,186

IndusInd Bank

1,00,000

1,35,000

1,271

Kotak Bank

1,00,000

77,000

747

70,000

680

Vijaya Bank

1,00,000

12,500

125

Total investments in certificates of deposit

2,54,500

2,482

5,54,000

5,269

The balances held in commercial paper as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as otherwise stated

Particulars

Face value

As at March 31, 2019

As at March 31, 2018

Units

Amount

Units

Amount

LIC

5,00,000

10,000

495

6,000

293

Total investments in commercial paper

10,000

495

6,000

293

2.5 Loans

in crore

Particulars

As at March 31,

2019

2018

Non-current

Unsecured, considered good

Other loans

Loans to employees

19

36

19

36

Unsecured, considered doubtful

Other loans

Loans to employees

24

17

43

53

Less : Allowance for doubtful loans to employees

24

17

Total non-current loans

19

36

Current

Unsecured, considered good

Other loans

Loans to employees

241

239

Total current loans

241

239

Total loans

260

275

2.6 Other financial assets

in crore

Particulars

As at March 31,

2019

2018

Non-current

Security deposits(1)

52

53

Rental deposits(1)

193

171

Restricted deposits(1)

67

60

Total non-current other financial assets

312

284

Current

Security deposits(1)

4

9

Rental deposits(1)

15

13

Restricted deposits(1)*

1,671

1,535

Unbilled revenues(1)#

2,093

4,261

Interest accrued but not due(1)

905

766

Foreign currency forward and options contracts(2)(3)

336

16

Escrow and other deposits pertaining to buyback
(Refer to Note 2.11)(1)

257

Others(1)

224

84

Total current other financial assets

5,505

6,684

Total other financial assets

5,817

6,968

(1) Financial assets carried at amortized cost

5,481

6,952

(2) Financial assets carried at fair value through other comprehensive income

37

12

(3) Financial assets carried at fair value through profit or loss

299

4

* Restricted deposits represent deposits with financial institutions to settle employee-related obligations as and when they arise during the normal course of business.

# Classified as financial asset as right to consideration is unconditional upon passage of time

2.7 Trade receivables

in crore

Particulars

As at March 31,

2019

2018

Current

Unsecured

Considered good(1)

14,827

13,142

Considered doubtful

483

354

15,310

13,496

Less : Allowance for credit loss

483

354

Total trade receivables

14,827

13,142

(1) Includes dues from companies where directors are interested

2.8 Cash and cash equivalents

in crore

Particulars

As at March 31,

2019

2018

Balances with banks

In current and deposit accounts

14,197

13,168

Cash on hand

Others

Deposits with financial institutions

5,371

6,650

Total cash and cash equivalents

19,568

19,818

Cash and cash equivalents included under assets classified under ‘Held for Sale’
(Refer to Note 2.1.2)

53

19,568

19,871

Balances with banks in unpaid dividend accounts

29

22

Deposit with more than 12 months maturity

6,582

6,332

Balances with banks held as margin money deposits against guarantees

114

356

Cash and cash equivalents as at March 31, 2019 and March 31, 2018 include restricted cash and bank balances of 358 crore and 533 crore, respectively. The restrictions are primarily on account of bank balances held by irrevocable trusts controlled by the Company, bank balances held as margin money deposits against guarantees.

The deposits maintained by the Group with banks and financial institutions comprise time deposits, which can be withdrawn by the Group at any point without prior notice or penalty on the principal.

The details of balances as on Balance Sheet dates with banks are as follows :

in crore

Particulars

As at March 31,

2019

2018

Current accounts

ANZ Bank, Taiwan

1

9

Axis Bank, India

1

Banamex Bank, Mexico

8

2

Banamex Bank, Mexico
(US Dollar account)

27

13

Bank of America, Mexico

102

25

Bank of America, USA

1,162

1,172

Bank of Baroda, Mauritius

1

1

Bank of Leumni , Israel

6

Bank of Tokyo-Mitsubishi UFJ Ltd., Japan

1

1

Bank Zachodni WBK S.A, Poland

17

Barclays Bank, UK

39

40

BNP Paribas Bank, Norway

24

88

China Merchants Bank, China

2

6

Citibank N.A., Australia

91

223

Citibank N.A., Brazil

31

14

Citibank N.A., China

65

116

Citibank N.A., China
(US Dollar account)

14

9

Citibank N.A., Costa Rica

1

1

Citibank N.A., Dubai

10

6

Citibank N.A., EEFC
(US Dollar account)

2

4

Citibank N.A., Europe

1

Citibank N.A., Hungary

1

6

Citibank N.A., India

2

2

Citibank N.A., Japan

22

18

Citibank N.A., New Zealand

3

11

Citibank N.A., Portugal

10

8

Citibank N.A., Romania

1

2

Citibank N.A., Singapore

77

4

Citibank N.A., South Africa

18

33

Citibank N.A., South Africa (Euro account)

1

1

Citibank N.A., South Korea

17

2

Citibank N.A., USA

8

4

Citibank N.A., Luxembourg

4

Commercial Bank, Germany

1

Danske Bank, Sweden

1

1

Deutsche Bank, Belgium

16

27

Deutsche Bank, Czech Republic

20

16

Deutsche Bank, Czech Republic (Euro account)

6

3

Deutsche Bank, Czech Republic (US Dollar account)

24

2

Deutsche Bank, EEFC (Australian Dollar account)

3

2

Deutsche Bank, EEFC
(Euro account)

23

34

Deutsche Bank, EEFC
(Swiss Franc account)

5

2

Deutsche Bank, EEFC
(US Dollar account)

217

32

Deutsche Bank, EEFC
(United Kingdom Pound Sterling account)

8

9

Deutsche Bank, France

20

19

Deutsche Bank, Germany

111

100

Deutsche Bank, Hong Kong

1

1

Deutsche Bank, India

45

44

Deutsche Bank, Malaysia

1

5

Deutsche Bank, Netherlands

34

15

Deutsche Bank, Philippines

4

25

Deutsche Bank, Philippines
(US Dollar account)

1

3

Deutsche Bank, Poland

28

18

Deutsche Bank, Poland
(Euro account)

8

8

Deutsche Bank, Russia

3

3

Deutsche Bank, Russia
(US Dollar account)

