Edgar Filing: INFOSYS TECHNOLOGIES LTD

Infosys Technologies Limited, Form 6-K 9/30/2003

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

Report of Foreign Issuer
Pursuant to Section 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended September 30, 2003

Commission File Number 333-72195

Infosys Technologies Limited

(Exact name of Registrant as specified in its charter)

Not Applicable
(Translation of Registrant’s name into English)

Bangalore, Karnataka, India
(Jurisdiction of incorporation or organization)

Electronics City, Hosur Road, Bangalore, Karnataka, India 561 100. +91-80-852-0261
(Address of principal executive offices)

Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F:


	Form 20-F x Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934.


	Yes o No x

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 2g 3-2(b).

Not applicable.

This Form 6-K contains our Quarterly Report for the quarter ended September 30, 2003 that we mailed to our equity shareholders on or about November 01, 2003. The information contained in this Form 6-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Infosys Technologies Limited
Report for the second quarter ended September 30, 2003

(INFOSYS LOGO)

At a glance – Indian GAAP (Non-consolidated financials)


		in Rs. crores, except per share data

		Quarter ended						Half-year ended						Year ended
		September 30,						September 30,						March 31,
		2003			2002			2003			2002			2003

For the period
Total revenue			1,134.75			879.57			2,216.73			1,644.19			3,622.69
Export revenue			1,115.98			857.23			2,174.63			1,607.75			3,543.51
Operating profit (PBIDTA)			378.43			323.24			726.73			598.17			1,272.04
PBIDTA/revenues (%)			33.35	%		36.75	%		32.78	%		36.38	%		35.11	%
Profit after tax (PAT)			300.16			225.77			578.28			442.62			957.93
PAT/revenues (%)			26.45	%		25.67	%		26.09	%		26.92	%		26.44	%
Earnings per share* (par value of Rs.5 each, fully paid)
	Basic		45.30			34.10			87.29			66.87			144.68
	Diluted		44.92			33.90			86.76			66.41			143.37
Dividend per share		NA			NA				14.50			12.50			27.00
Dividend amount		NA			NA				96.09			82.76			178.81
Capital expenditure			68.83			44.02			127.21			97.80			219.26
At the end of the period
Total assets									3,335.61			2,443.32			2,860.65
Fixed assets – net									793.26			753.53			772.72
Cash and cash equivalents									1,689.86			1,289.34			1,638.51
Working capital									2,031.49			1,623.01			2,017.92
Total debt									–			–			–
Net worth									3,335.61			2,443.32			2,860.65
Equity									33.13			33.10			33.12
Market capitalization									30,006.92			22,552.46			26,847.33

Note:
Market capitalization is calculated by considering the share price at National Stock Exchange on the shares outstanding at the period/ year end.
*EPS figures have been calculated for the period and have not been annualized.

(BAR CHART)

Letter to the shareholder

Dear shareholder,

Your company is delighted to report another quarter of robust growth. It has increased its guidance for revenue and EPS for this fiscal. Thanks to the dedicated efforts of all Infoscions, your company expects to grow into a billion dollar company, by the end of this fiscal.

Indian GAAP revenues grew by 4.88% over Q1 FY2004 while net profits from ordinary activities witnessed an increase of 7.92%. Revenues in US$ terms grew by 7.51% for the quarter as compared to the quarter ended June 30, 2003. Cash flows continue to be strong. Free cash flows during the quarter amounted to Rs. 313.62 crore which includes investment in liquid mutual funds.

Business opportunities continue to grow. Pricing is showing signs of stability. Margins have stabilized due to several proactive measures taken earlier. In fact, our initiatives to increase offshore revenue are yielding results. During the quarter, there was an increase of 10.9% in offshore effort as against 2.4% in onsite effort as compared to the previous quarter first service revenue. We continue to hedge our forex exposure, but the appreciating rupee may impact margins.

Your company added 29 new clients during the quarter. Significant wins include a Fortune 500 on-line shopping giant, one of the largest apparel manufacturers in the US, the second largest electronics entertainment software retailer, the world’s leading provider of information, technology and services to the pharma industry in Europe, one of the largest automakers in Japan and the European arm of one of the world’s leading suppliers of automotive components. In addition, Infosys completed an end-to-end package implementation for a women’s specialty apparel retailer.

In Australia, one of the largest electricity utilities relies on Infosys for technology solutions that will streamline and improve its systems and processes. Infosys’ consulting group is advising this Australian giant on strategies to grow its BPO business.

Global corporations are leveraging Infosys’ expertise in business consulting to maintain competitive advantage. The company is working with one of the largest electric utilities firms in the US, to develop a framework and to redefine tools for rationalizing the company’s enterprise portfolio. Infosys advised a global marketing information services corporation on defining its data architecture as well as on the selection of a package solution. During the quarter, Infosys also provided consulting services to an international provider of credit enhancement products and lender services based in the US.

Infosys’ Banking Business Unit (BBU) bagged its seventeenth client in India with one of the top public sector banks deploying FINACLE^® suite of products. Other significant wins in this sector include a leading bank headquartered in Saudi Arabia and a leading private sector bank headquartered in Mumbai, India. FINACLE^® has emerged as the world’s most scalable open systems based core-banking solution. In the recently concluded rigorous benchmarking exercise on HP Superdome server at the HP Capacity Planning Centre in Atlanta, USA, FINACLE^® broke all hitherto published benchmark results for core banking transaction processing.

Your company is making investments in order to enhance its end-to-end solution capability. It is also increasing capital spending on its global infrastructure. Infosys proposes to establish a software development center for 200 professionals in Shanghai. The China subsidiary will be offering software services to domestic companies in China and multinational companies operating in China. It will also serve as a hub for software services in Asia Pacific.

Your company is strengthening its client relationship management framework. Further, during the quarter, your company held its annual client forum – Milan – in the US. In fact, there was increased participation overall as well as increase in the number of high profile attendees (VP and above).

As a result of several proactive measures taken earlier, your company has increased its productivity and efficiency across all activities. Global corporations are increasingly accepting the outsourcing model and your company continues to focus on providing enhanced customer value. Your company has added several strategic clients which have the potential to grow into multi-million dollar accounts. We continue to demonstrate the scalability of our operations by adding a net of 2,025 employees without compromising on operational excellence. In fact, your company’s net employee addition for this quarter has been the highest ever.

As in the past, Infoscions continue to help global corporations transform their business leveraging technology. Our growth has been made possible through their unstinting commitment. On your behalf, we salute them for contributing to yet another successful quarter.




	Nandan M. Nilekani	S. Gopalakrishnan
Bangalore	Chief Executive Officer, President	Chief Operating Officer
October 10, 2003	and Managing Director	and Deputy Managing Director

Auditors’ report to the members of Infosys Technologies Limited

We have audited the attached Balance Sheet of Infosys Technologies Limited (the Company) as at September 30, 2003, the Profit and Loss Accounts and Cash Flow Statements of the Company for the quarter and half-year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that:

(a)		we have 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 have been kept by the Company so far as appears from our examination of the books;

(c)		the Balance Sheet, the Profit and Loss Accounts and the Cash Flow Statements dealt with by this report are in agreement with the books of account;

(d)		in our opinion, the Balance Sheet, the Profit and Loss Accounts and the Cash Flow Statements dealt with by this report comply with the Accounting Standards issued by the Institute of Chartered Accountants of India, to the extent applicable; and

(e)		in our opinion and to the best of our information and according to the explanations given to us, the said accounts give a true and fair view in conformity with the accounting principles generally accepted in India;

	(i)		in the case of the Balance Sheet, of the state of affairs of the Company as at September 30, 2003;

	(ii)		in the case of the Profit and Loss Accounts, of the profit of the Company for the quarter and half year ended on that date; and

	(iii)		in the case of the Cash Flow Statements, of the cash flows of the Company for the quarter and half year ended on that date.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
October 10, 2003

Balance Sheet as at


		in Rs. crore

		September 30, 2003		September 30, 2002		March 31, 2003

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share capital			33.13		33.10		33.12
Reserves and surplus			3,302.48		2,410.22		2,827.53

			3,335.61		2,443.32		2,860.65

APPLICATION OF FUNDS
FIXED ASSETS
Original cost			1,414.53		1,137.72		1,273.32
Less: Depreciation and amortization			683.27		476.54		577.15

Net book value			731.26		661.18		696.17
Add: Capital work-in-progress			62.00		92.35		76.55

			793.26		753.53		772.72
INVESTMENTS			476.99		33.20		33.20
DEFERRED TAX ASSETS			33.87		33.58		36.81
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors			577.26		458.25		512.14
Cash and bank balances			1,382.71		986.85		1,336.23
Loans and advances			937.64		870.16		872.78

			2,897.61		2,315.26		2,721.15
Less: Current liabilities			370.99		262.36		315.25
	Provisions		495.13		429.89		387.98

NET CURRENT ASSETS			2,031.49		1,623.01		2,017.92

			3,335.61		2,443.32		2,860.65

This is the Balance Sheet referred to in our report of even date.


for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President	Chief Operating Officer and
		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and	Director	Company Secretary and
	Chief Financial Officer		Vice President – Finance

Bangalore
October 10, 2003

Profit and Loss Account for the


		in Rs. crore, except per share data

		Quarter ended				Half-year ended				Year ended
		September 30,				September 30,				March 31,
		2003		2002		2003		2002		2003

INCOME
Software services and products
	Overseas		1,115.98		857.23		2,174.63		1,607.75		3,543.51
	Domestic		18.77		22.34		42.10		36.44		79.18

			1,134.75		879.57		2,216.73		1,644.19		3,622.69
SOFTWARE DEVELOPMENT EXPENSES			587.16		424.49		1,159.94		801.88		1,813.30

