Financials

Independent Auditors’ Report


To the Members of Infosys Limited

Report on the Standalone financial statements

We have audited the accompanying Standalone financial statements of Infosys Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2016, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Standalone financial statements

The Company’s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (‘the Act’) with respect to the preparation and presentation of these Standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these Standalone financial statements based on our audit.

We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company’s Directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2016 and its profit and its cash flows for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1.

As required by the Companies (Auditor’s Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of sub-section (11) of Section 143 of the Act, we give in the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.

2.

As required by Section 143 (3) of the Act, 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;

b.

in our opinion proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c.

the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account;

d.

in our opinion, the aforesaid Standalone financial statements comply with the Accounting Standards 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 as on 31 March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2016 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 of the Company and the operating effectiveness of such controls, refer to our separate report in ‘Annexure B’; and

g.

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

i.

the Company has disclosed the impact of pending litigations on its financial position in its financial statements – Refer to Note 2.20 to the financial statements;

ii.

the Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts – Refer to Note 2.7 to the financial statements;

iii.

there has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number: 101248W/W-100022

Bangalore

15 April, 2016

Supreet Sachdev

Partner

Membership number: 205385

Annexure A to the Auditors’ Report

The Annexure referred to in Independent Auditors’ Report to the members of the Company on the Standalone financial statements for the year ended 31 March 2016, we report that:

(i)

(a)

The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.

(b)

The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner over a period of three years. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.

(c)

According to the information and explanations given to us and on the basis of our examination of the records of the Company, the title deeds of immovable properties are held in the name of the Company.

(ii)

The Company is a service company, primarily rendering software services. Accordingly, it does not hold any physical inventories. Thus, paragraph 3(ii) of the Order is not applicable to the Company.

(iii)

The Company has granted loans to five bodies corporate covered in the register maintained under Section 189 of the Companies Act, 2013 (‘the Act’).

(a)

In our opinion, the rate of interest and other terms and conditions on which the loans had been granted to the bodies corporate listed in the register maintained under Section 189 of the Act were not, prima facie, prejudicial to the interest of the Company.

(b)

In the case of the loans granted to the bodies corporate listed in the register maintained under Section 189 of the Act, the borrowers have been regular in the payment of the principal and interest as stipulated.

(c)

There are no overdue amounts in respect of the loan granted to a body corporate listed in the register maintained under Section 189 of the Act.

(iv)

In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Section 185 and 186 of the Act, with respect to the loans and investments made.

(v)

The Company has not accepted any deposits from the public.

(vi)

The Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act, for any of the services rendered by the Company.

(vii)

(a)

According to the information and explanations given to us and on the basis of our examination of the records of the Company, amounts deducted / accrued in the books of account in respect of undisputed statutory dues including provident fund, income-tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues have been regularly deposited during the year by the Company with the appropriate authorities. As explained to us, the Company did not have any dues on account of employees’ state insurance and duty of excise.

According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, income tax, sales tax, value added tax, duty of customs, service tax, cess and other material statutory dues were in arrears as at 31 March 2016 for a period of more than six months from the date they became payable.

(b)

According to the information and explanations given to us, there are no material dues of duty of customs which have not been deposited with the appropriate authorities on account of any dispute. However, according to information and explanations given to us, the following dues of income tax, sales tax, duty of excise, service tax and value added tax have not been deposited by the Company on account of disputes:

Name of the statute

Nature of dues

Amount (in )

Period to which the amount relates

Forum where dispute is pending

Service tax

Service tax and penalty

(1) 5,75,63,973

July 2004 to October 2005

CESTAT, Bangalore

Service tax

Service tax

(1) 2,57,84,864

January 2005 to March 2009

CESTAT, Bangalore

Service tax

Service tax and penalty

(1) 23,15,21,178

February 2007 to March 2009

CESTAT, Bangalore

Service tax

Service tax

(1) 4,19,72,658

April 2009 to March 2010

CESTAT, Bangalore

Service tax

Service tax

(1) 6,46,54,051

April 2010 to March 2011

CESTAT, Bangalore

APVAT Act, 2005

Sales tax

(1)(2) 31,12,450

April 2007 to March 2008

High Court of Andhra Pradesh

MVAT Act, 2005

Sales tax

(1)(2) 9,35,455

April 2006 to December 2007

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax

4,52,50,506

September 2008 to October 2011

Specified Officer of SEZ

Central Excise Act, 1944

Excise duty and penalty

(1) 38,61,48,018

March 2006 to December 2009

CESTAT, Bangalore

Central Excise Act, 1944

Excise duty and penalty

(1) 2,67,46,497

January 2010 to December 2010

CESTAT, Bangalore

Central Excise Act, 1944

Excise duty and penalty

4,51,32,885

January 2011 to June 2011

CESTAT, Bangalore

Central Excise Act, 1944

Excise duty and penalty

(1) 3,23,44,749

July 2011 to December 2011

CESTAT, Bangalore

Central Excise Act, 1944

Excise duty and penalty

(1) 4,20,03,700

January 2012 to November 2012

CESTAT, Bangalore

KVAT Act, 2003

Sales tax, interest and penalty

(1)(2) 48,10,45,876

April 2005 to March 2009

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest and penalty

6,99,250

January 2008 to March 2008

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(1)(2) 22,01,534

April 2008 to March 2009

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(1) 31,32,547

April 2009 to March 2010

Joint Commissioner (Appeals)

Central Excise Act, 1944

Excise duty and penalty

(1) 4,81,39,052

December 2012 to September 2013

CESTAT, Bangalore

Central Excise Act, 1944

Excise duty and penalty

5,64,00,395

October 2013 to September 2014

CESTAT, Bangalore

Service tax

Service tax and penalty

(2) 11,94,51,864

April 2009 to March 2012

CESTAT, Bangalore

Service tax

Service tax and penalty

(2) 64,93,657

April 2009 to September 2011

Commissioner (Appeals)

Service tax

Service tax and penalty

(2) 61,23,280

October 2008 to September 2013

Commissioner (Appeals)

Service tax

Service tax and penalty

(2) 4,75,80,094

April 2012 to March 2013

CESTAT, Bangalore

Service tax

Service tax and penalty

(2) 98,194

October 2011 to December 2011

Commissioner (Appeals), Bangalore

Service tax

Service tax and penalty

4,21,06,232

October 2014 to June 2015

(3)

MVAT Act, 2005

Sales tax, interest

(1)(2) 98,01,056

April 2010 to March 2011

Joint Commissioner (Appeals)

Income-tax Act, 1961

Interest

3,81,54,376

Assessment year 2009-2010

CIT (Appeals)

The Rajasthan VAT Act, 2003

Sales tax

6,784

April 2012 to March 2013 and August 2015

Commercial tax officer

(1) A stay order has been received against the amount disputed and not deposited.

(2) Net of amounts paid under protest.

(3) The Company is in the process of filing an appeal before the CESTAT, Bangalore.

(viii)

The Company does not have any loans or borrowings from any financial institution, banks, government or debenture holders during the year. Accordingly, paragraph 3(viii) of the Order is not applicable.

(ix)

The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, paragraph 3(ix) of the Order is not applicable.

(x)

According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.

(xi)

According to the information and explanations give to us and based on our examination of the records of the Company, the Company has paid / provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Act.

(xii)

In our opinion and according to the information and explanations given to us, the Company is not a nidhi company. Accordingly, paragraph 3(xii) of the Order is not applicable.

(xiii)

According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with Sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.

(xiv)

According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv)

According to the information and explanations given to us and based on our examination of the records of the Company, the Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, paragraph 3(xv) of the Order is not applicable.

(xvi)

The Company is not required to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number: 101248W/W-100022

Bangalore

15 April, 2016

Supreet Sachdev

Partner

Membership number: 205385

Annexure B to the Auditors’ Report

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of Infosys Limited (‘the Company’) as of 31 March 2016 in conjunction with our audit of the Standalone financial statements of the Company for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company 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 (‘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 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 Companies Act, 2013.

Auditors’ Responsibility

Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting 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’) and the Standards on Auditing, issued by ICAI and deemed to be prescribed under Section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls, both applicable to an audit of Internal Financial Controls and, both issued by the Institute of Chartered Accountants of India. 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 were 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 auditors’ judgment, 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 Company’s internal financial controls system over financial reporting.

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 the Management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized 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, the Company has, 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 31 March 2016, based on the internal control over financial reporting criteria established by the Company 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 B S R & Co. LLP

Chartered Accountants

Firm’s registration number: 101248W/W-100022

Bangalore

15 April, 2016

Supreet Sachdev

Partner

Membership number: 205385

Balance Sheet

In crore

Particulars

Note

As at March 31,

2016

2015

EQUITY AND LIABILITIES

SHAREHOLDERS’ FUNDS

Share capital

2.1

1,148

574

Reserves and surplus

2.2

56,009

47,494

57,157

48,068

NON-CURRENT LIABILITIES

Deferred tax liabilities (net)

2.3

Other long-term liabilities

2.4

73

30

73

30

CURRENT LIABILITIES

Trade payables

2.5

Total outstanding dues of micro enterprises and small enterprises

Total outstanding dues of creditors other than micro enterprises and small enterprises

623

124

Other current liabilities

2.6

6,105

5,546

Short-term provisions

2.7

8,809

8,045

15,537

13,715

72,767

61,813

ASSETS

NON-CURRENT ASSETS

Fixed assets

Tangible assets

2.8

8,248

7,347

Capital work-in-progress

934

769

9,182

8,116

Non-current investments

2.10

11,111

6,108

Deferred tax assets (net)

2.3

405

433

Long-term loans and advances

2.11

5,970

4,378

Other non-current assets

2.12

2

26

26,670

19,061

CURRENT ASSETS

Current investments

2.10

2

749

Trade receivables

2.13

9,798

8,627

Cash and cash equivalents

2.14

29,176

27,722

Short-term loans and advances

2.15

7,121

5,654

46,097

42,752

72,767

61,813

SIGNIFICANT ACCOUNTING POLICIES

1

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

As per our report of even date attached

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number:101248W/W-100022

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

Supreet Sachdev

Partner

Membership number: 205385

R. Seshasayee

Chairman

Dr. Vishal Sikka

Chief Executive Officer and
Managing Director

U. B. Pravin Rao

Chief Operating Officer and Whole-time Director

Bangalore

April 15, 2016

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Statement of Profit and Loss

