Edgar Filing: INFOSYS TECHNOLOGIES LTD

Infosys Technologies Ltd., Form 6-K, 12/31/2003

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 December 31, 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 December 31, 2003 that we mailed to our equity shareholders on or about February 3, 2004. 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 quarter ended December 31, 2003

(INFOSYS LOGO)

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


											in Rs. crore, except per share data

		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

For the period
Total revenue			1,235.26			958.64			3,451.99			2,602.83			3,622.69
Export revenue			1,227.30			945.18			3,401.93			2,552.93			3,543.51
Operating profit (PBIDTA)			410.18			333.49			1,136.91			931.66			1,272.04
PBIDTA/revenues (%)			33.21	%		34.79	%		32.93	%		35.79	%		35.11	%
Profit after tax (PAT)			328.14			256.31			906.42			698.93			957.93
PAT/revenues (%)			26.56	%		26.74	%		26.26	%		26.85	%		26.44	%
Earnings per share* (par value of Rs.5 each, fully paid)
	Basic		49.43			38.70			136.73			105.57			144.68
	Diluted		48.54			38.22			135.43			104.70			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			85.19			50.86			212.39			148.66			219.26
At the end of the period
Total assets									3,725.28			2,707.10			2,860.65
Fixed assets – net									816.22			754.91			772.72
Cash and cash equivalents									1,893.96			1,432.21			1,638.51
Working capital									2,260.67			1,883.96			2,017.92
Total debt									—			—			—
Net worth									3,725.28			2,707.10			2,860.65
Equity									33.23			33.11			33.12
Market capitalization									36,980.77			31,613.32			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.

(TOTAL REVENUE, EXPORTS, ORDINARY ACTIVITIES 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. Indian GAAP revenues grew by 8.86% over Q2 FY2004, while net profits from ordinary activities witnessed an increase of 9.32%. Revenues in US GAAP terms grew by 9.7%, as compared to the quarter ended September 30, 2003. This quarter, your company saw a record cash addition. Free cash flows amounted to Rs. 344.25 crore.

This was an eventful quarter. Your company completed its first acquisition - Expert Information Systems Pty. Limited, Australia - and is working towards a seamless integration. This will accelerate its market penetration in Australia and provide enhanced value to its clients.

Your company has incorporated its wholly-owned subsidiary in the People’s Republic of China, ‘Infosys Technologies (Shanghai) Co. Limited’. The setting up of the software development center for 200 professionals in Shanghai is progressing well. The China subsidiary will be offering end-to-end software services to domestic as well as multinational companies operating in China.

Your company continued its focus on improving efficiency. At the same time, it completed its reorganization. This will enable it to face a new set of challenges – increased market expectations, a fast-changing economy, and a new competitive scenario. It will also help further empower the business units. Business opportunities continue to grow. Pricing has stabilized, as have margins. Your company’s billing for two clients (on an LTM basis) has crossed $ 50 million each.

This quarter saw the highest number of gross additions in terms of employees - 3,179, including 545 lateral hires. The net employee addition for the quarter stood at 2,689. In fact, 950,000 people applied to your company over the last twelve months. Clearly, it remains an employer of choice.

Your company added 30 new clients during the quarter. Significant wins include one of Canada’s leading telecommunications companies, a premier telecommunications carrier in the Asia Pacific region, one of the world’s premier media and entertainment companies, and a nationwide chain of superstores in the US. In addition, your company established a relationship with a global investment bank based in the UK.

High-tech companies are finding new ways of improving knowledge and expertise in cutting-edge technology. An industry leader providing global data and IP network and integration services for multinational businesses has engaged us in the design, development and support of its global CRM applications. The world’s leading supplier of process control and yield management solutions for the semiconductor and related microelectronics industries also established a partnership with your company during the last quarter. Other significant client additions in this space include a world leader in integrated IT and eProcessing solutions for the financial services industry, and a corporation providing global automated international trade management solutions.

The Banking Business Unit (BBU) made considerable headway in several countries this quarter, including Mauritius and Zimbabwe. BBU also established its presence in China, with one of the leading banks choosing Finacle^® for its branches. In addition, Finacle^® has emerged as the world’s most scalable open systems - based core-banking solution. In the recently concluded rigorous benchmarking exercise with Sun Microsystems, USA, Finacle^® broke all published benchmark results for core banking transaction processing.

As in the past, your company continued to deepen its relationship with global corporations, helping them realize business benefits through the innovative use of technology. Its growth has been made possible through the unstinting commitment of all Infoscions. On your behalf, we thank them for contributing to yet another successful quarter.


	/s/ Nandan M. Nilekani	/s/ S. Gopalakrishnan

Bangalore	Nandan M. Nilekani	S. Gopalakrishnan
January 9, 2004	Chief Executive Officer, President	Chief Operating Officer
	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 December 31, 2003, the Profit and Loss Account and Cash Flow Statement of the Company for the quarter and nine months 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 those books;

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

(d)		in our opinion, the Balance Sheet, the Profit and Loss Account and the Cash Flow Statement 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 December 31, 2003;

	(ii)		in the case of the Profit and Loss Account, of the profit of the Company for the quarter and nine months ended on that date; and

	(iii)		in the case of the Cash Flow Statement, of the cash flows of the Company for the quarter and nine months ended on that date.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
January 9, 2004

Balance Sheet as at


						in Rs. crore

		December 31, 2003		December 31, 2002		March 31, 2003

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share capital			33.23		33.11		33.12
Reserves and surplus			3,692.05		2,673.99		2,827.53

			3,725.28		2,707.10		2,860.65

APPLICATION OF FUNDS
FIXED ASSETS
Original cost			1,481.83		1,194.24		1,273.32
Less : Depreciation and amortization			744.99		525.74		577.15

Net book value			736.84		668.50		696.17
Add : Capital work-in-progress			79.38		86.41		76.55

			816.22		754.91		772.72
INVESTMENTS			615.54		33.20		33.20
DEFERRED TAX ASSETS			32.85		35.03		36.81
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors			683.87		487.32		512.14
Cash and bank balances			1,603.83		1,129.87		1,336.23
Loans and advances			945.50		948.47		872.78

			3,233.20		2,565.66		2,721.15
Less : Current liabilities			549.96		279.38		315.25
	Provisions		422.57		402.32		387.98

NET CURRENT ASSETS			2,260.67		1,883.96		2,017.92

			3,725.28		2,707.10		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
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President – Finance

Profit and Loss Account for the


					in Rs. crore, except per share data

			Quarter ended				Nine months ended				Year ended
			December 31,				December 31,				March 31,
			2003		2002		2003		2002		2003

INCOME
Software services and products
		Overseas		1,227.30		945.18		3,401.93		2,552.93		3,543.51
		Domestic		7.96		13.46		50.06		49.90		79.18

				1,235.26		958.64		3,451.99		2,602.83		3,622.69
SOFTWARE DEVELOPMENT EXPENSES				645.48		481.62		1,805.42		1,283.50		1,813.30

GROSS PROFIT				589.78		477.02		1,646.57		1,319.33		1,809.39
SELLING AND MARKETING EXPENSES				92.35		73.60		252.51		198.02		266.98
GENERAL AND ADMINISTRATION EXPENSES				87.25		69.93		257.15		189.65		270.37
				179.60		143.53		509.66		387.67		537.35
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION				410.18		333.49		1,136.91		931.66		1,272.04
Interest				—		—		—		—		—
Depreciation and amortization				62.23		49.48		168.82		136.19		188.95

OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION				347.95		284.01		968.09		795.47		1,083.09
Other income				47.48		29.80		124.21		72.22		99.61
Provision for investments				2.29		—		8.88		23.76		23.77

NET PROFIT BEFORE TAX				393.14		313.81		1,083.42		843.93		1,158.93
Provision for taxation				65.00		57.50		177.00		145.00		201.00

