Standalone financial statements

Independent Auditors’ Report

To the Members of Infosys Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of Infosys Limited (‘the Company’), which comprise the Balance Sheet as at 31 March 2017, the Statement of Profit and Loss (including other comprehensive income), the Statement of Cash Flows and the Statement of Changes in Equity for the year then ended and a summary of the significant accounting policies and other explanatory information (hereinafter referred to as ‘standalone Ind AS financial statements’).

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 of these standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Act read with relevant rules issued thereunder.

This responsibility also includes the 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 standalone Ind AS 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 Ind AS 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 standalone Ind AS financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the standalone Ind AS financial statements. The procedures selected depend on the Auditors’ judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 standalone Ind AS 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 standalone Ind AS 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 Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone Ind AS 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 including the Ind AS, of the financial position of the Company as at 31 March, 2017, and its financial performance including other comprehensive income, its cash flows and the changes in equity for the year ended on that date.

Report on Other Legal and Regulatory Requirements

1.

As required by the Companies (Auditors’ Report) Order, 2016 (‘the Order’) issued by the Central Government of India in terms of Section 143(11) 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, the Statement of Cash Flows and the Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;

d.

in our opinion, the aforesaid standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act read with relevant rule issued thereunder;

e.

on the basis of the written representations received from the directors as on 31 March 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March 2017 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 standalone Ind AS financial statements. Refer to Note 2.24 to the standalone Ind AS 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 2.16 to the standalone Ind AS 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; and

iv.

the Company has provided requisite disclosures in its standalone Ind AS financial statements as to holdings as well as dealings in Specified Bank Notes during the period from 8 November, 2016 to 30 December, 2016 and these are in accordance with the books of accounts maintained by the Company. Refer to Note 2.27 to the standalone Ind AS financial statements.

for B S R & Co. LLP

Chartered Accountants

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

Bengaluru

13 April, 2017

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 Ind AS financial statements for the year ended 31 March 2017, 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 program, 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 two 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 Sections 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 2017 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 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

(5) 5,75,63,973

July 2004 to October 2005

CESTAT, Bengaluru

Service tax

Service tax

(5) 2,57,84,864

January 2005 to March 2009

CESTAT, Bengaluru

Service tax

Service tax and penalty

(5) 23,15,21,178

February 2007 to March 2009

CESTAT, Bengaluru

Service tax

Service tax

(5) 4,19,72,658

April 2009 to March 2010

CESTAT, Bengaluru

Service tax

Service tax

(5) 6,46,54,051

April 2010 to March 2011

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 11,94,51,864

April 2009 to March 2012

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 64,93,657

April 2009 to September 2011

Commissioner (Appeals)

Service tax

Service tax and penalty

(1) 4,87,030

October 2008 to September 2013

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 4,75,80,094

April 2012 to March 2013

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1) 98,194

October 2011 to December 2011

Commissioner (Appeals), Bengaluru

Service tax

Service tax and penalty

4,21,06,232

October 2014 to June 2015

CESTAT, Bengaluru

Service tax

Service tax and penalty

(1)(5) 63,63,914

Assessment year 2007-08

Commissioner (Appeals)

Service tax

Service tax and penalty

(1) 61,03,641

July 2012 to March 2014

Commissioner, Bengaluru

Service tax

Service tax and penalty

1,35,21,166

April 2013 to September 2014

(2)

Service tax

Service tax and penalty

(1) 1,31,07,821

April 2014 to March 2015

Commissioner (Appeals)

APVAT Act, 2005

Sales tax

(1)(5) 31,12,450

April 2007 to March 2008

High Court of Andhra Pradesh

MVAT Act, 2005

Sales tax

(1)(5) 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

KVAT Act, 2003

Sales tax, interest and penalty

(1)(5) 48,10,45,876

April 2005 to March 2009

Supreme Court

MVAT Act, 2005

Sales tax, interest and penalty

(5) 6,99,250

January 2008 to March 2008

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(1)(5) 22,01,534

April 2008 to March 2009

Joint Commissioner (Appeals)

MVAT Act, 2005

Sales tax, interest

(5) 31,32,547

April 2009 to March 2010

Joint Commissioner (Appeals)

KVAT

Sales tax, interest and penalty

(1)(5) 3,57,79,253

Assessment year 2009-10

Joint Commissioner (Appeals)

KVAT

Sales tax and penalty

(1) 6,32,81,133

Assessment year 2010-11

Joint Commissioner (Appeals)

KVAT

Sales tax and penalty

(1) 10,25,39,169

Assessment year 2012-13

(3)

TNVAT

Sales tax and penalty

63,16,338

Assessment year 2015-16

(4)

MVAT Act, 2005

Sales tax, interest

(1)(5) 98,01,056

April 2010 to March 2011

Joint Commissioner (Appeals)

Central Excise Act, 1944

Excise duty and penalty

(5) 38,61,48,018

March 2006 to December 2009

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 2,67,46,497

January 2010 to December 2010

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

4,51,32,885

January 2011 to June 2011

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 3,23,44,749

July 2011 to December 2011

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 4,20,03,700

January 2012 to November 2012

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

(5) 4,81,39,052

December 2012 to September 2013

CESTAT, Bengaluru

Central Excise Act, 1944

Excise duty and penalty

5,64,00,395

October 2013 to September 2014

CESTAT, Bengaluru

Income-tax Act, 1961

Interest

3,81,54,376

Assessment year 2009-10

CIT (Appeals)

Income-tax Act, 1961

TDS and interest

(1)(5) 26,65,123

Assessment year 2010-11

CIT (Appeals)

Income-tax Act, 1961

Interest

2,08,88,269

Assessment year 2011-12

ITAT, Bengaluru

Income-tax Act, 1961

Income tax and interest

(1) 13,29,20,96,950

Assessment Year 2012-13

ITAT

Income-tax Act, 1961

Income tax and interest

(1) 3,58,99,73,710

Assessment Year 2013-14

CIT (Appeals)

(1) Net of amounts paid under protest.

(2) The Company is in the process of filing an appeal before Commissioner (Appeals).

(3) The Company is in the process of filing an appeal before Joint Commissioner (Appeals).

(4) The Company is in the process of filing an appeal before Deputy Commissioner.

(5) A stay order has been obtained against the amount disputed and not been deposited.

(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 given 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 standalone Ind AS financial statements as required by the applicable accounting standards.

(xiv)

According to the information and explanations give 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

Bengaluru

13 April, 2017

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 2017 in conjunction with our audit of the standalone Ind AS 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 was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the standalone Ind AS 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 2017, 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

Bengaluru

13 April, 2017

Supreet Sachdev

Partner

Membership number : 205385

Balance Sheet

in crore

Particulars

Note

As at March 31,

As at April 1, 2015

2017

2016

ASSETS

Non-current assets

Property, plant and equipment

2.3

8,605

8,248

7,347

Capital work-in-progress

1,247

934

769

Intangible assets

2.4

Financial assets

Investments

2.5

15,334

11,076

6,108

Loans

2.6

5

5

4

Other financial assets

2.7

216

192

110

Deferred tax assets (net)

2.17

346

405

433

Other non-current assets

2.10

996

755

349

Income tax assets (net)

2.17

5,454

5,020

3,941

Total non-current assets

32,203

26,635

19,061

Current assets

Financial assets

Investments

2.5

9,643

2

749

Trade receivables

2.8

10,960

9,798

8,627

Cash and cash equivalents

2.9

19,153

29,176

27,722

Loans

2.6

310

355

225

Other financial assets

2.7

5,403

4,801

4,045

Other current assets

2.10

2,213

1,965

1,384

Total current assets

47,682

46,097

42,752

Total assets

79,885

72,732

61,813

EQUITY AND LIABILITIES

Equity

Equity share capital

2.12

1,148

1,148

574

Other equity

66,869

59,934

51,617

Total equity

68,017

61,082

52,191

Liabilities

Non-current liabilities

Financial liabilities

Other financial liabilities

2.13

40

62

27

Other non-current liabilities

2.15

42

Deferred tax liabilities (net)

2.17

Total non-current liabilities

82

62

27

Current liabilities

Financial liabilities

Trade payables

2.14

269

623

124

Other financial liabilities

2.13

5,056

5,132

4,847

Other current liabilities

2.15

2,349

2,093

1,564

Provisions

2.16

350

436

382

Income tax liabilities (net)

2.17

3,762

3,304

2,678

Total current liabilities

11,786

11,588

9,595

Total equity and liabilities

79,885

72,732

61,813

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

Bengaluru

13 April, 2017

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,

2017

2016

Revenue from operations

2.18

59,289

53,983

Other income, net

2.19

3,062

3,006

Total income

62,351

56,989

Expenses

Employee benefit expenses

2.20

30,944

28,207

Deferred consideration pertaining to acquisition

149

Cost of technical sub-contractors

4,809

4,417

Travel expenses

1,638

1,655

Cost of software packages and others

2.20

1,235

1,049

Communication expenses

372

311

Consultancy and professional charges

538

563

Depreciation and amortization expense

2.3 & 2.4

1,331

1,115

Other expenses

2.20

2,546

1,923

Total expenses

43,413

39,389

Profit before tax

18,938

17,600

Tax expense

Current tax

2.17

5,068

4,898

Deferred tax

2.17

52

9

Profit for the period

13,818

12,693

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Remeasurement of the net defined benefit liability / asset

(42)

(2)

Equity instruments through other comprehensive income

2.5 & 2.17

(5)

(47)

(2)

Items that will be reclassified subsequently to profit or loss

Fair value changes on cash flow hedges, net

39

Fair value changes on investments, net

2.5

(10)

29

Total other comprehensive income, net of tax

(18)

(2)

Total comprehensive income for the period

13,800

12,691

Earnings per equity share

Equity shares of par value 5 each

Basic ()

60.16

55.26

Diluted ()

60.15

55.26

Weighted average equity shares used in computing earnings per equity share

Basic

2.23

2,29,69,44,664

2,29,69,44,664

Diluted

2.23

2,29,71,59,670

2,29,69,44,664

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

Bengaluru

13 April, 2017

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Statement of Changes in Equity

in crore

Particulars

Equity share capital

OTHER EQUITY

Total equity attributable to equity holders of the Company

Reserves and surplus

Other comprehensive income

Securities premium reserve

Retained earnings

Capital reserve

General reserve

Share options outstanding account

Special Economic Zone Re-investment Reserve (1)

Business transfer adjustment reserve (2)

Equity instruments through other comprehensive income

Cash flow hedge reserve

Other items of other comprehensive income

Balance as of April 1, 2015

574

2,778

40,065

54

8,291

2

412

15

52,191

Changes in equity for the year ended March 31, 2016

Increase in share capital on account of bonus issue
(Refer to Note 2.12)

574

574

Transfer to general reserve

(1,217)

1,217

Amounts utilized for bonus issue
(Refer to Note 2.12)

(574)

(574)

Transferred to Special Economic Zone Re-investment Reserve

(591)

591

Transferred from Special Economic Zone Re-investment Reserve on utilization

591

(591)

Share-based payment to employees (Refer to Note 2.12)

7

7

Remeasurement of the net defined benefit liability / asset, net of tax effect
(Refer to Notes 2.22 and 2.17)

(2)

(2)

Dividends
(including corporate dividend tax)

(6,843)

(6,843)

Profit on transfer of business (2)

3,036

3,036

Profit for the period

12,693

12,693

Balance as of March 31, 2016

1,148

2,204

44,698

54

9,508

9

3,448

13

61,082

Balance as of April 1, 2016

1,148

2,204

44,698

54

9,508

9

3,448

13

61,082

Changes in equity for the year ended March 31, 2017

Transfer to general reserve

(1,579)

1,579

Transferred to Special Economic Zone Re-investment Reserve

(953)

953

Transferred from Special Economic Zone Re-investment Reserve on utilization

953

(953)

Exercise of stock options
(Refer to Note 2.12)

3

(3)

Income tax benefit arising on exercise of stock options

1

1

Share-based payment to employees of the Group
(Refer to Notes 2.12 and 2.25)

114

114

Remeasurement of the net defined benefit liability / asset, net of tax effect
(Refer to Notes 2.22 and 2.17)

(42)

(42)

Fair value changes on cash flow hedge, net of tax (Refer to Note 2.11)

39

39

Fair valuation of investments, net of tax effect (Refer to Note 2.5)

(10)

(10)

Equity instruments through other comprehensive income, net of tax effect (Refer to Note 2.5)

(5)

(5)

Dividends
(including corporate dividend tax)

(6,980)

(6,980)

Profit for the period

13,818

13,818

Balance as of March 31, 2017

1,148

2,208

49,957

54

11,087

120

3,448

(5)

39

(39)

68,017

(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) Profit on transfer of business between entities under common control taken to reserve on account of transition to Indian Accounting Standards (Ind AS).

