Performance of Infosys for the Second Quarter and Half Year ended September 30, 2001

10-October-2001

Nandan M. NilekaniManaging Director, President

and Chief Operating Officer

Safe Harbour

Certain statements in this release concerning our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, the success of the companies in which Infosys has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our Annual Report on Form 20-F for the fiscal year ended March 31, 2001 and quarterly report on Form 6-K for the quarter ended June 30, 2001. This filing is available at www.sec.gov. Infosys may, from time to time, make additional written and oral forward-looking statements, including statements contained in the company’s filings with the Securities and Exchange Commission and our reports to shareholders. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company.

Agenda

Financial Performance

Operational Performance

Client acquisition and significant projects undertaken

Human resources

Infrastructure

Outlook for the future

Financial Performance

The Quarter at a Glance (Indian GAAP)

46%

Total income (Rs.cr)

Exports (Rs.cr)

45% 47

%

Operating profit(Rs.cr)

446.10

Q2 01 Q2 02

650.13

441.26

638.27

Q2 01 Q2 02

176.42

258.92

Q2 02Q2 01

The Quarter at a Glance (Indian GAAP)

PBT(Rs.cr)

37%

*From ordinary activities

31%

PAT* (Rs.cr)

31%

Basic EPS* (Rs)

171.76

Q2 01 Q2 02

234.56

154.01

201.56

Q2 01 Q2 02

30.47

Q2 02Q2 01

23.28

Highlights (Indian GAAP)

(Rs.cr)FY2002 FY2002 FY2001 % growth over

Q2 Q1 Q2 Q1 02 Q2 01Income 650.13 612.52 446.10 6.1 45.7S/w development expenses 306.95 285.56 204.57 7.5 50.0Gross profit 343.18 326.96 241.52 5.0 42.1S,G&A expenses 84.26 86.44 65.10 (2.5) 29.4Operating profit 258.92 240.51 176.42 7.7 46.8Depreciation 39.01 35.48 24.24 10.0 61.0Operating profit after depreciation 219.91 205.03 152.18 7.3 44.5Other income 14.66 13.50 19.58 8.6 (25.1)PBT 234.56 218.53 171.76 7.3 36.6Provision for tax 33.00 28.50 17.75 15.8 85.9PAT from ordinary activities 201.56 190.03 154.01 6.1 30.9

Half Year at a Glance (Indian GAAP)

58%

Total income (Rs.cr)

Exports (Rs.cr)

56% 59

%

Operating profit(Rs.cr)

801.63

H1 01 H1 02

1262.65

792.32

1234.58

H1 01 H1 02

314.06

499.43

H1 02H1 01

Half Year at a Glance (Indian GAAP)

PBT(Rs.cr)

48%

*From ordinary activities

42%

PAT* (Rs.cr)

39%

Basic EPS* (Rs)

306.77

H1 01 H1 02

453.09

275.31

391.59

H1 01 H1 02

59.19

H1 02H1 01

42.45

Highlights (Indian GAAP)

(Rs.cr)FY2002 % FY2001 % Growth

H1 H1Income 1262.65 100.0 801.62 100.0 57.5S/w development expenses 592.51 46.9 375.42 46.8 57.8Gross profit 670.13 53.1 426.20 53.2 57.2S,G&A expenses 170.71 13.5 112.15 14.0 52.2Operating profit 499.43 39.6 314.06 39.2 59.0Depreciation 74.49 5.9 41.97 5.2 77.5Operating profit after depreciation 424.94 33.7 272.08 33.9 56.2Other income 28.15 2.23 34.69 4.3 (18.9)PBT 453.09 35.9 306.77 38.3 47.7Provision for tax 61.50 4.9 31.46 3.9 95.5PAT from ordinary activities 391.59 31.0 275.31 34.3 42.2Extraordinary items - - 5.49 0.7 -Net profit after ext. items 391.59 31.0 280.81 35.0 39.5

Highlights

Q1 FY 02 Q2 FY 02H1 FY 02 Indian GAAP

Y-O-Y Growth Income 72.3%45.7% 57.5% PAT from ord. activities 56.7%30.9% 42.2%

US GAAP Y-O-Y Growth

Revenues 62.6% 40.1% 50.3% Net income 46.3%26.0% 35.1%

New clients 2628 54 Repeat business 95.2%90.0% 92.5% Headcount

Gross addition 315833 1,148 Net addition 116607 723 Period end headcount 9,94710,554 10,554

(Rs.cr)Sep 30, 01%Sep 30, 00 %

LIABILITIES Shareholders’ funds* 1,742.491001,094.04 100Total liabilities 1,742.491001,094.04 100

ASSETS Fixed assets 713.6641365.19 33Investments 44.443 45.734Deferred tax assets 18.641 --Current assets Cash & equivalents 714.8541535.90 49 Accounts receivables 343.6020243.06 22 Other current assets 336.1019176.94 16Less: Current liabilities (428.80)(25)(272.78) (25)Net current assets 965.7555683.12 62Total assets 1,742.491001,094.04 100

Balance Sheet Summary

FY2002 FY2002FY2001FY2002FY2001 LTM LTMQ2Q1 Q2H1 H1Sep01Sep 00

North America 71.1%72.2% 75.0%71.6% 74.7%72.1%76.1%

Europe 18.9%19.8%18.1% 19.4%17.7%19.5% 16.3%

India 1.8%2.6%1.1% 2.2%1.2%1.9% 1.3%

Rest of the world 8.1%5.3%5.8% 6.8%6.4%6.5% 6.3%

Total 100.0% 100.0%100.0% 100.0%100.0%100.0% 100.0%

LTM – Last Twelve Months

Region wise Revenue (%)