In crore, except equity share and per equity share data

Particulars

Note

Year ended March 31,

2016

2015

Income from software services and products

2.16

53,983

47,300

Other income

2.17

3,009

3,337

Total revenue

56,992

50,637

Expenses

Employee benefit expenses

2.18

28,206

25,115

Deferred consideration pertaining to acquisition

2.10.6

110

219

Cost of technical sub-contractors

2.18

4,417

2,909

Travel expenses

2.18

1,655

1,360

Cost of software packages and others

2.18

1,049

979

Communication expenses

2.18

311

384

Consultancy and professional charges

563

396

Depreciation and amortization expense

2.8

1,115

913

Other expenses

2.18

1,909

1,976

Total expenses

39,335

34,251

PROFIT BEFORE EXCEPTIONAL ITEM AND TAX

17,657

16,386

Profit on transfer of business

2.10.5

3,036

412

PROFIT BEFORE TAX

20,693

16,798

Tax expense

Current tax

2.19

4,898

4,537

Deferred tax

2.19

9

97

PROFIT FOR THE PERIOD

15,786

12,164

EARNINGS PER EQUITY SHARE

Equity shares of par value 5/- each

Before exceptional item

Basic

55.51

51.17

Diluted

55.51

51.17

After exceptional item

Basic

68.73

52.96

Diluted

68.73

52.96

Number of shares used in computing earnings per share

2.32

Basic

2,29,69,44,664

2,29,69,44,664

Diluted

2,29,69,44,664

2,29,69,75,348

SIGNIFICANT ACCOUNTING POLICIES

1

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

As per our report of even date attached

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number:101248W/W-100022

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

Supreet Sachdev

Partner

Membership number: 205385

R. Seshasayee

Chairman

Dr. Vishal Sikka

Chief Executive Officer and
Managing Director

U. B. Pravin Rao

Chief Operating Officer and Whole-time Director

Bangalore

April 15, 2016

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Cash Flow Statement

In crore

Particulars

Note

Year ended March 31,

2016

2015

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before tax

20,693

16,798

Adjustments to reconcile profit before tax to cash generated by operating activities

Depreciation and amortization expense

1,115

913

Provision for bad and doubtful debts

(48)

142

Deferred consideration pertaining to acquisition

110

219

Interest and dividend income

(2,563)

(2,738)

Profit on transfer of business (Refer to Note 2.10.5)

(3,036)

(412)

Other adjustments

122

52

Effect of exchange differences on translation of assets and liabilities

32

54

Changes in assets and liabilities

Trade receivables

(1,123)

(1,433)

Loans and advances and other assets

(1,615)

(326)

Liabilities and provisions

1,062

1,175

14,749

14,444

Income tax paid

(5,350)

(6,489)

NET CASH GENERATED BY OPERATING ACTIVITIES

9,399

7,955

CASH FLOWS FROM INVESTING ACTIVITIES

Payment towards capital expenditure, net of sale proceeds

(2,308)

(1,986)

Investment in subsidiaries

(258)

(350)

Payment towards acquisition (Refer to Notes 2.10.1 and 2.10.2)

(794)

(1,398)

Payment arising out of business transfer

(335)

Redemption of fixed maturity plans

110

Investment in preferred stock

(82)

Investment in liquid mutual fund units

(22,797)

(23,184)

Disposal of liquid mutual fund units

23,545

24,296

Investment in tax-free bonds

(299)

Investment in government bonds

(2)

Redemption of certificates of deposit

783

Interest and dividend received

2,302

2,394

NET CASH USED IN INVESTING ACTIVITIES

(1,028)

665

CASH FLOWS FROM FINANCING ACTIVITIES

Loan given to subsidiaries

(193)

(73)

Loan repaid by subsidiaries

126

47

Dividends paid (including corporate dividend tax)

(6,841)

(4,935)

NET CASH USED IN FINANCING ACTIVITIES

(6,908)

(4,961)

Effect of exchange differences on translation of foreign currency cash and cash equivalents

(9)

(37)

NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS

1,454

3,622

CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD

2.14

27,722

24,100

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD

29,176

27,722

SIGNIFICANT ACCOUNTING POLICIES

1

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

As per our report of even date attached

for B S R & Co. LLP

Chartered Accountants

Firm’s registration number:101248W/W-100022

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

Supreet Sachdev

Partner

Membership number: 205385

R. Seshasayee

Chairman

Dr. Vishal Sikka

Chief Executive Officer and
Managing Director

U. B. Pravin Rao

Chief Operating Officer and Whole-time Director

Bangalore

April 15, 2016

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Significant accounting policies

Company overview

Infosys is a global leader in consulting, technology, outsourcing and next-generation services. Along with its subsidiaries, Infosys provides Business IT services (comprising application development and maintenance, independent validation, infrastructure management, engineering services comprising product engineering and lifecycle solutions and business process management); consulting and systems integration services (comprising consulting, enterprise solutions, systems integration and advanced technologies); products, business platforms and solutions to accelerate intellectual property-led innovation including Finacle®, our banking solution; and offerings in the areas of Analytics, Cloud, and Digital Transformation.

The Company is a public limited company incorporated and domiciled in India and has its registered office at Bangalore, Karnataka, India. The Company has its primary listings on the BSE Limited and National Stock Exchange of India Limited in India. The Company’s American Depositary Shares representing equity shares are also listed on the New York Stock Exchange (NYSE), Euronext London and Euronext Paris.

1. Significant accounting policies

1.1 Basis of preparation of financial statements

These financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (GAAP) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (‘the Act’) read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). 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.

1.2 Use of estimates

The preparation of the financial statements in conformity with GAAP requires the Management to make estimates and assumptions that affect the reported balances of assets and liabilities and disclosures relating to contingent liabilities as at the date of the financial statements and reported amounts of income and expenses during the period. Examples of such estimates include computation of percentage of completion which requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended, provisions for doubtful debts, future obligations under employee retirement benefit plans, income taxes, post-sales customer support and the useful lives of fixed tangible assets and intangible assets.

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 in the period in which changes are made and, if material, their effects are disclosed in the notes to the financial statements.

1.3 Revenue recognition

Revenue is primarily derived from software development and related services and from the licensing of software products. Arrangements with customers for software development and related services are either on a fixed-price, fixed-timeframe or on a time-and-material basis.

Revenue on time-and-material contracts are recognized as the related services are performed and revenue from the end of the last billing to the Balance Sheet date is recognized as unbilled revenues. Revenue from fixed-price and fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognized based upon the percentage-of-completion method. When there is uncertainty about measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Cost and earnings in excess of billings are classified as unbilled revenue while billings in excess of cost and earnings are classified as unearned revenue. Deferred contract costs are amortized over the term of the contract. Provision for estimated losses, if any, on uncompleted contracts is recorded in the period in which such losses become probable based on the current estimates.

Annual Technical Services revenue and revenue from fixed-price maintenance contracts are recognized ratably over the period in which services are rendered. Revenue from the sale of user licenses for software applications is recognized on transfer of the title in the user license, except in case of multiple element contracts, which require significant implementation services, where revenue for the entire arrangement is recognized over the implementation period based upon the percentage-of-completion method. Revenue from client training, support and other services arising out of the sale of software products is recognized as the related services are performed.

The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the ratable allocation of the discount / incentive amount to each of the underlying revenue transactions that result in progress by the customer towards earning the discount / incentive. Also, when the level of discount varies with increases in levels of revenue transactions, the Company recognizes the liability based on its estimate of the customer’s future purchases. If it is probable that the criteria for the discount will not be met, or if the amount thereof cannot be estimated reliably, then discount is not recognized until the payment is probable and the amount can be estimated reliably. The Company recognizes changes in the estimated amount of obligations for discounts in the period in which change occurs. The discounts are passed on to the customer either as direct payments or as a reduction of payments due from the customer.

The Company presents revenues net of indirect taxes in its Statement of Profit and Loss.

Profit on sale of investments is recorded on transfer of title from the Company and is determined as the difference between the sale price and carrying value of the investment. Lease rentals are recognized ratably on a straight-line basis over the lease term. Interest is recognized using the time-proportion method, based on rates implicit in the transaction. Dividend income is recognized when the Company’s right to receive dividend is established.

1.4 Provisions and contingent liabilities

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that is reasonably estimable, and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. Where no reliable estimate can be made, a disclosure is made as contingent liability. A disclosure for a contingent liability is also made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources. Where there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

1.5 Post-sales client support and warranties

The Company provides its clients with a fixed period post-sales support for corrections of errors and support on all its fixed-price, fixed-timeframe contracts. Costs associated with such support services are accrued at the time when related revenues are recorded and included in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and the estimates are reviewed annually for any material changes in assumptions and likelihood of occurrence.

1.6 Onerous contracts

Provisions for onerous contracts are recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable costs of meeting the future obligations under the contract. The provision is measured at lower of the expected cost of terminating the contract and the expected net cost of fulfilling the contract.

1.7 Tangible assets and capital work-in-progress

Tangible assets are stated at cost, less accumulated depreciation and impairment, if any. Direct costs are capitalized until such assets are ready for use. Capital work-in-progress comprises the cost of fixed assets that are not yet ready for their intended use at the reporting date.

1.8 Intangible assets

Intangible assets are recorded at the consideration paid for acquisition of such assets and are carried at cost less accumulated amortization and impairment.

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 Company 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 materials, direct labor, and overhead cost that are directly attributable to preparing the asset for intended use.

1.9 Depreciation and amortization

Depreciation on tangible assets is provided on the straight-line method over the useful lives of assets estimated by the Management. Depreciation for assets purchased / sold during a period is proportionately charged. Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the Company for its use. The Management estimates the useful lives for the other fixed assets as follows:

Buildings (1)

22-25 years

Plant and machinery (1)

5 years

Office equipment

5 years

Computer equipment (1)

3-5 years

Furniture and fixtures (1)

5 years

Vehicles (1)

5 years

(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 are different from the useful lives as prescribed under Part C of Schedule II of the Companies Act 2013.

Depreciation and amortization methods, useful lives and residual values are reviewed periodically, including at each financial year end (Refer to Note 2.8).

1.10 Impairment

The Management periodically assesses, using external and internal sources, whether there is an indication that an asset may be impaired. An impairment loss is recognized wherever the carrying value of an asset exceeds its recoverable amount. The recoverable amount is the higher of the asset’s net selling price or value in use, which means the present value of future cash flows expected to arise from the continuing use of the asset and its eventual disposal. An impairment loss for an asset is reversed if, and only if, the reversal can be related objectively to an event occurring after the impairment loss was recognized. The carrying amount of an 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 or depreciation) had no impairment loss been recognized for the asset in prior years.