NET PROFIT AFTER TAX				328.14		256.31		906.42		698.93		957.93
AMOUNT AVAILABLE FOR APPROPRIATION				328.14		256.31		906.42		698.93		957.93
DIVIDEND
	Interim			—		—		96.09		82.76		82.76
	Final			—		—		—		—		96.05
	Dividend Tax			—		—		12.31		—		12.30
Amount transferred – general reserve				—		—		—		—		766.82
Balance in Profit and Loss Account				328.14		256.31		798.02		616.17		—

				328.14		256.31		906.42		698.93		957.93

EARNINGS PER SHARE (equity shares, par value Rs.5/- each)
	Basic			49.43		38.70		136.73		105.57		144.68
	Diluted			48.54		38.22		135.43		104.70		143.37
Number of shares used in computing earnings per share
	Basic			6,63,79,862		6,62,21,577		6,62,94,021		6,62,02,947		6,62,11,068
	Diluted			6,76,07,893		6,70,57,160		6,69,29,068		6,67,55,529		6,68,16,821

This is the Profit and Loss Account 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
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President – Finance

Cash Flow statement for the


					in Rs. crore

		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax			393.14			313.81			1,083.42			843.93			1,158.93
Adjustments to reconcile profit before tax to cash provided by operating activities
	(Profit)/Loss on disposal of fixed assets		(0.01	)		(0.08	)		(0.02	)		0.05			—
	Depreciation and amortization		62.23			49.48			168.82			136.19			188.95
	Interest and dividend income		(26.21	)		(19.52	)		(72.39	)		(55.89	)		(78.05	)
	Provision on long-term investments		2.29			—			8.88			23.76			23.77
	Exchange differences on translation of foreign currency cash and cash equivalents		(4.95	)		(1.04	)		(1.09	)		(2.43	)		(2.06	)
Changes in current assets and liabilities
	Sundry debtors		(106.61	)		(29.07	)		(171.73	)		(150.59	)		(175.41	)
	Loans and advances		16.73			(12.61	)		15.21			(86.25	)		(127.63	)
	Current liabilities and provisions		172.75			13.26			228.34			124.71			158.46
	Income taxes paid during the period/year		(18.80	)		(65.85	)		(79.08	)		(170.75	)		(232.09	)

NET CASH GENERATED BY OPERATING ACTIVITIES			490.56			248.38			1,180.36			662.73			914.87

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds on exercise of stock options			61.53			7.47			66.61			10.62			13.52
Dividends paid during the period/year, including dividend tax			(108.40	)		(82.76	)		(216.75	)		(165.49	)		(165.49	)

NET CASH USED IN FINANCING ACTIVITIES			(46.87	)		(75.29	)		(150.14	)		(154.87	)		(151.97	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress			(85.19	)		(50.86	)		(212.39	)		(148.66	)		(219.26	)
Advance for acquisition of company			(50.75	)		—			(50.75	)		—			—
Proceeds on disposal of fixed assets			0.01			0.08			0.09			0.25			0.33
Investments in securities			(134.82	)		—			(585.20	)		(12.52	)		(12.53	)
Interest and dividend income			26.21			19.52			72.39			55.89			78.05

NET CASH USED IN INVESTING ACTIVITIES			(244.54	)		(31.26	)		(775.86	)		(105.04	)		(153.41	)

Exchange differences on translation of foreign currency cash and cash equivalents			4.95			1.04			1.09			2.43			2.06

Net (decrease)/increase in cash and cash equivalents during the period/year			204.10			142.87			255.45			405.25			611.55
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR			1,689.86			1,289.34			1,638.51			1,026.96			1,026.96

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR			1,893.96			1,432.21			1,893.96			1,432.21			1,638.51

This is the Cash Flow Statement 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
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President - Finance

Schedules to the Profit and Loss Account for the


								in Rs. crore

		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

SOFTWARE DEVELOPMENT EXPENSES
Salaries and bonus including overseas staff expenses			545.94			378.90			1,483.31			1,019.82			1,433.85
Staff welfare			3.76			2.13			9.75			5.42			7.91
Contribution to provident and other funds			12.79			8.43			36.53			21.70			31.94
Overseas travel expenses			41.11			41.52			125.79			119.80			162.66
Consumables			2.60			1.77			6.37			4.19			6.25
Cost of software packages
	for own use		14.50			22.21			49.57			43.27			54.75
	for service delivery to clients		2.12			2.34			14.46			9.96			12.99
Computer maintenance			3.03			2.58			8.47			6.96			9.33
Communication expenses			7.73			5.73			23.66			17.99			23.94
Provision for post-sales client support			(0.21	)		(3.76	)		(0.36	)		(4.06	)		(6.18	)
Consultancy charges			10.75			19.77			45.04			38.45			75.86
Rent			1.36			—			2.83			—			—

			645.48			481.62			1,805.42			1,283.50			1,813.30

SELLING AND MARKETING EXPENSES
Salaries and bonus including overseas staff expenses			57.97			40.24			157.17			103.25			141.73
Staff welfare			0.15			0.16			0.38			0.47			0.62
Contribution to provident and other funds			0.27			0.23			1.44			0.47			1.34
Overseas travel expenses			11.53			12.25			29.57			30.84			45.16
Consumables			0.06			0.07			0.14			0.14			0.21
Cost of software packages for own use			—			0.01			0.01			0.04			0.21
Computer maintenance			—			—			0.02			—			0.01
Communication expenses			0.01			0.13			0.01			0.37			0.50
Traveling and conveyance			0.56			0.37			1.16			0.82			1.19
Rent			3.93			1.29			10.83			3.40			4.79
Telephone charges			1.45			1.40			3.74			3.92			5.35
Professional charges			1.32			3.03			4.06			8.27			10.63
Printing and stationery			0.25			0.25			0.77			1.02			1.43
Advertisements			0.04			0.33			0.28			0.73			1.04
Brand building			9.16			7.00			24.30			24.36			29.05
Office maintenance			0.08			1.66			0.19			2.16			2.72
Repairs to plant and machinery			—			—			—			—			0.02
Power and fuel			0.01			0.04			0.04			0.15			0.22
Insurance charges			0.03			0.03			0.07			0.06			0.20
Rates and taxes			0.01			0.02			0.04			0.25			0.27
Bank charges and commission			0.01			0.03			0.02			0.07			0.09
Commission charges			3.33			3.28			6.24			9.50			10.58
Marketing expenses			1.88			1.65			4.49			4.96			6.72
Sales promotion expenses			0.30			0.13			0.50			0.33			0.46
Other miscellaneous expenses			—			—			7.04			2.44			2.44

			92.35			73.60			252.51			198.02			266.98

GENERAL AND ADMINISTRATION EXPENSES
Salaries and bonus including overseas staff expenses			19.14			15.35			53.40			41.73			56.24
Contribution to provident and other funds			1.06			0.88			3.35			2.42			3.49
Overseas travel expenses			1.26			1.70			4.83			5.65			7.78
Traveling and conveyance			5.77			4.47			15.28			11.13			16.76
Rent			3.96			6.75			14.73			17.50			24.51
Telephone charges			6.57			5.82			21.33			14.83			21.34
Professional charges			8.50			9.37			24.78			23.88			37.99
Printing and stationery			1.29			1.02			4.68			3.68			4.80
Advertisements			0.82			1.05			2.18			2.72			5.15
Office maintenance			7.10			5.03			19.65			12.94			20.13
Repairs to building			3.97			2.06			7.36			5.08			7.27
Repairs to plant and machinery			1.15			1.66			3.75			3.75			4.75
Power and fuel			7.48			5.66			21.87			16.64			22.38
Insurance charges			6.07			2.34			17.26			6.80			9.83
Rates and taxes			1.64			1.33			3.79			3.60			5.14
Donations			3.55			1.52			10.57			4.56			6.09
Auditor’s remuneration
	audit fees		0.08			0.07			0.23			0.20			0.27
	certification charges		—			—			—			—			0.03
	out-of-pocket expenses		0.01			0.01			0.02			0.02			0.02
Provision for bad and doubtful debts			4.10			0.33			18.12			0.51			0.73
Provision for doubtful loans and advances			(0.06	)		(0.02	)		0.07			(0.07	)		(0.07	)
Bank charges and commission			0.19			0.18			0.54			0.50			0.66
Commission to non whole time directors			0.47			0.24			1.25			0.72			1.12
Postage and courier			0.84			1.03			2.78			3.00			3.99
Books and periodicals			0.44			0.32			1.02			0.97			1.42
Research grants			0.18			—			0.36			—			—
Freight charges			0.32			0.16			0.62			0.43			0.58
Professional membership and seminar participation fees			1.19			0.86			2.46			2.51			3.55
Other miscellaneous expenses			0.16			0.74			0.87			3.95			4.42