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

Bengaluru

13 April, 2017

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Statement of Cash Flows

in crore

Particulars

Year ended March 31,

2017

2016

Cash flows from operating activities

Profit for the period

13,818

12,693

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

Depreciation and amortization

1,331

1,115

Income tax expense

5,120

4,907

Allowance for credit losses on financial assets

135

(48)

Deferred consideration pertaining to acquisition

149

Interest and dividend income

(2,553)

(2,563)

Other adjustments

48

141

Exchange differences on translation of assets and liabilities

39

31

Changes in assets and liabilities

Trade receivables and unbilled revenue

(1,825)

(1,373)

Loans and other financial assets and other assets

(427)

(1,188)

Trade payables

(354)

499

Other financial liabilities, other liabilities and provisions

179

565

Cash generated from operations

15,511

14,928

Income taxes paid

(5,033)

(5,350)

Net cash generated by operating activities

10,478

9,578

Cash flows from investing activities

Expenditure on property, plant and equipment net of sale proceeds, including changes in retention money and capital creditors

(2,292)

(2,308)

Deposits with corporations

(155)

(115)

Loans to employees

23

(64)

Repayment of debentures

420

Investment in subsidiaries

(369)

(258)

Payment towards contingent consideration pertaining to acquisition

(36)

Payment towards acquisition

(794)

Payment arising out of business transfer

(335)

Payments to acquire financial assets

Preference securities

(43)

(82)

Liquid mutual fund and fixed maturity plan securities

(49,648)

(22,797)

Tax-free bonds

(312)

(299)

Non-convertible debentures

(3,664)

Certificates of deposit

(7,555)

Government bonds

(2)

Proceeds on sale of financial assets

Liquid mutual fund and fixed maturity plan securities

47,495

23,545

Tax-free bonds

2

Interest and dividend received on investments

2,640

2,302

Net cash used in investing activitieS

(13,494)

(1,207)

Cash flows from financing activities

Loan given to subsidiaries

(193)

Loan repaid by subsidiaries

126

Payment of dividends

(6,968)

(6,841)

Net cash used in financing activities

(6,968)

(6,908)

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

(39)

(9)

Net decrease in cash and cash equivalents

(9,984)

1,463

Cash and cash equivalents at the beginning of the period

29,176

27,722

Cash and cash equivalents at the end of the period

19,153

29,176

Supplementary information

Restricted cash balance

411

341

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

Bengaluru

13 April, 2017

Roopa Kudva

Director

M. D. Ranganath

Chief Financial Officer and
Executive Vice President

A. G. S. Manikantha

Company Secretary

Notes to the financial statements

1. Company overview and significant accounting policies

1.1 Company overview

Infosys (‘the Company’) is a leading provider of 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 life-cycle 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®, its 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 in Bengaluru, Karnataka, India. The Company has its primary listings on the BSE Limited and National Stock Exchange of India Limited. The Company’s American Depositary Shares (ADSs) representing equity shares are also listed on the New York Stock Exchange (NYSE), Euronext London and Euronext Paris.

The financial statements are approved for issue by the Company’s Board of Directors on April 13, 2017.

1.2 Basis of preparation of financial statements

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (‘the Act’) (to the extent notified) and guidelines issued by the Securities and Exchange Board of India (SEBI). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

The Company has adopted all the Ind AS standards and the adoption was carried out in accordance with Ind AS 101, First-Time Adoption of Indian Accounting Standards. The transition was carried out from Indian Accounting Principles generally accepted in India as prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014 (IGAAP), which was the previous GAAP. Reconciliations and descriptions of the effect of the transition have been summarized in Note 2.1.

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

As the quarter and year figures are taken from the source and rounded to the nearest digits, the figures already reported for all the quarters during the year might not always add up to the year figures reported in this statement.

1.3 Use of estimates

The preparation of the financial statements in conformity with Ind AS requires the Management to make estimates, judgments and assumptions. These estimates, judgments and assumptions affect the application of accounting policies and the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the period. The application of accounting policies that require critical accounting estimates involving complex and subjective judgments and the use of assumptions in these financial statements have been disclosed in Note 1.4. 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 the 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.

1.4 Critical accounting estimates

a. Revenue recognition

The Company uses the percentage-of-completion method in accounting for its fixed-price contracts. The use of the percentage-of-completion method requires the Company to estimate the efforts or costs expended to date as a proportion of the total efforts or costs to be expended. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the expected contract estimates at the reporting date.

b. Income taxes

The Company’s two major tax jurisdictions are India and the U.S., though the Company also files tax returns in other overseas jurisdictions. Significant judgments are involved in determining the provision for income taxes, including amount expected to be paid / recovered for uncertain tax positions. Refer to Notes 2.17 and 2.24.

c. Property, plant and equipment

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

1.5 Revenue recognition

The Company derives revenues primarily from software development and related services and from the licensing of software products. Arrangements with customers for software 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, fixed-timeframe contracts, where there is no uncertainty as to measurement or collectability of consideration, is recognized as per the percentage-of-completion method. When there is uncertainty as to the measurement or ultimate collectability, revenue recognition is postponed until such uncertainty is resolved. Efforts or costs expended have been used to measure progress towards completion as there is a direct relationship between input and productivity. Provisions for estimated losses, if any, on uncompleted contracts are recorded in the period in which such losses become probable based on the current contract estimates. Costs and earnings in excess of billings are classified as unbilled revenue while billings in excess of costs and earnings are classified as unearned revenue. Deferred contract costs are amortized over the term of the contract. Maintenance revenue is recognized rateably over the term of the underlying maintenance arrangement.

In arrangements for software development and related services and maintenance services, the Company has applied the guidance in Ind AS 18, Revenue, by applying the revenue recognition criteria for each separately identifiable component of a single transaction. The arrangements generally meet the criteria for considering software development and related services as separately identifiable components. For allocating the consideration, the Company has measured the revenue in respect of each separable component of a transaction at its fair value, in accordance with principles given in Ind AS 18. The price that is regularly charged for an item when sold separately is the best evidence of its fair value. In cases where the Company is unable to establish objective and reliable evidence of fair value for the software development and related services, the Company has used a residual method to allocate the arrangement consideration. In these cases, the balance of the consideration, after allocating the fair values of undelivered components of a transaction, has been allocated to the delivered components for which specific fair values do not exist.

License fee revenues are recognized when the general revenue recognition criteria given in Ind AS 18 are met. Arrangements to deliver software products generally have three elements : license, implementation and Annual Technical Services (ATS). The Company has applied the principles given in Ind AS 18 to account for revenues from these multiple element arrangements. Objective and reliable evidence of fair value has been established for ATS. Objective and reliable evidence of fair value is the price charged when the element is sold separately. When other services are provided in conjunction with the licensing arrangement and objective and reliable evidence of their fair values have been established, the revenue from such contracts are allocated to each component of the contract in a manner, whereby revenue is deferred for the undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of objective and reliable evidence of fair value for implementation, the entire arrangement fee for license and implementation is recognized using the percentage-of-completion method as the implementation is performed. Revenue from client training, support and other services arising due to the sale of software products is recognized as the services are performed. ATS revenue is recognized rateably over the period in which the services are rendered.

Advances received for services and products are reported as client deposits until all conditions for revenue recognition are met.

The Company accounts for volume discounts and pricing incentives to customers as a reduction of revenue based on the rateable allocation of the discounts / incentives amount to each of the underlying revenue transaction that results 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 the 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 the 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 value-added taxes in its Statement of Profit and Loss.

1.6 Property, plant and equipment

Property, plant and equipment are stated at cost less accumulated depreciation and impairment, if any. Costs directly attributable to acquisition are capitalized until the property, plant and equipment are ready for use, as intended by the Management. The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method. The estimated useful lives of assets are as follows :

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

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

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

1.7 Intangible assets

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

Research costs are expensed as incurred. Software product development costs are expensed as incurred unless technical and commercial feasibility of the project is demonstrated, future economic benefits are probable, the 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 material, direct labor, overhead costs that are directly attributable to preparing the asset for its intended use. Research and development costs and software development costs incurred under contractual arrangements with customers are accounted as expenses in the Statement of Profit and Loss.

1.8 Financial instruments

1.8.1 Initial recognition

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

1.8.2 Subsequent measurement

a. Non-derivative financial instruments

(i) Financial assets carried at amortized cost

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

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

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

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

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

(iv) Financial liabilities

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

(v) Investment in subsidiaries

Investment in subsidiaries is carried at cost in the separate financial statements.

b. Derivative financial instruments

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

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

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

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

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

(ii) Cash flow hedge

The 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 cash transactions.

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

c. Share capital

Ordinary shares

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

1.8.3 Derecognition of financial instruments

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

1.9 Fair value of financial instruments

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

Refer to Note 2.11 in for the disclosure on carrying value and fair value of financial assets and liabilities. For financial assets and liabilities maturing within one year from the Balance Sheet date and which are not carried at fair value, the carrying amounts approximate fair value due to the short maturity of these instruments.

1.10 Impairment

a. Financial assets

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

b. Non-financial assets

(i) Intangible assets and property, plant and equipment

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

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

1.11 Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal or constructive 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 discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and the risks specific to the liability.

a. Post-sales client support

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 related revenues are recorded in the Statement of Profit and Loss. The Company estimates such costs based on historical experience and estimates are reviewed on a periodic basis for any material changes in assumptions and likelihood of occurrence.

b. 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 the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

1.12 Foreign currency

Functional currency

The functional currency of the Company is the Indian rupee. These financial statements are presented in Indian rupees (rounded off to crore; one crore equals 10 million).

Transactions and translations

Foreign-currency-denominated monetary assets and liabilities are translated into the relevant functional currency at exchange rates in effect at the Balance Sheet date. The gains or losses resulting from such translations are included in net profit 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 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. Revenue, expense and cash-flow items denominated in foreign currencies are translated into the relevant functional currencies using the exchange rate in effect on the date of the transaction.

1.13 Earnings per equity share

Basic earnings per equity share are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares outstanding during the period. Diluted earnings per equity share are computed by dividing the net profit attributable to the equity holders of the Company by the weighted average number of equity shares considered for deriving basic earnings per equity share and also the weighted average number of equity shares that could have been issued upon conversion of all dilutive potential equity shares. The dilutive potential equity shares are adjusted for the proceeds receivable had the equity shares been actually issued at fair value (i.e. the average market value of the outstanding equity 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 equity 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.

1.14 Income taxes

Income tax expense comprises current and deferred income tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity, in which case it is recognized in other comprehensive income. Current income tax for current and prior periods is recognized at the amount expected to be paid to or recovered from the tax authorities, using the tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date. Deferred income tax assets and liabilities are recognized for all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

Deferred income tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the Balance Sheet date and are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of changes in tax rates on deferred income tax assets and liabilities is recognized as income or expense in the period that includes the enactment or the substantive enactment date. A deferred income tax asset is recognized to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences and tax losses can be utilized. Deferred income taxes are not provided on the undistributed earnings of subsidiaries and branches where it is expected that the earnings of the subsidiary or branch will not be distributed in the foreseeable future. The Company offsets current tax assets and current tax liabilities, where it has a legally enforceable right to set off the recognized amounts and where it intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. Tax benefits of deductions earned on the exercise of employee share options in excess of compensation charged to income are credited to share premium.

1.15 Employee benefits

1.15.1 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 Trusts and contributions are invested in a scheme with the Life Insurance Corporation of India as permitted by Indian law.

The Company recognizes the net obligation of a defined benefit plan in its Balance Sheet as an asset or liability. Gains and losses through remeasurements of the net defined benefit liability / (asset) are recognized in other comprehensive income. The actual return of the portfolio of plan assets, in excess of the yields computed by applying the discount rate used to measure the defined benefit obligation is recognized in other comprehensive income. The effect of any plan amendments are recognized in net profit in the Statement of Profit and Loss.

1.15.2 Superannuation

Certain employees of Infosys are participants in a defined contribution plan. The Company has no further 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.

1.15.3 Provident fund

Eligible employees of Infosys 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.

1.15.4 Compensated absences

The Company has a policy on compensated absences which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absences is determined by actuarial valuation performed by an independent actuary at each Balance Sheet date 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.

1.16 Share-based compensation

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

1.17 Cash flow statement

Cash flows are reported using the indirect method, whereby profit for the period 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.

1.18 Dividends

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

1.19 Other income

Other income is comprised primarily of interest income, dividend income, gain / loss on investments  and exchange gain / loss on forward and options contracts and on translation of other assets and liabilities. Interest income is recognized using the effective interest method. Dividend income is recognized when the right to receive payment is established.

1.20 Leases

Leases under which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. When acquired, such assets are capitalized at fair value 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 net profit in the Statement of Profit and Loss over the lease term.

1.21 Recent accounting pronouncements

1.21.1 Standards issued but not yet effective

In March 2017, the Ministry of Corporate Affairs issued the Companies (Indian Accounting Standards) (Amendments) Rules, 2017, notifying amendments to Ind AS 7, Statement of Cash Flows and Ind AS 102, Share-Based Payment. These amendments are in accordance with the recent amendments made by International Accounting Standards Board (IASB) to IAS 7, Statement of Cash Flows and IFRS 2, Share-Based Payment, respectively. The amendments are applicable to the Company from April 1, 2017.

Amendment to Ind AS 7

The amendment to Ind AS 7 requires the entities to provide disclosures that enable users of financial statements to evaluate changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes, suggesting inclusion of a reconciliation between the opening and closing balances in the Balance Sheet for liabilities arising from financing activities, to meet the disclosure requirement.

The Company has evaluated the disclosure requirements of the amendment and the effect on the standalone financial statements is not expected to be material.

Amendment to Ind AS 102

The amendment to Ind AS 102 provides specific guidance for the measurement of cash-settled awards, modification of cash-settled awards and awards that include a net settlement feature in respect of withholding taxes.

It clarifies that the fair value of cash-settled awards is determined on a basis consistent with that used for equity-settled awards. Market-based performance conditions and non-vesting conditions are reflected in the ‘fair values’, but non-market performance conditions and service vesting conditions are reflected in the estimate of the number of awards expected to vest. Also, the amendment clarifies that if the terms and conditions of a cash-settled share-based payment transaction are modified with the result that it becomes an equity-settled share-based payment transaction, the transaction is accounted for as such from the date of the modification. Further, the amendment requires the award that include a net settlement feature in respect of withholding taxes to be treated as equity-settled in its entirety. The cash payment to the tax authority is treated as if it was part of an equity settlement.