GROSS PROFIT			547.59		455.08		1,056.79		842.31		1,809.39
SELLING AND MARKETING EXPENSES			80.44		69.33		160.16		124.42		266.98
GENERAL AND ADMINISTRATION EXPENSES			88.72		62.51		169.90		119.72		270.37

			169.16		131.84		330.06		244.14		537.35
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION			378.43		323.24		726.73		598.17		1,272.04
Interest			–		–		–		–		–
Depreciation and amortization			62.33		46.24		106.59		86.71		188.95

OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION			316.10		277.00		620.14		511.46		1,083.09
Other income			44.28		17.53		76.73		42.42		99.61
Provision for investments			0.22		23.76		6.59		23.76		23.77

NET PROFIT BEFORE TAX			360.16		270.77		690.28		530.12		1,158.93
Provision for taxation			60.00		45.00		112.00		87.50		201.00

NET PROFIT AFTER TAX			300.16		225.77		578.28		442.62		957.93
AMOUNT AVAILABLE FOR APPROPRIATION			300.16		225.77		578.28		442.62		957.93

DIVIDEND
	Interim		96.09		82.76		96.09		82.76		82.76
	Final		–		–		–		–		96.05
	Dividend Tax		12.31		–		12.31		–		12.30
Amount transferred – general reserve			–		–		–		–		766.82
Balance in Profit and Loss Account			191.76		143.01		469.88		359.86		–

			300.16		225.77		578.28		442.62		957.93

EARNINGS PER SHARE (equity shares, par value Rs. 5/- each)
	Basic		45.30		34.10		87.29		66.87		144.68
	Diluted		44.92		33.90		86.76		66.41		143.37
Number of shares used in computing earnings per share
	Basic		6,62,57,028		6,61,98,735		6,62,51,101		6,61,93,632		6,62,11,068
	Diluted		6,68,24,404		6,65,96,469		6,66,51,085		6,66,51,932		6,68,16,821

These are the Profit and Loss Accounts referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants


S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President	Chief Operating Officer and
		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and	Director	Company Secretary and
	Chief Financial Officer		Vice President – Finance

Bangalore
October 10, 2003

Cash Flow Statement for the


		in Rs. crore

		Quarter ended						Half-year ended						Year ended
		September 30,						September 30,						March 31,
		2003			2002			2003			2002			2003

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax			360.16			270.77			690.28			530.12			1,158.93
Adjustments to reconcile profit before tax to cash provided by operating activities
	(Profit)/Loss on disposal of fixed assets		–			0.14			(0.01	)		0.13			–
	Depreciation and amortization		62.33			46.24			106.59			86.72			188.95
	Interest and dividend income		(23.43	)		(18.69	)		(46.18	)		(36.37	)		(78.05	)
	Provision on long-term investments		0.22			23.76			6.59			23.76			23.77
	Exchange differences on translation of foreign currency cash and cash equivalents		1.59			2.13			3.16			1.36			(2.06	)
Changes in current assets and liabilities
	Sundry debtors		(19.96	)		(44.96	)		(65.12	)		(121.52	)		(175.41	)
	Loans and advances		8.33			(22.05	)		(1.52	)		(73.64	)		(127.63	)
	Current liabilities and provisions		16.58			46.38			55.59			111.45			158.46
	Income taxes paid during the period/year		(49.22	)		(78.94	)		(60.28	)		(104.90	)		(232.09	)

NET CASH GENERATED BY OPERATING ACTIVITIES			356.60			224.78			689.10			417.11			914.87

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on exercise of stock options			4.01			2.75			5.08			3.15			13.52
Dividends paid during the period/year, including dividend tax			–			–			(108.35	)		(82.73	)		(165.49	)

NET CASH USED IN FINANCING ACTIVITIES			4.01			2.75			(103.27	)		(79.58	)		(151.97	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress			(68.83	)		(44.02	)		(127.21	)		(97.80	)		(219.26	)
Proceeds on disposal of fixed assets			–			0.04			0.09			0.16			0.33
Investments in securities			(349.83	)		–			(450.38	)		(12.52	)		(12.53	)
Interest and dividend income			23.43			18.69			46.18			36.37			78.05

NET CASH USED IN INVESTING ACTIVITIES			(395.23	)		(25.29	)		(531.32	)		(73.79	)		(153.41	)

Exchange differences on translation of foreign currency cash and cash equivalents			(1.59	)		(2.13	)		(3.16	)		(1.36	)		2.06

Net (decrease)/increase in cash and cash equivalents during the period/year			(36.21	)		200.11			51.35			262.38			611.55
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR			1,726.07			1,089.23			1,638.51			1,026.96			1,026.96

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR			1,689.86			1,289.34			1,689.86			1,289.34			1,638.51

These are the Cash Flow Statements referred to in our report of even date.

for Bharat S Raut & Co.
Chartered Accountants


S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President	Chief Operating Officer and
		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and	Director	Company Secretary and
	Chief Financial Officer		Vice President – Finance

Bangalore
October 10, 2003

Schedules to the Profit and Loss Account for the


		in Rs. crore

		Quarter ended September 30,						Half-year ended September 30,						Year ended March 31,
		2003			2002			2003			2002			2003

SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including overseas staff expenses			482.59			343.27			937.37			640.92			1,433.85
Staff welfare			2.86			1.60			5.99			3.29			7.91
Contribution to provident and other funds			12.99			6.81			23.74			13.27			31.94
Overseas travel expenses			43.07			41.22			84.68			78.28			162.66
Consumables			2.05			1.26			3.77			2.42			6.25
Cost of software packages
	for own use		21.47			11.30			35.07			21.06			54.75
	for service delivery to clients		2.48			0.74			12.34			7.62			12.99
Computer maintenance			3.14			2.52			5.44			4.38			9.33
Communication expenses			7.75			5.09			15.93			12.26			23.94
Provision for post-sales client support			(0.32	)		(2.27	)		(0.15	)		(0.30	)		(6.18	)
Consultancy charges			7.61			12.95			34.29			18.68			75.86
Rent			1.47			–			1.47			–			–

			587.16			424.49			1,159.94			801.88			1,813.30

SELLING AND MARKETING EXPENSES
Salaries and bonus including overseas staff expenses			49.36			32.96			99.20			63.01			141.73
Staff welfare			0.15			0.18			0.23			0.31			0.62
Contribution to provident and other funds			0.79			0.15			1.17			0.24			1.34
Overseas travel expenses			9.26			9.90			18.04			18.59			45.16
Consumables			0.02			0.05			0.08			0.07			0.21
Cost of software packages for own use			–			0.02			0.01			0.03			0.21
Computer maintenance			0.01			–			0.02			–			0.01
Communication expenses			–			0.18			–			0.24			0.50
Traveling and conveyance			0.28			0.30			0.60			0.45			1.19
Rent			3.94			1.20			6.90			2.11			4.79
Telephone charges			1.19			1.46			2.29			2.52			5.35
Professional charges			0.78			2.97			2.74			5.24			10.63
Printing and stationery			0.25			0.40			0.52			0.77			1.43
Advertisements			0.12			0.24			0.24			0.40			1.04
Brand building			9.42			9.37			15.14			17.36			29.05
Office maintenance			0.07			0.35			0.11			0.50			2.72
Repairs to plant and machinery			–			–			–			–			0.02
Power and fuel			0.01			0.07			0.03			0.11			0.22
Insurance charges			0.01			0.01			0.04			0.03			0.20
Rates and taxes			–			0.12			0.03			0.23			0.27
Bank charges and commission			–			0.03			0.01			0.04			0.09
Commission charges			0.64			4.70			2.91			6.22			10.58
Marketing expenses			1.76			2.20			2.61			3.31			6.72
Sales promotion expenses			0.09			0.05			0.20			0.20			0.46
Other miscellaneous expenses			2.29			2.42			7.04			2.44			2.44

			80.44			69.33			160.16			124.42			266.98

GENERAL AND ADMINISTRATION EXPENSES
Salaries and bonus including overseas staff expenses			17.36			14.17			34.26			26.38			56.24
Contribution to provident and other funds			1.15			0.75			2.29			1.54			3.49
Overseas travel expenses			1.87			2.15			3.57			3.95			7.78
Traveling and conveyance			5.18			3.74			9.51			6.66			16.76
Rent			3.66			5.52			10.77			10.75			24.51
Telephone charges			7.47			5.37			14.76			9.01			21.34
Professional charges			9.79			7.98			16.28			14.51			37.99
Printing and stationery			1.05			1.01			3.39			2.66			4.80
Advertisements			0.37			1.02			1.36			1.67			5.15
Office maintenance			6.32			3.98			12.55			7.91			20.13
Repairs to building			1.49			1.15			3.39			3.02			7.27
Repairs to plant and machinery			1.51			0.93			2.60			2.09			4.75
Power and fuel			7.19			5.32			14.39			10.98			22.38
Insurance charges			6.06			2.48			11.19			4.46			9.83
Rates and taxes			0.94			1.10			2.15			2.27			5.14
Donations			3.52			1.37			7.02			3.04			6.09
Auditor’s remuneration
	audit fees		0.08			0.07			0.15			0.13			0.27
	certification charges		–			–			–			–			0.03
	out-of-pocket expenses		–			–			0.01			0.01			0.02
Provision for bad and doubtful debts			10.73			0.11			14.02			0.18			0.73
Provision for doubtful loans and advances			0.12			(0.01	)		0.13			(0.05	)		(0.07	)
Bank charges and commission			0.16			0.16			0.35			0.32			0.66
Commission to non-whole time directors			0.39			0.24			0.78			0.48			1.12
Postage and courier			0.70			0.72			1.94			1.97			3.99
Books and periodicals			0.34			0.40			0.58			0.65			1.42
Research grants			0.12			–			0.18			–			–
Freight charges			0.15			0.16			0.30			0.27			0.58
Professional membership and seminar participation fees			0.65			0.83			1.27			1.65			3.55
Other miscellaneous expenses			0.35			1.79			0.71			3.21			4.42