			87.25			69.93			257.15			189.65			270.37

Schedules to the Statement of Cash Flows for the


		in Rs. crore

		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

CHANGE IN LOANS AND ADVANCES
As per the Balance Sheet			945.50			948.47			945.50			948.47			872.78
Less : Deposits with financial institutions and body corporate, included in cash and cash equivalents			(290.13	)		(302.34	)		(290.13	)		(302.34	)		(302.28	)
	Advance for acquisition of company		(50.75	)		—			(50.75	)		—			—
	Advance income taxes separately considered		(339.32	)		(407.00	)		(339.32	)		(407.00	)		(289.99	)

			265.30			239.13			265.30			239.13			280.51
Less : Opening balance considered			(282.03	)		(226.52	)		(280.51	)		(152.88	)		(152.88	)

			(16.73	)		12.61			(15.21	)		86.25			127.63

CHANGE IN CURRENT LIABILITIES AND PROVISIONS
As per the Balance Sheet			972.53			681.70			972.53			681.70			703.23
Add/(Less) : Provisions separately considered in the Cash Flow Statement
	Income taxes		(418.10	)		(395.38	)		(418.10	)		(395.38	)		(274.81	)
	Dividends		—			—			—			—			(96.05	)
	Dividend tax		—			—			—			—			(12.30	)
	Non Cash transactions		—			—			—			(24.50	)		(24.50	)
	Proceeds received on investment pending regulatory approval		(6.02	)		—			(6.02	)		—			—
Less : Opening balance considered			(375.66	)		(273.06	)		(320.07	)		(137.11	)		(137.11	)

			172.75			13.26			228.34			124.71			158.46

INCOME TAXES PAID
Charge as per the Profit and Loss Account			65.00			57.50			177.00			145.00			201.00
Add : Increase in advance income taxes			(9.14	)		65.85			49.33			170.75			53.74
Add : Increase/(Decrease) in Deferred taxes			(1.02	)		1.45			(3.96	)		10.81			12.59
Less : (Increase)/Decrease in income tax provision			(36.04	)		(58.95	)		(143.29	)		(155.81	)		(35.24	)

			18.80			65.85			79.08			170.75			232.09

PURCHASES OF FIXED ASSETS AND CHANGE IN CAPITAL WORK-IN-PROGRESS
As per the Balance Sheet			67.81			56.80			209.57			237.42			317.87
Less : Opening Capital work-in-progress			(62.00	)		(92.35	)		(76.56	)		(150.67	)		(150.67	)
Less : Non Cash transaction			—			—			—			(24.50	)		(24.50	)
Add : Closing Capital work-in-progress			79.38			86.41			79.38			86.41			76.56

			85.19			50.86			212.39			148.66			219.26

INVESTMENTS IN SECURITIES
As per the Balance Sheet			615.54			33.20			615.54			33.20			33.20
Add : Provisions on investments			2.29			—			8.88			23.76			23.77
	Proceeds received on investment pending regulatory approval		(6.02	)		—			(6.02	)		—			—

			611.81			33.20			618.40			56.96			56.97
Less : Opening balance considered			(476.99	)		(33.20	)		(33.20	)		(44.44	)		(44.44	)

			134.82			—			585.20			12.52			12.53

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR
As per the Balance Sheet			1,603.83			1,129.87			1,603.83			1,129.87			1,336.23
Add : Deposits with financial institutions and body corporate, included herein			290.13			302.34			290.13			302.34			302.28

			1,893.96			1,432.21			1,893.96			1,432.21			1,638.51

Extracts of significant accounting policies and notes on accounts

Company overview

Infosys Technologies Limited (“Infosys”) along with its subsidiaries Infosys Technologies (Shanghai) Co. Limited (“Infosys China”) and 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.

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.


		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

Salaries and bonus including overseas staff expenses			623.05			434.49			1,693.88			1,164.80			1,631.82
Contribution to provident and other funds			14.12			9.54			41.32			24.59			36.77
Staff welfare			3.91			2.29			10.13			5.89			8.53
Overseas travel expenses			53.90			55.47			160.19			156.29			215.60
Consumables			2.66			1.84			6.51			4.33			6.46
Cost of software packages
	for own use		14.50			22.22			49.58			43.31			54.96
	for service delivery to clients		2.12			2.34			14.46			9.96			12.99
Computer maintenance			3.03			2.58			8.49			6.96			9.34
Communication expenses			7.74			5.86			23.67			18.36			24.44
Consultancy charges			10.75			19.77			45.04			38.45			75.86
Provision for post-sales client support			(0.21	)		(3.76	)		(0.36	)		(4.06	)		(6.18	)
Traveling and conveyance			6.33			4.84			16.44			11.95			17.95
Rent			9.25			8.04			28.39			20.90			29.30
Telephone charges			8.02			7.22			25.07			18.75			26.69
Professional charges			9.82			12.40			28.84			32.15			48.62
Printing and stationery			1.54			1.27			5.45			4.70			6.23
Advertisements			0.86			1.38			2.46			3.45			6.19
Office maintenance			7.18			6.69			19.84			15.10			22.85
Repairs to building			3.97			2.06			7.36			5.08			7.27
Repairs to plant and machinery			1.15			1.66			3.75			3.75			4.77
Power and fuel			7.49			5.70			21.91			16.79			22.60
Brand building			9.16			7.00			24.30			24.36			29.05
Insurance charges			6.10			2.37			17.33			6.86			10.03
Rates and taxes			1.65			1.35			3.83			3.85			5.41
Commission charges			3.33			3.28			6.24			9.50			10.58
Donations			3.55			1.52			10.57			4.56			6.09
Auditor’s remuneration
	– audit fees		0.08			0.07			0.23			0.20			0.27
	– certification charges		—			—			—			—			0.03
	– out-of-pocket expenses		0.01			0.01			0.02			0.02			0.02
Provision for bad and doubtful debts			4.10			0.33			18.12			0.51			0.73
Provision for doubtful loans and advances			(0.06	)		(0.02	)		0.07			(0.07	)		(0.07	)
Bank charges and commission			0.20			0.21			0.56			0.57			0.75
Commission to non-whole time directors			0.47			0.24			1.25			0.72			1.12
Postage and courier			0.84			1.03			2.78			3.00			3.99
Books and periodicals			0.44			0.32			1.02			0.97			1.42
Research grants			0.18			—			0.36			—			—
Freight charges			0.32			0.16			0.62			0.43			0.58
Professional membership and seminar participation fees			1.19			0.86			2.46			2.51			3.55
Marketing expenses			1.88			1.65			4.49			4.96			6.72
Sales promotion expenses			0.30			0.13			0.50			0.33			0.46
Other miscellaneous expenses			0.16			0.74			7.91			6.39			6.86

			825.08			625.15			2,315.08			1,671.17			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

Nine months ended

Year ended

December 31,

March 31,

2003

2002

2003

2002

2003

Lease rentals recognized during the period/year

9.25

8.04

28.39

20.90

29.30


	As at				As at
Lease obligations	December 31, 2003		December 31, 2002		March 31, 2003

Within one year of the Balance Sheet date		27.84		17.96		17.93
Due in a period between one year and five years		65.00		40.05		36.00
Due after five years		6.60		5.40		7.00

		99.44		63.41		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, as at December 31, 2003 and December 31, 2002 due to Infosys within one year of the Balance Sheet date amounted to Rs. 8.02 and Rs. 2.46 and due in the period between one and five years amounted to Rs. 11.48 and Rs. 3.76 respectively. The lease for premises extends for a maximum period of five years from quarter ended June 30, 2002 (the period of inception).

