The Hindu : Business : Infosys in $1 b club, recommends 3:1 bonus

Online edition of India's National Newspaper
Wednesday, Apr 14, 2004

Business

Business

Infosys in $1 b club, recommends 3:1 bonus

By Our Staff Reporter

BANGALORE, APRIL 13. IT bellwether, Infosys Technologies, the Bangalore headquartered IT services company, announced on Tuesday that it had earned revenues of over a billion dollars for the year ended March 31, 2004. This year, a firmer rupee was still a cause for concern, but prices would hold and the company would grow revenues by 24 per cent, senior Infosys executives told reporters here.

Plans include higher investments in subsidiaries in China, Australia, the BPO arm Projeon and in a new consulting firm, Infosys Consulting, in the U.S. More investments were also planned in improving Infosys' banking product, Finacle. However, large outsourcing deals in the BPO sector could be `on hold,' K. Gopalakrishnan, Infosys' chief operating officer said.

On the billion-dollar revenues, an ebullient Chairman and Chief Mentor, N. R. Narayana Murthy, termed it "a historical milestone". Nandan M. Nilekani, CEO, President and Managing Director, said, "We have grown from $121 million in 1999 to a consolidated revenue of $1.06 billion in 2004. Today, we have the required size, brand, compelling value proposition and ambition to build the next generation software services and consulting company".

To celebrate, Infosys was giving its shareholders, three bonus shares for every share held, and a "one time special dividend" of Rs. 100 per equity share, amounting to a total of Rs. 666.41 crores. The board of directors of the company also declared a final dividend of Rs. 15 per share of Rs. 5, amounting to a total of Rs. 99.96 crores. Holders of American Depository Shares would get two to one. The ratio for converting ADS into equity share would be one equity share for one ADS. July 2 has been set as the record date and the equity shares would be credited on July 5, a company release said.

Net up 30 p.c.

Income from software development services and products was Rs. 1,308.90 crores for the quarter ended March 31, up 28 per cent year-on-year. The net profit after taxes was Rs. 337.05 crores, up 30 per cent year-on-year. Earnings per share increased 29 per cent year-on-year to Rs. 50.63 for the three months to March 31, a company release said.

For the year ended March 31, the company's income was Rs. 4,760.89 crores, up 31 per cent over the previous year and the net profit after taxes was up 30 per cent at Rs. 1,243.63 crores. Earnings per share increased by 30 per cent to Rs. 187.38.

During the quarter, employee strength increased by 2,425, and 9,758 in the year, taking the total to 25,634. Among the concerns for the year, was the rupee gaining on the dollar, as some "30 per cent of the income comes back to India," T. V. Mohandas Pai, Infosys' chief finance officer, said. Mr. Pai said $203 million had been hedged at Rs. 43.60. "We would be taking the rupee at 43.4 to a dollar, and hedge a larger quantum in the future," he said.

For the quarter ending June 30, 2004, income is projected at between Rs. 1,363 crores and Rs. 1,371 crores, a 25 per cent growth year-on-year.

Earnings per share are expected to be Rs. 50.4, a 20 per cent growth. For the year ending March 31, 2005, income is projected between Rs. 5,994 crores and Rs. 6,041 crores, a growth of 24 per cent. Earnings per share are pegged at Rs. 224, a 20 per cent growth.

The global (offshore) delivery model was here to stay, while the company would increase its breadth and depth, S. D. Shibulal, head of customer delivery said. With "practically every Fortune 1000 company" considering it, Infosys expected more deals in the range of between $5 million and $10 million, Basab Pradhan, head of worldwide sales, said. During the year ended March 31, 2004 the company had three `$50 million clients,' Mr. Pradhan said. On U.S. multinationals entering the domestic IT market in India, Mr. Nilekani said it would be far more disruptive "for them to reduce their cost structures in the U.S. (their home base), than for Infosys to sell the offshore idea to global markets.

On consulting, the organic approach, grow the business as it comes in, would be adopted, before seriously going after the market. Stephen Pratt, chief executive officer of newly formed Infosys Consulting Inc., said, "The integration of a world-class consulting team with the global delivery model is the way do it".

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