1.11 Retirement benefits to employees

Gratuity

The Company provides for gratuity, a defined benefit retirement plan (‘the Gratuity Plan’) covering eligible employees. The Gratuity Plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employee’s salary and the tenure of employment with the Company.

Liabilities with regard to the Gratuity Plan are determined by actuarial valuation, performed by an independent actuary, at each Balance Sheet date using the projected unit credit method. The Company fully contributes all ascertained liabilities to the Infosys Limited Employees’ Gratuity Fund Trust (‘the Trust’). Trustees administer contributions made to the Trust and contributions are invested in a scheme with Life Insurance Corporation of India as permitted by law of India. The Company recognizes the net obligation of the Gratuity Plan in the Balance Sheet as an asset or liability, respectively in accordance with Accounting Standard (AS) 15, ‘Employee Benefits’. The Company’s overall expected long-term rate-of-return on assets has been determined based on consideration of available market information, current provisions of Indian law specifying the instruments in which investments can be made, and historical returns. The discount rate is based on the Government securities yield. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are recognized in the Statement of Profit and Loss in the period in which they arise.

Superannuation

Certain employees are also participants in the superannuation plan (‘the Plan’) which is a defined contribution plan. The Company has no obligations to the Plan beyond its monthly contributions which are periodically contributed to a trust fund, the corpus of which is invested with the Life Insurance Corporation of India.

Provident fund

Eligible employees receive benefits from a provident fund, which is a defined benefit plan. Both the eligible employee and the Company make monthly contributions to the provident fund plan equal to a specified percentage of the covered employee’s salary. The Company contributes a portion to the Infosys Limited Employees’ Provident Fund Trust. The trust invests in specific designated instruments as permitted by Indian law. The remaining portion is contributed to the government administered pension fund. The rate at which the annual interest is payable to the beneficiaries by the trust is being administered by the government. The Company has an obligation to make good the shortfall, if any, between the return from the investments of the trust and the notified interest rate.

Compensated absences

The employees of the Company are entitled to compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation using projected unit credit method on the additional amount expected to be paid / availed as a result of the unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated absences is recognized in the period in which the absences occur.

1.12 Share-based payments

The Company accounts for equity settled stock options as per the accounting treatment prescribed by Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and the Guidance Note on Employee Share-based Payments issued by the Institute of Chartered Accountants of India using the intrinsic value method.

1.13 Foreign currency transactions

Foreign-currency-denominated monetary assets and liabilities are translated at exchange rates in effect at the Balance Sheet date. The gains or losses resulting from such translations are included in the Statement of Profit and Loss. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at fair value are translated at the exchange rate prevalent at the date when the fair value was determined. Non-monetary assets and non-monetary liabilities denominated in a foreign currency and measured at historical cost are translated at the exchange rate prevalent at the date of transaction.

Revenue, expense and cash-flow items denominated in foreign currencies are translated using the exchange rate in effect on the date of the transaction. Transaction gains or losses realized upon settlement of foreign currency transactions are included in determining net profit for the period in which the transaction is settled.

1.14 Forward and options contracts in foreign currencies

The Company uses foreign exchange forward and options contracts to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward and options contracts reduces the risk or cost to the Company and the Company does not use those for trading or speculation purposes.

Effective April 1, 2008, the Company adopted AS 30, ‘Financial Instruments: Recognition and Measurement’, to the extent that the adoption did not conflict with existing accounting standards and other authoritative pronouncements of the Company Law and other regulatory requirements.

Forward and options contracts are fair valued at each reporting date. The Company designates certain foreign exchange forward and options contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast transactions. The Company records the gain or loss on effective hedges, if any, in the hedging reserve until the transactions are complete. On completion, the gain or loss is transferred to the Statement of Profit and Loss of that period. To designate a forward or options contract as an effective hedge, the Management objectively evaluates and evidences with appropriate supporting documents at the inception of each contract and subsequently whether the contract is effective in achieving offsetting cash flows attributable to the hedged risk. Changes in the fair value relating to the ineffective portion of the hedges and derivative instruments that do not qualify or have not been designated for hedge accounting are recognized in the Statement of Profit and Loss.

1.15 Income taxes

Income taxes are accrued in the same period that the related revenue and expenses arise. A provision is made for income tax, based on the tax liability computed, after considering tax allowances and exemptions. Provisions are recorded when it is estimated that a liability due to disallowances or other matters is probable. Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives rise to future economic benefits in the form of tax credit against future income tax liability, is recognized as an asset in the Balance Sheet if there is convincing evidence that the Company will pay normal tax after the tax holiday period and the resultant asset can be measured reliably. The Company offsets, on a year-on-year basis, the current tax assets and liabilities, where it has a legally enforceable right and where it intends to settle such assets and liabilities on a net basis.

The differences that result between the profit considered for income taxes and the profit as per the financial statements are identified, and thereafter, a deferred tax asset or deferred tax liability is recorded for timing differences, namely the differences that originate in one accounting period and reverse in another, based on the tax effect of the aggregate amount of timing difference. The tax effect is calculated on the accumulated timing differences at the end of an accounting period based on enacted or substantively enacted regulations. Deferred tax assets in situation where unabsorbed depreciation and carry forward business loss exist, are recognized only if there is virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax asset can be realized. Deferred tax assets, other than in situation of unabsorbed depreciation and carry forward business loss, are recognized only if there is reasonable certainty that they will be realized. Deferred tax assets are reviewed for the appropriateness of their respective carrying values at each reporting date. Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority. The income tax provision for the interim period is made based on the best estimate of the annual average tax rate expected to be applicable for the full financial year. Tax benefits of deductions earned on exercise of employee share options in excess of compensation charged to Statement of Profit and Loss are credited to the securities premium reserve.

1.16 Earnings per share

Basic earnings per share is computed by dividing the net profit after tax by the weighted average number of equity shares outstanding during the period. Diluted earnings per share is computed by dividing the profit after tax by the weighted average number of equity shares considered for deriving basic earnings per share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The diluted potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value which is the average market value of the outstanding shares. Dilutive potential equity shares are deemed converted as of the beginning of the period, unless issued at a later date. Dilutive potential equity shares are determined independently for each period presented.

The number of shares and potentially dilutive equity shares are adjusted retrospectively for all periods presented for any share splits and bonus shares issues including for changes effected prior to the approval of the financial statements by the Board of Directors.

1.17 Investments

Trade investments are the investments made to enhance the Company’s business interests. Investments are either classified as current or long-term based on the Management’s intention. Current investments are carried at the lower of cost and fair value of each investment individually. Cost for overseas investments comprises the Indian rupee value of the consideration paid for the investment translated at the exchange rate prevalent at the date of investment. Long-term investments are carried at cost less provisions recorded to recognize any decline, other than temporary, in the carrying value of each investment.

1.18 Cash and cash equivalents

Cash and cash equivalents comprise cash and cash-on-deposit with banks and financial institutions. The Company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.

1.19 Cash flow statement

Cash flows are reported using the indirect method, whereby profit before tax 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 Company are segregated.

1.20 Leases

Lease under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Such assets acquired are capitalized at fair value of the asset or present value of the minimum lease payments at the inception of the lease, whichever is lower. Lease payments under operating leases are recognized as an expense on a straight-line basis in the Statement of Profit and Loss over the lease term.

2. Notes to accounts for the year ended March 31, 2016

Amounts in the financial statements are presented in crore, except for per equity share data and as otherwise stated. All exact amounts are stated with the suffix ‘/-’. One crore equals 10 million.

The previous period figures have been regrouped / reclassified, wherever necessary, to conform to the current period presentation.

2.1 Share capital

in crore, except as otherwise stated

Particulars

As at March 31,

2016

2015

Authorized

Equity shares, 5/- par value

2,40,00,00,000 (1,20,00,00,000) equity shares

1,200

600

Issued, subscribed and paid-up

Equity shares, 5/- par value (1)

1,148

574

2,29,69,44,664 (1,14,84,72,332) equity shares fully paid-up

1,148

574

Notes:

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

(1) Refer to Note 2.32 for details of basic and diluted shares

Effective January 1, 2015, Infosys Limited Employees’ Welfare Trust (‘the Trust’) has been deconsolidated consequent to SEBI (Share Based Employee Benefits) Regulations, 2014, issued on October 28, 2014.

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 Company declares and pays dividends in Indian rupees. The dividend proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the period of five years immediately preceding March 31, 2016:

The Company has allotted 1,14,84,72,332 fully-paid-up shares of face value 5 each during the quarter ended June 30, 2015, pursuant to bonus issue approved by the shareholders through a postal ballot. The book closure date fixed by the Board was June 17, 2015.

The Company has allotted 57,42,36,166 fully-paid-up equity shares of face value 5 each during the quarter ended December 31, 2014 pursuant to a bonus issue approved by the shareholders through a postal ballot. The record date fixed by the Board of Directors was December 3, 2014.

For both the bonus issues, a bonus share of one equity share for every equity share held, and a stock dividend of one American Depositary Share (ADS) for every ADS held, 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 have been adjusted for bonus shares.

During the year ended March 31, 2015, the amount of dividend per share recognized as distribution to equity shareholders includes 29.50 per share of final dividend (not adjusted for bonus shares on June 17, 2015) and 30 per share of interim dividend (not adjusted for bonus shares of June 17, 2015 and December 3, 2014). The total dividend appropriation for the year ended March 31, 2015 amounted to 6,145 crore, including corporate dividend tax of 1,034 crore.

The Board has increased dividend payout ratio from up to 40% to up to 50% of post-tax consolidated profits effective fiscal 2015.

The Board of Directors, in its meeting on October 12, 2015, declared an interim dividend of 10 per equity share. Further the Board of Directors, in its meeting on April 15, 2016, has proposed a final dividend of 14.25 per equity share for the financial year ended March 31, 2016. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on June 18, 2016. The total dividend appropriation for the year ended March 31, 2016 amounted to 6,704 crore, including corporate dividend tax of 1,134 crore.