The sub-lease rentals received from Progeon during the quarter and nine months ended December 31, 2003 amounted to Rs. 0.39 and Rs. 0.53.

Fixed assets stated below have been provided on operating lease to Progeon, as at December 31, 2003 and December 31, 2002 and March 31, 2003.


Particulars	Cost		Accumulated depreciation		Net book value

Building		10.24		1.14		9.10
		10.13		0.45		9.68
		10.21		0.62		9.59
Plant and machinery		3.76		1.34		2.42
		2.06		0.40		1.66
		2.94		0.70		2.24
Computers		1.23		0.91		0.32
		0.85		0.32		0.53
		0.85		0.49		0.36
Furniture & fixtures		5.60		2.07		3.53
		1.74		0.50		1.24
		2.64		0.88		1.76

Total		20.83		5.46		15.37
		14.78		1.67		13.11
		16.64		2.69		13.95

The aggregate depreciation charged on the above during the quarter and nine months ended December 31, 2003, amounted to Rs. 1.03 and Rs. 2.77 (for the quarter and nine months ended December 31, 2002 was Rs. 0.75 and Rs. 1.67 and for the year ended March 31, 2003 was Rs. 2.69). The rental income from Progeon for the quarter and nine months ended December 31, 2003 amounted to Rs. 1.61 and Rs. 4.43 (for the quarter and nine months ended December 31, 2002 was Rs. 0.61 and Rs. 1.16 and for the year ended March 31, 2003 was Rs. 1.96).

1.2.3 Related party transactions

The company entered into related party transactions with the Progeon. The transactions are set out below.


		Quarter ended				Nine months ended				Year ended
		December 31,				December 31,				March 31,
Particulars		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		—		—

Revenue transactions :
	Purchase of services		—		—		0.14		2.08		2.08

			—		—		0.14		2.08		2.08
Sale of services
	Business consulting services		0.04		1.83		0.08		2.94		3.56
	Shared services including facilities and personnel		3.08		2.95		9.49		5.32		9.61

			3.12		4.78		9.57		8.26		13.17

The company entered into related party transactions with Infosys China. The transactions are set out below.

Quarter ended

Nine months ended

Year ended

December 31,

March 31,

Particulars

2003

2002

2003

2002

2003

Capital transactions :

Financing transactions – amount remitted towards capital

4.54

—

4.54

—

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, nine months ended December 31, 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 December 31, 2003 amounted to Rs. nil (as at December 31, 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 nine months ended December 31, 2003 an amount of Rs. 3.50 and Rs. 10.50 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 nine months ended December 31, 2002 and year ended March 31, 2003 were Rs. 1.50, Rs. 4.03 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 December 31, 2003, 2002, nine months ended December 31, 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 December 31, 2003		0.30		0.06		0.33		0.69
	Quarter ended December 31, 2002		0.42		0.06		1.88		2.36
	Nine months ended December 31, 2003		1.00		0.18		0.74		1.92
	Nine months ended December 31, 2002		2.19		0.12		3.24		5.55
	Year ended March 31, 2003		2.61		0.18		3.30		6.09


						Reimbursement		Total
		Commission		Sitting fees		of expenses		remuneration

Independent directors
	Quarter ended December 31, 2003		0.08		0.02		0.06		0.16
	Quarter ended December 31, 2002		—		0.02		0.11		0.13
	Nine months ended December 31, 2003		1.21		0.02		0.26		1.49
	Nine months ended December 31, 2002		0.89		0.04		0.37		1.30
	Year ended March 31, 2003		0.89		0.05		0.42		1.36


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

Other key managerial personnel
	Quarter ended December 31, 2003		0.03		0.01		0.08		0.12		—		—
	Quarter ended December 31, 2002		0.01		—		0.04		0.05		—		—
	Nine months ended December 31, 2003		0.09		0.03		0.17		0.29		—		—
	Nine months ended December 31, 2002		0.04		0.01		0.08		0.13		—		—
	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 December 31, 2003, 2002, nine months ended December 31, 2003, 2002 and the year ended March 31, 2003 are as follows :

Number of

Exercise price

Expiration of

Name

Date of Grant

Option plan

options granted

(in Rs.)

options

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				Nine months ended				Year ended
		December 31,				December 31,				March 31,
		2003		2002		2003		2002		2003

Net profit :
	– As reported		328.14		256.31		906.42		698.93		957.93
	– Adjusted pro forma		325.07		250.31		893.42		680.80		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 December 31, 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 nine months ended December 31, 2003, management reduced the remaining estimated useful life of the intellectual property in a commercial software application product to three months, effective August 2003 and treasury management product to two months, effective November 2003. The revised estimation represents management’s present evaluation of the expected future commercial benefits from these products. The revision has resulted in an increased charge to the profit-and-loss account of Rs. 8.57 crore and Rs. 20.28 crore in the quarter and nine months ended December 31, 2003.

1.2.7 Investment activity

The following are the particulars of strategic investments made during the quarters and nine months ended December 31, 2003 and December 31, 2002, and year ended March 31, 2003 respectively :


	Quarter ended				Nine months ended				Year ended
	December 31,				December 31,				March 31,
Particulars of investee companies	2003		2002		2003		2002		2003

Progeon Limited, India		—		—		—		12.25		12.25
Infosys Technologies (Shanghai) Co. Limited, China		4.54		—		4.54		—		—
M-Commerce Ventures Pte. Limited, Singapore *		—		—		0.19		0.27		0.27
		4.54		—		4.73		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 from M-Commerce. Accordingly, the aggregate investment in M-Commerce as at December 31, 2003 amounts to Rs. 2.30.

Current liabilities include an amount of Rs. 6.02 received from CiDRA Corporation, USA on a buy back offer which is pending approval from regulatory authorities.

During the nine months ended December 31, 2003, Infosys received Rs. 3.27 from Workadia Inc., and Rs. 0.46 from Stratify Inc., towards recovery of the amounts invested. The remainder of the investment was written off in the quarter ended December 31, 2003.