			88.72			62.51			169.90			119.72			270.37

Schedules to the Statement of Cash Flows for the


in Rs. crore

			Quarter ended						Half-year ended						Year ended
			September 30,						September 30,						March 31,
			2003			2002			2003			2002			2003

CHANGE IN LOANS AND ADVANCES
As per the Balance Sheet				937.64			870.16			937.64			870.16			872.78
Less: Deposits with financial institutions and body corporate, included in cash and cash equivalents				(307.15	)		(302.49	)		(307.15	)		(302.49	)		(302.28	)
		Advance income taxes separately considered		(348.46	)		(341.15	)		(348.46	)		(341.15	)		(289.99	)

				282.03			226.52			282.03			226.52			280.51
Less: Opening balance considered				(290.36	)		(204.47	)		(280.51	)		(152.88	)		(152.88	)

				(8.33	)		22.05			1.52			73.64			127.63

CHANGE IN CURRENT LIABILITIES AND PROVISIONS
As per the Balance Sheet				866.12			692.25			866.12			692.25			703.23
Add/(Less): Provisions separately considered in the cash flow Statement
	Income taxes			(382.06	)		(336.43	)		(382.06	)		(336.43	)		(274.81	)
	Dividends			(96.09	)		(82.76	)		(96.09	)		(82.76	)		(96.05	)
	Dividend tax			(12.31	)		—			(12.31	)		—			(12.30	)
	Non Cash transactions			—			—			—			(24.50	)		(24.50	)
Less: Opening balance considered				(359.08	)		(226.68	)		(320.07	)		(137.11	)		(137.11	)

				16.58			46.38			55.59			111.45			158.46

INCOME TAXES PAID
Charge as per the Profit and Loss Account				60.00			45.00			112.00			87.50			201.00
Add: Increase in advance income taxes				49.22			78.94			58.47			104.90			53.74
Add: Increase/(Decrease) in Deferred taxes				(4.47	)		8.74			(2.94	)		9.36			12.59
Less: (Increase)/Decrease in income tax provision				(55.53	)		(53.74	)		(107.25	)		(96.86	)		(35.24	)

				49.22			78.94			60.28			104.90			232.09

PURCHASES OF FIXED ASSETS AND CHANGE IN CAPITAL WORK-IN-PROGRESS
As per the Balance Sheet				51.06			40.64			141.76			180.62			317.87
Less: Opening Capital work-in-progress				(44.23	)		(88.97	)		(76.55	)		(150.67	)		(150.67	)
Less: Non Cash transaction				—			—			—			(24.50	)		(24.50	)
Add: Closing Capital work-in-progress				62.00			92.35			62.00			92.35			76.56

				68.83			44.02			127.21			97.80			219.26

INVESTMENTS IN SECURITIES
As per the Balance Sheet				476.99			33.20			476.99			33.20			33.20
Add: Provisions on investments				0.22			23.76			6.59			23.76			23.77

				477.21			56.96			483.58			56.96			56.97
Less: Opening balance considered				(127.38	)		(56.96	)		(33.20	)		(44.44	)		(44.44	)

				349.83			—			450.38			12.52			12.53

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
As per the Balance Sheet				1,382.71			986.85			1,382.71			986.85			1,336.23
Add: Deposits with financial institutions and body corporate, included herein				307.15			302.49			307.15			302.49			302.28

				1,689.86			1,289.34			1,689.86			1,289.34			1,638.51

Extracts of significant accounting policies and notes on accounts

Company overview

Infosys Technologies Limited (“Infosys”) along with its majority owned and controlled subsidiary, Progeon Limited (“Progeon”), is a global technology and services organization engaged in delivering a comprehensive range of end-to-end solutions to customers. Infosys provides solutions across the entire software and process life-cycles including design, development, implementation, maintenance and management using its Global Delivery Model. Infosys offers the following services: consulting, software development, software re-engineering, systems integration, package evaluation and implementation, software maintenance, and business process management services (“BPM”). Infosys also provides proprietary software products for the banking industry.

Management’s Statement on significant accounting policies contained in the audited financial statements.

There are no changes in the accounting policies during the quarter ended September 30, 2003. The significant accounting policies of the company relate to revenue recognition, expenditure, fixed asset and capital work in progress, depreciation, retirement benefits to employees – principally gratuity, superannuation and provident fund benefits, research and development, income tax, earning per share, foreign currency transactions and investments.

1.1		Significant accounting policies

1.1.1.		Basis of preparation of financial statements

The accompanying financial statements are prepared in accordance with Indian Generally Accepted Accounting Principles (“GAAP”) under the historical cost convention on the accruals basis. GAAP comprises mandatory accounting standards issued by the Institute of Chartered Accountants of India (“ICAI”), the provisions of the Companies Act, 1956 and guidelines issued by the Securities and Exchange Board of India. These accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted by the company. Management evaluates the effect of accounting standards issued on an on-going basis and ensures they are adopted as mandated by the ICAI. There are no recently issued accounting standards that management believes have a material impact on the financial statements of the company.

1.2

Notes on accounts

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

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

1.2.1.

Aggregate expenses

The following are the aggregate amounts incurred on certain specific expenses that are required to be disclosed under Schedule VI to the Companies Act, 1956.


in Rs. crore

			Quarter ended September 30,						Half-year ended September 30,						Year ended March 31,
			2003			2002			2003			2002			2003

Salaries and bonus including overseas staff expenses				549.31			390.40			1,070.83			730.31			1,631.82
Contribution to provident and other funds				14.93			7.71			27.20			15.05			36.77
Staff welfare				3.01			1.78			6.22			3.60			8.53
Overseas travel expenses				54.20			53.27			106.29			100.82			215.60
Consumables				2.07			1.31			3.85			2.49			6.46
Cost of software packages
	for own use			21.47			11.32			35.08			21.09			54.96
	for service delivery to clients			2.48			0.74			12.34			7.62			12.99
Computer maintenance				3.15			2.52			5.46			4.38			9.34
Communication expenses				7.75			5.27			15.93			12.50			24.44
Consultancy charges				7.61			12.95			34.29			18.68			75.86
Provision for post-sales client support				(0.32	)		(2.27	)		(0.15	)		(0.30	)		(6.18	)
Traveling and conveyance				5.46			4.04			10.11			7.11			17.95
Rent				9.07			6.72			19.14			12.86			29.30
Telephone charges				8.66			6.83			17.05			11.53			26.69
Professional charges				10.57			10.95			19.02			19.75			48.62
Printing and stationery				1.30			1.41			3.91			3.43			6.23
Advertisements				0.49			1.26			1.60			2.07			6.19
Office maintenance				6.39			4.33			12.66			8.41			22.85
Repairs to building				1.49			1.15			3.39			3.02			7.27
Repairs to plant and machinery				1.51			0.93			2.60			2.09			4.77
Power and fuel				7.20			5.39			14.42			11.09			22.60
Brand building				9.42			9.37			15.14			17.36			29.05
Insurance charges				6.07			2.49			11.23			4.49			10.03
Rates and taxes				0.94			1.22			2.18			2.50			5.41
Commission charges				0.64			4.70			2.91			6.22			10.58
Donations				3.52			1.37			7.02			3.04			6.09
Auditor’s remuneration – audit fees				0.08			0.07			0.15			0.13			0.27
		– certification charges		—			—			—			—			0.03
		– out-of-pocket expenses		—			—			0.01			0.01			0.02
Provision for bad and doubtful debts				10.73			0.11			14.02			0.18			0.73
Provision for doubtful loans and advances				0.12			(0.01	)		0.13			(0.05	)		(0.07	)
Bank charges and commission				0.16			0.19			0.36			0.36			0.75
Commission to non-whole time directors				0.39			0.24			0.78			0.48			1.12
Postage and courier				0.70			0.72			1.94			1.97			3.99
Books and periodicals				0.34			0.40			0.58			0.65			1.42
Research grants				0.12			—			0.18			—			—
Freight charges				0.15			0.16			0.30			0.27			0.58
Professional membership and seminar participation fees				0.65			0.83			1.27			1.65			3.55
Marketing expenses				1.76			2.20			2.61			3.31			6.72
Sales promotion expenses				0.09			0.05			0.20			0.20			0.46
Other miscellaneous expenses				2.64			4.21			7.75			5.65			6.86

				756.32			556.33			1,490.00			1,046.02			2,350.65

1.2.2.

Obligations on long-term, non-cancelable operating leases

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

Quarter ended

Half-year ended

Year ended

September 30,

March 31,

2003

2002

2003

2002

2003

Lease rentals recognized during the period/year

9.07

6.72

19.14

12.86

29.30


	As at				As at
Lease obligations	September 30, 2003		September 30, 2002		March 31, 2003

Within one year of the balance sheet date		27.49		16.83		17.93
Due in a period between one year and five years		59.16		39.00		36.00
Due after five years		7.39		5.98		7.00

		94.04		61.81		60.93

The operating lease arrangements extend for a maximum of ten years from their respective dates of inception and relates to rented overseas premises and car rentals.

Lease rental commitments on a contract with Progeon Limited (“Progeon”), a subsidiary company, as at September 30, 2003 due to Infosys within one year of the balance sheet date amounted to Rs. 8.02 and due in the period between one and three years amounted to Rs. 9.29. The lease for premises extends for a maximum period of three years from quarter ended June 30, 2002 (the period of inception).