The Company is evaluating the requirements of the amendment and the impact on the financial statements.

2. Notes to the standalone financial statements for the year ended March 31, 2017

2.1 First-time adoption of Ind AS

These standalone financial statements of Infosys Limited for the year ended March 31, 2017 have been prepared in accordance with Ind AS. For the purposes of transition to Ind AS, the Company has followed the guidance prescribed in Ind AS 101, First-Time Adoption of Indian Accounting Standards, with April 1, 2015 as the transition date and IGAAP as the previous GAAP.

The transition to Ind AS has resulted in changes in the presentation of the financial statements, disclosures in the notes thereto and accounting policies and principles. The accounting policies set out in Note 1 have been applied in preparing the standalone financial statements for the year ended March 31, 2017 and the comparative information. An explanation of how the transition from previous GAAP to Ind AS has affected the Company’s Balance Sheet and Statement of Profit and Loss, is set out in Notes 2.2 and 2.2.2. Exemptions on the first-time adoption of Ind AS availed in accordance with Ind AS 101 have been set out in Note 2.1.1.

2.1.1 Exemptions availed on first-time adoption of Ind AS 101

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has accordingly applied the following exemptions.

(a) Share-based payment

The Company is allowed to apply Ind AS 102, Share-Based Payment, to equity instruments that remain unvested as of transition date. The Company has elected to avail itself of this exemption and apply the requirements of Ind AS 102 to all such grants under the 2015 Plan (formerly ‘the 2011 Plan’). Accordingly, these options have been measured at fair value as against intrinsic value previously under IGAAP.

The excess of stock compensation expense measured using fair value over the cost recognized under IGAAP using intrinsic value has been adjusted in ‘Share Option Outstanding Account’, with the corresponding impact taken to the retained earnings as on the transition date.

(b) Designation of previously recognized financial instruments

Under Ind AS 109, at initial recognition of a financial asset, an entity may make an irrevocable election to present subsequent changes in the fair value of an investment in an equity instrument in other comprehensive income. Ind AS 101 allows such designation of previously recognized financial assets, as ‘fair value through other comprehensive income’ on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

Accordingly, the Company has designated its investments in certain equity instruments at fair value through other comprehensive income on the basis of the facts and circumstances that existed at the date of transition to Ind AS.

2.2 Reconciliations

The following reconciliations provide the effect of transition to Ind AS from IGAAP in accordance with Ind AS 101 :

  1. 1. Equity as at April 1, 2015 and March 31, 2016
  2. 2. Net profit for the year ended March 31, 2016

    2.2.1 Reconciliation of equity as previously reported under IGAAP to Ind AS

in crore

Particulars

Note

Opening Balance Sheet as at April 1, 2015

Balance Sheet as at March 31, 2016

IGAAP

Effects of transition to Ind AS

Ind AS

IGAAP

Effects of transition to Ind AS

Ind AS

Assets

Non-current assets

Property, plant and equipment

7,347

7,347

8,248

8,248

Capital work-in-progress

769

769

934

934

Intangible assets

Financial assets

Investments

A

6,108

6,108

11,111

(35)

11,076

Loans

4

4

5

5

Other financial assets

110

110

192

192

Deferred tax assets (net)

433

433

405

405

Other non-current assets

349

349

755

755

Income tax assets (net)

3,941

3,941

5,020

5,020

Total non-current assets

19,061

19,061

26,670

(35)

26,635

Current assets

Financial assets

Investments

A

749

749

2

2

Trade receivables

8,627

8,627

9,798

9,798

Cash and cash equivalents

27,722

27,722

29,176

29,176

Loans

225

225

355

355

Other financial assets

4,045

4,045

4,801

4,801

Other current assets

1,384

1,384

1,965

1,965

Total current assets

42,752

42,752

46,097

46,097

Total assets

61,813

61,813

72,767

(35)

72,732

EQUITY AND LIABILITIES

Equity

Equity share capital

574

574

1,148

1,148

Other equity

E

47,494

4,123

51,617

56,009

3,925

59,934

Total equity

48,068

4,123

52,191

57,157

3,925

61,082

Liabilities

Non-current liabilities

Financial liabilities

Other financial liabilities

B

27

27

73

(11)

62

Other non-current liabilities

C

3

(3)

Deferred tax liabilities (net)

Total non-current liabilities

30

(3)

27

73

(11)

62

Current liabilities

Financial liabilities

Trade payables

124

124

623

623

Other financial liabilities

B

4,885

(38)

4,847

5,138

(6)

5,132

Other current liabilities

C

1,568

(4)

1,564

2,097

(4)

2,093

Provisions

D

4,460

(4,078)

382

4,375

(3,939)

436

Income tax liabilities (net)

2,678

2,678

3,304

3,304

Total current liabilities

13,715

(4,120)

9,595

15,537

(3,949)

11,588

Total equity and liabilities

61,813

61,813

72,767

(35)

72,732

Explanations for reconciliation of Balance Sheet as previously reported under IGAAP to Ind AS :

A. Investment

  1. a) Tax-free bonds are carried at amortized cost under Ind AS and IGAAP. Investment in equity instruments are carried at fair value through OCI in Ind AS, as compared to being carried at cost under IGAAP.
  2. b) Investments include discounted value of contingent consideration payable on acquisition of business under Ind AS, as compared to undiscounted value of contingent consideration under IGAAP.

B. Other financial liabilities

Adjustments include the impact of discounting the deferred and contingent consideration payable for acquisitions under Ind AS.

C. Other liabilities

Adjustments reflect unamortized negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained earnings.

D. Provisions

Adjustments reflect dividend (including corporate dividend tax), declared and approved post reporting period.

E. Other equity

  1. a) Adjustments to retained earnings and other comprehensive income have been made in accordance with Ind AS for the above-mentioned line items.
  2. b) In addition, as per Ind AS 19, actuarial gains and losses are recognized in other comprehensive income as compared to being recognized in the Statement of Profit and Loss under IGAAP.
  3. c) Profit on transfer of business between entities under common control, which were earlier recognized in Statement of Profit and Loss under IGAAP, are adjusted to reserves on transition to Ind AS.

    2.2.2 Reconciliation Statement of Profit and Loss as previously reported under IGAAP to Ind AS

in crore

Particulars

Note

Year ended March 31 2016

IGAAP

Effects of transition to Ind AS

Ind AS

Revenue from operations

53,983

53,983

Other income, net

G

3,009

(3)

3,006

Total income

56,992

(3)

56,989

Expenses

Employee benefit expenses

F

28,206

1

28,207

Deferred consideration pertaining to acquisition

G

110

39

149

Cost of technical sub-contractors

4,417

4,417

Travel expenses

1,655

1,655

Cost of software packages and others

1,049

1,049

Communication expenses

311

311

Consultancy and professional charges

563

563

Depreciation and amortization expenses

1,115

1,115

Other expenses

G

1,909

14

1,923

Total expenses

39,335

54

39,389

Profit before exceptional items and tax

17,657

(57)

17,600

Profit on transfer of business

H

3,036

(3,036)

Profit before tax

20,693

(3,093)

17,600

Tax expense

Current tax

I

4,898

4,898

Deferred tax

9

9

Profit for the period

15,786

(3,093)

12,693

Other comprehensive income

Items that will not be reclassified subsequently to profit or loss

Remeasurement of the net defined benefit liability / asset

F

(2)

(2)

(2)

(2)

Items that will be reclassified subsequently to profit or loss

Total other comprehensive income, net of tax

(2)

(2)

Total comprehensive income, for the period

15,786

(3,095)

12,691

Explanations for reconciliation of Statement of Profit and loss as previously reported under IGAAP to Ind AS :

F. Employee benefit expenses

  1. a) As per Ind AS 19, Employee Benefits, actuarial gains and losses are recognized in other comprehensive income and not reclassified to profit and loss in a subsequent period.
  2. b) Adjustments reflect unamortized negative past service cost arising on modification of the gratuity plan in an earlier period. Ind AS 19 requires such gains and losses to be adjusted to retained earnings.

G. Deferred and contingent consideration pertaining to acquisition

Adjustments reflect impact of discounting pertaining to deferred consideration and contingent consideration payable for business combinations.

H. Reversal of exceptional item

Profit on transfer of business between entities under common control has been reversed and taken to business transfer reserve on account of transition to Ind AS.

I. Current tax

The tax component on actuarial gains and losses which are transferred to other comprehensive income under Ind AS.

2.2.3 Cash flow statement

There were no significant reconciliation items between cash flows prepared under Indian GAAP and those prepared under Ind AS.

2.3 Property, plant and equipment

The changes in the carrying value of property, plant and equipment for the year ended March 31, 2017 are as follows :

in crore

Particulars

Land – Freehold

Land – Leasehold

Buildings (1)(2)

Plant and machinery
(2)(4)

Office equipment (2)

Computer equipment (2)

Furniture and fixtures (2)

Vehicles

Total

Gross carrying value as of April 1, 2016

970

638

6,173

1,679

679

3,481

1,070

19

14,709

Additions

123

21

310

344

122

654

237

6

1,817

Deletions

(4)

(32)

(249)

(30)

(1)

(316)

Gross carrying value as of March 31, 2017

1,093

659

6,483

2,019

769

3,886

1,277

24

16,210

Accumulated depreciation as of April 1, 2016

(21)

(2,150)

(1,044)

(369)

(2,195)

(671)

(11)

(6,461)

Depreciation

(5)

(227)

(250)

(111)

(572)

(162)

(4)

(1,331)

Accumulated depreciation on deletions

4

8

164

10

1

187

Accumulated depreciation as of March 31, 2017

(26)

(2,377)

(1,290)

(472)

(2,603)

(823)

(14)

(7,605)

Carrying value as of March 31, 2017

1,093

633

4,106

729

297

1,283

454

10

8,605

Carrying value as of April 1, 2016

970

617

4,023

635

310

1,286

399

8

8,248

The changes in the carrying value of property, plant and equipment for the year ended March 31, 2016 are as follows :

in crore

Particulars

Land – Freehold

Land – Leasehold

Buildings (1)(2)

Plant and machinery
(2)

Office equipment (2)

Computer equipment (2) (3)

Furniture and fixtures (2)

Vehicles

Total

Gross carrying value as of April 1, 2015

929

621

5,733

1,361

525

2,812

832

14

12,827

Additions

41

17

440

319

155

945

241

5

2,163

Deletions

(1)

(1)

(276)

(3)

(281)

Gross carrying value as of March 31, 2016

970

638

6,173

1,679

679

3,481

1,070

19

14,709

Accumulated depreciation as of April 1, 2015

(16)

(1,937)

(838)

(280)

(1,852)

(549)

(8)

(5,480)

For the period

(5)

(213)

(207)

(90)

(472)

(125)

(3)

(1,115)

Deduction / Adjustments during the period

1

1

129

3

134

Accumulated depreciation as of March 31, 2016

(21)

(2,150)

(1,044)

(369)

(2,195)

(671)

(11)

(6,461)

Carrying value as of March 31, 2016

970

617

4,023

635

310

1,286

399

8

8,248

Carrying value as of April 1, 2015

929

605

3,796

523

245

960

283

6

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, 2016, computer equipment having net book value of 20 crore was transferred to EdgeVerve (Refer to Note 2.5.3).

(4) Includes 25 crore spent on CSR activities for the year ended March 31, 2017.

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

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

Tangible assets provided on operating lease to subsidiaries as at March 31, 2017 and March 31, 2016 are as follows :

in crore

Particulars

Cost

Accumulated depreciation

Net book value

Buildings

197

82

115

197

75

122

Plant and machinery

33

19

14

33

14

19

Furniture and fixtures

25

16

9

25

12

13

Computer equipment

3

2

1

3

2

1

Office equipment

18

10

8

18

7

11

The aggregate depreciation charged on the above assets during the years ended March 31, 2017 and March 31, 2016 amounted to 19 crore each.

The rental income from subsidiaries for the years ended March 31, 2017 and March 31, 2016 amounted to 65 crore and 51 crore, respectively.

2.4 Intangible assets

The changes in the carrying value of acquired intangible assets for the year ended March 31, 2017 are as follows :

in crore

Particulars

Sub-contracting rights related

Others

Total

Gross carrying value as of April 1, 2016

21

9

30

Additions

Deletion

Gross carrying value as of March 31, 2017

21

9

30

Accumulated amortization as of April 1, 2016

(21)

(9)

(30)

Amortization expense

Deletion

Accumulated amortization as of March 31, 2017

(21)

(9)

(30)

Carrying value as of March 31, 2017

Carrying value as of April 1, 2016

-–

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

in crore

Particulars

Intellectual property rights-related

Sub-contracting rights-related

Others

Total

Gross carrying value as of April 1, 2015

12

21

9

42

Additions

Deletion / Retirement

(12)

(12)

Gross carrying value as of March 31, 2016

21

9

30

Accumulated amortization as of April 1, 2015

(12)

(21)

(9)

(42)

Amortization expense

Deletion / Retirement

12

12

Accumulated amortization as of March 31, 2016

(21)

(9)

(30)

Carrying value as of March 31, 2016

Carrying value as of April 1, 2015

Research and development expense recognized in net profit in the Statement of Profit and Loss for the years ended March 31, 2017 and March 31, 2016 is 351 crore and 384 crore, respectively.