1.2.8 Contingent liability

During the quarter ended September 30, 2003, Ms. Jennifer Griffith, a former employee, filed a lawsuit against the company and its former director, Mr. Phaneesh Murthy. The lawsuit was served on the company during the quarter ended December 31, 2003. 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, delivered 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 comprising 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


		Financial services		Manufacturing		Telecom		Retail		Others		Total

Quarter ended December 31, 2003 and December 31, 2002
	Revenues		457.86		178.85		183.84		151.98		262.73		1,235.26
			360.79		166.23		134.60		112.82		184.20		958.64
	Identifiable operating expenses		190.06		80.49		74.24		57.44		109.49		511.72
			138.26		64.45		46.43		34.97		71.42		355.53
	Allocated expenses		116.14		45.37		46.64		38.56		66.65		313.36
			104.91		45.80		37.08		31.08		50.75		269.62

	Segmental operating income		151.66		52.99		62.96		55.98		86.59		410.18
			117.62		55.98		51.09		46.77		62.03		333.49
	Unallocable expenses												62.23
													49.48

	Operating income												347.95
													284.01
	Other income (expense), net												45.19
													29.80

	Net profit before taxes												393.14
													313.81
	Income taxes												65.00
													57.50
	Net profit after taxes												328.14
													256.31

Nine months ended December 31, 2003 and December 31, 2002
	Revenues		1,295.09		522.28		511.59		413.70		709.33		3,451.99
			982.25		442.36		379.19		300.59		498.44		2,602.83
	Identifiable operating expenses		546.67		228.11		204.99		154.06		292.37		1,426.20
			395.17		179.90		129.93		94.94		187.69		987.63
	Allocated expenses		333.54		134.52		131.76		106.51		182.55		888.88
			267.21		113.73		97.26		77.28		128.06		683.54

	Segmental operating income		414.88		159.65		174.84		153.13		234.41		1,136.91
			319.87		148.73		152.00		128.37		182.69		931.66
	Unallocable expenses												168.82
													136.19

	Operating income												968.09
													795.47
	Other income (expense), net												115.33
													48.46

	Net profit before taxes												1,083.42
													843.93
	Income taxes												177.00
													145.00
	Net profit after taxes												906.42
													698.93

Year ended March 31, 2003
	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


		North America		Europe		India		Rest of the World		Total

Quarter ended December 31, 2003 and December 31, 2002
	Revenues		891.80		253.86		7.96		81.64		1,235.26
			708.47		157.71		13.46		79.00		958.64
	Identifiable operating expenses		369.54		101.98		2.80		37.40		511.72
			281.61		51.84		4.58		17.50		355.53
	Allocated expenses		226.23		64.40		2.02		20.71		313.36
			198.14		41.96		7.72		21.80		269.62

	Segmental operating income		296.03		87.48		3.14		23.53		410.18
			228.72		63.91		1.16		39.70		333.49
	Unallocable expenses										62.23
											49.48

	Operating income										347.95
											284.01
	Other income (expense), net										45.19
											29.80

	Net profit before taxes										393.14
											313.81
	Income taxes										65.00
											57.50

	Net profit after taxes										328.14
											256.31

Nine months ended December 31, 2003 and December 31, 2002
	Revenues		2,535.05		647.61		50.06		219.27		3,451.99
			1,909.05		450.15		49.90		193.73		2,602.83
	Identifiable operating expenses		1,064.33		260.44		15.70		85.73		1,426.20
			758.31		155.01		17.18		57.13		987.63
	Allocated expenses		652.85		166.64		12.94		56.45		888.88
			496.98		114.76		18.76		53.04		683.54

	Segmental operating income		817.87		220.53		21.42		77.09		1,136.91
			653.76		180.38		13.96		83.56		931.66
	Unallocable expenses										168.82
											136.19

	Operating income										968.09
											795.47
	Other income (expense), net										115.33
											48.46

	Net profit before taxes										1,083.42
											843.93
	Income taxes										177.00
											145.00

	Net profit after taxes										906.42
											698.93

Year ended March 31, 2003
	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				Nine months ended				Year ended
	December 31,				December 31,				March 31,
	2003		2002		2003		2002		2003

Number of shares considered as basic weighted average shares outstanding		6,63,79,862		6,62,21,577		6,62,94,021		6,62,02,947		6,62,11,068
Add : Effect of dilutive issues of shares/stock options		12,28,031		8,35,583		6,35,047		5,52,582		6,05,753

Number of shares considered as weighted average shares and potential shares outstanding		6,76,07,893		6,70,57,160		6,69,29,068		6,67,55,529		6,68,16,821

Consolidated financial statements of Infosys Technologies Limited and its subsidiaries

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 standard on Consolidated Financial Statements issued by the ICAI. The financial statements of the parent company, Infosys, and its subsidiaries, Infosys Technologies (Shanghai) Co. Limited (“Infosys China”) and Progeon Limited (“Progeon”) have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances and transactions and resulting unrealized gains/losses. The consolidated financial statements are prepared applying uniform accounting policies in use at Infosys, Progeon and Infosys China.

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 December 31, 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 subsidiaries

We have audited the attached consolidated balance sheet of Infosys Technologies Limited (the Company) and its subsidiaries as at December 31, 2003, and also the consolidated profit and loss account and the consolidated cash flow statement for the quarter and nine months 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 the 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 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 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 the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India.

In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India :

(a)		in the case of the consolidated balance sheet, of the state of affairs of Infosys Technologies Limited and its subsidiaries as at December 31, 2003;

(b)		in the case of the consolidated profit and loss account, of the profit of Infosys Technologies Limited and its subsidiaries for the quarter and nine months ended on that date; and

(c)		in the case of the consolidated cash flow statement, of the cash flows of Infosys Technologies Limited and its subsidiaries for the quarter and nine months ended on that date.

for Bharat S. Raut & Co.
Chartered Accountants

S. Balasubrahmanyam
Partner
Membership No. 53315

Bangalore
January 9, 2004

Consolidated Balance Sheet as at


in Rs. crore

	December 31, 2003		December 31, 2002		March 31, 2003

SOURCES OF FUNDS
SHAREHOLDERS’ FUNDS
Share capital		33.23		33.11		33.12
Reserves and surplus		3,690.87		2,670.09		2,824.37

		3,724.10		2,703.20		2,857.49
Preference shares issued by subsidiary		49.00		49.00		49.00

		3,773.10		2,752.20		2,906.49

APPLICATION OF FUNDS
FIXED ASSETS
Original cost		1,499.00		1,199.09		1,279.04
Less : Depreciation and amortization		749.88		526.48		578.54

Net book value		749.12		672.61		700.50
Add : Capital work-in-progress		80.47		86.42		77.39

		829.59		759.03		777.89
INVESTMENTS		614.01		20.95		20.95
DEFERRED TAX ASSETS		32.85		35.03		36.81
CURRENT ASSETS, LOANS AND ADVANCES
Sundry debtors		696.96		491.56		518.65
Cash and bank balances		1,616.99		1,138.72		1,346.54
Loans and advances		961.69		991.57		913.46

		3,275.64		2,621.85		2,778.65
Less : Current liabilities		555.71		282.17		319.60
Provisions		423.28		402.49		388.21

NET CURRENT ASSETS		2,296.65		1,937.19		2,070.84

		3,773.10		2,752.20		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	Chief Operating Officer and
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President – Finance

Consolidated Profit and Loss Account for the


in Rs. crore, except per share data

			Quarter ended				Nine months ended				Year ended
			December 31,				December 31,				March 31,
			2003		2002		2003		2002		2003

INCOME - Software services, products and business process management
	Overseas			1,249.09		951.56		3,453.53		2,560.41		3,564.36
	Domestic			7.92		13.46		49.98		49.90		75.62

				1,257.01		965.02		3,503.51		2,610.31		3,639.98
Software development and business process management expenses				656.70		486.04		1,831.58		1,289.46		1,822.96

GROSS PROFIT				600.31		478.98		1,671.93		1,320.85		1,817.02
SELLING AND MARKETING EXPENSES				94.89		75.09		259.23		200.61		271.73
GENERAL AND ADMINISTRATION EXPENSES				92.33		71.21		267.66		192.59		275.67

				187.22		146.30		526.89		393.20		547.40
OPERATING PROFIT BEFORE INTEREST, DEPRECIATION AND AMORTIZATION				413.09		332.68		1,145.04		927.65		1,269.62
Interest				—		—		—		—		—
Depreciation and amortization				63.75		50.05		172.32		136.93		190.34

OPERATING PROFIT AFTER INTEREST, DEPRECIATION AND AMORTIZATION				349.34		282.63		972.72		790.72		1,079.28
Other income				46.46		29.78		121.56		73.07		100.26
Provision for investments				2.29		—		8.88		23.76		23.77