The Sub-lease rentals received from Progeon during the quarter and half year ended September 30, 2003 amounted to Rs. 0.13 and Rs. 0.13.

Fixed assets stated below have been provided on operating lease to Progeon, a subsidiary company under the same management, as at September 30, 2003 and September 30, 2002 and March 31, 2003.


			Accumulated
Particulars	Cost		depreciation		Net book value

Building		10.24		0.96		9.28
		9.59		0.27		9.32
		10.21		0.62		9.59
Plant and machinery		3.70		1.12		2.58
		2.42		0.27		2.15
		2.94		0.70		2.24
Computers		1.23		0.76		0.47
		0.78		0.12		0.66
		0.85		0.49		0.36
Furniture & fixtures		5.60		1.59		4.01
		1.74		0.26		1.48
		2.64		0.88		1.76

Total		20.77		4.43		16.34
		14.53		0.92		13.61
		16.64		2.69		13.95

The aggregate depreciation charged on the above during the quarter and half year ended September 30, 2003 amounted to Rs. 1.08 and Rs. 1.74 respectively (for the quarter and half year ended September 30, 2002 was Rs. 0.69 and Rs. 0.92 and for the year ended March 31, 2003 was Rs. 2.69). The rental income from Progeon for the quarter and half-year ended September 30, 2003 amounted to Rs. 1.61 and Rs. 2.82 (for the quarter and half year ended September 30, 2002 was Rs. 0.41 and Rs. 0.55 and for the year ended March 31, 2003 was Rs. 1.95).

1.2.3.

Related party transactions

The company entered into related party transactions during the year ended March 31, 2002 with Yantra Corporation, USA, the subsidiary of the company until February 27, 2002, and key management personnel.

The outstanding dues from Yantra Corporation as at September 30, 2003 were Rs. Nil. Such dues as at September 30, 2002 were Rs. 0.45 and as at March 31, 2003 were Rs. 0.07.

The company entered into related party transactions during the period ended September 30, 2003 with Progeon, the subsidiary company, under the same management. The transactions are set out below.


		Quarter ended				Half-year ended				Year ended
		September 30,				September 30,				March 31,
		2003		2002		2003		2002		2003

Capital transactions:
	Financing transactions – amount paid to Progeon for issue of 1,22,49,993 fully paid equity shares of Rs.10/- each at par		—		—		—		12.25		12.25
	Rental deposit placed		1.61		—		1.61		—		—

Revenue transactions:
	Purchase of services		—		1.87		0.14		2.08		2.07

			—		1.87		0.14		2.08		2.07
Sale of services
	Business consulting services		0.03		0.99		0.03		1.11		3.56
	Shared services including facilities and personnel		3.40		1.64		6.41		2.37		9.61

			3.43		2.63		6.44		3.48		13.17

The company has an alliance with SupplyChainge Inc., USA to jointly market and deliver lead-time optimization solutions. Prof. Marti G. Subrahmanyam, an external director of the company, is also a director on the board of SupplyChainge Inc. During the quarter and half-year ended September 30, 2003 and year ended March 31, 2003, the company paid Rs. Nil, Rs 0.71 and Rs. Nil respectively to SupplyChainge Inc. towards marketing services under this alliance. Additionally, amount receivable from SupplyChainge Inc. as at September 30, 2003 amounted to Rs.Nil (as at September 30, 2002 Rs. 0.03 and March 31, 2003 Rs. 0.03) an amount that has been outstanding for a period exceeding six months and fully provided.

During the quarter and half-year ended September 30, 2003 an amount of Rs. 3.50 and Rs. 7.00 respectively has been donated to Infosys Foundation a not-for- profit trust, in which certain directors of the company are trustees. Donation to the Foundation for the quarter and half-year ended September 30, 2002 and year ended March 31, 2003 were Rs. 1.28, Rs. 2.53 and Rs. 5.53 respectively.

1.2.4.

Transactions with key management personnel

Key management personnel comprise our directors and statutory officers.

Particulars of remuneration and other benefits provided to key management personnel

Particulars of remuneration and other benefits provided to key management personnel during the quarters ended September 30, 2003, 2002, half-year ended September 30, 2003, 2002 and the year ended March 31, 2003, are set out below.


				Contributions to
				provident and		Perquisites and		Total
		Salary		other funds		incentives		remuneration

Executive directors
	Quarter ended September 30, 2003		0.42		0.06		0.08		0.56
	Quarter ended September 30, 2002		1.12		0.06		0.54		1.72
	Half-year ended September 30, 2003		0.71		0.10		0.41		1.22
	Half-year ended September 30, 2002		1.77		0.11		1.34		3.22
	Year ended March 31, 2003		2.60		0.17		3.30		6.07


						Reimbursement		Total
		Commission		Sitting fees		of expenses		remuneration

Independent directors
	Quarter ended September 30, 2003		—		—		0.09		0.09
	Quarter ended September 30, 2002		—		—		0.10		0.10
	Half-year ended September 30, 2003		—		—		0.21		0.21
	Half-year ended September 30, 2002		—		—		0.31		0.31
	Year ended March 31, 2003		1.12		0.04		0.48		1.64


				Contributions to		Perquisites				Total		Outstanding
				provident and		and		Total		loans		loans and
		Salary		other funds		incentives		remuneration		granted		advances

Other key managerial personnel
	Quarter ended September 30, 2003		0.03		0.01		0.03		0.07		—		—
	Quarter ended September 30, 2002		0.01		0.01		0.02		0.04		—		—
	Half-year ended September 30, 2003		0.05		0.02		0.10		0.17		—		—
	Half-year ended September 30, 2002		0.03		0.01		0.04		0.08		—		—
	Year ended March 31, 2003		0.06		0.02		0.09		0.17		—		—

In addition, the details of the options granted to non-wholetime directors and other senior officers during the quarters ended September 30, 2003, 2002, half-year ended September 30, 2003, 2002 and the year ended March 31, 2003 are as follows:

Option plan

Number of

Exercise price

Name

Date of Grant

options granted

(in Rs.)

options

Expiration of

Non-wholetime directors

Claude Smadja

July 10, 2002

1999

2,000

3,333.65

July 09, 2012

Sridar A. Iyengar

April 10, 2003

1999

2,000

3,049.75

April 09, 2013

1.2.5.

Pro forma disclosures relating to the Employee Stock Option Plans (“ESOPs”)

The company’s 1994 stock option plan was established prior to the SEBI guidelines on stock options.

Had the stock compensation costs for this stock option plan been determined as per the guidelines issued by SEBI, the company’s reported net profit would have been reduced to the pro forma amounts indicated below.


		Quarter ended				Half-year ended				Year ended
		September 30,				September 30,				March 31,
		2003		2002		2003		2002		2003

Net profit:
	– As reported		300.16		225.77		578.28		442.62		957.93
	– Adjusted pro forma		295.24		219.73		568.33		430.50		934.76

1.2.6.

Fixed assets

The company has entered into lease-cum-sale agreements to acquire certain properties. In accordance with the terms of these agreements, the company has the option to purchase the properties on expiry of the lease period. The company has already paid 99% of the value of the properties at the time of entering into the lease-cum-sale agreements. These amounts are disclosed as “Land - leasehold” under “Fixed assets” in the financial statements.Additionally, certain land has been purchased for which the company has possession certificate for which sale deeds are yet to be executed as at September 30, 2003.

During the year ended March 31, 2003, the company entered into several arrangements to purchase Intellectual Property Rights (“IPR”). These primarily included:

The purchase of IPR in the Trade IQ, a treasury management product, from IQ Financial Systems Inc., USA (“IQFS”) for a consideration of Rs. 16.97 (US$ 3.47 million).

An agreement to purchase IPR in AUTOLAY, a commercial software application product, with the Aeronautical Development Agency, India (“ADA”). The company has a firm commitment to share revenues with ADA for a maximum of US$ 5 million (Rs. 24.50) payable by 10 years from the contract date after which the ownership of intellectual property in AUTOLAY will transfer to the company.

Purchase of a non-exclusive global license in ILink, a signature display software, from Integra Microsystems Private Limited, for Rs. 0.65.

During the quarter ended September 30, 2003, management reduced the remaining estimated useful life of the intellectual property in a commercial software application product to three months effective August 2003. The revised estimation represents management’s present evaluation of the expected future commercial benefits from the product. The revision has resulted in an increased charge to the profit and loss account of Rs. 11.71 crore in the quarter and half year ended September 30, 2003.

1.2.7.

Investment activity


		Quarter ended September 30,			Half-year ended September 30,			Year ended March 31,
Particulars of investee companies			2003	2002		2003	2002		2003

Net profit:
	Progeon Limited, India		—	—		—	12.25		12.25
	M-Commerce Ventures Pte. Limited, Singapore *		—	—		0.19	0.27		0.27

			—	—		0.19	12.52		12.52

*Net of redemptions

Progeon was incorporated on April 3, 2002, and is a majority owned and controlled subsidiary, established to provide business process management and transitioning services. As at the balance sheet date, the company has invested Rs. 12.25 in 1,22,49,993 fully paid equity shares in Progeon of face value Rs 10/- each, at par. Progeon seeks to leverage the benefits of service delivery globalization, process redesign and technology to drive efficiency and cost effectiveness in customer business processes. Progeon obtained its financial closure by securing funding of Rs. 49.00 from Citicorp International Finance Corporation, USA (“CIFC”) in exchange for 43,75,000 cumulative, convertible, redeemable preferred shares of face value Rs 100/- at a premium of Rs 12/- per share. The preference shares are convertible to an equal number of equity shares based on certain events as agreed between the company and CIFC.