5

Deutsche Bank, Singapore

15

17

Deutsche Bank, Spain

1

1

Deutsche Bank, Switzerland

33

29

Deutsche Bank, United Kingdom

42

79

Deutsche Bank, USA

61

2

Deutsche Bank, Switzerland
(US Dollar account)

1

HSBC Bank,
(US Dollar account)

1

Hua Xia Bank, RMB

1

HSBC Bank, Dubai

2

HSBC Bank, Hong Kong

1

2

HSBC Bank, United Kingdom

19

6

HSBC Bank, India

3

ICICI Bank, EEFC
(Euro account)

7

1

ICICI Bank, EEFC
(US Dollar account)

34

40

ICICI Bank, EEFC
(United Kingdom Pound Sterling account)

6

11

ICICI Bank, India

42

52

Nordbanken, Sweden

45

50

Nordea

17

Punjab National Bank, India

2

12

Kotak Bank

5

Raiffeisen Bank, Czech Republic

5

Raiffeisen Bank, Romania

3

Royal Bank of Canada, Canada

136

166

Santander Bank, Argentina

1

Silicon Valley Bank, USA

13

Splitska Banka D.D., Société Générale Group, Croatia

14

8

State Bank of India, India

3

1

The Saudi British Bank, Saudi Arabia

3

3

Washington Trust Bank

48

2,886

2,703

Deposit accounts

Axis Bank

925

Bank BGZ BNP Paribas S.A.

235

144

Barclays Bank

500

200

Canara Bank

85

84

Citibank

176

224

Deutsche Bank, AG

24

Deutsche Bank, Poland

126

211

HDFC Bank

50

2,498

HSBC Bank

200

ICICI Bank

3,177

3,497

IDBI Bank

250

IDFC Bank

2,450

1,500

IndusInd Bank

550

1,000

Kotak Mahindra Bank

500

South Indian Bank

173

450

Standard Chartered Bank

2,000

Washington trust bank

21

Yes Bank

5

11,168

10,087

Unpaid dividend accounts

Axis Bank – Unpaid dividend account

4

1

HDFC Bank – Unpaid dividend account

1

ICICI Bank – Unpaid dividend account

25

20

29

22

Margin money deposits against guarantees

Canara Bank

45

151

Citibank

3

ICICI Bank

69

202

114

356

Deposits with financial institutions

HDFC Limited

4,146

5,450

LIC Housing Finance Limited

1,225

1,200

5,371

6,650

Total cash and cash equivalents

19,568

19,818

2.9 Other assets

in crore

Particulars

As at March 31,

2019

2018

Non-current

Capital advances

489

421

Advances other than capital advances

Prepaid gratuity
(Refer to Note 2.20.1)

42

43

Others

Withholding taxes and others

929

1,428

Prepaid expenses

162

111

Deferred contract cost

277

262

Advance for business acquisition
(Refer to Note 2.1.1)

206

Total non-current other assets

2,105

2,265

Current

Advances other than capital advances

Payment to vendors for supply of goods

109

119

Others

Unbilled revenues(1)

3,281

Withholding taxes and others

1,488

1,032

Prepaid expenses

751

472

Deferred contract cost

58

44

Total current other assets

5,687

1,667

Total other assets

7,792

3,932

(1) Classified as non-financial asset as the contractual right to consideration is dependent on completion of contractual milestones.

Deferred contract costs are upfront costs incurred for the contract and are amortized over the term of the contract. Withholding taxes and others primarily consist of input tax credits and Cenvat recoverable from the Government of India. Cenvat recoverable includes 523 crore which is pending adjudication. The Group expects these amounts to be sustainable on adjudication and recoverable on final resolution.

2.10 Financial instruments

Accounting policy

2.10.1 Initial recognition

The Group recognizes financial assets and financial liabilities when it becomes a party to the contractual provisions of the instrument. All financial assets and liabilities are recognized at fair value on initial recognition, except for trade receivables which are initially measured at transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities, that are not at fair value through profit or loss, are added to the fair value on initial recognition. Regular way purchase and sale of financial assets are accounted for at trade date.

2.10.2 Subsequent measurement

a. Non-derivative financial instruments

(i) Financial assets carried at amortized cost

A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

(ii) Financial assets at fair value through other comprehensive income (FVOCI)

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. The Group has made an irrevocable election for its investments which are classified as equity instruments to present the subsequent changes in fair value in other comprehensive income based on its business model.

(iii) Financial assets at fair value through profit or loss

A financial asset which is not classified in any of the above categories is subsequently fair valued through profit or loss.

(iv) Financial liabilities

Financial liabilities are subsequently carried at amortized cost using the effective interest method, except for contingent consideration recognized in a business combination which is subsequently measured at fair value through profit or loss. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate the fair value due to the short maturity of these instruments.

b. Derivative financial instruments

The Group holds derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank.

(i) Financial assets or financial liabilities, at fair value through profit or loss.

This category has derivative financial assets or liabilities which are not designated as hedges.

Although the Group believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, Financial Instruments. Any derivative that is either not designated as hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the Consolidated Statement of Profit and Loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets / liabilities in this category are presented as current assets / current liabilities if they are either held for trading or are expected to be realized within 12 months after the Balance Sheet date.

(ii) Cash flow hedge

The Group designates certain foreign exchange forward and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions.

When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the derivative is recognized in other comprehensive income and accumulated in the cash flow hedging reserve. Any ineffective portion of changes in the fair value of the derivative is recognized immediately in the net profit in the Consolidated Statement of Profit and Loss. If the hedging instrument no longer meets the criteria for hedge accounting, then hedge accounting is discontinued prospectively. If the hedging instrument expires or is sold, terminated or exercised, the cumulative gain or loss on the hedging instrument recognized in cash flow hedging reserve till the period the hedge was effective remains in cash flow hedging reserve until the forecasted transaction occurs. The cumulative gain or loss previously recognized in the cash flow hedging reserve is transferred to the net profit in the Consolidated Statement of Profit and Loss upon the occurrence of the related forecasted transaction. If the forecasted transaction is no longer expected to occur, then the amount accumulated in cash flow hedging reserve is reclassified to net profit in the Consolidated Statement of Profit and Loss.

c. Share capital and treasury shares

(i) Ordinary shares

Ordinary shares are classified as equity. Incremental costs directly attributable to the issuance of new ordinary shares and share options and buyback of ordinary shares are recognized as a deduction from equity, net of any tax effects.