2.5 Investments

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current investments

Equity instruments of subsidiaries

7,305

6,901

4,873

Debentures of subsidiary

2,129

2,549

Preference securities, equity investments

132

93

1

Others

3

Tax-free bonds

1,833

1,533

1,234

Fixed maturity plan securities

357

Non-convertible debentures

3,575

15,334

11,076

6,108

Current investments

Liquid mutual fund units

1,755

749

Fixed maturity plan securities

151

Certificates of deposit

7,635

Government bonds

2

Non-convertible debentures

102

9,643

2

749

Total carrying value

24,977

11,078

6,857

in crore, except as otherwise stated

Particulars

As at March 31,

2017

2016

Non-current investments

Unquoted

Investment carried at cost

Investments in equity instruments of subsidiaries

Infosys BPO Limited

659

659

3,38,22,319 (3,38,22,319) equity shares of 10 each, fully paid

Infosys Technologies (China) Co. Limited

236

169

Infosys Technologies (Australia) Pty Limited

66

66

1,01,08,869 (1,01,08,869) equity shares of AUD 0.11 par value, fully paid

Infosys Technologies, S. de R.L. de C.V., Mexico

65

65

17,49,99,990 (17,49,99,990) equity shares of MXN 1 par value, fully paid up

Infosys Technologies (Sweden) AB

76

1,000 (1,000) equity shares of SEK 100 par value, fully paid

Infosys Technologia do Brasil Ltda.

149

149

5,91,24,348 (5,91,24,348) shares of BRL 1.00 par value, fully paid

Infosys Technologies (Shanghai) Company Limited

826

646

Infosys Public Services, Inc.

99

99

3,50,00,000 (3,50,00,000) shares of USD 0.50 par value, fully paid

Infosys Consulting Holding AG (formerly Lodestone Holding AG)

1,323

1,323

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

Infosys Americas Inc.

1

1

10,000 (10,000) shares of USD 10 per share, fully paid up

EdgeVerve Systems Limited (Refer to Note 2.5.3)

1,312

1,312

1,31,18,40,000 (1,31,18,40,000) equity shares of 10 each, fully paid

Panaya Inc.

1,398

1,398

     2 (2) shares of USD 0.01 per share, fully paid up

Infosys Nova Holdings LLC

94

94

Kallidus Inc. (Refer to Note 2.5.2)

619

619

10,21,35,416 (10,21,35,416) shares

Skava Systems Private Limited (Refer to Note 2.5.2)

59

59

25,000 (25,000) shares of 10 per share, fully paid up

Noah Consulting LLC (Refer to Note 2.5.1)

313

242

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

10

1,09,90,000 (Nil) shares of SGD 1.00 par value, fully paid

7,305

6,901

Investment carried at amortized cost

Investment in debentures of subsidiary

EdgeVerve Systems Limited (Refer to Note 2.5.3)

21,29,00,000 (25,49,00,000) Unsecured redeemable, non-convertible debentures of 100 each fully paid up

2,129

2,549

2,129

2,549

9,434

9,450

Investments carried at fair value through profit or loss

Others

3

3

Investment carried at fair value through other comprehensive income (Refer to Note 2.5.5)

Preference securities

131

92

Equity instruments

1

1

132

93

Quoted

Investments carried at amortized cost

Tax-free bonds (Refer to Note 2.5.6)

1,833

1,533

1,833

1,533

Investments carried at fair value through profit or loss

Fixed maturity plans (Refer to Note 2.5.7)

357

357

Investments carried at fair value through other comprehensive income

Non-convertible debentures (Refer to Note 2.5.8)

3,575

3,575

Total non-current investments

15,334

11,076

Current investments

   Unquoted

Investments carried at fair value through profit or loss (Refer to Note 2.5.7)

Liquid mutual fund units

1,755

Fixed maturity plan securities

151

1,906

Investments carried at fair value through other comprehensive income

Certificates of deposit (Refer to Note 2.5.8)

7,635

7,635

Quoted

Investments carried at amortized cost

Government bonds (Refer to Note 2.5.6)

2

2

Investments carried at fair value through other comprehensive income (Refer to Note 2.5.8)

Non-convertible debentures

102

102

Total current investments

9,643

2

Total investments

24,977

11,078

Aggregate amount of quoted investments

5,867

1,535

Market value of quoted investments (including interest accrued)

6,327

1,627

Aggregate amount of unquoted investments

19,110

9,543

Aggregate amount of impairment in value of investments

6

6

Investments carried at cost

7,305

6,901

Investments carried at amortized cost

3,962

4,084

Investments carried at fair value through other comprehensive income

11,444

93

Investments carried at fair value through profit or loss

2,266

2.5.1 Investment in Noah Consulting LLC

On November 16, 2015, Infosys acquired 100% membership interest in Noah Consulting, LLC (Noah), 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 cash consideration of US $ 33 million (approximately 216 crore), contingent consideration up to US $ 5 million (approximately 33 crore on acquisition date) and retention bonus up to US $ 32 million (approximately 212 crore on acquisition date). The payment of contingent consideration to the sellers of Noah was dependent upon 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.

2.5.2 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. During the year ended March 31, 2017, a contingent consideration of 40 crore was paid to the sellers of Kallidus on the achievement of certain financial targets.

2.5.3 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 were transferred and accordingly a gain of 412 crore was recorded as an exceptional item under previous GAAP. On adoption of Ind AS, the same has been reversed from retained earnings and transferred to ‘Business Transfer Adjustment Reserve’, in accordance with Ind AS 103, which requires common control transactions to be recorded at book values. 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 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 businesses were 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) were transferred and accordingly, a gain of 3,036 crore had been recorded as an exceptional item under previous GAAP. On adoption of Ind AS, the same has been recorded in business transfer adjustment reserve, in accordance with Ind AS 103, which requires common control transactions to be recorded at book values.

The consideration was settled through the 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. During the year ended March 31, 2017, EdgeVerve had repaid 420 crore by redeeming proportionate number of debentures.

2.5.4 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 was payable to the selling shareholders of Lodestone on the third anniversary of the acquisition date and was contingent upon their continued employment for a period of three years. The investment in Lodestone was recorded at the acquisition cost and the deferred consideration was being recognized on a proportionate basis over a period of three years from the date of acquisition. During the year ended March 31, 2016, the liability towards deferred consideration was settled.

2.5.5 Details of investments

The details of investments in preference and equity instruments as at March 31, 2017 and March 31, 2016 are as follows :

in crore

Particulars

As at March 31,

2017

2016

Preference Securities

Airviz Inc.

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

9

13

ANSR Consulting

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

10

9

Whoop Inc.

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

15

20

CloudEndure Ltd.

25,59,290 (12,79,645) Preferred Series B Shares, fully paid up, par value ILS 0.01 each

37

13

Nivetti Systems Private Limited

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

10

10

Waterline Data Science, Inc.

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

24

27

Trifacta Inc.

11,80,358 (Nil) Preferred Stock

26

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

Merasport Technologies Private Limited

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

Global Innovation and Technology Alliance

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

1

1

Others

Stellaris Venture Partners India I

3

135

93

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

The balances held in tax-free bonds as at March 31, 2017 and March 31, 2016 are as follows :

in crore

Particulars

Face value

As at March 31, 2017

As at March 31, 2016

Units

Amount

Units

Amount

7.04% Indian Railway Finance Corporation Limited Bonds 03MAR2026

10,00,000

470

50

7.16% Power Finance Corporation Ltd. Bonds 17JUL2025

10,00,000

1,000

107

7.18% Indian Railway Finance Corporation Limited Bonds 19FEB2023

1,000

20,00,000

201

20,00,000

201

7.28% Indian Railway Finance Corporation Limited 21DEC2030

1,000

4,22,800

42

4,22,800

42

7.28% National Highways Authority of India Bonds 18SEP2030

10,00,000

3,300

343

2,000

200

7.34% Indian Railway Finance Corporation Limited Bonds 19FEB2028

1,000

21,00,000

211

21,00,000

211

7.35% National Highways Authority of India Bonds 11JAN2031

1,000

5,71,396

57

5,71,396

57

7.93% Rural Electrification Corporation Limited Bonds 27MAR2022

1,000

2,00,000

21

2,00,000

21

8.10% Indian Railway Finance Corporation Limited Bonds 23FEB2027

1,000

5,00,000

53

5,00,000

53

8.26% India Infrastructure Finance Company Limited Bonds 23AUG2028

10,00,000

1,000

100

1,000

100

8.30% National Highways Authority of India 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

68,05,416

1,833

68,02,646

1,533

The balances held in government bonds as at March 31, 2017 and March 31, 2016 are as follows :

in crore

Particulars

Face value PHP

As at March 31, 2017

As at March 31, 2016

Units

Amount

Units

Amount

Treasury Notes PHY6972FW G18 MAT Date 22 Feb 2017

100

1,50,000

2

1,50,000

2

2.5.7 Details of investments in liquid mutual fund units and fixed maturity plan securities

The balances held in liquid mutual fund as at March 31, 2017 are as follows :

in crore

Particulars

As at March 31, 2017

Units

Amount

Birla Sun Life Cash Plus Growth Direct Plan

1,33,97,873

350

ICICI Prudential Liquid Direct Plan Growth

1,03,88,743

250

IDFC Cash Fund Growth
(Direct Plan)

12,65,679

250

Kotak Low Duration Fund Direct Growth (Ultra Short-Term)

15,02,564

305

L&T Liquid Fund Direct Plan Growth

6,72,806

150

Reliance Liquid Fund – Treasury Plan – Direct Growth Plan – Growth Option

8,82,465

350

SBI Premier Liquid Fund Direct Plan Growth

3,91,909

100

2,85,02,039

1,755

The balances held in fixed maturity plan securities as at March 31, 2017 are as follows :

in crore

Particulars

As at March 31, 2017

Units

Amount

Birla Sun Life Fixed Term Plan-series OD 1145 Days – GR – direct

5,00,00,000

51

Birla Sun Life Fixed Term Plan – series OE 1153 days – GR direct

2,50,00,000

25

HDFC FMP 1155D Feb 2017-Direct Growth Series 37

2,80,00,000

28

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

4,50,00,000

45

ICICI FMP Series 80-1194 D Plan F Div

4,00,00,000

40

ICICI Prudential Fixed maturity Plan Series 80-1187 Days Plan G direct Plan

4,20,00,000

42

ICICI Prudential Fixed Maturity Plan series 80-1253 Days Plan J Direct Plan

3,00,00,000

30

IDFC Fixed Term Plan Series 129 direct Plan-Growth 1147 Days

1,00,00,000

10

IDFC Fixed Term Plan Series 131 direct Plan-Growth 1139 Days

1,50,00,000

15

Kotak FMP Series 199 Direct – Growth

3,50,00,000

36

Reliance Fixed Horizon Fund-XXXII Series 8-Dividend Plan

3,50,00,000

35

Reliance Yearly Interval Fund Series-1-Direct Plan-Growth Plan

10,69,06,898

151

46,19,06,898

508

2.5.8 Details of investments in non-convertible debentures and certificates of deposit

The balances held in non-convertible debenture as at March 31, 2017 are as follows :

in crore, except as otherwise stated

Particulars

As at March 31, 2017

Face value

Units

Amount

7.48% Housing Development Finance Corporation Ltd 18NOV2019

1,00,00,000

50

52

7.58% LIC Housing Finance Ltd 28FEB2020

10,00,000

1,000

100

7.58% LIC Housing Finance Ltd 11JUN2020

10,00,000

500

51

7.59% LIC Housing Finance Ltd 14OCT2021

10,00,000

3,000

309

7.75% LIC Housing Finance Ltd 27AUG2021

10,00,000

1,250

129

7.79% LIC Housing Finance Ltd 19JUN2020

10,00,000

500

52

7.80% Housing Development Finance Corporation Ltd 11NOV2019

1,00,00,000

150

155

7.81% LIC Housing Finance Ltd 27APR2020

10,00,000

2,000

208

7.95% Housing Development Finance Corporation Ltd 23SEP2019

1,00,00,000

50

53

8.02% LIC Housing Finance Ltd 18FEB2020

10,00,000

500

51

8.26% Housing Development Finance Corporation Ltd 12AUG2019

1,00,00,000

100

106

8.34% Housing Development Finance Corporation Ltd 06MAR2019

1,00,00,000

200

217

8.37% LIC Housing Finance Ltd 03OCT2019

10,00,000

2,000

218

8.37% LIC Housing Finance Ltd 10MAY2021

10,00,000

500

55

8.43% IDFC Bank Limited 30JAN2018

10,00,000

1,000

102

8.46% Housing Development Finance Corporation Ltd 11MAR2019

1,00,00,000

50

54

8.47% LIC Housing Finance Ltd 21JAN2020

10,00,000

500

52

8.50% Housing Development Finance Corporation Ltd 31AUG2020

1,00,00,000

50

54

8.54% IDFC Bank Limited 30MAY2018

10,00,000

1,500

182

8.59% Housing Development Finance Corporation Ltd 14JUN2019

1,00,00,000

50

51

8.60% LIC Housing Finance Ltd 29JUL2020

10,00,000

1,400

152

8.61% LIC Housing Finance Ltd 11DEC2019

10,00,000

1,000

104

8.66% IDFC Bank Limited 25JUN2018

10,00,000

1,520

184

8.72% Housing Development Finance Corporation Ltd 15APR2019

1,00,00,000

75

77

8.75% Housing Development Finance Corporation Ltd 13JAN2020

5,00,000

5,000

260

8.75% LIC Housing Finance Ltd 14JAN2020

10,00,000

1,070

112

8.75% LIC Housing Finance Ltd 21DEC2020

10,00,000

1,000

104

8.97% LIC Housing Finance Ltd 29OCT2019

10,00,000

500

53

9.45% Housing Development Finance Corporation Ltd 21AUG2019

10,00,000

3,000

327

9.65% Housing Development Finance Corporation Ltd 19JAN2019

10,00,000

500

53

30,015

3,677

The balances held in certificates of deposit as at March 31, 2017 are as follows :

in crore, except as otherwise stated

Particulars

As at March 31, 2017

Face value

Units

Amount

Andhra Bank

1,00,000

35,000

344

Axis Bank

1,00,000

2,93,600

2,800

Corporation Bank

1,00,000

33,500

327

DBS Bank

1,00,000

5,000

49

ICICI Bank Limited

1,00,000

42,500

413

IDFC Bank

1,00,000

1,35,000

1,281

IndusInd Bank

1,00,000

1,06,400

1,011

Kotak Bank

1,00,000

74,000

704

Vijaya Bank

1,00,000

14,000

137

Yes Bank

1,00,000

60,000

569

7,99,000

7,635

2.6 Loans

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current

Unsecured, considered good

Other loans

Loans to employees

5

5

4

5

5

4

Unsecured, considered doubtful

Loans to employees

17

13

10

22

18

14

Less : Allowance for doubtful loans to employees

17

13

10

5

5

4

Current

Unsecured, considered good

Loans to subsidiaries (Refer to Note 2.25)