The Central Government, in consultation with the National Advisory Committee on Accounting Standards, has amended the Companies (Accounting Standards) Rules, 2006 (‘principal rules’), through a notification issued by the Ministry of Corporate Affairs dated March 30, 2016. The Companies (Accounting Standards) Rules, 2016 is effective March 30, 2016. According to the amended rules, the above-mentioned proposed dividend will not be recorded as a liability as at March 31, 2016. (Refer to Para 8.5 of AS-4 – Contingencies and Events occurring after Balance Sheet date). The Company believes, based on a legal opinion, that the Rule 3(2) of the principal rules has not been withdrawn or replaced and accordingly, the Companies (Accounting Standards) Rule, 2016 will apply for the accounting periods commencing on or after March 30, 2016. Therefore the Company has recorded 3,939 crore as liability for proposed dividends (including corporate dividend tax) as at March 31, 2016.

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.

The details of shareholders holding more than 5% shares as at March 31, 2016 and March 31, 2015 are as follows:

Name of the shareholder

As at March 31, 2016

As at March 31, 2015

No. of shares

% held

No. of shares

% held

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

38,53,17,937

16.78

18,60,73,981

16.20

Life Insurance Corporation of India

13,22,74,300

5.76

5,52,74,758

4.81

The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2016 and March 31, 2015 is as follows:

Particulars

As at March 31, 2016

As at March 31, 2015

No. of shares

Amount
( crore)

No. of shares

Amount
( crore)

Number of shares at the beginning of the period

1,14,84,72,332

574

57,14,02,566

286

Add: Bonus shares issued (including bonus on treasury shares)

1,14,84,72,332

574

57,42,36,166

287

Add: Treasury shares on account of deconsolidation of trust

28,33,600

1

Number of shares at the end of the period

2,29,69,44,664

1,148

1,14,84,72,332

574

Stock option plan

2015 Stock Incentive Compensation Plan: SEBI issued the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘SEBI Regulations’) which replaced the SEBI ESOP Guidelines, 1999. The 2011 Plan (as explained below) was required to be amended and restated in accordance with the SEBI Regulations. Consequently, to effect this change and to further introduce stock options / ADRs and other stock incentives, the Company put forth the 2015 Stock Incentive Compensation Plan (‘the 2015 Plan’) for approval to the shareholders of the Company. Pursuant to the approval by the shareholders through a postal ballot which ended on March 31, 2016, the Board of Directors 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 currently held by the Trust towards the 2011 Plan). 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. These instruments will vest over a period of four years and the Company expects to grant the instruments under the 2015 Plan over a period of four to seven years.

2011 RSU Plan: The Company had a 2011 RSU Plan (‘the 2011 Plan’) which provided for the grant of restricted stock units (RSUs) to eligible employees of the Company. The Board of Directors recommended the establishment of the 2011 Plan to the shareholders on August 30, 2011 and the shareholders approved the recommendation of the Board of Directors on October 17, 2011 through a postal ballot. The maximum aggregate number of shares that may be awarded under the 2011 Plan was 1,13,34,400 and the 2011 Plan was expected to continue in effect for a term of 10 years from the date of initial grant under the plan. During the year ended March 31, 2015, the Company made a grant of 1,08,268 restricted stock units (adjusted for bonus issues) to Dr. Vishal Sikka, Chief Executive Officer and Managing Director. The Board, in its meeting held on June 22, 2015, on the recommendation of the nomination and remuneration committee, further granted 1,24,061 RSUs to Dr. Vishal Sikka. These RSUs are vesting over a period of four years from the date of the grant in the proportions specified in the award agreement. The RSUs will vest subject to achievement of certain key performance indicators as set forth in the award agreement for each applicable year of the vesting tranche and continued employment through each vesting date. Further, the Company has earmarked 1,00,000 equity shares for employee welfare activities approved by the shareholders through the postal ballot which ended on March 31, 2016. The equity shares currently held under this plan, i.e. 1,12,23,576 equity shares (this includes the aggregate number of equity shares that may be awarded under the 2011 Plan as reduced by 10,824 equity shares already exercised by Dr. Vishal Sikka and 1,00,000 equity shares which have been earmarked for welfare activities of the employees) have been subsumed under the 2015 Plan.

Further, the award granted to Dr. Vishal Sikka on June 22, 2015 was modified by the nomination and remuneration committee on April 14, 2016. There is no modification or change in the total number of RSUs granted or the vesting period (which is four years). The modifications relate to the criteria of vesting for each of the years. Based on the modification, the first tranche of the RSUs will vest subject to achievement of certain key performance indicators for the year ended March 31, 2016. Subsequent vesting of RSUs for each of the remaining years would be subject to continued employment.

In accordance with the SEBI Regulations, the excess of the closing market price on the grant date of the RSUs over the exercise price is amortized on a straight-line basis over the vesting period.

The activity in the 2011 Plan during the years ended March 31, 2016 and March 31, 2015 is as follows:

Particulars

Year ended March 31, 2016

Year ended March 31, 2015

Shares arising out of options

Weighted average exercise price ()

Shares arising out of options

Weighted average exercise price ()

2011 Plan:

Outstanding at the beginning

1,08,268

5

Granted (1)

1,24,061

5

1,08,268

5

Forfeited and expired

Exercised (1)

10,824

5

Outstanding at the end

2,21,505

5

1,08,268

5

Exercisable at the end

(1) Adjusted for bonus issues

The weighted average share price of options exercised under the 2011 Plan on the date of exercise was 1,088.

The weighted average remaining contractual life of RSUs outstanding as of March 31, 2016 and March 31, 2015 under the 2011 Plan was 1.98 years and 2.39 years.

The differential on stock compensation expense if the ‘fair value’ of the RSUs on the date of the grant were considered instead of the ‘intrinsic value’ is less than 1 crore for each of the years ended March 31, 2016 and March 31, 2015. Consequently, there is no impact on earnings per share.

The fair value for the above impact analysis is estimated on the date of grant using the Black-Scholes-Merton model with the following assumptions:

Particulars

Options granted during fiscal

2016

2015

Grant date

22-Jun-15

21-Aug-14

Weighted average share price () (1)

1,024

3,549

Exercise price () (1)

5

5

Expected volatility (%)

28-36

30-37

Expected life of the option (years)

1-4

1-4

Expected dividends (%)

2.43

1.84

Risk-free interest rate (%)

7-8

8-9

Weighted average fair value as on grant date () (1)

948

3,355

(1) Data for fiscal 2015 is not adjusted for bonus issues

The expected term of an RSU is estimated based on the vesting term and contractual term of the RSU, as well as expected exercise behavior of the employee who receives the RSU. Expected volatility during the expected term of the RSU 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.

During the year ended March 31, 2016, the Company recorded an employee compensation expense of 7 crore in the Statement of Profit and Loss ( 2 crore during the year ended March 31, 2015)

2.2 Reserves and surplus

in crore

Particulars

As at March 31,

2016

2015

Capital reserve – Opening balance

54

54

Add: Transferred from surplus

54

54

Securities premium account – Opening balance

2,778

3,069

Less: Deconsolidation of trust
(Refer to Note 2.1)

4

Less: Amount utilized for issuance of bonus shares (Refer to Note 2.1)

574

287

Add: Exercise of stock options

1

2,205

2,778

Stock options outstanding – Opening balance (Refer to Note 2.1)

2

Additions during the period

7

2

Less: Exercise of stock options

1

8

2

General reserve – Opening balance

9,508

8,291

Add: Transferred from surplus

1,579

1,217

11,087

9,508

Special Economic Zone Re-investment Reserve – Opening balance (1)

Add: Transferred from surplus

591

Less: Transferred to surplus on utilization

591

Special Economic Zone Re-investment Reserve – Closing balance

Surplus – Opening balance

35,152

30,392

Add: Net profit after tax transferred from Statement of Profit and Loss

15,786

12,164

Less: Deconsolidation of trust, net
(Refer to Note 2.1)

42

Add: Transfer from Special Economic Zone Re-investment Reserve on utilization

591

Amount available for appropriation

51,529

42,514

Appropriations:

Interim dividend

2,297

1,723

Final dividend

3,273

3,388

Total dividend

5,570

5,111

Dividend tax

1,134

1,034

Amount transferred to general reserve

1,579

1,217

Amount transferred to Special Economic Zone Re-investment Reserve

591

Surplus – Closing balance

42,655

35,152

56,009

47,494

(1) 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 the Income-tax Act,1961. The reserve should be utilized by the Company 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.

2.3 Deferred taxes

in crore

Particulars

As at March 31,

2016

2015

Deferred tax assets

Fixed assets

146

210

Trade receivables

79

100

Compensated absences

359

280

Computer software

50

51

Accrued compensation to employees

46

29

Post-sales client support

76

72

Others

21

7

777

749

Deferred tax liabilities

Branch profit tax

334

316

Others

38

372

316

Deferred tax assets after set-off

405

433

Deferred tax liabilities after set-off

Deferred tax assets and deferred tax liabilities have been offset wherever the Company has a legally enforceable right to set off current tax assets against current tax liabilities and where the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority.

As at March 31, 2016 and March 31, 2015, the Company has provided for branch profit tax of 334 crore and 316 crore, respectively, for its overseas branches, as the Company estimates that these branch profits would be distributed in the foreseeable future. The change in provision for branch profit tax includes 18 crore movement on account of exchange rate during the year ended March 31, 2016.

2.4 Other long-term liabilities

in crore

Particulars

As at March 31,

2016

2015

Others

Gratuity obligation – unamortized amount relating to plan amendment
(Refer to Note 2.29)

3

Payable for acquisition of business
(Refer to Notes 2.10.1 and 2.10.2)

46

Rental deposits received from subsidiary (Refer to Note 2.26)

27

27

73

30

2.5 Trade payables

in crore

Particulars

As at March 31,

2016

2015

Trade payables

Total outstanding dues of micro enterprises and small enterprises

Total outstanding dues of creditors other than micro enterprises and small enterprises (1)

623

124

623

124

(1) Includes dues to subsidiaries (Refer to Note 2.26)

145

102

As at March 31, 2016, there are no outstanding dues to micro and small enterprises (less than 1 crore as at March 31, 2015). There are no interests due or outstanding on the same.