(ii) Treasury shares

When any entity within the Group purchases the Company’s ordinary shares, the consideration paid including any directly attributable incremental cost, is presented as a deduction from total equity, until they are cancelled, sold or reissued. When treasury shares are sold or reissued subsequently, the amount received is recognized as an increase in equity, and the resulting surplus or deficit on the transaction is transferred to / from share premium.

2.10.3 Derecognition of financial instruments

The Group derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109. A financial liability (or a part of a financial liability) is derecognized from the Group’s Balance Sheet when the obligation specified in the contract is discharged or cancelled or expires.

2.10.4 Fair value of financial instruments

In determining the fair value of its financial instruments, the Group uses a variety of methods and assumptions that are based on market conditions and risks existing at each reporting date. The methods used to determine fair value include discounted cash flow analysis, available quoted market prices and dealer quotes. All methods of assessing fair value result in general approximation of value, and such value may never actually be realized.

Refer to the table, ‘Financial instruments by category’, below for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximates fair value due to the short maturity of those instruments.

2.10.5 Impairment

The Group recognizes loss allowances using the expected credit loss (ECL) model for the financial assets and unbilled revenue which are not fair valued through profit or loss. Loss allowance for trade receivables and unbilled revenues with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets, ECLs are measured at an amount equal to the 12-month ECL, unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of ECLs (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognized is recognized as an impairment gain or loss in Consolidated Statement of Profit and Loss.

Financial instruments by category

The carrying value and fair value of financial instruments by categories as at March 31, 2019 are as follows :

in crore

Particulars

Amortized cost

Financial assets / liabilities at fair value through profit or loss

Financial assets /liabilities at fair value through OCI

Total carrying value

Total fair value

Designated upon initial recognition

Mandatory

Equity instruments designated upon initial recognition

Mandatory

Assets

Cash and cash equivalents
(Refer to Note 2.8)

19,568

19,568

19,568

Investments (Refer to Note 2.4)

Equity and preference securities

23

100

123

123

Tax-free bonds and government bonds

1,911

1,911

(1)2,125

Liquid mutual fund units

1,786

1,786

1,786

Non-convertible debentures

3,266

3,266

3,266

Government securities

724

724

724

Commercial paper

495

495

495

Certificates of deposit

2,482

2,482

2,482

Other investments

16

16

16

Fixed maturity plan securities

458

458

458

Trade receivables (Refer to Note 2.7)

14,827

14,827

14,827

Loans (Refer to Note 2.5)

260

260

260

Other financials assets
(Refer to Note 2.6)(3)

5,481

299

37

5,817

(2)5,733

Total

42,047

2,582

100

7,004

51,733

51,863

Liabilities

Trade payables

1,655

1,655

1,655

Other financial liabilities
(Refer to Note 2.12)

8,731

205

8,936

8,936

Total

10,386

205

10,591

10,591

(1) On account of fair value changes including interest accrued

(2) Excludes interest accrued on tax-free bonds and government bonds

(3) Excludes unbilled revenue for fixed-price development contracts where right to consideration is conditional on factors other than passage of time

The carrying value and fair value of financial instruments by categories as at March 31, 2018 were as follows :

in crore

Particulars

Amortized cost

Financial assets / liabilities at fair value through profit or loss

Financial assets / liabilities at fair value through OCI

Total carrying value

Total fair value

Designated upon initial recognition

Mandatory

Equity instruments designated upon initial recognition

Mandatory

Assets

Cash and cash equivalents
(Refer to Note 2.8)

19,818

19,818

19,818

Investments (Refer to Note 2.4)

Equity and preference securities

138

138

138

Tax-free bonds and government bonds

1,897

1,897

(1)2,151

Liquid mutual fund units

81

81

81

Non-convertible debentures

3,978

3,978

3,978

Certificates of deposit

5,269

5,269

5,269

Commercial paper

293

293

293

Convertible promissory note

12

12

12

Other investments

66

66

66

Fixed maturity plan securities

429

429

429

Trade receivables (Refer to Note 2.7)

13,142

13,142

13,142

Loans (Refer to Note 2.5)

275

275

275

Other financial assets
(Refer to Note 2.6)

6,952

4

12

6,968

(2)6,884

Total

42,084

592

138

9,552

52,366

52,536

Liabilities

Trade payables

694

694

694

Other financial liabilities
(Refer to Note 2.12)

5,442

93

3

5,538

5,538

Total

6,136

93

3

6,232

6,232

(1) On account of fair value changes including interest accrued

(2) Excludes interest accrued on tax-free bonds and government bonds

Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as at March 31, 2019 is as follows :

in crore

Particulars

As at March 31, 2019

Fair value measurement at end of the reporting period using

Level 1

Level 2

Level 3

Assets

Investments in liquid mutual funds (Refer to Note 2.4)

1,786

1,786

Investments in tax-free bonds (Refer to Note 2.4)

2,107

1,836

271

Investments in government bonds (Refer to Note 2.4)

18

18

Investments in equity instruments (Refer to Note 2.4)

11

11

Investments in preference securities (Refer to Note 2.4)

112

112

Investments in non-convertible debentures (Refer to Note 2.4)

3,266

1,780

1,486

Investments in certificates of deposit (Refer to Note 2.4)

2,482

2,482

Investment in government securities

724

724

Investments in fixed maturity plan securities (Refer to Note 2.4)

458

458

Investment in commercial paper

495

495

Other investments (Refer to Note 2.4)

16

16

Derivative financial instruments - gain on outstanding foreign currency forward and options contracts (Refer to Note 2.6)

336

336

Liabilities

Derivative financial instruments - loss on outstanding foreign currency forward and options contracts (Refer to Note 2.12)

15

15

Liability towards contingent consideration (Refer to Note 2.12)(1)

190

190

(1) Discount rate pertaining to contingent consideration ranges from 9% to 16%.

During the year ended March 31, 2019, tax-free bonds and non-convertible debentures of 336 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and 746 crore was transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.