The company received Rs. 0.35 towards return of premium of S$ 1,110 /- each on 126 redeemable preference shares of face value of S$ 1/- each during the quarter ended September 30, 2003. Accordingly, the aggregate investment in M-Commerce as at September 30, 2003 amounts to Rs. 2.30.

Current liabilities include an amount of Rs. 3.27 received from Workadia Inc. and Rs. 0.46 from Stratify Inc. towards recovery of investment that is pending clearance from regulatory authorities for setting off against the investment.

1.2.8.

Contingent liability

Ms. Jennifer Griffith, a former employee, has filed a lawsuit against the company and its former director, Mr. Phaneesh Murthy. The lawsuit has not yet been served on the company. Management is reviewing the allegations. Based on its present knowledge of facts, management estimates that the lawsuit will not have material impact on the result of operation or financial position of the company.

1.2.9.

Segment reporting

The company’s operations predominantly relate to providing IT services, devlivered to customers globally operating in various industry segments. Accordingly, IT service revenues represented along industry classes comprise the primary basis of segmental information set out in these financial statements. Secondary segmental reporting is performed on the basis of the geographical location of customers.

The accounting principles consistently used in the preparation of the financial statements are also consistently applied to record income and expenditure in individual segments. These are as set out in the note on significant accounting policies.

Industry segments at the company are primarily financial services comprising customers providing banking, finance and insurance services; manufacturing companies; companies in the telecommunications and the retail industries; and others such as utilities, transportation and logistics companies.

Income and direct expenses in relation to segments is categorized based on items that are individually identifiable to that segment, while the remainder of the costs are categorized in relation to the associated turnover of the segment. Certain expenses such as depreciation, which form a significant component of total expenses, are not specifically allocable to specific segments as the underlying services are used interchangeably. The company believes that it is not practical to provide segment disclosures relating to those costs and expenses, and accordingly these expenses are separately disclosed as “unallocated” and directly charged against total income.

Fixed assets used in the company’s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments. Accordingly, no disclosure relating to total segment assets and liabilities are made.

Customer relationships are driven based on the location of the respective client. North America comprises the United States of America, Canada and Mexico; Europe includes continental Europe (both the East and the West), Ireland and the United Kingdom; and the Rest of the World comprises all other places except, those mentioned above and India.

Geographical revenues are segregated based on the location of the customer who is invoiced or in relation to which the revenue is otherwise recognized.

Industry segments

Quarter ended September 30, 2003 and September 30, 2002


	Financial services		Manufacturing		Telecom		Retail		Others		Total

Revenues		436.26		172.89		171.61		134.34		219.65		1,134.75
		339.61		150.46		128.45		99.21		161.84		879.57
Identifiable operating expenses		178.37		74.86		63.81		51.11		90.39		458.54
		139.84		61.38		44.87		30.74		62.17		339.00
Allocated expenses		114.48		45.37		45.04		35.25		57.64		297.78
		84.92		36.90		31.50		24.33		39.68		217.33

Segmental operating income		143.41		52.66		62.76		47.98		71.62		378.43
		114.85		52.18		52.08		44.14		59.99		323.24
Unallocable expenses												62.33
												46.24

Operating income												316.10
												277.00
Other income (expense), net												44.06
												(6.23	)

Net profit before taxes												360.16
												270.77
Income taxes												60.00
												45.00
Net profit after taxes												300.16
												225.77

Half-year ended September 30, 2003 and September 30, 2002


	Financial services		Manufacturing		Telecom		Retail		Others		Total

Revenues		837.23		343.43		327.75		261.72		446.60		2,216.73
		621.46		276.13		244.59		187.77		314.24		1,644.19
Identifiable operating expenses		356.61		147.62		130.75		96.62		182.88		914.48
		256.91		115.45		83.50		59.97		116.27		632.10
Allocated expenses		217.40		89.15		85.12		67.95		115.90		575.52
		162.30		67.93		60.18		46.20		77.31		413.92

Segmental operating income		263.22		106.66		111.88		97.15		147.82		726.73
		202.25		92.75		100.91		81.60		120.66		598.17
Unallocable expenses												106.59
												86.71

Operating income												620.14
												511.46
Other income (expense), net												70.14
												18.66

Net profit before taxes												690.28
												530.12
Income taxes												112.00
												87.50

Net profit after taxes												578.28
												442.62

Year ended March 31, 2003


	Financial services		Manufacturing		Telecom		Retail		Others		Total

Revenues		1,355.94		597.84		543.19		414.54		711.18		3,622.69
Identified operating expenses		546.77		243.93		186.18		132.45		264.64		1,373.97
Allocated expenses		377.31		157.77		143.72		109.56		188.32		976.68

Segmental operating income		431.86		196.14		213.29		172.53		258.22		1,272.04
Unallocable expenses												188.95

Operating income												1,083.09
Other income (expense), net												75.84

Net profit before taxes												1,158.93
Income taxes												201.00

Net profit after taxes												957.93

Geographic segments

Quarter ended September 30, 2003 and September 30, 2002

North America

Europe

India

Rest of the World

Total

Revenues

837.30

203.64

18.77

75.04

1,134.75

648.01

144.94

22.35

64.27

879.57

Identifiable operating expenses

346.76

81.63

2.55

27.60

458.54

260.29

48.76

6.72

23.23

339.00

Allocated expenses

219.73

53.44

4.93

19.68

297.78

161.04

36.02

5.00

15.27

217.33

Segmental operating income

270.81

68.57

11.29

27.76

378.43

226.68

60.16

10.63

25.77

323.24

Unallocable expenses

62.33

46.24

Operating income

316.10

277.00

Other income (expense), net

44.06

(6.23

)

Net profit before taxes

360.16

270.77

Income taxes

60.00

45.00

Net profit after taxes

300.16

225.77

Half-year ended September 30, 2003 and September 30, 2002

North America

Europe

India

Rest of the World

Total

Revenues

1,643.25

393.75

42.10

137.63

2,216.73

1,200.57

292.44

36.45

114.73

1,644.19

Identifiable operating expenses

694.79

158.46

12.90

48.33

914.48

476.70

103.17

12.60

39.63

632.10

Allocated expenses

426.62

102.24

10.92

35.74

575.52

298.84

72.80

11.04

31.24

413.92

Segmental operating income

521.84

133.05

18.28

53.56

726.73

425.03

116.47

12.81

43.86

598.17

Unallocable expenses

106.59

86.71

Operating income

620.14

511.46

Other income (expense), net

70.14

18.66

Net profit before taxes

690.28

530.12

Income taxes

112.00

87.50

Net profit after taxes

578.28

442.62

Year ended March 31, 2003


	North America		Europe		India		Rest of the World		Total

Revenues		2,637.51		641.58		79.18		264.42		3,622.69
Identifiable operating expenses		1,052.82		224.82		19.79		76.54		1,373.97
Allocated expenses		704.20		169.21		30.01		73.26		976.68

Segmental operating income		880.49		247.55		29.38		114.62		1,272.04
Unallocable expenses										188.95

Operating income										1,083.09
Other income (expense), net										75.84

Net profit before taxes										1,158.93
Income taxes										201.00

Net profit after taxes										957.93

1.2.10.

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


	Quarter ended				Half-year ended				Year ended
	September 30,				September 30,				March 31,
	2003		2002		2003		2002		2003

Number of shares considered as basic weighted average shares outstanding		6,62,57,028		6,61,98,735		6,62,51,101		6,61,93,632		6,62,11,068
Add: Effect of dilutive issues of shares/stock options		5,67,376		3,97,734		3,99,984		4,58,300		6,05,753

Number of shares considered as weighted average shares and potential shares outstanding		6,68,24,404		6,65,96,469		6,66,51,085		6,66,51,932		6,68,16,821

Consolidated financial statement of Infosys Technologies Limited and its subsidiary

Principles of consolidation

The financial statements are prepared in accordance with the principles and procedures for the preparation and presentation of consolidated financial statements as laid down under the accounting standards on Consolidated Financial Statements issued by the ICAI. The financial statements of the parent company, Infosys and Progeon have been combined on a line-by-line basis by adding together book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and transactions and resulting unrealized gain/loss. The consolidated financial statements are prepared applying uniform accounting policies in use at Infosys and Progeon.

Management’s Statement on significant accounting policies contained in the audited financial statements.

There are no changes in the accounting policies during the quarter ended September 30, 2003. The significant accounting policies of the company relate to revenue recognition, expenditure, fixed assets and capital work-in-progress, depreciation, retirement benefits to employees – principally gratuity, superannuation and provident fund benefits, research and development, income tax, earning per share, foreign currency transactions and investments.

A complete set of the audited consolidated financial statements is available at www.infosys.com

Auditors’ report to the Board of Directors on the Consolidated Financial Statements of Infosys Technologies Limited and its subsidiary

We have examined the attached Consolidated Balance Sheet of Infosys Technologies Limited (the Company) and its subsidiary Progeon Limited (subsidiary) as at September 30, 2003, the Consolidated Profit and Loss Accounts and the Consolidated Cash Flow Statements for the quarter and half-year then ended. These financial statements are the responsibility of the Infosys Technologies Limited’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in India. Those Standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are prepared, in all material respects, in accordance with the financial reporting framework generally accepted in India and are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statements presentation. We believe that our audit provides a reasonable basis for our opinion.

We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis of separate audited financial statements of Infosys Technologies Limited and its subsidiary included in the consolidated financial statements.