2.6 Other current liabilities

in crore

Particulars

As at March 31,

2016

2015

Accrued salaries and benefits

Salaries and benefits

992

1,144

Bonus and incentives

772

575

Unearned revenue

1,025

831

Unpaid dividends

5

3

Other liabilities

Provision for expenses (1)

1,707

1,582

Retention monies

58

50

Withholding and other taxes payable

1,068

733

Gratuity obligation – unamortized amount relating to plan amendment, current (Refer to Note 2.29)

4

4

Other payables (2)

370

79

Advances received from clients

16

20

Mark-to-market forward and options contracts

2

Payable for acquisition of business
(Refer to Notes 2.10.1 and 2.10.2)

86

525

6,105

5,546

(1) Includes dues to subsidiaries (Refer to Note 2.26)

29

36

(2) Includes dues to subsidiaries (Refer to Note 2.26)

38

33

2.7 Short-term provisions

in crore

Particulars

As at March 31,

2016

2015

Provision for employee benefits

Compensated absences

1,130

907

Other provisions

Proposed dividend

3,273

3,388

Tax on dividend

666

690

Income taxes
(net of advance tax and TDS)

3,304

2,678

Post-sales client support and warranties and others

436

382

8,809

8,045

Provision for post-sales client support and warranties and other provisions

The movement in the provision for post-sales client support and warranties and other provisions is as follows:

in crore

Particulars

Year ended March 31,

2016

2015

Balance at the beginning

382

325

Provision recognized / (reversed)

82

134

Provision utilized

(49)

(78)

Exchange difference during the period

21

1

Balance at the end

436

382

Provision for post-sales client support and other provisions are expected to be utilized over a period of six months to one year.

2.8 Fixed assets

The changes in the carrying value of fixed assets for the year ended March 31, 2016 are as follows:

in crore, except as otherwise stated

Particulars

Tangible assets

Intangible assets

Total

Land – Freehold

Land – Leasehold

Buildings (1)(2)

Plant and machinery (2)

Office equipment (2)

Computer equipment (2)(3)

Furniture and fixtures (2)

Vehicles

Total

Intellectual property rights

Total

Original cost

As at April 1, 2015

929

621

5,733

1,361

525

2,812

832

14

12,827

42

42

12,869

Additions / Adjustments during the period

41

17

440

319

155

945

241

5

2,163

2,163

Deductions / Retirement during the period

(1)

(1)

(276)

(3)

(281)

(12)

(12)

(293)

As at March 31, 2016

970

638

6,173

1,679

679

3,481

1,070

19

14,709

30

30

14,739

Depreciation and amortization

As at April 1, 2015

16

1,937

838

280

1,852

549

8

5,480

42

42

5,522

For the period

5

213

207

90

472

125

3

1,115

1,115

Deductions / Adjustments during the period

(1)

(1)

(129)

(3)

(134)

(12)

(12)

(146)

As at March 31, 2016

21

2,150

1,044

369

2,195

671

11

6,461

30

30

6,491

Net book value

As at March 31, 2016

970

617

4,023

635

310

1,286

399

8

8,248

8,248

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

(2) Includes certain assets provided on cancellable operating lease to subsidiaries

(3) During the year ended March 31, 2016, computer equipment having net book value of 20 crore was transferred to EdgeVerve (Refer to Note 2.10.5)

The changes in the carrying value of fixed assets for the year ended March 31, 2015 are as follows:

in crore, except as otherwise stated

Particulars

Tangible assets

Intangible assets

Total

Land – Freehold

Land – Leasehold

Buildings (1)(2)

Plant and machinery (2)

Office equipment (2)

Computer equipment (2)(3)

Furniture and fixtures (2)

Vehicles

Total

Intellectual property rights

Total

Original cost

As at April 1, 2014

781

349

4,878

1,090

393

2,178

679

13

10,361

59

59

10,420

Additions / Adjustments during the year

148

272

855

274

134

694

160

3

2,540

2,540

Deductions / Retirement during the year

(3)

(2)

(60)

(7)

(2)

(74)

(17)

(17)

(91)

As at March 31, 2015

929

621

5,733

1,361

525

2,812

832

14

12,827

42

42

12,869

Depreciation and amortization

As at April 1, 2014

1,754

671

215

1,554

441

7

4,642

46

46

4,688

For the period

16

183

169

67

350

113

2

900

13

13

913

Deductions / Adjustments during the year

(2)

(2)

(52)

(5)

(1)

(62)

(17)

(17)

(79)

As at March 31, 2015

16

1,937

838

280

1,852

549

8

5,480

42

42

5,522

Net book value

As at March 31, 2015

929

605

3,796

523

245

960

283

6

7,347

7,347

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

(2) Includes certain assets provided on cancellable operating lease to subsidiaries

(3) During the year ended March 31, 2015, computer equipment having net book value of 8 crore was transferred to EdgeVerve (Refer to Note 2.10.5)

During the quarter ended June 30, 2014, the Management, based on internal and external technical evaluation, had reassessed the remaining useful life of certain assets primarily consisting of buildings and computers with effect from April 1, 2014. Accordingly, the useful lives of certain assets required a change from previous estimate.

The Company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of some of these agreements, the Company has the option to purchase or renew the properties on expiry of the lease period.

Tangible assets provided on operating lease to subsidiaries as at March 31, 2016 and March 31, 2015 are as follows:

in crore

Particulars

Cost

Accumulated depreciation

Net book value

Buildings

197

75

122

98

35

63

Plant and machinery

33

14

19

12

3

9

Furniture and fixtures

25

12

13

11

2

9

Computer equipment

3

2

1

Office equipment

18

7

11

6

1

5

The aggregate depreciation charged on the above assets during the year ended March 31, 2016 amounted to 19 crore ( 9 crore for the year ended March 31, 2015).

The rental income from subsidiaries for the year ended March 31, 2016 amounted to 51 crore ( 40 crore for the year ended March 31, 2015).

2.9 Leases

Obligations on long-term, non-cancellable operating leases: The lease rentals charged during the period and the obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows:

in crore

Particulars

Year ended March 31,

2016

2015

Lease rentals recognized during the period

175

158

in crore

Particulars

As at March 31,

2016

2015

Lease obligations payable

Within one year of the Balance Sheet date

170

101

Due in a period between one year and five years

417

284

Due after five years

315

158

The operating lease arrangements are renewable on a periodic basis and for most of the leases extend up to a maximum of 10 years from their respective dates of inception and relate to rented premises. Some of these lease agreements have price escalation clauses.

2.10 Investments

in crore, except as otherwise stated

Particulars

As at March 31,

2016

2015

Non-current investments

Long-term investments – at cost

Trade (unquoted)

Investments in equity instruments of subsidiaries

Infosys BPO Limited
3,38,22,319 (3,38,22,319) equity shares of 10/- each, fully paid-up

659

659

Infosys Technologies (China) Co. Limited

169

169

Infosys Technologies (Australia) Pty. Limited
1,01,08,869 (1,01,08,869) equity shares of AUD 0.11 par value, fully paid-up

66

66

Infosys Technologies, S. de R.L. de C.V., Mexico
17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid-up

65

65

Infosys Technologies (Sweden) AB
1,000 (1,000) equity shares of SEK 100 par value, fully paid-up

Infosys Technologia do Brasil Ltda.
5,91,24,348 (5,91,24,348) shares of BRL 1.00 par value, fully paid-up

149

149

Infosys Technologies (Shanghai) Company Limited

646

388

Infosys Public Services, Inc. 3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid-up

99

99

Infosys Consulting Holding AG
(formerly Lodestone Holding AG) (Refer to Note 2.10.6)
23,350 (23,350) – Class A shares of CHF 1,000 each and 29,400 (29,400) – Class B Shares of CHF 100 each, fully paid-up

1,323

1,323

Infosys Americas Inc.
10,000 (10,000) shares of USD 10 per share, fully paid-up

1

1

EdgeVerve Systems Limited
(Refer to Note 2.10.5)
1,31,18,40,000 (46,18,39,994) equity shares of 10/- each, fully paid-up

1,312

462

Panaya Inc. (Refer to Note 2.10.4)
2(2) shares of USD 0.01 per share, fully paid-up

1,398

1,398

Infosys Nova Holdings LLC
(Refer to Note 2.10.3)

94

94

Kallidus Inc. (Refer to Note 2.10.2)
10,21,35,416 (Nil) shares

647

Skava Systems Pvt. Ltd.
(Refer to Note 2.10.2)
25,000 (Nil) shares of 10 per share, fully paid-up

59

Noah Consulting LLC
(Refer to Note 2.10.1)

249

6,936

4,873

Investment in debentures

EdgeVerve Systems Limited
(Refer to Note 2.10.5)
25,49,00,000 (Nil) Unsecured redeemable, non-convertible debentures of 100 each fully paid-up

2,549

9,485

4,873

Others (unquoted) (Refer to Note 2.10.7)

Investments in preferred stock

92

Investments in equity instruments

7

7

Less: Provision for investments

6

6

93

1

Others (quoted)

Investments in tax-free bonds
(Refer to Note 2.10.8)

1,533

1,234

1,533

1,234

Total non-current investments

11,111

6,108

Current investments – at the lower of cost and fair value

Other current investments

Unquoted

Liquid mutual fund units
(Refer to Note 2.10.9)

749

749

Quoted

Investments in government bonds
(Refer to Note 2.10.8)

2

2

Total current investments

2

749

Total investments

11,113

6,857

Aggregate amount of quoted investments excluding interest accrued but not due of 55 crore as at March 31, 2016 ( 46 crore as at March 31, 2015) included under Note 2.15 Short-term loans and advances.

1,535

1,234

Market value of quoted investments

1,627

1,269

Aggregate amount of unquoted investments

9,584

5,629

Aggregate amount of provision made for non-current unquoted investments

6

6

2.10.1 Investment in Noah Consulting LLC

On November 16, 2015, Infosys acquired 100% membership interest in Noah Consulting LLC, a leading provider of advanced information management consulting services for the oil and gas industry. The business acquisition was conducted by entering into a share purchase agreement for a cash consideration of US $33 million (approximately 216 crore), contingent consideration of up to US $5 million (approximately 33 crore on acquisition date) and retention bonus of up to US $32 million (approximately 212 crore on acquisition date). The payment of contingent consideration to the sellers of Noah was dependent on the achievement of certain financial targets by Noah for the years ended December 31, 2015 and December 31, 2016. During the year ended March 31, 2016, based on the assessment of Noah achieving the targets for the respective periods, the entire contingent consideration was reversed.