NET PROFIT BEFORE TAX				393.51		312.41		1,085.40		840.03		1,155.77
Provision for taxation				65.00		57.50		177.00		145.00		201.00

NET PROFIT AFTER TAX				328.51		254.91		908.40		695.03		954.77

AMOUNT AVAILABLE FOR APPROPRIATION				328.51		254.91		908.40		695.03		954.77
DIVIDEND
	Interim			—		—		96.09		82.76		82.76
	Final (Subject to deduction of tax, if any)			—		—		—		—		96.05
	Dividend tax			—		—		12.31		—		12.30
	Amount transferred - general reserve			—		—		—		—		763.66
Balance in Profit and Loss Account				328.51		254.91		800.00		612.27		—

				328.51		254.91		908.40		695.03		954.77

EARNINGS PER SHARE (Equity shares, par value Rs.5/- each)
		Basic		49.49		38.49		137.03		104.98		144.20
		Diluted		48.59		38.01		135.73		104.12		142.89
Number of shares used in computing earnings per share
		Basic		6,63,79,862		6,62,21,577		6,62,94,021		6,62,02,947		6,62,11,068
		Diluted		6,76,07,893		6,70,57,160		6,69,29,068		6,67,55,529		6,68,16,821

This is the Consolidated Profit and Loss Account 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
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President – Finance

Consolidated Cash Flow Statement for the


in Rs. crore

		Quarter ended						Nine months ended						Year ended
		December 31,						December 31,						March 31,
		2003			2002			2003			2002			2003

CASH FLOWS FROM OPERATING ACTIVITIES
Profit before tax			393.51			312.41			1,085.40			840.03			1,155.77
Adjustments to reconcile profit before tax to cash provided by operating activities
	(Profit)/Loss on sale of fixed assets		(0.01	)		(0.08	)		(0.02	)		0.05			(0.01	)
	Depreciation and amortization		63.75			50.05			172.32			136.93			190.34
	Interest and dividend income		(26.59	)		(20.37	)		(73.81	)		(57.87	)		(80.67	)
	Provisions on long-term investments		2.29			—			8.88			23.76			23.77
	Exchange differences on translation of foreign currency cash and cash equivalents		(4.95	)		0.01			(1.09	)		(2.46	)		(2.06	)
Changes in current assets and liabilities
	Sundry debtors		(104.37	)		(31.83	)		(178.31	)		(154.83	)		(181.92	)
	Loans and advances		21.89			(13.82	)		16.45			(88.92	)		(132.38	)
	Current liabilities and provisions		173.33			10.97			230.22			127.67			163.04
	Income taxes paid during the period/year		(18.89	)		(66.11	)		(79.40	)		(171.16	)		(232.54	)

NET CASH GENERATED BY OPERATING ACTIVITIES			499.96			241.23			1,180.64			653.20			903.34

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issue of preference share capital			—			—			—			49.00			49.00
Proceeds on exercise of stock options			61.53			7.47			66.61			10.62			13.52
Dividends paid during the period/year, including dividend tax			(108.40	)		(82.76	)		(216.75	)		(165.49	)		(165.49	)

NET CASH USED IN FINANCING ACTIVITIES			(46.87	)		(75.29	)		(150.14	)		(105.87	)		(102.97	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of fixed assets and change in capital work-in-progress			(90.50	)		(52.33	)		(224.26	)		(153.52	)		(225.82	)
Advance for acquisition of company			(50.75	)		—			(50.75	)		—			.—
Proceeds on disposal of fixed assets			0.02			0.08			0.26			0.25			0.33
Long-term investments in securities			(145.54	)		—			(595.92	)		(0.27	)		(0.27	)
Interest and dividend income			26.59			20.37			73.81			57.87			80.67

NET CASH USED IN INVESTING ACTIVITIES			(260.18	)		(31.88	)		(796.86	)		(95.67	)		(145.09	)

Effect of exchange differences on translation of foreign currency cash and cash equivalents			4.95			(0.01	)		1.09			2.46			2.06

Net (decrease)/increase in cash and cash equivalents during the period/year			197.86			134.05			234.73			454.12			657.34
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD/YEAR			1,721.17			1,347.03			1,684.30			1,026.96			1,026.96

CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR			1,919.03			1,481.08			1,919.03			1,481.08			1,684.30

This is the Consolidated Cash Flow Statement 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
Membership No. 53315		and Managing Director	Deputy Managing Director

	Deepak M. Satwalekar	Marti G. Subrahmanyam	Philip Yeo
	Director	Director	Director

	Omkar Goswami	Larry Pressler	Rama Bijapurkar
	Director	Director	Director

	Claude Smadja	Sridar A. Iyengar	K. Dinesh
	Director	Director	Director

	S. D. Shibulal	T. V. Mohandas Pai	Srinath Batni
	Director	Director and	Director
		Chief Financial Officer

	V. Balakrishnan
Bangalore	Company Secretary and
January 9, 2004	Vice President – Finance

Ratio analysis as per Indian GAAP (Non consolidated)


		Quarter ended				Nine months ended				Year ended
		December 31,				December 31,				March 31,
		2003		2002		2003		2002		2003

Financial performance
	Export revenue/total revenue (%)		99.36		98.6		98.55		98.08		97.81
	Domestic revenue/total revenue (%)		0.64		1.4		1.45		1.92		2.19
	Software development expenses/total revenue (%)		52.25		50.24		52.3		49.31		50.05
	Gross profit/total revenue (%)		47.75		49.76		47.7		50.69		49.95
	Selling and marketing expenses/total revenue (%)		7.48		7.68		7.31		7.61		7.37
	General and administration expenses/total revenue (%)		7.06		7.3		7.45		7.29		7.46
	Selling, general and administration expenses/total revenue (%)		14.54		14.97		14.76		14.89		14.83
	Employee costs/total revenue (%)		51.9		46.56		50.56		45.92		46.3
	Operating profit/total revenue (%)		33.21		34.79		32.93		35.79		35.11
	Depreciation and amortization/total revenue (%)		5.04		5.16		4.89		5.23		5.22
	Operating profit after depreciation and Interest/total revenue (%)		28.17		29.63		28.04		30.56		29.9
	Other income/total revenue (%)		3.84		3.11		3.6		2.78		2.75
	Provision for Investments/total revenue (%)		0.19		—		0.26		0.91		0.66
	Profit before tax/total revenue (%)		31.83		32.73		31.39		32.42		31.99
	Tax/total revenue (%)		5.26		6		5.1		5.57		5.55
	Tax/PBT (%)		16.53		18.32		16.25		17.18		17.34
	PAT from ordinary activities/total revenue (%)		26.56		26.74		26.28		26.85		26.44
	Capital expenditure/total revenue (%) (LTM)		6.9		5.3		6.15		5.71		6.05
	PAT from ordinary activities/average net worth (%) (LTM)		36.27		39.05		36.27		39.05		38.78
	ROCE (PBIT/Average capital employed) (%) (LTM)		43.48		46.95		43.48		46.95		46.91
	Return on invested capital (%) (LTM)		87.9		73.29		87.9		73.29		79.86
	Capital output ratio (LTM)		1.39		1.41		1.39		1.41		1.47
	Invested capital output ratio (LTM)		3.55		2.78		3.55		2.78		3.18
Balance sheet
	Debt-equity ratio		—		—		—		—		—
	Debtors turnover (Days) (LTM)		56		54		56		54		52
	Current ratio		3.26		3.76		3.26		3.76		3.87
	Cash and cash equivalents/total assets (%)*		66.68		52.91		66.68		52.91		57.28
	Cash and cash equivalents/total revenue (%) (LTM)*		55.55		43.63		55.55		43.63		45.23
	Depreciation/average gross block (%) (LTM)		16.56		17.71		16.56		17.71		16.92
	Technology investment/total revenue (%) (LTM)		4.35		3.6		4.35		3.6		3.62
Year on Year Growth (%) **
	Export revenue		30		46		33		36		39
	Total revenue		29		45		33		35		39
	Operating profit		23		25		22		21		23
	Net profit		28		24		30		17		19
	EPS		28		24		30		17		18
Per-share data (period end)
	Basic earnings per share from ordinary activities (Rs.)		49.43		38.72		136.87		105.57		144.68
	Basic cash earnings per share from ordinary activities (Rs.)		58.81		46.19		162.33		126.15		173.22
	Book value (Rs.)		561.93		408.91		561.93		408.91		431.84
	Price/earning (LTM)		31.63		34.76		31.63		34.76		28.01
	Price/cash earnings (LTM)		26.58		28.99		26.58		28.99		23.4
	Price/book value		9.9		11.67		9.9		11.67		9.39
	PE/EPS growth		1.14		1.43		1.07		2.06		1.52
	Dividend per share (Rs.)		—		—		14.5		12.5		27