69

91

24

Other loans

Loans to employees

241

264

201

310

355

225

Total loans

315

360

229

2.7 Other financial assets

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current

Security deposits (1)

81

73

65

Rental deposits (1)(4)

135

119

45

216

192

110

Current

Security deposits (1)

2

1

1

Rental deposits (1)

2

2

6

Restricted deposits (1)

1,309

1,154

1,039

Unbilled revenues (1)(5)

3,200

2,673

2,423

Interest accrued but not due (1)

514

696

433

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

268

109

94

Others (1)(6)

108

166

49

5,403

4,801

4,045

Total

5,619

4,993

4,155

(1) Financial assets carried at amortized cost

5,351

4,884

4,061

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

52

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

216

109

94

(4) Includes dues from subsidiaries
(Refer to Note 2.25)

21

21

(5) Includes dues from subsidiaries
(Refer to Note 2.25)

47

20

6

(6) Includes dues from subsidiaries
(Refer to Note 2.25)

18

24

43

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

2.8 Trade receivables (1)

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Current

Unsecured

Considered good (2)

10,960

9,798

8,627

Considered doubtful

289

249

322

11,249

10,047

8,949

Less : Allowances for credit losses

289

249

322

10,960

9,798

8,627

(1) Includes dues from companies where directors are interested

1

1

6

(2) Includes dues from subsidiaries
(Refer to Note 2.25)

235

244

309

2.9 Cash and cash equivalents

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Balances with banks

In current and deposit accounts

12,222

24,276

23,722

Cash on hand

Others

Deposits with financial institution

6,931

4,900

4,000

19,153

29,176

27,722

Balances with banks in unpaid dividend accounts

17

5

3

Deposit with more than 12 months maturity

6,765

237

182

Balances with banks held as margin money deposits against guarantees

394

336

185

Cash and cash equivalents as of March 31, 2017, March 31, 2016 and April 1, 2015 include restricted cash and bank balances of 411 crore, 341 crore and 188 crore, respectively. The restrictions are primarily on account of bank balances held as margin money deposits against guarantees and balances held in unpaid dividends bank accounts.

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 as on Balance Sheet dates with banks are as follows :

in crore

Particulars

As at March 31,

2017

2016

In current accounts

ANZ Bank, Taiwan

3

13

Bank of America, USA

769

563

BNP Paribas Bank, Norway

7

Citibank N.A., Australia

8

24

Citibank N.A., India

2

1

Citibank N.A., Dubai

1

1

Citibank N.A., EEFC (U.S. Dollar account)

1

Citibank N.A., Hungary

3

Citibank N.A., Japan

12

15

Citibank N.A., New Zealand

6

2

Citibank N.A., South Africa

9

4

Citibank N.A., South Korea

1

Deutsche Bank, Philippines

4

11

Deutsche Bank, India

9

4

Deutsche Bank, EEFC
(Euro account)

11

17

Deutsche Bank, EEFC (United Kingdom Pound Sterling account)

8

8

Deutsche Bank, EEFC
(Australian Dollar account)

38

2

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

73

95

Deutsche Bank, EEFC
(Swiss Franc account)

2

2

Deutsche Bank, Belgium

10

59

Deutsche Bank, France

8

10

Deutsche Bank, Germany

48

17

Deutsche Bank, Netherlands

2

4

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

1

1

Deutsche Bank, Russia

3

2

Deutsche Bank, Singapore

6

4

Deutsche Bank, Switzerland

5

1

Deutsche Bank, Switzerland
(U.S. Dollar Account)

1

Deutsche Bank, United Kingdom

25

170

Deutsche Bank, Malaysia

7

9

HSBC Bank, Hong Kong

1

1

ICICI Bank, India

40

57

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

3

10

Nordbanken, Sweden

22

5

Punjab National Bank, India

6

4

Royal Bank of Canada, Canada

5

24

State Bank of India

6

7

1,166

1,147

In deposit accounts

Andhra Bank

848

Axis Bank

945

1,170

Barclays Bank

825

Canara Bank

1,861

Central Bank of India

1,518

Corporation Bank

1,185

HDFC Bank

349

2,500

HSBC Bank

500

ICICI Bank

4,351

3,755

IDBI Bank

1,750

1,750

IndusInd Bank

191

250

Indian Overseas Bank

1,000

Jammu & Kashmir Bank

25

Kotak Mahindra Bank

500

492

Oriental Bank of Commerce

1,967

South Indian Bank

200

Standard Chartered Bank

500

State Bank of India

2,310

Syndicate Bank

49

1,250

Union Bank of India

7

Vijaya Bank

200

Yes Bank

485

700

10,645

22,788

In unpaid dividend accounts

Axis Bank, unpaid dividend account

2

2

HDFC Bank, unpaid dividend account

2

1

ICICI Bank, unpaid dividend account

13

2

17

5

In margin money deposits against guarantees

Canara Bank

177

132

ICICI Bank

217

147

State Bank of India

57

394

336

Deposits with financial institution

HDFC Limited

6,231

4,900

LIC Housing Finance Ltd

700

6,931

4,900

Total cash and cash equivalents as per Balance Sheet

19,153

29,176

2.10 Other assets

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current

Capital advances

562

333

316

Advances other than capital advance

Prepaid gratuity
(Refer to Note 2.22)

56

2

26

Others

Prepaid expenses

95

87

7

Deferred contract cost

283

333

996

755

349

Current

Advances other than capital advance

Payment to vendors for supply of goods

87

58

60

Others

Prepaid expenses (1)

387

209

71

Deferred contract cost

74

48

Withholding taxes and others

1,665

1,650

1,253

2,213

1,965

1,384

Total other assets

3,209

2,720

1,733

(1) Includes dues from subsidiaries
(Refer to Note 2.25)

56

43

Deferred contract costs are upfront costs incurred for the contract and are amortized over the term of the contract. Withholding taxes and others primarily consist of input tax credits.

2.11 Financial instruments

Financial instruments by category

The carrying value and fair value of financial instruments by categories as of March 31, 2017 are as follows :

in crore

Particulars

Amortized cost

Financial assets / liabilities at fair value through profit or loss

Financial assets / liabilities at fair value through OCI

Total carrying value

Total fair value

Designated upon initial recognition

Mandatory

Equity instruments designated upon initial recognition

Mandatory

Assets

Cash and cash equivalents
(Refer to Note 2.9)

19,153

19,153

19,153

Investments
(Refer to Note 2.5)

Equity, preference securities and others

3

132

135

135

Tax-free bonds and government bonds

1,833

1,833

(1) 2,142

Liquid mutual fund units

1,755

1,755

1,755

Redeemable, non-convertible debentures (2)

2,129

2,129

2,129

Fixed maturity plan securities

508

508

508

Certificates of deposit

7,635

7,635

7,635

Non-convertible debentures

3,677

3,677

3,677

Trade receivables
(Refer to Note 2.8)

10,960

10,960

10,960

Loans (Refer to Note 2.6)

315

315

315

Other financial assets
(Refer to Note 2.7)

5,351

216

52

5,619

5,619

Total

39,741

2,482

132

11,364

53,719

Liabilities

Trade payables
(Refer to Note 2.14)

269

269

269

Other financial liabilities
(Refer to Note 2.13)

3,867

87

3,954

3,954

Total

4,136

87

4,223

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

(2) The carrying value of debentures approximates fair value as the instruments are at prevailing market rates.

The carrying value and fair value of financial instruments by categories as of March 31, 2016 were as follows :

in crore

Particulars

Amortized cost

Financial assets / liabilities at fair value through profit or loss

Financial assets / liabilities at fair value through OCI

Total carrying value

Total fair value

Designated upon initial recognition

Mandatory

Equity instruments designated upon initial recognition

Mandatory

Assets

Cash and cash equivalents
(Refer to Note 2.9)

29,176

29,176

29,176

Investments
(Refer to Note 2.5)

Equity and preference securities

93

93

93

Tax-free bonds and government bonds

1,535

1,535

(1) 1,627

Redeemable, non-convertible debentures (2)

2,549

2,549

2,549

Trade receivables
(Refer to Note 2.8)

9,798

9,798

9,798

Loans (Refer to Note 2.6)

360

360

360

Other financial assets
(Refer to Note 2.7)

4,884

109

4,993

4,993

Total

48,302

109

93

48,504

Liabilities

Trade payables
(Refer to Note 2.14)

623

623

623

Other financial liabilities
(Refer to Note 2.13)

3,947

117

4,064

4,064

Total

4,570

117

4,687

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

(2) The carrying value of debentures approximates fair value as the instruments are at prevailing market rates.

The carrying value and fair value of financial instruments by categories as of April 1, 2015 were as follows :

in crore

Particulars

Amortized cost

Financial assets / liabilities at fair value through profit or loss

Financial assets /liabilities at fair value through OCI

Total carrying value

Total fair value

Designated upon initial recognition

Mandatory

Equity instruments designated upon initial recognition

Mandatory

Assets

Cash and cash equivalents
(Refer to Note 2.9)

27,722

27,722

27,722

Investments
(Refer to Note 2.5)

Equity and preference securities

1

1

1

Bonds and government bonds

1,234

1,234

(1) 1,269

Liquid mutual fund units

749

749

749

Trade receivables
(Refer to Note 2.8)

8,627

8,627

8,627

Loans (Refer to Note 2.6)

229

229

229

Other financial assets
(Refer to Note 2.7)

4,061

94

4,155

4,155

Total

41,873

843

1

42,717

Liabilities

Trade payables
(Refer to Note 2.14)

124

124

124

Other financial liabilities
(Refer to Note 2.13)

3,967

3,967

3,967

Total

4,091

4,091

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

Fair value hierarchy

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

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

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

The fair value hierarchy of assets and liabilities measured at fair value as of March 31, 2017 is as follows :

in crore

Particulars

As of March 31, 2017

Fair value measurement at end of the reporting period / year using

Level 1

Level 2

Level 3

Assets

Investments in liquid mutual fund units (Refer to Note 2.5)

1,755

1,755

Investments in tax-free bonds (Refer to Note 2.5)

2,142

206

1,936

Investments in equity instruments (Refer to Note 2.5)

1

1

Investments in preference securities (Refer to Note 2.5)

131

131

Investments in fixed maturity plan securities (Refer to Note 2.5)

508

508

Investments in certificates of deposit (Refer to Note 2.5)

7,635

7,635

Investments in non-convertible debentures (Refer to Note 2.5)

3,677

3,160

517

Others (Refer to Note 2.5)

3

3

Derivative financial instruments – gain on outstanding foreign currency forward and options contracts (Refer to Note 2.7)

268

268

Liabilities

Derivative financial instruments – loss on outstanding foreign currency forward and options contracts (Refer to Note 2.13)

2

2

Liability towards contingent consideration (Refer to Note 2.13) (1)

85

85

(1) Discounted US $ 14 million (approximately 91 crore) at 14.2%

During the year ended March 31, 2017, tax-free bonds of 115 crore were transferred from Level 1 to Level 2 of fair value hierarchy, since these were valued based on market observable inputs.

The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of March 31, 2016 was as follows :

in crore

Particulars

As of March 31, 2016

Fair value measurement at end of the reporting period / year using

Level 1

Level 2

Level 3

Assets

Investments in tax-free bonds (Refer to Note 2.5)

1,625

298

1,327

Investments in government bonds (Refer to Note 2.5)

2

2

Investments in equity instruments (Refer to Note 2.5)

1

1

Investments in preference securities (Refer to Note 2.5)

92

92

Derivative financial instruments – gain on foreign currency forward and options contracts (Refer to Note 2.7)

109

109

Liabilities

Derivative financial instruments – loss on foreign currency forward and options contracts (Refer to Note 2.13)

2

2

Liability towards contingent consideration (Refer to Note 2.13) (1)

115

115

(1) Discounted US $ 20 million (approximately 132 crore) at 13.7%

The fair value hierarchy of assets and liabilities measured at fair value on a recurring basis as of April 1, 2015 was as follows :

in crore

Particulars

As of April 1, 2015

Fair value measurement at end of the reporting period / year using

Level 1

Level 2

Level 3

Assets

Investments in liquid mutual fund units (Refer to Note 2.5)

749

749

Investments in tax-free bonds (Refer to Note 2.5)

1,269

533

736

Investments in equity instruments (Refer to Note 2.5)

1

1

Derivative financial instruments – gain on foreign currency forward and options contracts (Refer to Note 2.7)

94

94

Liabilities

Derivative financial instruments – loss on foreign currency forward and options contracts (Refer to Note 2.13)

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

The movement in contingent consideration as of March 31, 2017 from March 31, 2016 is on account of settlement of contingent consideration of 40 crore and change in discount rates and passage of time.