2.10.2 Investment in Kallidus Inc. and Skava Systems Pvt. Ltd.

On June 2, 2015, Infosys acquired 100% of the voting interests in Kallidus Inc., (d.b.a Skava) (Kallidus), a leading provider of digital experience solutions, including mobile commerce and in-store shopping experiences to large retail clients and 100% of the voting interests of Skava Systems Private Limited, India, an affiliate of Kallidus. The business acquisition was conducted by entering into a share purchase agreement for a cash consideration of US $91 million (approximately 578 crore) and a contingent consideration of up to US $20 million (approximately 128 crore on acquisition date), the payment of which is dependent upon the achievement of certain financial targets by Kallidus over a period of three years ending on December 31, 2017.

2.10.3 Investment in DWA Nova LLC

During the year ended March 31, 2015, Infosys Nova Holdings LLC acquired 20% of the equity interests in DWA Nova LLC for a cash consideration of 94 crore. The Company has made this investment to form a new company along with Dream Works Animation (DWA). The new company, DWA Nova LLC, will develop and commercialize image generation technology in order to provide end-to-end digital manufacturing capabilities for companies involved in the design, manufacturing, marketing or distribution of physical consumer products. As of March 31, 2016, Infosys Nova Holdings holds 16% of the equity interest in DWA Nova LLC.

2.10.4 Investment in Panaya Inc.

On March 5, 2015, Infosys acquired 100% of the voting interests in Panaya Inc. (‘Panaya’), a Delaware Corporation in the United States. Panaya is a leading provider of automation technology for large-scale enterprise and software management. The business acquisition was conducted by entering into a share purchase agreement for a cash consideration of 1,398 crore.

2.10.5 Investment in EdgeVerve Systems Limited

On February 14, 2014, a wholly-owned subsidiary, EdgeVerve Systems Limited (‘EdgeVerve’), was incorporated. EdgeVerve was created to focus on developing and selling products and platforms. The Company has undertaken an enterprise valuation by an independent valuer and accordingly the business has been transferred for a consideration of 421 crore with effect from July 1, 2014. Net assets amounting to 9 crore have also been transferred and accordingly a gain of 412 crore has been recorded as an exceptional item. The consideration has been settled through the issue of fully-paid-up equity shares in EdgeVerve.

On April 24, 2015, the Board of Directors of Infosys has authorized the Company to execute a Business Transfer Agreement and related documents with EdgeVerve, to transfer the business of Finacle and Edge Services. Post the requisite approval from shareholders through a postal ballot on June 4, 2015, a Business Transfer Agreement and other related documents were executed with EdgeVerve to transfer the business with effect from August 1, 2015. The Company has undertaken an enterprise valuation by an independent valuer and accordingly the business was transferred for a consideration of 3,222 crore and 177 crore for Finacle and Edge Services, respectively. Net assets amounting to 363 crore (including working capital amounting to 337 crore) have been transferred and accordingly a gain of 3,036 crore has been recorded as an exceptional item. The consideration was settled through an issue of 85,00,00,000 equity shares amounting to 850 crore and 25,49,00,000 non-convertible redeemable debentures amounting to 2,549 crore in EdgeVerve, post the requisite approval from shareholders on December 11, 2015.

2.10.6 Investment in Infosys Consulting Holding AG (Formerly Lodestone Holding AG)

On October 22, 2012, Infosys acquired 100% of the outstanding share capital of Infosys Consulting Holding AG, a global management consultancy firm headquartered in Zurich, Switzerland. The acquisition was executed through a share purchase agreement for an upfront cash consideration of 1,187 crore and a deferred consideration of up to 608 crore.

The deferred consideration is payable to the selling shareholders of Lodestone on the third anniversary of the acquisition date and is contingent upon their continued employment for a period of three years. The investment in Lodestone has been recorded at the acquisition cost and the deferred consideration is being recognized on a proportionate basis over a period of three years from the date of acquisition. During the quarter ended December 31, 2015, the liability towards deferred consideration was settled.

Amounts of 110 crore and 219 crore, representing the proportionate charge of the deferred consideration have been recognized as an expense during the years ended March 31, 2016 and March 31, 2015, respectively.

2.10.7 Details of investments

The details of other non-current investments in preferred stock and equity instruments as at March 31, 2016 and March 31, 2015 are as follows:

in crore

Particulars

As at March 31,

2016

2015

Preferred Stock

Airviz Inc.

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

13

ANSR Consulting

52,631 (Nil) Series A Preferred Stock, fully paid-up, par value USD 0.001 each

9

Whoop Inc

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

20

CloudEndure Ltd.

12,79,645 (Nil) Preferred Series B Shares, fully paid-up, par value ILS 0.01 each

13

Nivetti Systems Private Limited

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

10

Waterline Data Science, Inc

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

27

Equity Instrument

OnMobile Systems Inc., USA

21,54,100 (21,54,100) common stock at USD 0.4348 each, fully paid-up, par value USD 0.001 each

4

4

Merasport Technologies Private Limited

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

2

2

Global Innovation and Technology Alliance

15,000 (10,000) equity shares at 1,000/- each, fully paid-up, par value 1,000/- each

1

1

99

7

Less: Provision for investment

6

6

93

1

2.10.8 Details of investments in tax-free bonds

The balances held in tax-free bonds as at March 31, 2016 and March 31, 2015 are as follows:

in crore

Particulars

Face value

As at March 31, 2016

As at March 31, 2015

Units

Amount

Units

Amount

7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023

1,000/-

20,00,000

201

20,00,000

201

7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028

1,000/-

21,00,000

211

21,00,000

211

7.93% Rural Electrification Corporation Limited Bonds 27MAR2022

1,000/-

2,00,000

21

2,00,000

21

8.26% India Infrastructure Finance Company Limited Bonds 23AUG28

10,00,000/-

1,000

100

1,000

100

8.30% National Highways Authority of India Bonds 25JAN2027

1,000/-

5,00,000

53

5,00,000

53

8.35% National Highways Authority of India 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

7.28% National Highways Authority of India Bonds 18SEP30

10,00,000/-

2,000

200

8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027

1,000/-

5,00,000

53

5,00,000

53

7.28% Indian Railway Finance Corporation Limited 21DEC30

1,000/-

4,22,800

42

7.35% National Highways Authority of India Bonds 11JAN31

1,000/-

5,71,396

57

68,02,646

1,533

58,06,450

1,234

The balances held in government bonds as at March 31, 2016 and March 31, 2015 are as follows:

in crore

Particulars

Face value PHP

As at March 31,

2016

2015

Units

Amount

Units

Amount

Fixed Rate Treasury Notes 7.00 PCT PIBD0716A488 MAT Date 27 Jan 2016

100

10,000

Fixed Rate Treasury Notes 1.70 PCT PHY6972FW G18 MAT Date 22 Feb 2017

100

1,50,000

2

1,50,000

2

10,000

2.10.9 Details of investments in liquid mutual fund units

The balances held in liquid mutual fund units as at March 31, 2015 are as follows:

in crore

Particulars

Units

Amount

IDFC Cash Fund – Direct Plan Daily Dividend

29,30,197

293

Reliance Liquid Fund – Treasury Plan – Direct Plan Daily Dividend Option

9,81,551

150

SBI Premier Liquid Fund – Direct Plan Daily Dividend

9,97,094

100

ICICI Liquid Plan – Direct Plan Daily Dividend

2,05,44,807

206

2,54,53,649

749

2.11 Long-term loans and advances

in crore

Particulars

As at March 31,

2016

2015

Unsecured, considered good

Capital advances

333

316

Security deposits

73

65

Rental deposits (1)

119

45

Other loans and advances

Advance income taxes
(net of provisions)

5,020

3,941

Prepaid expenses

87

7

Deferred contract cost

333

Loans and advances to employees

5

4

5,970

4,378

Unsecured, considered doubtful

Loans and advances to employees

13

10

5,983

4,388

Less: Provision for doubtful loans and advances to employees

13

10

5,970

4,378

(1) Includes deposits with subsidiaries (Refer to Note 2.26)

21

21

2.12 Other non-current assets

in crore

Particulars

As at March 31,

2016

2015

Others

Advance to gratuity trust
(Refer to Note 2.29)

2

26

2

26

2.13 Trade receivables (1)

in crore

Particulars

As at March 31,

2016

2015

Debts outstanding for a period exceeding six months

Unsecured

Considered doubtful

176

162

Less: Provision for doubtful debts

176

162

Other debts

Unsecured

Considered good (2)

9,798

8,627

Considered doubtful

73

160

9,871

8,787

Less: Provision for doubtful debts

73

160

9,798

8,627

9,798

8,627

(1) Includes dues from companies where directors are interested

1

6

(2) Includes dues from subsidiaries (Refer to Note 2.26)

244

309

2.14 Cash and cash equivalents

in crore

Particulars

As at March 31,

2016

2015

Cash on hand

Balances with banks

In current and deposit accounts

24,276

23,722

Others

Deposits with financial institution

4,900

4,000

29,176

27,722

Balances with banks in unpaid dividend accounts

5

3

Deposit accounts with more than 12 months maturity

237

182

Balances with banks held as margin money deposits against guarantees

336

185

Cash and cash equivalents as at March 31, 2016 and March 31, 2015 include restricted cash and bank balances of 341 crore and 188 crore, respectively. The restrictions are primarily on account of cash and bank balances held as margin money deposits against guarantees and unpaid dividends.

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

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

in crore

Particulars

As at March 31,

2016

2015

In current accounts

ANZ Bank, Taiwan

13

4

Bank of America, U.S.