Operational Performance

Utilization Rates

69.5 73.268.8 72.7

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

Q1 FY 2002 Q2 FY 2002

Q1 FY 2002 69.5 73.2 Q2 FY 2002 68.8 72.7

Including training Excluding training

Revenues by Project type

FY2002 FY2002FY2001FY2002FY 2001 LTMLTMQ2 Q1Q2 H1H1 Sep 01Sep 00

Fixed Price 29.9%27.0%27.6% 28.5%27.1%28.7% 29.3%

Time & Materials 70.1%73.0% 72.4% 71.5%72.9%71.3% 70.7%

Total 100.0% 100.0%100.0% 100.0%100.0% 100.0%100.0%

Onsite-Offshore Revenue split

FY2002 FY2002FY2001FY2002FY2001 LTMLTMQ2 Q1Q2 H1H1Sep 01 Sep 00

Onsite 50.3%50.5%54.6% 50.4%53.7%50.1% 52.2%

Offshore 49.7%49.5% 45.4% 49.6% 46.3%49.9%47.8%

Total 100.0%100.0%100.0% 100.0%100.0% 100.0%100.0%

Customer Concentration

FY2002 FY2002FY2001FY2002FY2001Q2 Q1Q2 H1H1

Top client contribution to revenues 6.4%6.7%7.7% 6.6%7.4%

Top 5 client contribution to revenues 25.3%27.4% 24.9% 26.1% 24.4%

Top 10 client contribution to revenues 39.7% 43.7%38.0% 41.2% 36.9%

Million dollar clients* 8484 5784 57

Five million dollar clients* 2221 1222 12

Ten million dollar clients* 1411 614 6

*LTM

Diversifying Customer Risk

293

2826

277

0

30

60

90

120150

180

210

240

270

Q1 FY 2002 Q2 FY 2002New Customers Active Clients

Year AR % of DSO(mn$) Operating Revenue

H1 FY 02 71.81 13.6 50

H1 FY 01 52.82 15.2 55

FY 2001 64.94 15.9 58

Accounts Receivables

Other Highlights

Software revenues in US dollar terms grew by 5.2% during the quarter over the quarter ended June 30, 2001. Revenue growth comprised volume growth of 2.6% and price growth of 2.6%, as compared to the quarter ended June 30, 2001

Interim dividend of Rs. 7.50 per share (150% on an equity share of par value of Rs. 5 per share) declared by the Board

Client Acquisition and Significant Projects Undertaken

Client Acquisition

Client acquisitions during the quarter was 28 as compared to 26 in Q1 of FY 2002

Strengthened presence in the financial services industry through strategic services like

Post merger integration for UFJ Holdings, The Sanwa Bank, The Tokai Bank and the Toyo Trust and Banking Company

Straight through processing – a mission critical application development project for a leading financial institution

Security consulting for Bank Muscat, one of the largest banks in Oman

Other prestigious clients added in the financial services industry include DGZ DekaBank, the largest investment bank in Germany ING Group Royal Bank of Canada Financial Group, the largest and oldest financial institution

in Canada

Won its first consulting engagement in the government sector with an assignment for UK Government’s National Health Service

Projects Undertaken

Currently working with Lear Corporation and Visteon, two of the largest automotive suppliers in the world

Started work for the Japan-based JGC Corporation, a fully integrated engineering procurement construction company

Won engagements from a leading apparel company and a large office supplies superstore in the US

Other prestigious clients in the retail sector include Trader Joe’s, a US-based speciality grocer McCain Foods, a diversified foods major based in Canada Pier 1 Imports, one of the leading retailer of gifts and home furnishings located

in the US

Vivendi Water Systems, the world’s largest water company and Dentsu MarchFirst, the IT subsidiary of Dentsu Inc., a leading advertisement major in Japan are other significant clients added during the quarter

Banking Products

Successfully deployed FinacleTM, Infosys’ core banking solution, for Kenya Commercial Bank, the largest bank in East Africa with over 100 branches in Kenya and a presence in Tanzania

Successfully completed the implementation of BankAway corporate banking and WAP banking at National Bank of Abu Dhabi, the leading bank in the Middle East

Successfully implemented BankAway (retail banking) for IDBI Banking

Human Resources

Human Resources

Total employees strength at 10,554 as on September 30, 2001, up from 9,831 as on March 31, 2001 and 7,925 as on September 30, 2000

Net addition of 607 employees during the quarter as compared to 116 during the quarter ended June 30, 2001

92 lateral employees joined during the quarter 9,297 software professionals as on September 30, 2001, up from

8,656 as on March 31, 2001 and 6,941 as on September 30, 2000 Of these software professionals, 690 are undergoing training and

146 belong to the Banking Products group Deferred the joining schedules of campus recruits to align them

with our business requirements

Infrastructure

Infrastructure

Capital expenditure of Rs. 129.77 cr was incurred during the quarter

As of September 30, 2001, the company had 19,98,800 sq. ft of space capable of accommodating 11,100 professionals and 15,61,000 sq. ft under construction including the Infosys Leadership Institute

Outlook for the Future

Indian GAAP

Quarter ending December 31, 2001 Income from software development services and products is expected

to be in the range of Rs. 640 cr to Rs. 656 cr Earnings per share is expected to be in the range of Rs. 29.00 to

Rs. 31.00

Fiscal year ending March 31, 2002 Income from software development services and products is expected

to be in the range of Rs. 2,540 cr to Rs. 2,590 cr Earnings per share is expected to be in the range of Rs. 120.00 to

Rs. 123.00

Summary

Summary

Reported a comfortable quarter amidst turbulent conditions

Pricing pressure continues

Challenging business environment

Phased-out joining schedules of campus recruits to align with business requirements

Effective cost management

Increase breadth and depth of services

Prepared to seize business opportunities

Thank You