The fair value hierarchy of assets and liabilities as at March 31, 2018 was as follows :

in crore

Particulars

As at March 31, 2018

Fair value measurement at end of the reporting period using

Level 1

Level 2

Level 3

Assets

Investments in liquid mutual funds (Refer to Note 2.4)

81

81

Investments in tax-free bonds (Refer to Note 2.4)

2,150

1,878

272

Investments in government bonds (Refer to Note 2.4)

1

1

Investments in equity instruments (Refer to Note 2.4)

22

22

Investments in preference securities (Refer to Note 2.4)

116

116

Investments in non-convertible debentures (Refer to Note 2.4)

3,978

2,695

1,283

Investments in certificates of deposit (Refer to Note 2.4)

5,269

5,269

Investments in commercial paper (Refer to Note 2.4)

293

293

Investments in fixed maturity plan securities (Refer to Note 2.4)

429

429

Investments in convertible promissory note (Refer to Note 2.4)

12

12

Other investments (Refer to Note 2.4)

66

66

Derivative financial instruments - gain on outstanding foreign currency forward and options contracts (Refer to Note 2.6)

16

16

Liabilities

Derivative financial instruments - loss on outstanding foreign currency forward and options contracts (Refer to Note 2.12)

42

42

Liability towards contingent consideration (Refer to Note 2.12)(1)

54

54

(1) Discounted contingent consideration at 10%

During the year ended March 31, 2018, tax-free bonds and non-convertible debentures of 1,797 crore were transferred from Level 2 to Level 1 of fair value hierarchy, since these were valued based on quoted price and 850 crore was transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.

A one percentage point change in the unobservable inputs used in fair valuation of Level 3 assets and liabilities does not have a significant impact in its value.

Financial risk management

Financial risk factors

The Group’s activities expose it to a variety of financial risks : market risk, credit risk and liquidity risk. The Group’s primary focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the Group is foreign exchange risk. The Group uses derivative financial instruments to mitigate foreign exchange-related risk exposures. The Group’s exposure to credit risk is influenced mainly by the individual characteristic of each customer and the concentration of risk from the top few customers.

Market risk

The Group operates internationally and a major portion of the business is transacted in several currencies and consequently the Group is exposed to foreign exchange risk through its sales and services in the US and elsewhere, and purchases from overseas suppliers in various foreign currencies. The Group holds derivative financial instruments such as foreign exchange forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The exchange rate between the Indian rupee and foreign currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of the Group’s operations are adversely affected as the rupee appreciates / depreciates against these currencies.

The foreign currency risk from monetary assets and liabilities as at March 31, 2019 is as follows :

in crore

Particulars

USD

Euro

GBP

AUD

Other currencies

Total

Cash and cash equivalents

1,640

266

110

213

1,113

3,342

Trade receivables

9,950

1,844

1,025

527

971

14,317

Other financial assets , loans and other current assets

4,189

873

285

310

748

6,405

Trade payables

(708)

(128)

(139)

(80)

(107)

(1,162)

Other financial liabilities

(4,201)

(560)

(217)

(382)

(759)

(6,119)

Net assets / (liabilities)

10,870

2,295

1,064

588

1,966

16,783

The foreign currency risk from monetary assets and liabilities as at March 31, 2018 was as follows :

in crore

Particulars

USD

Euro

GBP

AUD

Other currencies

Total

Cash and cash equivalents

1,287

218

147

353

1,192

3,197

Trade receivables

8,317

1,751

845

788

781

12,482

Other financial assets (including loans)

2,636

663

330

173

470

4,272

Trade payables

(273)

(81)

(114)

(30)

(58)

(556)

Other financial liabilities

(2,289)

(417)

(215)

(273)

(596)

(3,790)

Net assets / (liabilities)

9,678

2,134

993

1,011

1,789

15,605

Sensitivity analysis between Indian rupee and US dollar

Particulars

Year ended March 31,

2019

2018

Impact on the Group’s incremental operating margins

0.47%

0.50%

Sensitivity analysis is computed based on the changes in the income and expenses in foreign currency upon conversion into functional currency, due to exchange rate fluctuations between the previous reporting period and the current reporting period.

Derivative financial instruments

The Group holds derivative financial instruments such as foreign currency forward and options contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The counterparty for these contracts is generally a bank. These derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

The details in respect of outstanding foreign currency forward and options contracts are as follows :

Particulars

As at March 31, 2019

As at March 31, 2018

In million

In crore

In million

In crore

Derivatives designated as cash flow hedges

Options contracts

In Australian dollars

120

588

60

300

In Euro

135

1,049

100

808

In United Kingdom Pound Sterling

25

226

20

184

Other derivatives

Forward contracts

In Australian dollars

8

37

5

25

In Canadian dollars

13

68

20

99

In Euro

176

1,367

91

735

In Japanese Yen

550

34

550

34

In New Zealand Dollar

16

75

16

76

In Norwegian Krone

40

32

40

34

In Singapore Dollar

140

716

5

25

In South African Rand

25

14

In Swedish Krona

50

37

50

40

In Swiss Franc

25

172

21

146

In US Dollar

955

6,608

623

4,061

In United Kingdom Pound Sterling

80

724

51

466

Options contracts

In Australian Dollar

10

49

20

100

In Canadian Dollar

13

69

In Euro

60

466

45

363

In Swiss Franc

5

35

5

33

In US Dollar

433

2,995

320

2,086

In United Kingdom Pound Sterling

10

91

25

231

Total forward and options contracts

15,438

9,860

The foreign exchange forward and options contracts mature within 12 months.

The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as at the Balance Sheet date :

in crore

Particulars

As at March 31,

2019

2018

Not later than one month

4,432

2,828

Later than one month and not later than three months

6,921

4,568

Later than three months and not later than one year

4,085

2,464

15,438

9,860

During the year ended March 31, 2019, the Group has designated certain foreign exchange forward and option contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedges as at March 31, 2019 are expected to occur and reclassified to the statement of profit or loss within three months.

Hedge effectiveness is determined at the inception of the hedge relationship, and through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument, including whether the hedging instrument is expected to offset changes in cash flows of hedged items.

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in the statement of profit or loss at the time of the hedge relationship rebalancing.