563

498

Citibank NA, Australia

24

10

Citibank NA, India

1

6

Citibank NA, Dubai

1

1

Citibank NA, EEFC
(U.S. Dollar account)

2

Citibank NA, Japan

15

20

Citibank NA, New Zealand

2

3

Citibank NA, South Africa

4

2

Deutsche Bank, Philippines

11

2

Deutsche Bank, India

4

4

Deutsche Bank, EEFC (Euro account)

17

2

Deutsche Bank, EEFC (GBP account)

8

5

Deutsche Bank, EEFC (AUD account)

2

Deutsche Bank, EEFC
(U.S. Dollar account)

95

7

Deutsche Bank, EEFC (CHF account)

2

4

Deutsche Bank, Belgium

59

13

Deutsche Bank, France

10

2

Deutsche Bank, Germany

17

8

Deutsche Bank, Netherlands

4

1

Deutsche Bank, Russia
(U.S. Dollar account)

1

Deutsche Bank, Russia
(Russian Ruble account)

2

Deutsche Bank, Singapore

4

5

Deutsche Bank, Spain

1

Deutsche Bank, Switzerland

1

Deutsche Bank, UK

170

24

Deutsche Bank, Malaysia

9

HSBC, Hong Kong

1

44

ICICI Bank, India

57

18

ICICI Bank, EEFC (U.S. Dollar account)

10

9

Nordbanken, Sweden

5

1

Punjab National Bank, India

4

7

Royal Bank of Canada, Canada

24

11

State Bank of India

7

1

1,147

715

In deposit accounts

Allahabad Bank

200

Andhra Bank

848

97

Axis Bank

1,170

1,415

Bank of Baroda

2,314

Bank of India

2,691

Canara Bank

1,861

2,841

Central Bank of India

1,518

1,303

Corporation Bank

1,185

1,197

Development Bank of Singapore

35

HDFC Bank

2,500

2,017

ICICI Bank

3,755

3,059

IDBI Bank

1,750

706

IndusInd Bank

250

75

ING Vysya Bank

100

Indian Overseas Bank

1,000

573

Jammu & Kashmir Bank

25

Kotak Mahindra Bank

492

Oriental Bank of Commerce

1,967

1,500

Punjab National Bank

512

State Bank of India

2,310

Syndicate Bank

1,250

327

Union Bank of India

7

971

Vijaya Bank

200

386

Yes Bank

700

500

22,788

22,819

In unpaid dividend accounts

Axis Bank – Unpaid dividend account

2

HDFC Bank – Unpaid dividend account

1

1

ICICI Bank – Unpaid dividend account

2

2

5

3

In margin money deposits against guarantees

Canara Bank

132

128

ICICI Bank

147

State Bank of India

57

57

336

185

Deposits with financial institution

HDFC Limited

4,900

4,000

4,900

4,000

Total cash and cash equivalents as per Balance Sheet

29,176

27,722

2.15 Short-term loans and advances

in crore

Particulars

As at March 31,

2016

2015

Unsecured, considered good

Loans to subsidiaries (Refer to Note 2.26)

91

24

Others

Advances

Prepaid expenses (3)

209

71

Deferred contract cost

48

For supply of goods and rendering of services

58

60

Withholding and other taxes receivable

1,650

1,253

Others (1)

166

49

2,222

1,457

Restricted deposits (Refer to Note 2.33)

1,154

1,039

Unbilled revenues (2)

2,673

2,423

Interest accrued but not due

696

433

Loans and advances to employees

Housing and other loans

54

53

Salary advances

210

148

Security deposits

1

1

Mark-to-market forward and options contracts

109

94

Rental deposits

2

6

7,121

5,654

(1) Includes dues from subsidiaries (Refer to Note 2.26)

24

43

(2) Includes dues from subsidiaries (Refer to Note 2.26)

20

6

(3) Includes dues from subsidiaries (Refer to Note 2.26)

43

2.16 Income from software services and products

in crore

Particulars

Year ended March 31,

2016

2015

Income from software services

53,334

45,658

Income from software products

649

1,642

53,983

47,300

2.17 Other income

in crore

Particulars

Year ended March 31,

2016

2015

Interest received on deposits with banks and others

2,506

2,592

Dividend received on investment in mutual fund units

57

146

Gain on sale of investments

10

Miscellaneous income, net

276

64

Gains / (losses) on foreign currency, net

170

525

3,009

3,337

2.18 Expenses

in crore

Particulars

Year ended March 31,

2016

2015

Employee benefit expenses

Salaries and bonus including overseas staff expenses

27,551

24,509

Contribution to provident and other funds

547

519

Employee stock compensation expense (Refer to Note 2.1)

7

2

Staff welfare

101

85

28,206

25,115

Cost of technical sub-contractors

Technical sub-contractors – subsidiaries

1,761

1,385

Technical sub-contractors – others

2,656

1,524

4,417

2,909

Travel expenses

Overseas travel expenses

1,510

1,235

Travelling and conveyance

145

125

1,655

1,360

Cost of software packages and others

For own use

663

797

Third party items bought for service delivery to clients

386

182

1,049

979

Communication expenses

Telephone charges

214

247

Communication expenses

97

137

311

384

Other expenses

Office maintenance

480

361

Power and fuel

179

185

Brand building

178

94

Rent

175

158

Rates and taxes, excluding taxes on income

99

108

Repairs to building

188

99

Repairs to plant and machinery

85

70

Computer maintenance

120

104

Consumables

28

39

Insurance charges

48

42

Provision for post-sales client support and warranties

18

17

Commission to non-whole-time directors

8

7

Provision for bad and doubtful debts and advances

(45)

145

Auditors’ remuneration

Statutory audit fees

2

2

Other services

Reimbursement of expenses

Bank charges and commission

4

8

Contributions towards Corporate Social Responsibility
(Refer to Note 2.34)

202

243

Others

140

294

1,909

1,976

2.19 Tax expenses

in crore

Particulars

Year ended March 31,

2016

2015

Current tax

Income tax

4,898

4,537

Deferred tax

9

97

4,907

4,634

During the years ended March 31, 2016 and March 31, 2015, the Company had a reversal (net of provisions) of 331 crore and 161 crore, respectively, pertaining to tax relating to prior years.

Income taxes

The provision for taxation includes tax liabilities in India on the Company’s global income as reduced by exempt incomes and any tax liabilities arising overseas on income sourced from those countries as per Indian Income-tax Act, 1961. Infosys’ operations are conducted through Software Technology Parks (‘STPs’) and Special Economic Zones (‘SEZs’). Income from STPs were tax exempt for the first 10 years from the fiscal in which the unit commenced software development, or March 31, 2011 whichever is earlier. Income from SEZ units is fully tax exempt for the first five years, 50% exempt for the next five years and 50% exempt for another five years subject to fulfilling certain conditions.

2.20 Contingent liabilities and commitments (to the extent not provided for)

in crore

Particulars

As at March 31,

2016

2015

Contingent liabilities

Outstanding guarantees and counter guarantees to various banks, in respect of the guarantees given by those banks in favor of various government authorities and others

29

22

Claims against the Company, not acknowledged as debts (1)

188

167

[Net of amount paid to statutory authorities 4,386 crore ( 3,572 crore)]

Commitments

Estimated amount of unexecuted capital contracts (net of advances and deposits)

1,295

1,272

(1) Claims against the Company not acknowledged as debts for the year ended March 31, 2016 include demand from the Indian income tax authorities for payment of tax of 4,135 crore ( 3,337 crore), including interest of 1,224 crore ( 964 crore) upon completion of their tax assessment for fiscals 2007, 2008, 2009, 2010 and 2011 (for the year ended March 31, 2015 – upon completion of their tax assessment for fiscals 2006, 2007, 2008, 2009 and 2010). These demands were paid to statutory tax authorities, including 913 crore paid during the year ended March 31, 2016, consequent to demand from tax authorities in India for fiscal 2011 towards denial of certain tax benefits. The Company has filed an appeal with the income tax appellate authorities.

Demand for fiscals 2007, 2008 and 2009 includes disallowance of a portion of the deduction claimed by the Company under Section 10A of the Income-tax Act as determined by the ratio of export turnover to total turnover. The disallowance arose from certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover. Demand for fiscals 2007, 2008, 2009, 2010 and 2011 also includes disallowance of the portion of profit earned outside India from the STP units under Section 10A of the Income-tax Act and disallowance of profits earned from SEZ units under Section 10AA of the Income-tax Act. The matters for fiscals 2007, 2008 and 2009 are pending before the Commissioner of Income Tax (Appeals) Bangalore. The matter for fiscals 2010 and 2011 is pending before the Income Tax Appellate Tribunal (ITAT) Bangalore.

The Company is contesting the demand and the Management including its tax advisors believes that its position will likely be upheld in the appellate process. The Management believes that the ultimate outcome of these proceedings will not have a material adverse effect on the Company’s financial position and results of operations.

2.21 Derivative instruments

The details in respect of outstanding foreign exchange forward and option contracts are as follows:

Particulars

As at March 31,

2016

2015

in million

in crore

in million

in crore

Forward contracts outstanding

In USD

467

3,094

664

4,150

In Euro

84

633

59

396

In GBP

60

573

68

632

In AUD

50

255

95

452

In CAD

12

59

In SGD

25

114

In CHF

25

173

Options Outstanding

In USD

125

828

5,556

5,803

As of March 31, 2016 and March 31, 2015, there were no net foreign currency exposures that were not hedged by a derivative instrument or otherwise.

The foreign exchange forward and option contracts mature within 12 months. The table below analyzes the derivative financial instruments into relevant maturity groupings based on the remaining period as of the Balance Sheet date:

in crore

Particulars

As at March 31,

2016

2015

Not later than one month

1,468

1,382

Later than one month and not later than three months

3,260

3,608

Later than three months and not later than one year

828

813

5,556

5,803

The Company recognized gains of 29 crore and 499 crore on derivative instruments during the years ended March 31, 2016 and March 31, 2015, respectively, which is included in ‘other income’.

2.22 Quantitative details

The Company is primarily engaged in the development and maintenance of computer software. The production and sale of such software cannot be expressed in any generic unit. Hence, it is not possible to give the quantitative details of sales and certain information as required under paragraphs 5 (viii)(c) of general instructions for preparation of the Statement of Profit and Loss as per Schedule III to the Companies Act, 2013.

2.23 Imports (valued on the cost, insurance and freight basis)

in crore

Particulars

Year ended March 31,

2016

2015

Capital goods

391

415

Software packages

3

3

394

418

2.24 Activity in foreign currency

in crore

Particulars

Year ended March 31,

2016

2015

Earnings in foreign currency

Income from software services and products

52,860

46,153

Interest received from banks and others

6

5

52,866

46,158

Expenditure in foreign currency

Overseas travel expenses
(including visa charges)

1,305

992

Professional charges

405

222

Technical sub-contractors – subsidiaries

1,477

1,168

Overseas salaries and incentives

19,041

15,967

Other expenditure incurred overseas for software development

3,910

3,278

26,138

21,627

Net earnings in foreign currency

26,728

24,531

2.25 Dividends remitted in foreign currencies

The Company remits the equivalent of the dividends payable to equity shareholders and holders of ADS. For ADS holders the dividend is remitted in Indian rupees to the depository bank, which is the registered shareholder on record for all owners of the Company’s ADSs. The depositary bank purchases the foreign currencies and remits dividends to the ADS holders.