The movement in Level 3 investments from fiscal 2016 to fiscal 2017 is on account of purchase of additional investments during the year and change in fair value.

The fair value of liquid mutual funds is based on quoted price. The fair value of tax-free bonds and government bonds is based on quoted prices and market observable inputs. The fair value of non-convertible debentures is based on quoted prices and market observable inputs. The fair value of fixed maturity plan securities and certificates of deposit is based on market observable inputs. Derivative financial instruments are valued based on quoted prices for similar assets and liabilities in active markets or inputs that are directly or indirectly observable in the marketplace.

The amount invested and fair value of unquoted equity and preference securities of March 31, 2017 is 134 crore and 132 crore, respectively. The fair value is determined using Level 3 inputs like Discounted cash flows, Market multiple method, Option pricing model, etc.

Financial risk management

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

Market risk

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

The foreign currency risks from financial instruments as of March 31, 2017 were as follows :

in crore

Particulars

USD

Euro

GBP

AUD

Other currencies

Total

Cash and cash equivalents

849

79

33

45

97

1,103

Trade receivables

7,611

1,005

793

533

361

10,303

Other financial assets
(including loans)

2,686

436

365

148

136

3,771

Trade payables

(145)

(5)

(11)

(12)

(22)

(195)

Other financial liabilities

(1,847)

(227)

(169)

(186)

(137)

(2,566)

Net assets / (liabilities)

9,154

1,288

1,011

528

435

12,416

The foreign currency risk from financial instruments as of March 31, 2016 were as follows :

in crore

Particulars

USD

Euro

GBP

AUD

Other currencies

Total

Cash and cash equivalents

670

107

178

26

93

1,074

Trade receivables

6,875

973

664

539

296

9,347

Other financial assets
(including loans)

2,005

370

210

108

125

2,818

Trade payables

(199)

(42)

(133)

(32)

(39)

(445)

Other financial liabilities

(2,241)

(232)

(139)

(200)

(146)

(2958)

Net assets / (liabilities)

7,110

1,176

780

441

329

9,836

For each of the years ended March 31, 2017 and March 31, 2016, every percentage point depreciation / appreciation in the exchange rate between the Indian rupee and US dollar, has affected the Company’s incremental operating margins by approximately 0.52%.

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

Derivative financial instruments

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

The details of the outstanding foreign exchange forward and options contracts are as follows :

in crore

Particulars

As of March 31, 2017

As of March 31, 2016

In million

In crore

In million

In crore

Derivatives designated as cash flow hedges

Forward contracts

In Euro

95

658

In GBP

40

324

In AUD

130

644

Options contracts

In Euro

40

277

Other derivatives

Forward contracts

In USD

480

3,113

467

3,094

In Euro

106

735

84

633

In GBP

70

566

60

573

In AUD

30

149

50

255

In CHF

10

65

25

173

In SGD

5

23

In SEK

50

36

Options contracts

In USD

195

1,265

125

828

In Euro

25

173

In GBP

30

243

In CAD

13

65

Total forwards and options

 

8,336

5,556

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

in crore

Particulars

As of March 31,

2017

2016

Not later than one month

2,215

1,468

Later than one month and not later than three months

4,103

3,260

Later than three months and not later than one year

2,018

828

8,336

5,556

During the year ended March 31, 2017, the Company has designated certain foreign exchange forward contracts as cash flow hedges to mitigate the risk of foreign exchange exposure on highly probable forecast cash transactions. The related hedge transactions for balance in cash flow hedging reserve are expected to occur and reclassified to revenue in the Statement of Profit and Loss within three months.

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

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

The reconciliation of cash flow hedge reserve for the year ended March 31, 2017 is as follows :

in crore

Year ended March 31, 2017

Balance at the beginning of the period

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

121

Amount reclassified to revenue during the period

(69)

Tax impact on above

(13)

Balance at the end of the period

39

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

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

in crore

Particulars

As of March 31, 2017

As of March 31, 2016

Derivative financial asset

Derivative financial liability

Derivative financial asset

Derivative financial liability

Gross amount of recognized financial asset / liability

269

(3)

117

(10)

Amount set off

(1)

1

(8)

8

Net amount presented in Balance Sheet

268

(2)

109

(2)

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial loss. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables amounting to 10,960 crore and 9,798 crore as of March 31, 2017 and March 31, 2016, respectively and unbilled revenue amounting to 3,200 crore and 2,673 crore as of March 31, 2017 and March 31, 2016, respectively. Trade receivables and unbilled revenue are typically unsecured and are derived from revenue earned from customers primarily located in the United States. Credit risk has always been managed by the Group through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Group grants credit terms in the normal course of business. On account of the adoption of Ind AS 109, the Group uses ECL model to assess the impairment loss or gain. The Group uses a provision matrix to compute the ECL allowance for trade receivables and unbilled revenues. The provision matrix takes into account available external and internal credit risk factors such as credit default swap quotes, credit ratings from international credit rating agencies and the Group’s historical experience for customers.

The details of percentage of revenues generated from top customer and top five customers are as follows :

in %

Particulars

Year ended March 31,

2017

2016

Revenue from top customer

3.9

4.2

Revenue from top five customers

14.1

15.7

Credit risk exposure

The allowance for lifetime ECL on customer balances for the year ended March 31, 2017 was 135 crore. The reversal for lifetime ECL on customer balances for the year ended March 31, 2016 was 48 crore.

in crore

Particulars

Year ended March 31,

2017

2016

Balance at the beginning

249

322

Impairment loss recognized / reversed

135

(48)

Amounts written off

(1)

(31)

Translation differences

(4)

6

Balance at the end

379

249

Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and domestic credit rating agencies. Investments primarily include investment in liquid mutual fund units, quoted bonds issued by government and quasi-government organizations, non-convertible debentures issued by government-aided institutions and certificates of deposit which are marketable securities of banks and eligible financial institutions for a specified time period with high credit rating given by domestic credit rating agencies.

Liquidity risk

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

As of March 31, 2017, the Company had a working capital of 35,896 crore including cash and cash equivalents of 19,153 crore and current investments of 9,643 crore. As of March 31, 2016, the Company had a working capital of 34,509 crore including cash and cash equivalents of 29,176 crore and current investments of 2 crore.

As of March 31, 2017 and March 31, 2016, the outstanding compensated absences were 1,142 crore and 1,130 crore, respectively, which have been substantially funded. Accordingly, no liquidity risk is perceived.

The details of the contractual maturities of significant financial liabilities as of March 31, 2017 are as follows :

in crore

Particulars

Less than 1 year

1-2 years

2-4 years

4-7 years

Total

Trade payables

269

269

Other financial liabilities (excluding liability towards acquisition) (Refer to Note 2.13)

3,867

3,867

Liability towards acquisitions on an undiscounted basis (including contingent consideration)

45

46

91

The details of the contractual maturities of significant financial liabilities as of March 31, 2016 are as follows :

in crore

Particulars

Less than 1 year

1-2 years

2-4 years

4-7 years

Total

Trade payables

623

623

Other liabilities (excluding liability towards acquisition) (Refer to Note 2.13)

3,922

27

3,949

Liability towards acquisitions on an undiscounted basis (including contingent consideration)

86

46

132

2.12 Equity

Equity share capital

in crore, except as otherwise stated

Particulars

As at March 31,

April 1, 2015

2017

2016

Authorized

Equity shares, 5 par value

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

1,200

1,200

600

Issued, subscribed and
paid up

Equity shares, 5 par value (1)

2,29,69,44,664 (2,29,69,44,664 (2)) equity shares, fully paid up

1,148

1,148

574

1,148

1,148

574

(1) Refer to Note 2.23 for details of basic and diluted shares.

(2) Represents number of shares as of March 31, 2016

The authorized equity shares were 1,20,00,00,000 and the issued, subscribed and paid-up shares were 1,14,84,72,332 as of April 1, 2015. Forfeited shares amounted to 1,500 ( 1,500).

The Company has only one class of shares referred to as equity shares having a par value of 5. Each holder of equity shares is entitled to one vote per share. The equity shares represented by ADSs carry similar rights to voting and dividends as the other equity shares. Each ADS represents one underlying equity 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. The remittance of dividends outside India is governed by Indian law on foreign exchange and is subject to applicable distribution taxes.

In the period of five years immediately preceding March 31, 2017 :

  • The Company has allotted 1,14,84,72,332 and 57,42,36,166 fully paid-up shares of face value 5 each during the quarter ended June 30, 2015 and December 31, 2014, pursuant to bonus issue approved by the shareholders through a postal ballot. For both the bonus issues, a bonus share of one equity share for every equity share held, and a stock dividend of one ADS for every ADS held, respectively, has been allotted. Consequently, the ratio of equity shares underlying the ADSs held by an American Depositary Receipt (ADR) holder remains unchanged. Options granted under the restricted stock unit plan have been adjusted for bonus shares.

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

The Board, in its meeting on April 15, 2016, recommended a final dividend of 14.25 per equity share and the same was approved by the shareholders at the Annual General Meeting held on June 18, 2016. This resulted in a cash outflow of 3,939 crore including corporate dividend tax.
(Refer to Note 2.2.1 for impact on transition to Ind AS)

The Board, in its meeting on October 14, 2016, declared an interim dividend of 11 per equity share, which resulted in a cash outflow of 3,041 crore, inclusive of corporate dividend tax.

The amount of per share dividend recognized as distributions to equity shareholders for the year ended March 31, 2015 includes final dividend of 29.50 per equity share (not adjusted for the June 17, 2015 bonus issue) and an interim dividend of 10 per equity share.

The Board, in its meeting on April 13, 2017, has recommended a final dividend of 14.75 per equity share for the financial year ended March 31, 2017. The proposal is subject to the approval of shareholders at the Annual General Meeting to be held on June 24, 2017 and, if approved, would result in a cash outflow of approximately 4,078 crore including corporate dividend tax.

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, 2017 and March 31, 2016 are as follows :

in crore, except as stated otherwise

Name of the shareholder

As at March 31, 2017

As at March 31, 2016

No. of shares

% held

No. of shares

% held

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

38,33,17,937

16.69

38,53,17,937

16.78

Life Insurance Corporation of India

16,14,36,123

7.03

13,22,74,300

5.76

The reconciliation of the number of shares outstanding and the amount of share capital as at March 31, 2017 and March 31, 2016 is as follows :

in crore, except as stated otherwise

Particulars

As at March 31, 2017

As at March 31, 2016

No. of shares

Amount

No. of shares

Amount

At the beginning of the period

2,29,69,44,664

1,148

1,14,84,72,332

574

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

1,14,84,72,332

574

At the end of the period

2,29,69,44,664

1,148

2,29,69,44,664

1,148

Employee Stock Option Plan (ESOP)

2015 Stock Incentive Compensation Plan (the 2015 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 were held by the trust towards the 2011 Plan as at March 31, 2016). 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.

On August 1, 2016, the Company granted 17,83,615 RSUs (including equity shares and equity shares represented by ADSs) at par value, to employees up to mid-management (excluding grants made to Dr. Vishal Sikka). Further, the Company granted 73,020 incentive units (cash-settled) to eligible employees. These instruments will vest equally over a period of four years and are subject to continued service.

On November 1, 2016, the Company granted 9,70,375 RSUs (including equity shares and equity shares represented by ADSs) at par value, 12,05,850 employee stock options (ESOPs) (including equity shares and equity shares represented by ADSs) to be exercised at market price at the time of grant, to certain employees at the senior management level. Further, the Company granted 20,640 incentive units (cash-settled) to certain employees at the senior management level. These instruments will vest equally over a period of four years and are subject to continued service.

On February 1, 2017, the Company granted 18,550 incentive units (cash-settled) to certain employees at the senior management level. These instruments will vest equally over a period of four years and are subject to continued service.

As of March 31, 2017, 1,12,89,514 shares are held by the trust under the 2015 Plan, out of which 1,00,000 shares have been earmarked for welfare activities for employees. As of March 31, 2017, 1,06,845 incentive units were outstanding (net of forfeitures) and the carrying value of the cash liability is 3 crore.

Pursuant to the approval from the shareholders through a postal ballot on March 31, 2016, Dr. Vishal Sikka (CEO & MD) is eligible to receive under the 2015 Plan, an annual grant of RSUs of fair value US $ 2 million which will vest over time, subject to continued service, and an annual grant of performance-based equity and stock options of US $ 5 million subject to achievement of performance targets set by the Board or its committee, which will vest over time. US $ 2 million of fair value in RSUs for fiscal 2017 was granted on August 1, 2016 amounting to 1,20,700 RSUs in equity shares represented by ADSs.