The reconciliation of cash flow hedge reserve for the year ended March 31, 2019 is as follows :

in crore

Particulars

Year ended March 31,

2019

2018

Gain / (Loss)

Balance at the beginning of the period

39

Gain / (Loss) recognized in other comprehensive income during the period

118

(93)

Amount reclassified to profit or loss during the period

(90)

41

Tax impact on above

(7)

13

Balance at the end of the period

21

The Group offsets a financial asset and a financial liability when it currently has a legally enforceable right to set off the recognized amounts and the Group intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

The quantitative information about offsetting of derivative financial assets and derivative financial liabilities is as follows :

in crore

Particulars

As at March 31, 2019

As at March 31, 2018

Derivative financial asset

Derivative financial liability

Derivative financial asset

Derivative financial liability

Gross amount of recognized financial asset / liability

338

(17)

20

(46)

Amount set off

(2)

2

(4)

4

Net amount presented in Balance Sheet

336

(15)

16

(42)

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to 14,827 crore and 13,142 crore as at March 31, 2019 and March 31, 2018, respectively and unbilled revenues amounting to 5,374 crore and 4,261 crore as at March 31, 2019 and March 31, 2018, respectively. Trade receivables and unbilled revenues are typically unsecured and are derived from revenue earned from customers primarily located in the US. Credit risk has always been managed by the Group through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. The Group uses expected credit loss model to assess the impairment loss or gain. The Group uses a provision matrix to compute the expected credit loss allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and internal credit risk factors such as credit default swap quotes, credit ratings from international credit rating agencies and the Group’s historical experience for customers.

The details in respect of percentage of revenues generated from top customer and top 10 customers are as follows :

in %

Particulars

Year ended March 31,

2019

2018

Revenue from top customer

3.6

3.4

Revenue from top 10 customers

19.0

19.3

Credit risk exposure

The allowance for lifetime ECL on customer balances for years ended March 31, 2019 and March 31, 2018 was 239 crore and 34 crore, respectively.

The movement in credit loss allowance on customer balance is as follows :

in crore

Particulars

Year ended March 31,

2019

2018

Balance at the beginning

449

411

Impairment loss recognized

239

34

Write-offs

(73)

(5)

Reclassified from ‘Held for Sale’ (Refer to Note 2.1.2)

(1)

Translation differences

12

10

Balance at the end

627

449

Credit exposure

The Group’s credit period generally ranges from 30-60 days.

in crore

Particulars

As at March 31,

2019

2018

Trade receivables

14,827

13,142

Unbilled revenues

5,374

4,261

Days sales outstanding was 66 days and 67 days as at March 31, 2019 and March 31, 2018, respectively.

Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, fixed maturity plan securities, certificates of deposit, commercial paper, quoted bonds issued by government and quasi-government organizations and non-convertible debentures.

The Group’s principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from operations. The Group has no outstanding borrowings. The Group believes that the working capital is sufficient to meet its current requirements.

As at March 31, 2019, the Group had a working capital of 34,240 crore, including cash and cash equivalents of 19,568 crore and current investments of 6,627 crore. As at March 31, 2018, the Group had a working capital of 34,176 crore, including cash and cash equivalents of 19,818 crore and current investments of 6,407 crore.

As at March 31, 2019 and March 31, 2018, the outstanding compensated absences were 1,663 crore and 1,469 crore, respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.

Under the Company’s ongoing buyback program, the maximum buyback size is 8,260 crore. The Company has bought back shares amounting to 797 crore (including transaction costs) till March 31, 2019 (refer to Note 2.11).

The details regarding the contractual maturities of significant financial liabilities as at March 31, 2019 are as follows :

in crore

Particulars3

Less than 1 year

1-2 years

2-4 years

4-7 years

Total

Trade payables

1,655

1,655

Other financial liabilities (excluding liability towards acquisition) (Refer to Note 2.12)

8,716

11

4

8,731

Liability towards acquisitions on an undiscounted basis (including contingent consideration) (Refer to Note 2.12)

114

83

36

233

The details regarding the contractual maturities of significant financial liabilities as at March 31, 2018 were as follows :

in crore

Particulars

Less than 1 year

1-2 years

2-4 years

4-7 years

Total

Trade payables

694

694

Other financial liabilities (excluding liability towards acquisition) (Refer to Note 2.12)

5,442

5,442

Liability towards acquisitions on an undiscounted basis (including contingent consideration) (Refer to Note 2.12)

41

7

7

55

2.11 Equity

Share capital

in crore, except as otherwise stated

Particulars

As at March 31,

2019

2018

Authorized

Equity shares, 5 par value 480,00,00,000 (240,00,00,000) equity shares

2,400

1,200

Issued, subscribed and paid-up

Equity shares, 5 par value 433,59,54,462 (217,33,12,301) equity shares fully paid up(1)(2)

2,170

1,088

2,170

1,088

Note : Forfeited shares amounted to 1,500 ( 1,500)

(1) Refer to Note 2.21 for details of basic and diluted shares

(2) Net of treasury shares 2,03,24,982 (1,08,01,956)

The Company has only one class of shares referred to as equity shares having a par value of 5. Each holder of equity shares is entitled to one vote per share. The equity shares represented by American Depositary Shares (ADS) carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying equity share.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the remaining assets of the Company in proportion to the number of equity shares held by the shareholders, after distribution of all preferential amounts. However, no such preferential amounts exist currently, other than the amounts held by irrevocable controlled trusts. For irrevocable controlled trusts, the corpus would be settled in favour of the beneficiaries.

In the period of five years immediately preceding March 31, 2019 :

Bonus issue

The Company has allotted 218,41,91,490 fully-paid-up equity shares (including treasury shares) of face value 5 each during the three months ended September 30, 2018 pursuant to a bonus issue approved by the shareholders through a postal ballot. Record date fixed by the Board of Directors was September 5, 2018. The bonus shares were issued by capitalization of profits transferred from general reserve. A bonus share of one equity share for every equity share held, and a bonus issue, viz., a stock dividend of one ADS for every ADS held, respectively, have been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted under the stock option plan have been adjusted for bonus shares.