The particulars of dividends remitted are as follows:

in crore

Particulars

Number of non-resident shareholders

Number of shares to which the dividends relate

Year ended March 31,

2016

2015

Interim dividend for fiscal 2016

2

38,53,33,537

385

Final dividend for fiscal 2015

2

19,22,58,436

567

Interim dividend for fiscal 2015

2

8,23,17,281

247

Final dividend for fiscal 2014

2

9,30,32,691

400

2.26 Related party transactions

List of related parties

in %

Name of subsidiary

Country

Holding as at March 31,

2016

2015

Infosys BPO Limited (Infosys BPO)

India

99.98

99.98

Infosys Technologies (China) Co. Limited (Infosys China)

China

100

100

Infosys Technologies
S. de R. L. de C. V.
(Infosys Mexico)

Mexico

100

100

Infosys Technologies (Sweden) AB (Infosys Sweden)

Sweden

100

100

Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai)

China

100

100

Infosys Tecnologia do
Brasil Ltda.
(Infosys Brasil)

Brazil

100

100

Infosys Public Services, Inc. (Infosys Public Services)

U.S.

100

100

Infosys Americas Inc. (Infosys Americas)

U.S.

100

100

Infosys (Czech Republic) Limited s.r.o
(formerly Infosys BPO s.r.o) (1)

Czech Republic

99.98

99.98

Infosys Poland Sp. z o.o. (formerly Infosys BPO (Poland)
Sp. z.o.o)
(1)

Poland

99.98

99.98

Infosys BPO
S. de R.L. de C.V (1)(17)

Mexico

Infosys McCamish Systems LLC (1)

U.S.

99.98

99.98

Portland Group Pty. Limited (1)

Australia

99.98

99.98

Portland Procurement Services Pty Ltd (5)

Australia

Infosys BPO Americas LLC (1)(16)

U.S.

Infosys Technologies (Australia) Pty. Limited (Infosys Australia) (2)

Australia

100

100

EdgeVerve Systems Limited (EdgeVerve) (7)

India

100

100

Infosys Consulting Holding AG (Infosys Lodestone) (formerly Lodestone Holding AG)

Switzerland

100

100

Lodestone Management Consultants Inc. (3)

U.S.

100

100

Infosys Management Consulting Pty Limited (formerly Lodestone Management Consultants Pty. Limited)(3)

Australia

100

100

Infosys Consulting AG (formerly Lodestone Management Consultants AG) (3)

Switzerland

100

100

Lodestone Augmentis AG (2)(6)

Switzerland

100

100

Lodestone GmbH (formerly Hafner Bauer & Ödman GmbH) (2)(3)

Switzerland

100

100

Lodestone Management Consultants
(Belgium) S.A. (4)

Belgium

99.90

99.90

Infosys Consulting GmbH (formerly Lodestone Management Consultants GmbH) (3)

Germany

100

100

Infosys Consulting Pte Ltd. (formerly Lodestone Management Consultants Pte Ltd) (3)

Singapore

100

100

Infosys Consulting SAS (formerly Lodestone Management Consultants SAS) (3)

France

100

100

Infosys Consulting s.r.o. (formerly Lodestone Management Consultants s.r.o.) (3)

Czech Republic

100

100

Lodestone Management Consultants GmbH (3)

Austria

100

100

Lodestone Management Consultants Co., Ltd. (3)

China

100

100

Infy Consulting Company Limited (formerly Lodestone Management Consultants Ltd.) (3)

U.K.

100

100

Infy Consulting B.V.

(formerly Lodestone Management Consultants B.V.) (3)

Netherlands

100

100

Infosys Consulting Ltda. (formerly Lodestone Management Consultants Ltda.) (4)

Brazil

99.99

99.99

Infosys Consulting
Sp. Z o.o.
(formerly Lodestone Management Consultants Sp. z o.o.) (3)

Poland

100

100

Lodestone Management Consultants Portugal, Unipessoal, Lda (3)

Portugal

100

100

S.C. Infosys Consulting S.R.L. (formerly SC Lodestone Management Consultants S.R.L.) (3)

Romania

100

100

Infosys Consulting S.R.L. (formerly Lodestone Management Consultants S.R.L.) (3)

Argentina

100

100

Infosys Canada Public Services Ltd. (8)

Canada

Infosys Nova Holdings LLC (Infosys Nova) (9)

U.S.

100

100

Panaya Inc. (Panaya) (10)

U.S.

100

100

Panaya Ltd. (11)

Israel

100

100

Panaya GmbH (11)

Germany

100

100

Panaya Pty Ltd. (11)

Australia

Panaya Japan Co. Ltd. (11)

Japan

100

100

Skava Systems Pvt. Ltd. (Skava Systems) (12)

India

100

Kallidus Inc. (Kallidus) (13)

U.S.

100

Noah Consulting LLC (Noah) (14)

U.S.

100

Noah Information Management Consulting Inc. (Noah Canada) (15)

Canada

100

(1) Wholly-owned subsidiary of Infosys BPO.

(2) Under liquidation

(3) Wholly-owned subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)

(4) Majority-owned and controlled subsidiaries of Infosys Consulting Holding AG (formerly Lodestone Holding AG)

(5) Wholly-owned subsidiary of Portland Group Pty. Limited. Liquidated effective May 14, 2014.

(6) Wholly-owned subsidiary of Infosys Consulting AG (formerly Lodestone Management Consultants AG)

(7) Incorporated effective February 14, 2014 (Refer to Note 2.10.5)

(8) Wholly-owned subsidiary of Infosys Public Services, Inc. Incorporated effective December 19, 2014

(9) Incorporated effective January 23, 2015

(10) On March 5, 2015, Infosys acquired 100% of the voting interest in Panaya Inc.
(Refer to Note 2.10.4).

(11) Wholly-owned subsidiary of Panaya Inc.

(12) On June 2, 2015, Infosys acquired 100% of the voting interest in Skava Systems
(Refer to Note 2.10.2).

(13) On June 2, 2015, Infosys acquired 100% of the voting interest in Kallidus Inc.
(Refer to Note 2.10.2).

(14) On November 16, 2015, Infosys acquired 100% of the membership interests in Noah
(Refer to Note 2.10.1).

(15) Wholly-owned subsidiary of Noah

(16) Incorporated effective November 20, 2015

(17) Liquidated effective March 15, 2016

Infosys has provided guarantee for the performance of certain contracts entered into by its subsidiaries.

in %

Name of associate

Country

Holding as at March 31,

2016

2015

DWA Nova LLC (1)

U.S.

16

20

(1) Associate of Infosys Nova Holdings LLC

List of other related parties

Particulars

Country

Nature of relationship

Infosys Limited Employees’ Gratuity Fund Trust

India

Post-employment benefit plan of Infosys

Infosys Limited Employees’ Provident Fund Trust

India

Post-employment benefit plan of Infosys

Infosys Limited Employees’ Superannuation Fund Trust

India

Post-employment benefit plan of Infosys

Infosys Science Foundation

India

Controlled trust

Infosys Limited Employees’ Welfare Trust

India

Controlled trust

Infosys Employee Welfare Trust

India

Controlled trust

Notes:

Refer to Notes 2.29 and 2.30 for information on transactions with post-employment benefit plans mentioned above.

List of key managerial personnel

Whole-time directors

S. D. Shibulal

(resigned effective July 31, 2014)

Srinath Batni

(resigned effective July 31, 2014)

B. G. Srinivas

(resigned effective June 10, 2014)

U. B. Pravin Rao

Dr. Vishal Sikka

(appointed effective June 14, 2014)

Non-whole-time directors

N. R. Narayana Murthy

(resigned effective October 10, 2014)

S. Gopalakrishnan

(resigned effective October 10, 2014)

K. V. Kamath

(resigned effective June 5, 2015)

Dr. Omkar Goswami

(retired effective December 31, 2014)

Prof. Jeffrey S. Lehman

R. Seshasayee

Ann M. Fudge

(retired effective June 14, 2014)

Ravi Venkatesan

Kiran Mazumdar-Shaw

Carol M. Browner

(resigned effective November 23, 2015)

Prof. John W. Etchemendy

(appointed effective December 4, 2014)

Roopa Kudva

(appointed effective February 4, 2015)

Dr. Punita Kumar-Sinha

(appointed effective January 14, 2016)

Executive officers

M. D. Ranganath

Chief Financial Officer and Executive Vice President (effective October 12, 2015)

David D. Kennedy

Executive Vice President, General Counsel and Chief Compliance Officer
(effective November 1, 2014)

Rajiv Bansal

Chief Financial Officer
(till October 12, 2015)

Srikantan Moorthy

Group Head of Human Resource Development (till March 31, 2015)

Parvatheesam K.

Company Secretary (resigned effective January 10, 2015)

Company Secretary

A. G. S. Manikantha

(appointed effective June 22, 2015)

The details of amounts due to or due from related parties as at March 31, 2016 and March 31, 2015 are as follows:

in crore

Particulars

As at March 31,

2016

2015

Investment in debentures

EdgeVerve (1)

2,549

Trade receivables

Infosys China

29

16

Infosys Mexico

6

1

Infosys Brasil

1

5

Infosys BPO

5

1

Infosys Consulting Ltd.

8

26

EdgeVerve

14

Infosys Public Services

153

246

Infosys Sweden

28

Panaya Ltd.

14

244

309

Loans (2)

Infosys Consulting Ltd.

6

Infosys Sweden

24

Infosys Technologies China

67

EdgeVerve

18

91

24

Other receivables

Infosys BPO

5

1

Infosys Public Services

8

4

EdgeVerve

3

14

Panaya

43

Infosys Consulting SAS

6

3

Infosys Consulting GmbH

1

1

Infosys Consulting Ltd.

1

20

67

43

Unbilled revenues

Infosys Consulting SAS

1

EdgeVerve

20

Infosys McCamish Systems LLC

5

20

6

Trade payables

Infosys China

10

10

Infosys BPO

6

Infosys (Czech Republic) Limited s.r.o

2

Portland Group Pty. Limited

1

Infosys Mexico

2

1

Infosys Sweden

8

5

Lodestone Management Consultants
Pty Limited

16

10

Infosys Consulting Pte Ltd.

7

8

Infosys Consulting Ltd.

83

65

Infosys Brasil

2

EdgeVerve

Panaya Ltd.

9

Infosys Public Services

2

145

102

Other payables

Infosys BPO

27

16

Infosys McCamish Systems LLC

2

Infosys Consulting AG

1

1

Infosys Consulting Ltd.

1

1

EdgeVerve