* Investments in Liquid funds have been considered as Cash & 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						Nine months ended						Year ended
	December 31,						December 31,						March 31,
	2002			2003			2002			2003			2003

For the period
Revenues		200.01			275.89			537.78			759.91			753.81
Operating income		57.27			75.69			159.15			207.54			218.64
Operating income/revenues (%)		28.63	%		27.43	%		29.59	%		27.31	%		29.00	%
Net income		52.25			70.55			141.80			193.53			194.87
Net income/revenues (%)		26.12	%		25.57	%		26.37	%		25.47	%		25.85	%
Basic earnings per equity share ($)		0.80			1.07			2.16			2.95			2.97
Cash dividend per equity share ($)		0.26			0.36			0.51			0.71			0.51
Capital expenditure		10.80			19.83			30.88			48.63			46.71
At the end of the period
Total assets		635.40			969.24			635.40			969.24			704.31
Property, plant and equipment- net		150.71			182.13			150.71			182.13			157.19
Cash and cash equivalents		308.56			421.30			308.56			421.30			354.36
Working capital		387.42			630.82			387.42			630.82			444.77
Total debt		—			—			—			—			—
Stockholders’ equity		565.13			821.02			565.13			821.02			626.00
Common stock		8.60			8.63			8.60			8.63			8.60
Market capitalization		6,586.11			8,118.72			6,586.11			8,118.72			5,648.50

Note : Market capitalization is calculated by considering the share price at National Stock Exchange on the shares outstanding at the period/year end.

(BAR CHART)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 December 31, 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 December 31, 2003, for cable transfers in Indian rupees as certified for customs purposes by the Federal Reserve Bank of New York which was Rs. 45.55 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⁾			December 31, 2003
					(Unaudited)

ASSETS
Current Assets
	Cash and cash equivalents	$	354,362,918		$	421,302,898
	Investments in liquid mutual fund units		—			133,011,380
	Trade accounts receivable, net of allowances		109,119,856			153,010,094
	Deferred tax assets		288,541			472,095
	Prepaid expenses and other current assets		24,384,316			35,637,535
	Unbilled revenue		19,702,186			20,420,935

	Total current assets		507,857,817			763,854,937
Property, plant and equipment, net			157,194,190			182,131,622
Intangible assets, net			6,471,236			—
Deferred tax assets			7,264,885			6,509,330
Investments			4,613,833			1,925,167
Prepaid income taxes			4,452,678			169,688
Other assets			16,454,328			14,651,560

TOTAL ASSETS		$	704,308,967		$	969,242,304

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
	Accounts payable	$	426,611		$	342,644
	Client deposits		3,208,295			21,203,634
	Other accrued liabilities		46,249,269			78,656,396
	Income taxes payable		—			14,321,236
	Unearned revenue		13,202,115			18,510,857

Total current liabilities			63,086,290			133,034,767
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 December 31, 2003		10,000,000			10,757,408
	Other non-current liabilities		5,217,758			4,427,000
Stockholders’ Equity
	Common stock, $0.16 par value; 100,000,000 equity shares authorized, Issued and outstanding - 66,243,078 and 66,455,992 as of March 31, 2003 and December 31, 2003 respectively		8,602,909			8,626,207
	Additional paid-in capital		127,042,751			144,070,027
	Retained earnings		524,621,160			670,884,201
	Deferred stock compensation		(2,817,066	)		—
	Accumulated other comprehensive income		(31,444,835	)		(2,557,306	)

Total stockholders’ equity			626,004,919			821,023,129

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	704,308,967		$	969,242,304

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

Unaudited consolidated statements of income


		Three months ended December 31,				Nine months ended December 31,
		2002		2003		2002		2003

Revenues		$	200,014,166	$	275,886,678	$	537,775,974	$	759,911,290
Cost of revenues (including amortization of stock compensation expenses of $729,994 and $395,344 for the three months ended December 31, 2002 and 2003 and $2,189,981 and $1,653,156 for the nine months ended December 31, 2002 and 2003)			110,928,922		155,856,199		294,226,283		429,501,225

Gross profit			89,085,244		120,030,479		243,549,691		330,410,065

Operating Expenses:
	Selling and marketing expenses		14,952,660		20,827,551		40,734,946		56,243,853
	General and administrative expenses		15,422,086		20,586,131		40,383,534		58,747,502
	Amortization of stock compensation expense		513,954		278,343		1,541,863		1,163,910
	Amortization of intangible assets		924,249		2,647,778		1,744,274		6,719,351

Total operating expenses			31,812,949		44,339,803		84,404,617		122,874,616

Operating income			57,272,295		75,690,676		159,145,074		207,535,449
	Other income, net		6,907,692		8,842,133		12,538,464		24,385,839
Income before income taxes			64,179,987		84,532,809		171,683,538		231,921,288

	Provision for income taxes		11,926,841		13,987,449		29,885,621		38,391,629

Net income		$	52,253,146	$	70,545,360	$	141,797,917	$	193,529,659

Earnings per equity share
	Basic	$	0.80	$	1.07	$	2.16	$	2.95
	Diluted	$	0.78	$	1.05	$	2.13	$	2.91
Weighted equity shares used in computing earnings per equity share
	Basic		65,569,377		65,709,862		65,567,814		65,628,199
	Diluted		66,667,561		67,181,796		66,405,932		66,557,167

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		43,359		4,480		2,191,234
Cash dividends		—		—		—
Income tax benefit arising on exercise of stock options		—		—		804,695
Amortization of compensation related to stock option grants		—		—
Comprehensive income
Net income		—		—			$	141,797,917
Other comprehensive income
Translation adjustment		—		—		—		8,232,075

Comprehensive income							$	150,029,992

Balance as of December 31, 2002		66,229,489	$	8,601,481	$	126,075,877

Balance as of March 31, 2003		66,243,078	$	8,602,909	$	127,042,751

Common stock issued		212,914		23,298		14,560,748
Cash dividends		—		—		—
Income tax benefit arising on exercise of stock options		—		—		2,466,528
Amortization of compensation related to stock option grants		—		—		—
Comprehensive income
Net income		—		—		—	$	193,529,659
Other comprehensive income
Unrealized gain on investments, net of taxes		—		—		—		89,130
Translation adjustment								28,798,399

Comprehensive income							$	222,417,188

Balance as of December 31, 2003		66,455,992	$	8,626,207	$	144,070,027

[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		—			—			—			2,195,714
Cash dividends		—			—			(34,013,046	)		(34,013,046	)
Income tax benefit arising on exercise of stock options		—			—			—			804,695
Amortization of compensation related to stock option grants		—			3,731,844			—			3,731,844
Comprehensive income
Net income		—			—			141,797,917			141,797,917
Other comprehensive income
Translation adjustment		8,232,075			—			—			8,232,075
Comprehensive income