The Company has allotted 114,84,72,332 and 57,42,36,166 fully-paid-up shares of face value 5 each during the quarter ended June 30, 2015 and December 31, 2014, pursuant to the bonus issue approved by the shareholders through a postal ballot. For both the bonus issues, a bonus share of one equity share for every equity share held, and a stock dividend of one ADS for every ADS held, respectively, have been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt holder remains unchanged. Options granted under the restricted stock unit plan (RSU) have been adjusted for bonus shares.

The bonus shares once allotted shall rank pari passu in all respects and carry the same rights as the existing equity shareholders and shall be entitled to participate in full, in any dividend and other corporate action, recommended and declared after the new equity shares are allotted.

Update on Capital Allocation Policy and buyback

In line with the Capital Allocation Policy announced in April 2018, the Board, at its meeting held on January 11, 2019, approved the following :

(a) A special dividend of 4 per equity share;

(b) A buyback of equity shares from the open market route through Indian stock exchanges of up to 8,260 crore (maximum buyback size) at a price not exceeding 800 per share (maximum buyback price) subject to shareholders’ approval by way of a postal ballot. After the execution of the above, along with the special dividend (including dividend distribution tax) of 2,633 crore already paid in June 2018, the Company would complete the distribution of 13,000 crore, which was announced as part of its Capital Allocation Policy in April 2018.

The shareholders approved the proposal of buyback of equity shares recommended by its Board of Directors at its meeting held on January 11, 2019 through the postal ballot that concluded on March 12, 2019. At the maximum buyback price of 800 per equity share and the maximum buyback size of 8,260 crore, the indicative maximum number of equity shares bought back would be 10,32,50,000 equity shares (maximum buyback shares) comprising approximately 2.36% of the paid-up equity share capital of the Company as of March 12, 2019 (the date of conclusion of the postal ballot for approval for buyback).

The buyback was offered to all eligible equity shareholders of the Company (other than the Promoters, the Promoter Group and Persons in Control of the Company) under the open market route through the stock exchange. The Company will fund the buyback from its free reserves. The buyback of equity shares through the stock exchange commenced on March 20, 2019 and is expected to be completed by September 2019. During the year ended March 31, 2019, 1,26,52,000 equity shares were purchased from the stock exchange which includes 18,18,000 shares which have been purchased but not extinguished as of March 31, 2019 and 36,36,000 shares which have been purchased but have not been settled and therefore not extinguished as of March 31, 2019. In accordance with Section 69 of the Companies Act, 2013, during the year ended March 31, 2019, the Company has created ‘Capital Redemption Reserve’ of 5 crore equal to the nominal value of the shares bought back as an appropriation from general reserve.

The Board, at its meeting on August 19, 2017, approved a proposal for the Company to buy back its fully-paid-up equity shares of face value of 5 each from the eligible equity shareholders of the Company for an amount not exceeding 13,000 crore. The shareholders approved the said proposal of buyback of equity shares through the postal ballot that concluded on October 7, 2017. The buyback offer comprised a purchase of 11,30,43,478 equity shares aggregating 4.92% of the paid-up equity share capital of the Company at a price of 1,150 per equity share. The buyback was offered to all eligible equity shareholders (including those who became equity shareholders as on the record date by cancelling ADSs and withdrawing underlying equity shares) of the Company as on the record date (i.e. November 1, 2017) on a proportionate basis through the ‘tender offer’ route. The Company concluded the buyback procedures on December 27, 2017 and 11,30,43,478 equity shares were extinguished. The Company has utilized its securities premium and general reserve for the buyback of its shares. In accordance with Section 69 of the Companies Act, 2013, the Company has created a Capital Redemption Reserve of 56 crore equal to the nominal value of the shares bought back as an appropriation from the general reserve during the year ended March 31, 2018.

The Company’s objective when managing capital is to safeguard its ability to continue as a going concern and to maintain an optimal capital structure so as to maximize shareholder value. In order to maintain or achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to shareholders, issue new shares or buy back issued shares. As at March 31, 2019, the Company has only one class of equity shares and has no debt. Consequent to the above capital structure there are no externally imposed capital requirements.

Dividend

The final dividend on shares is recorded as a liability on the date of approval by the shareholders and interim dividends are recorded as a liability on the date of declaration by the Company’s Board of Directors.

The Company declares and pays dividends in Indian rupees. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution taxes. Dividend distribution tax paid by subsidiaries may be reduced / available as credit against dividend distribution tax payable by Infosys Limited.

Effective fiscal 2018, the Company’s policy is to pay out up to 70% of the free cash flow of the corresponding financial year in such manner (including by way of dividend and / or share buyback) as may be decided by the Board from time to time, subject to applicable laws and requisite approvals, if any. Free cash flow is defined as net cash provided by operating activities less capital expenditure as per the Consolidated Statement of Cash Flows prepared under IFRS. Dividend payout includes dividend distribution tax.

The amount of per share dividend recognized as distribution to equity shareholders :

in

Particulars

Year ended March 31,

2019

2018

Special dividend for fiscal 2019

4.00

Interim dividend for fiscal 2019

7.00

Final dividend for fiscal 2018

10.25

Special dividend for fiscal 2018

5.00

Interim dividend for fiscal 2018

6.50

Final Dividend for fiscal 2017

7.38

Note : Dividend per equity share disclosed in the above table represents dividends declared previously, retrospectively adjusted for the September 2018 bonus issue.

During the year ended March 31, 2019 on account of the final dividend for fiscal 2018, special dividend for fiscal 2018 and fiscal 2019 and interim dividend for fiscal 2019 the Company has incurred a net cash outflow of 13,705 crore (excluding dividend paid on treasury shares) inclusive of dividend distribution tax.

The Board of Directors, at its meeting on April 12, 2019, recommended a final dividend of 10.50 per equity share for the financial year ended March 31, 2019. This payment is subject to the approval of shareholders in the ensuing Annual General Meeting of the Company, to be held on June 22, 2019 and if approved, would result in a net cash outflow of approximately 5,483 crore, (excluding dividend paid on treasury shares) including dividend distribution tax. The final dividend of 10.50 per equity share and the resultant expected cash outflow is based on the outstanding number of shares after considering shares bought back by the Company subsequent to the year ended March 31, 2019.