On the basis of the information and explanation given to us, and on consideration of separate audit reports on individual audited financial statements of Infosys Technologies Limited and its subsidiary, we are of the opinion that:

	(i)		the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of the Infosys Technologies Limited and its subsidiary as at September 30, 2003;

	(ii)		the Consolidated Profit and Loss Accounts gives a true and fair view of the consolidated results of operations of Infosys Technologies Limited and its subsidiary for the quarter and half-year then ended; and

	(iii)		the Consolidated Cash Flow Statements gives a true and fair view of the consolidated cash flows of Infosys Technologies Limited and its subsidiary for the quarter and half-year then ended.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
October 10, 2003

Consolidated Balance Sheet as at


in Rs. crore

	September 30, 2003		September 30, 2002		March 31, 2003

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share capital		33.13		33.10		33.12
Reserves and surplus		3,300.93		2,407.73		2,824.37

		3,334.06		2,440.83		2,857.49
Preference shares issued by subsidiary		49.00		49.00		49.00

		3,383.06		2,489.83		2,906.49

APPLICATION OF FUNDS
FIXED ASSETS
Original cost		1,423.85		1,140.87		1,279.04
Less: Depreciation and amortization		686.63		476.70		578.54

Net book value		737.22		664.17		700.50
Add: Capital work-in-progress		65.63		92.59		77.39

		802.85		756.76		777.89
INVESTMENTS		464.74		20.95		20.95
DEFERRED TAX ASSETS		33.87		33.58		36.81
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors		592.59		459.73		518.65
Cash and bank balances		1,387.26		1,004.11		1,346.54
Loans and advances		973.75		912.20		913.46

		2,953.60		2,376.04		2,778.65
Less: Current liabilities		376.30		267.58		319.60
Provisions		495.70		429.92		388.21

NET CURRENT ASSETS		2,081.60		1,678.54		2,070.84

		3,383.06		2,489.83		2,906.49

This is the Consolidated Balance Sheet referred to in our report of even date.


for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President and Managing Director	Chief Operating Officer and Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and Chief Financial Officer	Director	Company Secretary and Vice President – Finance

Bangalore October 10, 2003

Consolidated Profit and Loss Account for the


in Rs. crore, except per share data

		Quarter ended				Half-year ended				Year ended
		September 30,				September 30,				March 31,
		2003		2002		2003		2002		2003

INCOME – Software services, products and business process management
	Overseas		1,133.06		858.24		2,204.43		1,608.86		3,564.36
	Domestic		18.74		22.34		42.07		36.44		75.62

			1,151.80		880.58		2,246.50		1,645.30		3,639.98
Software development and business process management expenses			595.28		425.50		1,174.87		803.24		1,822.96

GROSS PROFIT			556.52		455.08		1,071.63		842.06		1,817.02
SELLING AND MARKETING EXPENSES			82.69		70.26		164.34		125.53		271.73
GENERAL AND ADMINISTRATION EXPENSES			92.37		63.38		175.35		121.27		275.67

			175.06		133.64		339.69		246.80		547.40
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION			381.46		321.44		731.94		595.26		1,269.62
Interest			–		–		–		–		–
Depreciation and amortization			63.42		46.39		108.56		86.88		190.34

OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION			318.04		275.05		623.38		508.38		1,079.28
Other income			43.16		18.21		75.10		43.01		100.26
Provision for investments			0.22		23.76		6.59		23.76		23.77

NET PROFIT BEFORE TAX			360.98		269.50		691.89		527.63		1,155.77

Provision for taxation			60.00		45.00		112.00		87.50		201.00

NET PROFIT AFTER TAX			300.98		224.50		579.89		440.13		954.77

AMOUNT AVAILABLE FOR APPROPRIATION			300.98		224.50		579.89		440.13		954.77
DIVIDEND
	Interim		96.09		82.76		96.09		82.76		82.76
	Final (Subject to deduction of tax, if any)		–		–		–		–		96.05
	Dividend tax		12.31		–		12.31		–		12.30
	Amount transferred – general reserve		–		–		–		–		763.66
Balance in Profit and Loss Account			192.58		141.74		471.49		357.37		–

			300.98		224.50		579.89		440.13		954.77

EARNINGS PER SHARE (Equity shares, par value Rs. 5/- each)
	Basic		45.43		33.91		87.53		66.49		144.20
	Diluted		45.04		33.71		87.00		66.03		142.89
Number of shares used in computing earnings per share
	Basic		6,62,57,028		6,61,98,735		6,62,51,101		6,61,93,632		6,62,11,068
	Diluted		6,68,24,404		6,65,96,469		6,66,51,085		6,66,51,932		6,68,16,821

These are the Consolidated Profit and Loss Accounts referred to in our report of even date.


for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President and Managing Director	Chief Operating Officer and Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and Chief Financial Officer	Director	Company Secretary and Vice President – Finance

Bangalore October 10, 2003

Consolidated Cash Flow Statement for the


		in Rs. crore, except per share data

		Quarter ended
		September 30,
		2003			2002

CASHFLOWS FROM OPERATING ACTIVITIES
Profit before tax			360.98			269.50
Adjustments to reconcile profit before tax to cash provided by operating activities
	(Profit)/Loss on sale of fixed assets		–			(0.14	)
	Depreciation and amortization		63.42			46.39
	Interest and dividend income		(23.91	)		(19.79	)
	Provisions on long-term investments		0.22			23.76
	Exchange differences on translation of foreign currency cash and cash equivalents		1.59			2.13
Changes in current assets and liabilities
	Sundry debtors		(27.09	)		(45.84	)
	Loans and advances		4.03			(23.96	)
	Current liabilities and provisions		18.99			50.80
	Income taxes paid during the period/year		(49.33	)		(79.09	)

NET CASH GENERATED BY OPERATING ACTIVITIES			348.90			223.76

CASHFLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of preference share capital			–			–
Proceeds on exercise of stock options			4.02			2.74
Dividends paid during the period/year, including dividend tax			–			–

NET CASH USED IN FINANCING ACTIVITIES			4.02			2.74

CASHFLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress			(72.63	)		(46.99	)
Proceeds on disposal of fixed assets			(0.01	)		0.32
Long-term investments in securities			(349.83	)		–
Interest and dividend income			23.91			19.79

NET CASH USED IN INVESTING ACTIVITIES			(398.56	)		(26.88	)

Effect of exchange differences on translation of foreign currency cash and cash equivalents			(1.59	)		(2.13	)

Net (decrease)/increase in cash and cash equivalents during the period/year			(47.23	)		197.49
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR			1,768.40			1,149.54

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR			1,721.17			1,347.03

[Additional columns below]

[Continued from above table, first column(s) repeated]


		in Rs. crore, except per share data

		Half-year ended						Year ended
		September 30,						March 31,
		2003			2002			2003

CASHFLOWS FROM OPERATING ACTIVITIES
Profit before tax			691.89			527.63			1,155.77
Adjustments to reconcile profit before tax to cash provided by operating activities
	(Profit)/Loss on sale of fixed assets		0.01			(0.13	)		(0.01	)
	Depreciation and amortization		108.56			86.88			190.34
	Interest and dividend income		(47.22	)		(37.50	)		(80.67	)
	Provisions on long-term investments		6.59			23.76			23.77
	Exchange differences on translation of foreign currency cash and cash equivalents		3.17			1.36			(2.23	)
Changes in current assets and liabilities
	Sundry debtors		(73.94	)		(123.00	)		(181.92	)
	Loans and advances		(5.44	)		(75.10	)		(132.38	)
	Current liabilities and provisions		56.89			116.70			163.04
	Income taxes paid during the period/year		(60.51	)		(105.05	)		(232.54	)

NET CASH GENERATED BY OPERATING ACTIVITIES			680.00			415.55			903.17

CASHFLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of preference share capital			–			49.00			49.00
Proceeds on exercise of stock options			5.08			3.14			13.52
Dividends paid during the period/year, including dividend tax			(108.35	)		(82.73	)		(165.49	)

NET CASH USED IN FINANCING ACTIVITIES			(103.27	)		(30.59	)		(102.97	)

CASHFLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress			(133.76	)		(101.19	)		(225.82	)
Proceeds on disposal of fixed assets			0.23			0.43			0.33
Long-term investments in securities			(450.38	)		(0.27	)		(0.27	)
Interest and dividend income			47.22			37.50			80.67

NET CASH USED IN INVESTING ACTIVITIES			(536.69	)		(63.53	)		(145.09	)

Effect of exchange differences on translation of foreign currency cash and cash equivalents			(3.17	)		(1.36	)		2.23

Net (decrease)/increase in cash and cash equivalents during the period/year			36.87			320.07			657.34
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR			1,684.30			1,026.96			1,026.96

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR			1,721.17			1,347.03			1,684.30

These are the Cash Flow Statements referred to in our report of even date.

for Bharat S. Raut & Co.
Chartered Accountants


S. Balasubrahmanyam	N. R. Narayana Murthy	Nandan M. Nilekani	S. Gopalakrishnan
Partner	Chairman and Chief Mentor	Chief Executive Officer, President	Chief Operating Officer and
		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Rama Bijapurkar
	Director	Director	Director

	Sridar A. Iyengar	K. Dinesh	S. D. Shibulal
	Director	Director	Director

	T. V. Mohandas Pai	Srinath Batni	V. Balakrishnan
	Director and	Director	Company Secretary and
	Chief Financial Officer		Vice President – Finance

Bangalore

October 10, 2003

Ratio analysis as per Indian GAAP (Non consolidated)


		Quarter ended				Half-year ended
		September 30,				September 30,
		2003		2002		2003		2002