The Board, based on the recommendations of the nomination and remuneration committee, approved on April 13, 2017, performance-based equity and stock options for fiscal 2017 comprising RSUs amounting to US $ 1.9 million and ESOPs amounting to US $ 0.96 million. Further, the Board also approved the annual time-based vesting grant for fiscal 2018 amounting to RSUs of US $ 2 million. These RSUs and ESOPs will be granted w.e.f. May 2, 2017. Though the performance-based RSUs and stock options for fiscal 2017 and time-based RSUs for the remaining employment term have not been granted as of March 31, 2017, in accordance with Ind AS 102, Share-Based Payment, the Company has recorded employee stock-based compensation expense. The Company has recorded employee stock-based compensation expense of 28 crore and 7 crore during the years ended March 31, 2017 and March 31, 2016 respectively, towards CEO compensation.

The nomination and remuneration committee, in its meeting held on October 14, 2016, recommended a grant of 27,250 RSUs and 43,000 ESOPs to U. B. Pravin Rao, Chief Operating Officer (COO), under the 2015 Plan and the same was approved by the shareholders through a postal ballot on March 31, 2017. These RSUs and ESOPs will be granted w.e.f. May 2, 2017. These RSUs and stock options would vest over a period of four years and shall be exercisable within the period as approved by the committee. The exercise price of the RSUs will be equal to the par value of the shares and the exercise price of the stock options would be the market price as on the date of grant, as approved by the shareholders. Though these RSUs and ESOPs have not been granted as of March 31, 2017, in accordance with Ind AS 102, Share-Based Payment, the Company has recorded employee stock-based compensation expense for the same during the year ended March 31, 2017.

2011 RSU Plan (‘the 2011 Plan’) now called 2015 Stock Incentive Compensation Plan (‘the 2015 Plan’) : The Company had a 2011 RSU Plan which provided for the grant of 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 plan was 1,13,34,400 as on the date of approval of the plan adjusted for bonus shares, and the plan was expected to continue in effect for a term of 10 years from the date of initial grant under the plan. Awards have been granted to Dr. Vishal Sikka under the 2011 RSU plan as detailed below. Further, the Company has earmarked 1,00,000 equity shares for welfare activities of the employees, approved by the shareholders vide a postal ballot which ended on March 31, 2016. The equity shares as of March 31, 2016 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.

During the year ended March 31, 2015, the Company made a grant of 1,08,268 RSUs (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 recommendation of 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.

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 the 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.

The activity in the 2015 Plan (formerly ‘the 2011 RSU Plan’) for equity-settled share-based payment transactions during the year ended March 31, 2017 is as follows :

Particulars

Year ended March 31, 2017

Shares arising out of options

Weighted average exercise price ()

2015 Plan : Indian equity shares (RSU – IES)

Outstanding at the beginning (1)

2,21,505

5

Granted

18,78,025

5

Forfeited and expired

61,540

5

Exercised

34,062

5

Outstanding at the end

20,03,928

5

Exercisable at the end

2015 Plan : Employee Stock Options
(ESOPs – IES)

Outstanding at the beginning

Granted

3,09,650

998

Forfeited and expired

Exercised

Outstanding at the end

3,09,650

998

Exercisable at the end

(1) Adjusted for bonus issues (Refer to Note 2.12 above)

Particulars

Year ended March 31, 2017

Shares arising out of options

Weighted average exercise price ($)

2015 Plan : American Depositary Shares
(RSU – ADS)

Outstanding at the beginning

Granted

9,96,665

0.07

Forfeited and expired

39,220

0.07

Exercised

Outstanding at the end

9,57,445

0.07

Exercisable at the end

2015 Plan : Employee Stock Options
(ESOPs – ADS)

Outstanding at the beginning

Granted

8,96,200

15.26

Forfeited and expired

8,200

15.26

Exercised

Outstanding at the end

8,88,000

15.26

Exercisable at the end

The activity in the 2015 Plan (formerly ‘the 2011 RSU Plan’) for equity-settled, share-based payment transactions during the year ended March 31, 2016 was as follows :

Particulars

Year ended March 31, 2016

Shares arising out of options

Weighted average exercise price ()

2015 Plan : Indian equity shares (IES)

Outstanding at the beginning (1)

1,08,268

5

Granted

1,24,061

5

Forfeited and expired

Exercised (1)

10,824

5

Outstanding at the end

2,21,505

5

Exercisable at the end

(1) adjusted for bonus issues (Refer to Note 2.12 above)

During the year ended March 31, 2017, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 1,084. During the year ended March 31, 2016, the weighted average share price of options exercised under the 2015 Plan on the date of exercise was 1,088.

The details of the equity-settled RSUs and ESOPs outstanding as of March 31, 2017 are as follows :

Range of exercise prices per share ()

Options outstanding

No. of shares arising out of options

Weighted average remaining contractual life

Weighted average exercise price ()

2015 Plan : ADS and IES

0-5 (RSU)

29,61,373

1.88

5.00

900-1100 (ESOP)

11,97,650

7.09

1,026.50

41,59,023

3.38

299.16

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

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

Particulars

For options granted in fiscal 2017

Equity shares

ADSs

RSU

ESOP

RSU

ESOP

Grant date

1-Nov-16

1-Nov-16

1-Nov-16

1-Nov-16

Weighted average share price
() / ($ – ADS)

989

989

15.26

15.26

Exercise price () / ($ – ADS)

5.00

998

0.07

15.26

Expected volatility (%)

24-29

27-29

26-29

27-31

Expected life of the option (years)

1-4

3-7

1-4

3-7

Expected dividends (%)

2.37

2.37

2.29

2.29

Risk-free interest rate (%)

6-7

6-7

1-2

1-2

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

929

285

14.35

3.46

Particulars

For options granted in

Fiscal 2017- Equity shares - RSU

Fiscal 2017- ADS - RSU

Fiscal 2016- Equity shares - RSU

Fiscal 2015- Equity shares - RSU

Grant date

1-Aug-16

1-Aug-16

22-Jun-15

21-Aug-14

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

1,085

16.57

1,024

3,549

Exercise price () / ($ – ADS) (1)

5.00

0.07

5.00

5.00

Expected volatility (%)

25-29

26-30

28-36

30-37

Expected life of the option (years)

1-4

1-4

1-4

1-4

Expected dividends (%)

2.37

2.29

2.43

1.84

Risk-free interest rate (%)

6-7

0.5-1

7-8

8-9

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

1,019

15.59

948

3,355

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

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

During the years ended March 31, 2017 and March 31, 2016, the Company recorded an employee stock compensation expense of 107 crore and 7 crore in the Statement of Profit and Loss, which includes cash-settled stock compensation expense of 1 crore and nil, respectively.

2.13 Other financial liabilities

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current

Rental deposits (1)

27

27

Payable for acquisition of business (Refer to Notes 2.5.1 and 2.5.2)

40

35

40

62

27

Current

Unpaid dividends

17

5

3

Others

Accrued compensation to employees

1,404

1,764

1,719

Accrued expenses (2)

2,013

1,707

1,582

Retention monies

153

58

50

Payable for acquisition of business (Refer to Notes 2.5.1 and 2.5.2)

Deferred consideration

487

Contingent consideration

45

80

Client deposits

25

16

20

Capital creditors

36

66

37

Compensated absences

1,142

1,130

907

Other payables (3)

219

304

42

Foreign currency forward and options contracts

2

2

5,056

5,132

4,847

Total financial liabilities

5,096

5,194

4,874

Financial liability carried at amortized cost

3,867

3,947

3,967

Financial liability carried at fair value through profit or loss

87

117

Liability towards acquisition of business on undiscounted basis

91

132

(1) Includes dues to subsidiaries
(Refer to Note 2.25)

27

27

(2) Includes dues to subsidiaries
(Refer to Note 2.25)

3

29

36

(3) Includes dues to subsidiaries
(Refer to Note 2.25)

14

38

33

2.14 Trade payables

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Trade payables (1)

269

623

124

269

623

124

(1) Includes dues to subsidiaries
(Refer to Note 2.25)

135

145

102

As at March 31, 2017 and March 31, 2016, there are no outstanding dues to micro and small enterprises. There are no interests due or outstanding on the same.

2.15 Other liabilities

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Non-current

Deferred income

42

42

Current

Unearned revenue

1,320

1,025

831

Others

Withholding taxes and others

1,027

1,068

733

Deferred rent

2

2,349

2,093

1,564

2,391

2,093

1,564

2.16 Provisions

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Current

Others

Post-sales client support and warranties and others

350

436

382

350

436

382

Provision for post-sales client support and warranties and others

in crore

Particulars

Year ended March 31, 2017

Balance at the beginning

436

Provision recognized / (reversed)

86

Provision utilized

(167)

Exchange difference

(5)

Balance at the end

350

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

2.17 Income taxes

Income tax expense in the Statement of Profit and Loss comprises :

in crore

Particulars

Year ended March 31,

2017

2016

Current taxes

5,068

4,898

Deferred taxes

52

9

Income tax expense

5,120

4,907

Current tax expense for the years ended March 31, 2017 and March 31, 2016 includes reversals (net of provisions) amounting to 218 crore and 331 crore respectively pertaining to prior periods.

Entire deferred income tax for the years ended March 31, 2017 and March 31, 2016 relates to origination and reversal of temporary differences.

During the years ended March 31, 2017 and March 31, 2016, a current tax credit of 8 crore and nil, respectively, have been recorded in other comprehensive income pertaining to remeasurement of defined benefit plan asset.

During the year ended March 31, 2017, a deferred tax liability of 13 crore has been recorded in other comprehensive income pertaining to unrealized gains on derivatives designated as cash flow hedges.

A reconciliation of the income tax provision to the amount computed by applying the statutory income tax rate to the income before income taxes is summarized as follows :

in crore

Particulars

Year ended March 31,

2017

2016

Profit before income tax

18,938

17,600

Enacted tax rates in India (%)

34.61

34.61

Computed expected tax expense

6,554

6,091

Tax effect due to non-taxable income for Indian tax purposes

(1,915)

(1,659)

Overseas taxes

735

709

Tax reversals, overseas and domestic

(218)

(330)

Effect of exempt non-operating income

(51)

(69)

Effect of non-deductible expenses

16

185

Additional deduction on research and development expense

(19)

Others

(1)

(1)

Income tax expense

5,120

4,907

The applicable Indian statutory tax rate for fiscal 2017 and fiscal 2016 is 34.61%.

The foreign tax expense is due to income taxes payable overseas, principally in the United States. In India, the Company has benefited from certain tax incentives that the Government of India has provided to the export of software for the units registered under the Special Economic Zones (SEZ) Act, 2005. SEZ units which began the provision of services on or after April 1, 2005 are eligible for a deduction of 100% of profits or gains derived from the export of services for the first five years from the financial year in which the unit commenced the provision of services and 50% of such profits or gains for further five years. Up to 50% of such profits or gains is also available for a further five years subject to the creation of a Special Economic Zone Re-investment Reserve out of the profit of the eligible SEZ units and utilization of such reserve by the Company for acquiring new plant and machinery for the purpose of its business as per the provisions of the Income-tax Act, 1961.

Infosys is subject to a 15% Branch Profit Tax (BPT) in the U.S. to the extent its U.S. branch’s net profit during the year is greater than the increase in the net assets of the U.S. branch during the year, computed in accordance with the Internal Revenue Code. As of March 31, 2017, Infosys’ U.S. branch net assets amounted to approximately 5,995 crore. As of March 31, 2017, the Company has provided for branch profit tax of 327 crore for its U.S. branch, as the Company estimates that these branch profits are expected to be distributed in the foreseeable future. The change in provision for branch profit tax includes the 7 crore movement on account of exchange rate during the year ended March 31, 2017.

Deferred income tax liabilities have not been recognized on temporary differences amounting to 5,309 crore and 4,195 crore as of March 31, 2017 and March 31, 2016, respectively, associated with investments in subsidiaries and branches as it is probable that the temporary differences will not reverse in the foreseeable future.

The details of income tax assets and income tax liabilities as of March 31, 2017, March 31, 2016 and April 1, 2015 are as follows :

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Income tax assets

5,454

5,020

3,941

Current income tax liabilities

3,762

3,304

2,678

Net current income tax assets / (liability) at the end

1,692

1,716

1,263

The gross movement in the current income tax asset / (liability) for the years ended March 31, 2017 and March 31, 2016 is as follows :

in crore

Particulars

Year ended March 31,

2017

2016

Net current income tax asset / (liability) at the beginning

1,716

1,263

Income tax paid

5,033

5,350

Current income tax expense
(Refer to Note 2.17)

(5,068)

(4,898)

Income tax on other comprehensive income

8

Tax benefit on the exercise of share-based payments

1

Translation difference

2

1

Net current income tax asset / (liability) at the end

1,692

1,716

The tax effects of significant temporary differences that resulted in deferred income tax assets and liabilities are as follows :

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Deferred income tax assets

Property, plant and equipment

107

146

210

Computer software

40

50

51

Accrued compensation to employees

35

46

29

Trade receivables

123

79

100

Compensated absences

336

359

280

Post-sales client support

93

76

72

Others

32

21

7

Total deferred income tax assets

766

777

749

Deferred income tax liabilities

Branch profit tax

327

334

316

Others

93

38

Total deferred income tax liabilities

420

372

316

Deferred income tax assets after set off

346

405

433

Deferred income 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.

In assessing the realizability of deferred income tax assets, the Management considers whether some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which the temporary differences become deductible. The Management considers the scheduled reversals of deferred income tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based on the level of historical taxable income and projections for future taxable income over the periods in which the deferred income tax assets are deductible, the Management believes that the Group will realize the benefits of those deductible differences. The amount of the deferred income tax assets considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carry forward period are reduced.