The details of shareholder holding more than 5% shares as at March 31, 2019 and March 31, 2018 are as follows :

Name of the shareholder

As at March 31, 2019

As at March 31, 2018

No. of shares

% held

No. of shares

% held

Deutsche Bank Trust Company Americas
(Depository of ADRs – legal ownership)

74,62,54,648

17.11

75,98,11,718

17.39

Life Insurance Corporation of India

25,43,32,376

5.83

29,90,28,034

6.85

Information in the table above is adjusted for the September 2018 bonus issue

The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2019 and March 31, 2018 are as follows :

in crore, except as stated otherwise

Particulars

As at March 31, 2019

As at March 31, 2018

No. of shares

Amount

No. of shares

Amount

At the beginning of the period

217,33,12,301

1,088

228,56,55,150

1,144

Add : Shares issued on exercise of employee stock options – before bonus issue

3,92,528

7,00,629

Add : Bonus shares issued

217,37,04,829

1,088

Add : Shares issued on exercise of employee stock options – after bonus issue

11,96,804

Less : Shares bought back (1)(2)

1,26,52,000

6

11,30,43,478

56

At the end of the period

433,59,54,462

2,170

217,33,12,301

1,088

(1) Includes 18,18,000 shares which have been purchased on account of buyback during the three months ended March 31, 2019 and have not been extinguished as of March 31, 2019

(2) Includes 36,36,000 shares which have been purchased on account of buyback during the three months ended March 31, 2019 but have not been settled and therefore not extinguished as of March 31, 2019

Retained earnings

Retained earnings represent the amount of accumulated earnings of the Group.

Securities premium

The amount received in excess of the par value has been classified as securities premium. Additionally, share-based compensation recognized in net profit in the Consolidated Statement of Profit and Loss is credited to securities premium.

Other components of equity

Other components of equity consist of currency translation, remeasurement of net defined benefit liability / asset, cumulative impact on reversal of unrealized gain on quoted debt securities on adoption of Ind AS 109, equity instruments fair valued through other comprehensive income, changes on fair valuation of investments and changes in fair value of derivatives designated as cash flow hedges, net of taxes.

Employee Stock Option Plan (ESOP)

Accounting policy

The Group recognizes compensation expense relating to share-based payments in net profit using fair value in accordance with Ind AS 102, Share-Based Payment. The estimated fair value of awards is charged to income on a straight-line basis over the requisite service period for each separately-vesting portion of the award as if the award was in-substance, multiple awards with a corresponding increase to share options outstanding account.

2015 Stock Incentive Compensation Plan (“the 2015 Plan”) (formerly 2011 RSU Plan) :

On March 31, 2016, pursuant to the approval by the shareholders through a postal ballot, the Board has been authorized to introduce, offer, issue and allot share-based incentives to eligible employees of the Company and its subsidiaries under the 2015 Plan. The maximum number of shares under the 2015 Plan shall not exceed 2,40,38,883 equity shares (this includes 1,12,23,576 equity shares which are held by the trust towards the 2011 Plan as at March 31, 2016). Out of this 1,70,38,883 equity shares will be issued as RSUs at par value and 70,00,000 equity shares will be issued as stock options at market price on the date of the grant. These instruments will vest over a period of four years and the Company expects to grant the instruments under the 2015 Plan over the period of four to seven years. The plan numbers mentioned above would further be adjusted for the September 2018 bonus issue.

Consequent to the September 2018 bonus issue, all outstanding options granted under the stock option plan have been adjusted for bonus shares. Unless otherwise stated, all the prior period share numbers, share prices and weighted average exercise prices in this note have been adjusted to give effect to the September 2018 bonus issue.

Controlled trust holds 2,03,24,982 and 1,08,01,956 shares (not adjusted for the September 2018 bonus issue) as at March 31, 2019 and March 31, 2018, respectively under the 2015 Plan. Out of these shares, 2,00,000 and 1,00,000 (not adjusted for the September 2018 bonus issue) equity shares have been earmarked for welfare activities of the employees as at March 31, 2019 and March 31, 2018, respectively.

The summary of grants during the years ended March 31, 2019 and March 31, 2018 under the 2015 Plan is as follows :

Particulars

Year ended March 31,

2019

2018

RSUs

Salil Parekh, CEO & MD
(Refer to Note 1 below)

2,60,130

2,26,048

U.B. Pravin Rao, COO & WTD

68,250

54,500

Dr. Vishal Sikka(1)

5,40,448

Other KMP

3,47,150

5,46,200

Employees other than KMP

36,65,170

31,94,020

43,40,700

45,61,216

ESOPs

U.B. Pravin Rao, COO & WTD

86,000

Dr. Vishal Sikka(1)

661,050

Other KMP

88,900

Employees other than KMP

147,200

983,150

Incentive units cash-settled

Other employees

74,090

100,080

74,090

100,080

Total grants

44,14,790

56,44,446

Information in the table above is adjusted for the September 2018 bonus issue

(1) Upon Dr. Vishal Sikka’s resignation from his roles of the Company, the unvested RSUs and ESOPs have been forfeited

1. Stock incentives granted to Salil Parekh, CEO & MD

Pursuant to the approval of the shareholders through a postal ballot on February 20, 2018, Salil Parekh (CEO & MD) is eligible to receive under the 2015 Plan :

a)

an annual grant of RSUs of fair value 3.25 crore which will vest over time in three equal annual installments upon completion of each year of service from the respective grant date

b)

a one-time grant of RSUs of fair value 9.75 crore which will vest over time in two equal annual installments upon completion of each year of service from the grant date, and

c)

annual grant of performance-based RSUs of fair value 13 crore which will vest after completion of three years, the first of which concludes on March 31, 2021, subject to the achievement of performance targets set by the Board or its committee.

The Board, based on the recommendations of the nomination and remuneration committee, approved on February 27, 2018, the annual time-based grant for fiscal 2018 of 56,512 RSUs (adjusted for the September 2018 bonus issue) and the one-time time-based grant of 1,69,536 RSUs (adjusted for the September 2018 bonus issue) The grants were made effective February 27, 2018.

Further, the Board, based on the recommendations of the nomination and remuneration committee, granted 217,200 performance-based RSUs (adjusted for the September 2018 bonus issue) to Salil Parekh effective May 2, 2018. The grants would vest upon successful completion of three full fiscal years with the Company concluding on March 31, 2021 and will be determined based on the achievement of certain performance targets for the said three-year period.