Balance as of December 31, 2002	$	(37,209,073	)	$	(3,888,756	)	$	471,549,036		$	565,128,565

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

Common stock issued		—			—			—			14,584,046
Cash dividends		—			—			(47,266,618	)		(47,266,618	)
Income tax benefit arising on exercise of stock options		—			—			—			2,466,528
Amortization of compensation related to stock option grants		—			2,817,066			—			2,817,066
Comprehensive income
Net income		—			—			193,529,659			193,529,659
Other comprehensive income
Unrealized gain on investments, net of taxes		89,130			—			—			89,130
Translation adjustment		28,798,399									28,798,399
Comprehensive income

Balance as of December 31, 2003	$	(2,557,306	)		—		$	670,884,201		$	821,023,129

See accompanying notes to the unaudited consolidated financial statements

Unaudited consolidated statements of cash flows


	Nine months ended December 31,
	2002			2003

OPERATING ACTIVITIES:
Net income	$	141,797,917		$	193,529,659
Adjustments to reconcile net income to net cash provided by operating activities
Loss on sale of property, plant and equipment		8,437			—
Depreciation		26,466,706			30,717,514
Amortization of intangible assets		1,744,274			6,719,351
Provision for investments		3,219,030			1,922,070
Deferred taxes		(2,228,025	)		853,268
Amortization of deferred stock compensation expense		3,731,844			2,817,066
Changes in assets and liabilities
Trade accounts receivable		(31,876,890	)		(38,665,222	)
Prepaid expenses and other current assets		(3,401,291	)		(154,127	)
Unbilled revenue		(11,183,030	)		135,986
Income taxes		(3,159,384	)		20,305,900
Accounts payable		126,497			(101,250	)
Client deposits		3,776,724			17,636,155
Unearned revenue		8,014,837			4,676,599
Other accrued liabilities		14,275,082			29,409,213

Net cash provided by operating activities		151,312,728			269,802,182

INVESTING ACTIVITIES:
Expenditure on property, plant and equipment		(26,796,968	)		(48,630,139	)
Expenditure on intangible asset		(4,078,363	)		—
Proceeds from sale of property, plant and equipment		53,222			56,378
Loans to employees		(4,973,581	)		3,714,929
Investments in liquid mutual fund units		—			(130,818,049	)
Cash advanced for contemplated business combination		—			(11,141,603	)

Net cash used in investing activities		(35,795,690	)		(186,818,484	)

FINANCING ACTIVITIES:
Proceeds from issuance of common stock		2,195,714			14,584,046
Proceeds from issuance of preferred stock by subsidiary		10,000,000			—
Payment of dividends		(34,013,046	)		(47,153,536	)

Net cash used in financing activities		(21,817,332	)		(32,569,490	)

Effect of exchange rate changes on cash		4,373,092			16,525,772
Net increase in cash and cash equivalents during the period		98,072,798			66,939,980
Cash and cash equivalents at the beginning of the period		210,485,940			354,362,918

Cash and cash equivalents at the end of the period	$	308,558,738		$	421,302,898

Supplementary information:
Cash paid towards taxes	$	33,014,206		$	17,204,767
Non cash transaction (see Note 2.5)	$	5,000,000			—

See accompanying notes to the unaudited consolidated financial statements

Notes to the unaudited consolidated financial statements

1 Company overview and significant accounting policies

1.1 Company overview

Infosys Technologies Limited (“Infosys’’ or “the Company’’) along with its majority owned and controlled subsidiaries, Progeon Limited (“Progeon’’) and Infosys Technologies (Shanghai) Co. Limited is a leading global information technology, or IT, services company. The Company provides end-to-end business solutions that leverage technology thus enabling its clients to enhance business performance. The Company provides solutions that span the entire software life cycle encompassing consulting, design, development, re-engineering, maintenance, systems integration and package evaluation and implementation. In addition, the Company offers software products for the banking industry and business process management services.

1.2 Basis of preparation of financial statements

The accompanying consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”). Inter-company balances and transactions are eliminated on consolidation. All amounts are stated in U.S. dollars, except as otherwise specified.

Interim information presented in the consolidated financial statements has been prepared by the management without audit and, in the opinion of management, includes all adjustments of a normal recurring nature that are necessary for the fair presentation of the financial position, results of operations and cash flows for the periods shown, and is in accordance with GAAP. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the company’s annual report on Form 20-F for the fiscal year ended March 31, 2003.

1.3 Use of estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities on the date of the financial statements, and the reported amounts of revenues and expenses during the period. Examples of estimates include accounting for contract costs expected to be incurred to complete software development, allowance for uncollectible accounts receivable, future obligations under employee benefit plans, provisions for post-sales customer support and the useful lives of property, plant and equipment and intangible assets. Actual results could differ from those estimates.

1.4 Revenue recognition

The company derives revenues primarily from software development and related services, licensing of software products and from business process management services. Arrangements with customers for software development and related services are either on a fixed price, fixed timeframe or on a time and material basis.

Revenue on time-and-material contracts is recognized as the related services are performed. Revenue from the end of the last billing to the balance sheet date is recognized as unbilled revenues. Revenue from fixed-price, fixed-time frame contracts is recognized as per the percentage-of-completion method. Guidance has been drawn from paragraph 95 of Statement of Position (SOP) 97-2 to account for revenue from fixed price arrangements for software development and related services in conformity with SOP 81-1. The input (efforts expended) method has 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. Maintenance revenue is recognized ratably over the term of the underlying maintenance agreement.

The company provides its clients with a fixed-period warranty for corrections of errors and telephone support on all its fixed-price, fixed-time frame contracts. Costs associated with such support services are accrued at the time related revenues are recorded and included in cost of revenues. 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.

In accordance with SOP 97-2, Software Revenue Recognition, license fee revenues are recognized when persuasive evidence of an arrangement exists, delivery has occurred, the license fee is fixed and determinable, and the collection of the fee is probable. Arrangements to deliver our software products generally have three elements: license, implementation and Annual Technical Services (“ATS’’). The company has applied the principles in SOP 97-2 to account for revenue from these multiple element arrangements. Vendor specific objective evidence of fair value (“VSOE”) has been established for ATS. VSOE is the price charged when the element is sold separately. When other services are provided in conjunction with the licensing arrangement, the revenue from such contracts are allocated to each component of the contract using the residual method, whereby revenue is deferred for the undelivered services and the residual amounts are recognized as revenue for delivered elements. In the absence of an established VSOE for implementation, the entire arrangement fee for license and implementation is recognised 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 recognised ratably over the period in which the services are rendered.

Revenues from business process management and other services are recognized on both, the time-and-material and fixed-price, fixed-time frame basis. Revenue on time-and-material contracts is recognized as the related services are rendered. Revenue from fixed-price, fixed-time frame contracts is recognized as per the proportional performance method using an output measure of performance.

When the company receives advances for services and products, such amounts are reported as client deposits until all conditions for revenue recognition are met.

1.5 Cash and cash equivalents

The company considers all highly liquid investments with a remaining maturity at the date of purchase/investment of three months or less to be cash equivalents. Cash and cash equivalents comprise cash, cash on deposit with banks, and deposits with corporations.

1.6 Property, plant and equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. 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:


Buildings		15 years
Furniture and fixtures		5 years
Computer equipment		2-5 years
Plant and equipment		5 years
Vehicles		5 years

The cost of software purchased for internal use is accounted under SOP 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. Deposits paid towards the acquisition of property, plant and equipment outstanding at each balance sheet date and the cost of property, plant and equipment not put to use before such date are disclosed under “Capital work-in-progress".

1.7 Intangible assets

Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, commencing from the date the asset is available to the company for its use. Management estimates the useful lives of acquired rights in software applications to range between one throug