The gross movement in the deferred income tax account for the years ended March 31, 2017 and March 31, 2016, is as follows :

in crore

Particulars

Year ended March 31,

2017

2016

Net deferred income tax asset at the beginning

405

433

Translation differences

6

(19)

Credits / (charge) relating to temporary differences
(Refer to Note 2.17)

(52)

(9)

Temporary differences on other comprehensive income

(13)

Net deferred income tax asset at the end

346

405

The charge relating to temporary differences during the year ended March 31, 2017 is primarily on account of property, plant and equipment, accrued compensation and compensated absences partially offset by trade receivable. The credits relating to temporary differences during the year ended March 31, 2016 are primarily on account of accrued compensation to employees and compensated absences partially offset by reversal of credits pertaining to property, plant and equipment and trade receivables.

2.18 Revenue from operations

in crore

Particulars

Year ended March 31,

2017

2016

Revenue from software services

59,257

53,334

Revenue from software products

32

649

59,289

53,983

2.19 Other income

in crore

Particulars

Year ended March 31,

2017

2016

Interest received on financial assets carried at amortized cost

Tax-free bonds, government bonds and debentures

320

168

Deposits with banks and others

2,028

2,338

Interest received on financial assets fair valued through other comprehensive income

Non-convertible debentures and certificates of deposit

182

Dividend received on investments carried at fair value through profit or loss

Mutual fund units

23

57

Gain / (loss) on investments carried at fair value through profit or loss

111

Exchange gains / (losses) on foreign currency forward and options contracts

551

26

Exchange gains / (losses) on translation of other assets and liabilities

(324)

141

Miscellaneous income, net

171

276

3,062

3,006

2.20 Expenses

in crore

Particulars

Year ended March 31

2017

2016

Employee benefit expenses

Salaries including bonus

30,111

27,551

Contribution to provident and other funds

640

548

Share-based payments to employees (Refer to Note 2.12)

107

7

Staff welfare

86

101

30,944

28,207

Cost of software packages and others

For own use

729

663

Third-party items bought for service delivery to clients

506

386

1,235

1,049

Other expenses

Power and fuel

180

179

Brand and marketing

276

229

Operating lease payments

284

175

Rates and taxes

118

99

Repairs and maintenance

1,073

873

Consumables

31

28

Insurance

45

48

Provision for post-sales client support and warranties

84

18

Commission to non-whole-time directors

9

8

Impairment loss recognized / (reversed) on financial assets

140

(45)

Auditors’ remuneration

Statutory audit fees

2

2

Other services

Reimbursement of expenses

Contributions towards corporate social responsibility

215

202

Others

89

107

2,546

1,923

2.21 Leases

The lease rentals charged during the period are as follows :

in crore

Particulars

Year ended March 31,

2017

2016

Lease rentals

284

175

The obligations on long-term, non-cancellable operating leases payable as per the rentals stated in the respective agreements are as follows :

in crore

Future minimum lease payable

As at March 31,

April 1, 2015

2017

2016

Not later than 1 year

275

170

101

Later than 1 year and not later than 5 years

809

417

284

Later than 5 years

631

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 relates to rented premises. Some of these lease agreements have price escalation clauses.

2.22 Employee benefits

a. Gratuity

The following tables set out the funded status of the gratuity plans and the amounts recognized in the Company’s financial statements as at March 31, 2017 and March 31, 2016 :

in crore

Particulars

As at March 31,

2017

2016

Change in benefit obligations

Benefit obligations at the beginning

826

755

Service cost

111

106

Interest expense

61

55

Curtailment gain

(3)

Transfer of obligation

(1)

(34)

Remeasurements – Actuarial (gains) / losses

61

10

Benefits paid

(76)

(66)

Benefit obligations at the end

979

826

Change in plan assets

Fair value of plan assets at the beginning

828

781

Interest income

69

59

Transfer of assets

(43)

Remeasurements – Return on plan assets excluding amounts included in interest income

11

7

Contributions

203

90

Benefits paid

(76)

(66)

Fair value of plan assets at the end

1,035

828

Funded status

56

2

The amount for the years ended March 31, 2017 and March 31, 2016 recognized in the Statement of Profit and Loss under employee benefit expenses is as follows :

in crore

Particulars

Year ended March 31,

2017

2016

Service cost

111

106

Net interest on the net defined benefit liability / asset

(8)

(4)

Curtailment gain

(3)

Net gratuity cost

100

102

The amount for the years ended March 31, 2017 and March 31, 2016 recognized in the statement of other comprehensive income is as follows :

in crore

Particulars

Year ended March 31

2017

2016

Remeasurements of the net defined benefit liability / (asset)

Actuarial (gains) / losses

61

10

(Return) / loss on plan assets excluding amounts included in the net interest on the net defined benefit liability / (asset)

(11)

(7)

50

3

in crore

Particulars

Year ended March 31

2017

2016

(Gain) / loss from change in demographic assumptions

(Gain) / loss from change in financial assumptions

49

49

The weighted-average assumptions used to determine benefit obligations as at March 31, 2017, March 31, 2016 and April 1, 2015 are as follows :

in %

Particulars

As of March 31,

April 1,

2015

2017

2016

Discount rate

6.9

7.8

7.8

Weighted average rate of increase in compensation levels

8.0

8.0

8.0

The weighted-average assumptions used to determine net periodic benefit cost for the years ended March 31, 2017 and March 31, 2016 are as follows :

Particulars

Year ended March 31,

2017

2016

Discount rate (%)

7.8

7.8

Weighted average rate of increase in compensation levels (%)

8.0

8.0

Weighted average duration of defined benefit obligation (years)

6.1

6.4

Assumptions regarding future mortality experience are set in accordance with the published statistics by the Life Insurance Corporation of India.

The Company assesses these assumptions with its projected long-term plans of growth and prevalent industry standards. The discount rate is based on the government securities yield.

As of March 31, 2017, every percentage point increase /decrease in discount rate will affect our gratuity benefit obligation by approximately 57 crore.

As of March 31, 2017, every percentage point increase / decrease in weighted average rate of increase in compensation levels will affect our gratuity benefit obligation by approximately 49 crore.

Sensitivity to significant actuarial assumptions is computed by varying one actuarial assumption used for the valuation of the defined benefit obligation by one percentage, keeping all other actuarial assumptions constant.

Gratuity is applicable only to employees drawing salaries in Indian rupees and there are no other significant foreign-defined benefit gratuity plans.

The Company contributes all ascertained liabilities towards gratuity to the Infosys Limited Employees’ Gratuity Fund Trust. Trustees administer contributions made to the trust. As of March 31, 2017 and March 31, 2016, the plan assets have been primarily invested in insurer-managed funds.

Actual return on assets for the years ended March 31, 2017 and March 31, 2016 was 80 crore and 66 crore, respectively.

The Company expects to contribute 85 crore to the gratuity trusts during fiscal 2018.

The maturity profile of defined benefit obligation is as follows :

in crore

Within 1 year

133

1-2 year

141

2-3 year

149

3-4 year

163

4-5 year

174

5-10 years

863

b. Superannuation

The Company contributed 151 crore and 227 crore to the Superannuation Trust during the years ended March 31, 2017 and March 31, 2016, respectively and the same has been recognized in the Statement of Profit and Loss under the head employee benefit expense.

c. Provident fund

Infosys has an obligation to fund any shortfall on the yield of the trust’s investments over the administered interest rates on an annual basis. These administered rates are determined annually predominantly considering the social rather than economic factors and in most cases, the actual return earned by the Company has been higher in the past years. The actuary has provided a valuation for provident fund liabilities on the basis of guidance issued by the Actuarial Society of India and based on the assumptions provided below, there is no shortfall as at March 31, 2017 and March 31, 2016 and April 1, 2015, respectively.

The details of fund and plan asset positions are as follows :

in crore

Particulars

As of March 31,

April 1, 2015

2017

2016

Plan assets at period end, at fair value

4,459

3,808

2,912

Present value of benefit obligation at period end

4,459

3,808

2,912

Asset recognized in Balance Sheet

The plan assets have been primarily invested in government securities.

Assumptions used in determining the present value obligation of the interest rate guarantee under the Deterministic Approach :

Particulars

As at March 31,

April 1, 2015

2017

2016

Government of India (GOI) bond yield (%)

6.90

7.80

7.80

Remaining term to maturity of portfolio (years)

6

7

7

Expected guaranteed interest rate

First year (%)

8.60

8.75

8.75

Thereafter (%)

8.60

8.60

8.60

The Company contributed 378 crore and 345 crore during the years ended March 31, 2017 and March 31, 2016, respectively, and the same has been recognized in the Statement of Profit and Loss under the head employee benefit expense.

The provident fund plans are applicable only to employees drawing salaries in Indian rupees and there are no other significant foreign-defined benefit plans.

Employee benefits cost include :

in crore

Particulars

Year ended March 31

2017

2016

Salaries and bonus (1)

30,315

27,534

Defined contribution plans

151

227

Defined benefit plans

478

446

30,944

28,207

(1) Includes stock compensation expense of 107 crore for the year ended March 31, 2017 ( 7 crore for the year ended March 31, 2016), refer to Note 2.12.

2.23 Reconciliation of basic and diluted shares used in computing earnings per share

The following is a reconciliation of the equity shares used in the computation of basic and diluted earnings per equity share :

Particulars

Year ended March 31,

2017

2016

Basic earnings per equity share – weighted average number of equity shares outstanding

2,29,69,44,664

2,29,69,44,664

Effect of dilutive common equivalent shares – share options outstanding

2,15,006

Diluted earnings per equity share – weighted average number of equity shares and common equivalent shares outstanding

2,29,71,59,670

2,29,69,44,664

For the year ended March 31, 2017, 77,942 options to purchase equity shares had an anti-dilutive effect. For the year ended March 31, 2016, no outstanding option to purchase equity shares had an anti-dilutive effect.

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

in crore

Particulars

As at March 31,

April 1, 2015

2017

2016

Contingent liabilities

Claims against the Company, not acknowledged as debts (2)

[Net of amount paid to statutory authorities 4,694 crore ( 4,386 crore)]

1,902

188

167

Commitments

Estimated amount of contracts remaining to be executed on capital contracts and not provided for (net of advances and deposits)

1,094

1,295

1,272

Other commitments (1)

37

(1) Uncalled capital pertaining to investments

(2) Claims against the Company not acknowledged as debts as on March 31, 2017 include demand from the Indian income tax authorities for payment of tax of 6,122 crore ( 4,135 crore), including interest of 1,885 crore ( 1,224 crore) upon completion of their tax assessment for fiscals 2007, 2008, 2009, 2010, 2011, 2012 and 2013. Demands were paid to statutory tax authorities in full except for fiscals 2009, 2011, 2012 and 2013.

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 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. Demand for fiscals 2012 and 2013 includes disallowance of certain expenses incurred in foreign currency being reduced from export turnover but not reduced from total turnover and disallowance of profits earned from SEZ units which commenced operations before April 1, 2009 under Section 10AA of the Income-tax Act and also others. The matters for fiscals 2007, 2008, 2009 and 2013 are pending before the Commissioner of Income Tax (Appeals), Bengaluru. The matter for fiscals 2010, 2011 and 2012 is pending before the Hon’ble Income Tax Appellate Tribunal (ITAT), Bengaluru.

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.

The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company’s management does not reasonably expect that these legal actions, when ultimately concluded and determined, will have a material and adverse effect on the Company’s results of operations or financial condition.

2.25 Related party transactions

in %

Name of subsidiaries

Country

Holding as at

March 31, 2017

March 31, 2016

April 1, 2015

Infosys BPO Limited (Infosys BPO)

India

99.98

99.98

99.98

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

China

100

100

100

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

Mexico

100

100

100

Infosys Technologies (Sweden) AB. (Infosys Sweden)

Sweden

100

100

100

Infosys Technologies (Shanghai) Company Limited (Infosys Shanghai)

China

100

100

100

Infosys Tecnologia do Brasil Ltda. (Infosys Brasil)

Brazil

100

100

100

Infosys Public Services, Inc. USA (Infosys Public Services)

U.S.

100

100

100

Infosys Americas Inc., (Infosys Americas)

U.S.

100

100

100

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

Czech Republic

99.98

99.98

99.98

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

Poland

99.98

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

99.98

Portland Group Pty Ltd (1)

Australia

99.98

99.98

99.98

Portland Procurement Services Pty Ltd (5)

Australia

Infosys BPO Americas LLC. (1)(16)

U.S.

99.98

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

Australia

100

100

100

EdgeVerve Systems Limited (EdgeVerve) (7)

India

100

100

100

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

Switzerland

100

100

100

Lodestone Management Consultants Inc. (3)

U.S.

100

100

100

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

Australia

100

100

100

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

Switzerland

100

100

100

Lodestone Augmentis AG (6)(18)

Switzerland

100

100

Lodestone GmbH (formerly Hafner Bauer & Ödman GmbH) (3)(20)

Switzerland

100

100

Infosys Consulting (Belgium) NV
(formerly Lodestone Management Consultants (Belgium) S.A.) (4)

Belgium

99.90

99.90

99.90

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

Germany

100

100

100

Infosys Consulting Pte Ltd.
(formerly Lodestone Management Consultants Pte Ltd) (21)

Singapore

100

100

100

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

France

100

100

100

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

Czech Republic

100

100

100

Lodestone Management Consultants GmbH (3)

Austria

100

100