Financial performance
	Export revenue / total revenue (%)		98.35		97.46		98.10		97.78
	Domestic revenue / total revenue (%)		1.65		2.54		1.90		2.22
	Software development expenses / total revenue (%)		51.74		48.26		52.33		48.77
	Gross profit / total revenue (%)		48.26		51.74		47.67		51.23
	Selling and marketing expenses / total revenue (%)		7.09		7.88		7.23		7.57
	General and administration expenses / total revenue (%)		7.82		7.11		7.66		7.28
	Selling, general and administration expenses / total revenue (%)		14.91		14.99		14.89		14.85
	Employee costs / total revenue (%)		49.99		45.46		49.81		45.55
	Operating profit / total revenue (%)		33.35		36.75		32.78		36.38
	Depreciation and amortization / total revenue (%)		5.49		5.26		4.81		5.27
	Operating profit after depreciation and Interest / total revenue (%)		27.86		31.49		27.98		31.11
	Other income / total revenue (%)		3.90		1.99		3.46		2.58
	Provision for investments / total revenue (%)		0.02		2.70		0.30		1.45
	Profit before tax / total revenue (%)		31.74		30.78		31.14		32.24
	Tax / total revenue (%)		5.29		5.12		5.05		5.32
	Tax / PBT (%)		16.66		16.62		16.23		16.51
	PAT from ordinary activities / total revenue (%)		26.45		25.67		26.09		26.92
	Capital expenditure / total revenue (%) (LTM)		5.93		6.33		5.93		6.33
	PAT from ordinary activities / average net worth (%) (LTM)		37.85		41.04		37.85		41.04
	ROCE ( PBIT/Average capital employed) (%) (LTM)		45.65		48.76		45.65		48.76
	Return on invested capital (%) (LTM)*		88.20		75.04		88.28		75.04
	Capital output ratio (LTM)		1.45		1.43		1.45		1.43
	Invested capital output ratio (LTM)*		3.57		2.74		3.57		2.74
Balance sheet
	Debt-equity ratio		–		–		–		–
	Debtors turnover (Days) (LTM)		50		56		50		56
	Current ratio		3.35		3.34		3.35		3.34
	Cash and cash equivalents / total assets (%)*		64.15		52.77		64.15		52.77
	Cash and cash equivalents / total revenue (%) (LTM)*		51.00		43.19		51.00		43.19
	Depreciation/ average gross block (%) (LTM)		16.36		17.95		16.36		17.95
	Technology investment / total revenue (%) (LTM)		3.99		3.14		3.99		3.14
Year on Year Growth (%) **
	Export revenue		30		34		35		30
	Total revenue		29		35		35		30
	Operating profit		17		25		21		20
	Net profit		33		12		31		13
	EPS		33		12		31		13
Per-share data (period end)
	Basic earnings per share from ordinary activities (Rs.)		45.30		34.10		87.29		66.87
	Basic earnings per share (including extraordinary items) (Rs.)		45.30		34.10		87.29		66.86
	Basic cash earnings per share from ordinary activities (Rs.)		54.71		41.09		103.37		79.96
	Basic cash earnings per share (including extraordinary items) (Rs.)		54.71		41.09		103.37		79.95
	Book value (Rs.)		503.34		369.05		503.34		369.05
	Price / earning (LTM)		27.43		26.25		27.43		26.25
	Price / cash earnings (LTM)		23.03		21.86		23.03		21.86
	Price / book value		9.00		9.23		9.00		9.23
	PE / EPS growth		0.84		2.20		0.90		2.03
	Dividend per share (Rs.)		14.50		12.50		14.50		12.50

[Additional columns below]

[Continued from above table, first column(s) repeated]


		Year ended
		March 31,
		2003

Financial performance
	Export revenue / total revenue (%)		97.81
	Domestic revenue / total revenue (%)		2.19
	Software development expenses / total revenue (%)		50.05
	Gross profit / total revenue (%)		49.95
	Selling and marketing expenses / total revenue (%)		7.37
	General and administration expenses / total revenue (%)		7.46
	Selling, general and administration expenses / total revenue (%)		14.83
	Employee costs / total revenue (%)		46.30
	Operating profit / total revenue (%)		35.11
	Depreciation and amortization / total revenue (%)		5.22
	Operating profit after depreciation and Interest / total revenue (%)		29.90
	Other income / total revenue (%)		2.75
	Provision for investments / total revenue (%)		0.66
	Profit before tax / total revenue (%)		31.99
	Tax / total revenue (%)		5.55
	Tax / PBT (%)		17.34
	PAT from ordinary activities / total revenue (%)		26.44
	Capital expenditure / total revenue (%) (LTM)		6.05
	PAT from ordinary activities / average net worth (%) (LTM)		38.78
	ROCE ( PBIT/Average capital employed) (%) (LTM)		46.91
	Return on invested capital (%) (LTM)*		79.86
	Capital output ratio (LTM)		1.47
	Invested capital output ratio (LTM)*		3.18
Balance sheet
	Debt-equity ratio		–
	Debtors turnover (Days) (LTM)		52
	Current ratio		3.87
	Cash and cash equivalents / total assets (%)*		57.28
	Cash and cash equivalents / total revenue (%) (LTM)*		45.23
	Depreciation/ average gross block (%) (LTM)		16.92
	Technology investment / total revenue (%) (LTM)		3.62
Year on Year Growth (%) **
	Export revenue		39
	Total revenue		39
	Operating profit		23
	Net profit		19
	EPS		18
Per-share data (period end)
	Basic earnings per share from ordinary activities (Rs.)		144.68
	Basic earnings per share (including extraordinary items) (Rs.)
	Basic cash earnings per share from ordinary activities (Rs.)		173.22
	Basic cash earnings per share (including extraordinary items) (Rs.)
	Book value (Rs.)		431.84
	Price / earning (LTM)		28.01
	Price / cash earnings (LTM)		23.40
	Price / book value		9.39
	PE / EPS growth		1.52
	Dividend per share (Rs.)		27.00

* Investments in liquid funds have been considered as Cash and Cash equivalents for the purpose of the above ratio analysis.

** Denotes growth compared with figures of the corresponding period in the previous year.

LTM : Last Twelve Months

At a glance – US GAAP


	US $millions, except as otherwise stated

	Quarter ended						Half-year ended						Year ended
	September 30,						September 30,						March 31,
	2002			2003			2002			2003			2003

For the period
Revenues		181.45			250.77			337.76			484.02			753.81
Operating income		55.44			67.81			101.87			131.84			218.64
Operating income/revenues (%)		30.55	%		27.04	%		30.16	%		27.24	%		29.00	%
Net income		46.70			64.71			89.54			122.98			194.87
Net income/revenues (%)		25.74	%		25.80	%		26.51	%		25.41	%		25.85	%
Basic earnings per equity share ($)		0.71			0.99			1.36			1.87			2.97
Cash dividend per equity share ($)		NA			–			0.26			0.31			0.51
Capital expenditure		9.48			15.79			20.08			28.80			46.71
At the end of the period
Total assets		591.52			854.27			591.52			854.27			704.31
Property, plant and equipment – net		149.20			172.74			149.20			172.74			157.19
Cash and cash equivalents		278.31			375.97			278.31			375.97			354.36
Working capital		355.04			567.05			355.04			567.05			444.77
Total debt		–			–			–			–			–
Stockholders’ equity		524.02			754.39			524.02			754.39			626.00
Common stock		8.60			8.61			8.60			8.61			8.60
Market capitalization		4,659.60			6,554.59			4,659.60			6,554.59			5,648.50

Note:

Market capitalization is calculated by considering the Indian market price for the shares outstanding at the period / year-end.

(INCOME GRAPH)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

Form 6-K

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934

For the quarter ended September 30, 2003

Commission File Number 333-72195

Infosys Technologies Limited

(Exact name of Registrant as specified in its charter)

Not Applicable

(Translation of Registrant’s name into English)

Bangalore, Karnataka, India

(Jurisdiction of incorporation or organization)

Electronics City, Hosur Road, Bangalore, Karnataka, India 560 100 +91-80-852-0261.

(Address of principal executive offices)

Indicate by check mark registrant files or will file annual reports under cover Form 20-F or Form 40-F

Form 20-F þ Form 40-F o

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of 1934

Yes o No þ

If “Yes” is marked, indicate below the file number assigned to registrant in connection with Rule 12g 3-2(b)

Not applicable

Currency of Presentation and Certain Defined Terms

In this Quarterly Report, references to “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to “$” or “dollars” or “U.S. dollars” are to the legal currency of the United States and references to “Rs.” or “rupees” or “Indian rupees” are to the legal currency of India. Our financial statements are presented in Indian rupees and translated into U.S. dollars and are prepared in accordance with United States Generally Accepted Accounting Principles, or U.S. GAAP. References to “Indian GAAP” are to Indian Generally Accepted Accounting Principles. References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

All references to “we,” “us,” “our,” “Infosys” or the “Company” shall mean Infosys Technologies Limited. “Infosys” is a registered trademark of Infosys Technologies Limited in the United States and India. All other trademarks or tradenames used in this Quarterly Report are the property of their respective owners.

Except as otherwise stated in this Quarterly Report, all translations from Indian Rupees to U.S. dollars are based on the noon buying rate in the City of New York on September 30, 2003, for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York which was Rs. 45.78 per $1.00. No representation is made that the Indian rupee amounts have been, could have been or could be converted into U.S. dollars at such a rate or any other rate. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Information contained in our website, www.infosys.com, is not part of this Quarterly Report.

Forward-looking Statements May Prove Inaccurate

In addition to historical information, this Quarterly Report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause such differences include but are not limited to, those discussed in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. In addition, readers should carefully review the other information in this Quarterly Report and in the Company’s periodic reports and other documents filed with the Securities and Exchange Commission (“SEC”) from time to time.