The Board, based on the recommendations of the nomination and remuneration committee, approved on January 11, 2019, the annual time-based grant for fiscal 2019 of 42,930 RSUs. The grants was made effective February 1, 2019.

Though the annual time-based grants for the remaining employment term ending on March 31, 2023 have not been granted as at March 31, 2019, since the service commencement date precedes the grant date, the Company has recorded employment stock compensation expense in accordance with Ind AS 102, Share-based Payment.

The RSUs and stock options would vest generally over a period of four years and shall be exercisable within the period as approved by the Committee. The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options would be the market price as on the date of grant.

As at March 31, 2019 and March 31, 2018, incentive units were outstanding (net of forfeitures) 1,77,454 and 2,23,514 (adjusted for the September 2018 bonus issue), respectively.

The break-up of employee stock compensation expense is as follows :

in crore

Particulars

Year ended March 31,

2019

2018

Granted to :

KMP(2)

33

(13)

Employees other than KMP

169

97

Total(1)

202

84

(1) Cash-settled stock compensation expense included above

5

5

(2) Included a reversal of stock compensation cost of 35 crore recorded during the three months ended September 30, 2017 towards forfeiture of stock incentives granted to Dr. Vishal Sikka upon his resignation

The carrying value of liability towards cash-settled share-based payments was 9 crore and 6 crore as at March 31, 2019 and March 31, 2018, respectively.

The activity in the 2015 Plan (formerly 2011 RSU Plan) for equity-settled share-based payment transactions during the years ended March 31, 2019 and March 31, 2018 is as follows :

Particulars

Year ended March 31, 2019

Year ended March 31, 2018

Shares arising out of options

Weighted average exercise price ()

Shares arising out of options

Weighted average exercise price ()

2015 Plan : RSUs

Outstanding at the beginning

75,00,818

2.50

59,22,746

2.50

Granted

43,40,700

3.84

45,61,216

2.50

Exercised

18,64,510

2.50

12,96,434

2.50

Forfeited and expired

7,95,810

2.61

16,86,710

2.50

Outstanding at the end

91,81,198

3.13

75,00,818

2.50

Exercisable at the end

2,35,256

2.50

48,410

2.50

2015 Plan : ESOPs

Outstanding at the beginning

19,33,826

493

23,95,300

496

Granted

9,83,150

472

Exercised

1,17,350

515

1,04,824

492

Forfeited and expired

1,93,300

521

13,39,800

481

Outstanding at the end

16,23,176

516

19,33,826

493

Exercisable at the end

6,98,500

517

3,93,824

496

Information in the table above is adjusted for the September 2018 bonus issue.

During the years ended March 31, 2019 and March 31, 2018, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 701 and 496 (adjusted for the September 2018 bonus issue), respectively.

The summary of information about equity-settled RSUs and ESOPs outstanding as at March 31, 2019 is as follows :

Range of exercise prices per share ()

Options outstanding

No. of shares arising out of options

Weighted average remaining contractual life

Weighted average exercise price ()

2015 Plan

0-5 (RSU)

91,81,198

1.70

3.13

450-600 (ESOP)

16,23,176

5.04

516

1,08,04,374

2.20

80

Information in the table above is adjusted for the September 2018 bonus issue.

The summary of information about equity settled RSUs and ESOPs outstanding as at March 31, 2018 was as follows :

Range of exercise prices per share ()

Options outstanding

No. of shares arising out of options

Weighted average remaining contractual life

Weighted average exercise price ()

2015 Plan

0-2.50 (RSU)

75,00,818

1.89

2.50

450-600 (ESOP)

19,33,826

6.60

493

94,34,644

2.57

104

Information in the table above is adjusted for the September 2018 bonus issue.

The fair value of each equity-settled award is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions :

Particulars

For options granted
in fiscal 2019

Equity shares – RSU

ADS – RSU

Weighted average share price () / ($-ADS)(1)

696

10.77

Exercise price () / ($-ADS)(1)

3.31

0.06

Expected volatility (%)

21-25

22-26

Expected life of the option (years)

1-4

1-4

Expected dividends (%)

2.65

2.65

Risk-free interest rate (%)

7-8

2-3

Weighted average fair value as on grant date () / ($-ADS)(1)

648

10.03

Particulars

For options granted in fiscal 2018

Equity shares – RSU

Equity shares – ESOP

ADS – RSU

ADS – ESOP

Weighted average share price () / ($-ADS)(1)

572

461

8.31

7.32

Exercise price () / ($-ADS)(1)

2.50

459

0.04

7.33

Expected volatility (%)

20-25

25-28

21-26

25-31

Expected life of the option (years)

1-4

3-7

1-4

3-7

Expected dividends (%)

2.78

2.78

2.74

2.74

Risk-free interest rate (%)

6-7

6-7

1-2

1-2

Weighted average fair value as on grant date () / ($-ADS)(1)

533

127

7.74

1.47

(1) Adjusted for the September 2018 bonus issue

The expected life of the RSU / ESOP is estimated based on the vesting term and contractual term of the RSU / ESOP, as well as expected exercise behavior of the employee who receives the RSU / ESOP. Expected volatility during the expected term of the RSU / ESOP is based on historical volatility of the observed market prices of the Company’s publicly traded equity shares during a period equivalent to the expected term of the RSU / ESOP.

2.12 Other financial liabilities

in crore

Particulars

As at March 31,

2019

2018

Non-current

Others

Accrued compensation to employees(1)

15

Compensated absences

44

48

Payable for acquisition of business (Refer to Note 2.1.1)(2)

Contingent consideration

88

13

Total non-current other financial liabilities

147

61

Current

Unpaid dividends(1)

29

22

Others

Accrued compensation to employees(1)

2,572

2,509

Accrued expenses(1)

3,319

2,452

Retention monies(1)

112

132

Payable for acquisition of business

Contingent consideration (Refer to Note 2.1.1)(2)

102

41

Payable by controlled trusts(1)

168

139

Financial liability relating to buyback (Refer to Note 2.11)(1)

1,202

Compensated absences

1,619