Part I - Financial information

Item 1. Financial statements
Consolidated balance sheets


			March 31, 2003⁽¹⁾

ASSETS
Current Assets
	Cash and cash equivalents		$	354,362,918
	Investments in liquid mutual fund units			–
	Trade accounts receivable, net of allowances			109,119,856
	Deferred tax assets			288,541
	Prepaid expenses and other current assets			24,384,316
	Unbilled revenue			19,702,186

	Total current assets			507,857,817
Property, plant and equipment, net				157,194,190
Intangible assets, net				6,471,236
Deferred tax assets				7,264,885
Investments				4,613,833
Prepaid income taxes				4,452,678
Other assets				16,454,328

TOTAL ASSETS			$	704,308,967

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Accounts payable		$	426,611
	Client deposits			3,208,295
	Other accrued liabilities			46,249,269
	Income taxes payable			–
	Unearned revenue			13,202,115

Total current liabilities				63,086,290
Non-current liabilities
Preferred stock of subsidiary
	0.0005% Cumulative Convertible Preference Shares, par value $2 each, 4,375,000 preference shares Authorized, issued and outstanding – 4,375,000 preference shares as of March 31, 2003 and September 30, 2003			10,000,000
	Other non-current liabilities			5,217,758
Stockholders’ Equity
		Common stock, $0.16 par value; 100,000,000 equity shares authorized, Issued and outstanding – 66,243,078 and 66,268,972 as of March 31, 2003 and September 30, 2003, respectively		8,602,909
		Additional paid-in capital		127,042,751
		Accumulated other comprehensive income		(31,444,835	)
		Deferred stock compensation		(2,817,066	)
Retained earnings				524,621,160

Total stockholders’ equity				626,004,919

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	704,308,967

[Additional columns below]

[Continued from above table, first column(s) repeated]


			September 30, 2003
			(Unaudited)

ASSETS
Current Assets
	Cash and cash equivalents		$	375,967,500
	Investments in liquid mutual fund units			98,257,986
	Trade accounts receivable, net of allowances			129,442,231
	Deferred tax assets			116,065
	Prepaid expenses and other current assets			29,323,666
	Unbilled revenue			18,694,049

	Total current assets			651,801,497
Property, plant and equipment, net				172,741,594
Intangible assets, net				2,628,011
Deferred tax assets				6,826,125
Investments				3,259,660
Prepaid income taxes				149,868
Other assets				16,862,659

TOTAL ASSETS			$	854,269,414

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Accounts payable		$	235,574
	Client deposits			3,037,861
	Other accrued liabilities			60,087,899
	Income taxes payable			5,834,081
	Unearned revenue			15,551,461

Total current liabilities				84,746,876
Non-current liabilities
Preferred stock of subsidiary
	0.0005% Cumulative Convertible Preference Shares, par value $2 each, 4,375,000 preference shares Authorized, issued and outstanding – 4,375,000 preference shares as of March 31, 2003 and September 30, 2003			10,703,364
	Other non-current liabilities			4,427,001
Stockholders’ Equity
		Common stock, $0.16 par value; 100,000,000 equity shares authorized, Issued and outstanding – 66,243,078 and 66,268,972 as of March 31, 2003 and September 30, 2003, respectively		8,605,728
		Additional paid-in capital		128,818,007
		Accumulated other comprehensive income		(6,610,579	)
		Deferred stock compensation		(673,687	)
Retained earnings				624,252,704

Total stockholders’ equity				754,392,173

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	854,269,414

⁽¹⁾ March 31, 2003 balances were obtained from audited financial statements

Unaudited consolidated statements of income


			Three months ended September 30,				Six months ended September 30,
			2002		2003		2002

Revenues			$	181,446,939	$	250,768,976	$	337,761,808
Cost of revenues (including amortization of stock compensation expenses of $729,994 and $628,905 for the three months ended September 30, 2002 and 2003 and $1,459,988 and $1,257,812 for the six months ended September 30, 2002 and 2003)				97,292,593		140,742,637		183,297,362

Gross profit				84,154,346		110,026,339		154,464,446

Operating Expenses:
	Selling and marketing expenses			14,484,552		18,013,747		25,782,286
	General and administrative expenses			13,102,320		20,437,144		24,961,448
	Amortization of stock compensation expense			513,954		442,783		1,027,908
	Amortization of intangible assets			615,904		3,322,455		820,025

Total operating expenses				28,716,730		42,216,129		52,591,667

Operating income				55,437,616		67,810,210		101,872,779
	Other income, net			534,252		10,242,926		5,630,772

Income before income taxes				55,971,868		78,053,136		107,503,551
	Provision for income taxes			9,271,397		13,339,383		17,958,780

		Net income	$	46,700,471	$	64,713,753	$	89,544,771

Earnings per equity share
	Basic		$	0.71	$	0.99	$	1.36
	Diluted		$	0.70	$	0.97	$	1.35
Weighted equity shares used in computing earnings per equity share
	Basic			65,567,135		65,591,028		65,567,033
	Diluted			66,175,895		66,412,725		66,275,118

[Additional columns below]

[Continued from above table, first column(s) repeated]


		Six months ended September 30,
		2003

Revenues		$	484,024,612
Cost of revenues (including amortization of stock compensation expenses of $729,994 and $628,905 for the three months ended September 30, 2002 and 2003 and $1,459,988 and $1,257,812 for the six months ended September 30, 2002 and 2003)			273,645,026

Gross profit			210,379,586

Operating Expenses:
	Selling and marketing expenses		35,416,302
	General and administrative expenses		38,161,371
	Amortization of stock compensation expense		885,567
	Amortization of intangible assets		4,071,573

Total operating expenses			78,534,813

Operating income			131,844,773
	Other income, net		15,543,706

Income before income taxes			147,388,479
	Provision for income taxes		24,404,180

Net income		$	122,984,299

Earnings per equity share
	Basic	$	1.87
	Diluted	$	1.85
Weighted equity shares used in computing earnings per equity share
	Basic		65,587,368
	Diluted		66,244,852

See accompanying notes to the unaudited consolidated financial statements

Unaudited consolidated statements of stockholders’ equity and comprehensive income

Common stock

Additional

paid-in

Comprehensive

Shares

Par value

capital

income

Balance as of March 31, 2002

66,186,130

8,597,001

123,079,948

Common stock issued

19,050

1,961

646,906

Cash dividends declared

–

Income tax benefit arising on exercise of stock options

–

438,139

Amortization of compensation related to stock option grants

–

Comprehensive income

Net income

–

89,544,771

Other comprehensive income

Translation adjustment

–

5,473,659

Comprehensive income

95,018,430

Balance as of September 30, 2002

66,205,180

8,598,962

124,164,993

Balance as of March 31, 2003

66,243,078

8,602,909

127,042,751

Common stock issued

25,894

2,819

1,105,240

Cash dividends declared

–

Income tax benefit arising on exercise of stock options

–

670,016

Amortization of compensation related to stock option grants

–

Comprehensive income

Net income

–

122,984,299

Other comprehensive income

Translation adjustment

–

24,834,256

Comprehensive income

147,818,555

Balance as of September 30, 2003

66,268,972

8,605,728

128,818,007

[Additional columns below]

[Continued from above table, first column(s) repeated]


	Accumulated
	other									Total
	comprehensive			Deferred stock			Retained			stockholders’
	income			compensation			earnings			equity

Balance as of March 31, 2002	$	(45,441,148	)	$	(7,620,600	)	$	363,764,165		$	442,379,366
Common stock issued		–			–			–			648,867
Cash dividends declared		–			–			(16,956,889	)		(16,956,889	)
Income tax benefit arising on exercise of stock options		–			–			–			438,139
Amortization of compensation related to stock option grants		–			2,487,896			–			2,487,896
Comprehensive income
Net income		–			–			89,544,771			89,544,771
Other comprehensive income
Translation adjustment		5,473,659			–			–			5,473,659

Comprehensive income

Balance as of September 30, 2002	$	(39,967,489	)	$	(5,132,704	)	$	436,352,047		$	524,015,809

Balance as of March 31, 2003	$	(31,444,835	)	$	(2,817,066	)	$	524,621,160		$	626,004,919

Common stock issued		–			–			–			1,108,059
Cash dividends declared		–			–			(23,352,755	)		(23,352,755	)
Income tax benefit arising on exercise of stock options		–			–			–			670,016
Amortization of compensation related to stock option grants		–			2,143,379			–			2,143,379
Comprehensive income
Net income		–			–			122,984,299			122,984,299
Other comprehensive income
Translation adjustment		24,834,256			–			–			24,834,256

Comprehensive income

Balance as of September 30, 2003	$	(6,610,579	)	$	(673,687	)	$	624,252,704		$	754,392,173

See accompanying notes to the unaudited consolidated financial statements

Unaudited consolidated statements of cash flows


	Six months ended September 30,
	2002			2003

OPERATING ACTIVITIES:
Net income	$	89,544,771		$	122,984,299
Adjustments to reconcile net income to net cash provided by operating activities
Loss on sale of property, plant and equipment		24,787			2,153
Depreciation		17,386,573			19,365,934
Amortization of intangible assets		820,025			4,071,573
Provision for investments		3,163,560			1,419,662
Deferred taxes		(1,561,294	)		907,313
Amortization of deferred stock compensation expense		2,487,896			2,143,379
Changes in assets and liabilities
Trade accounts receivable		(25,241,313	)		(15,922,435	)
Prepaid expenses and other current assets		(2,819,465	)		(5,535,317	)
Unbilled revenue		(9,355,693	)		1,736,340
Income taxes		(3,908,096	)		10,456,367
Accounts payable		337,610			(204,409	)
Client deposits		1,298,162			(288,926	)
Unearned revenue		7,270,897			1,818,558