Infosys Limited · NSE:INFY
Infosys — Investor Presentation (August 2002)
23 slides from Infosys's investor presentation, Aug 27, 2002
Slide 1: Living up to the promise
Analyst Meet August 27, 2002 “Living up to the promise” Living up to the promise T.V. Mohandas Pai © 2002 Infosys Technologies Limited
Slide 2: Agenda
Analyst Meet August 27, 2002 Agenda ■ Promises made, promises kept ■ Predictability, sustainability, de-risking ■ Corporate Governance ■ Transparency and reporting ■ Acquisitions ■ Current issues – Infosys’ response and position ■ Crisis of confidence in corporations ■ Stock option accounting © 2002
Slide 3: In a challenging business environment…
Analyst Meet August 27, 2002 In a challenging business environment… ■ General reduction in technology spending ■ ROI based IT investments by customers ■ Greater outsourcing of technology and offshore becoming mainstream ■ Challenging pricing environment ■ Rationalization of vendors and customers pre
Slide 4: Promise Vs Performance
Analyst Meet August 27, 2002 “Living up to the promise” Promise Vs Performance © 2002 Infosys Technologies Limited
Slide 5: Guidance vs Performance - Quarterly
Analyst Meet August 27, 2002 Guidance vs Performance - Quarterly © 2002 Infosys Technologies Limited
Slide 6: Guidance vs Performance - Annual
Analyst Meet August 27, 2002 Guidance vs Performance - Annual © 2002 Infosys Technologies Limited
Slide 7: How did we do it?
Analyst Meet August 27, 2002 How did we do it? ■ Revenue and cost projections ■ Cost control ■ Re-calibrating Capex ■ Maintaining liquidity © 2002 Infosys Technologies Limited
Slide 8: Revenue and cost projections
Analyst Meet August 27, 2002 Revenue and cost projections ■ Relationship model gives us a good insight into our Clients’ plans / thinking ■ Over 85% repeat business ■ Implemented a state of the art pipeline visibility system – “InPipe” ■ Senior management is in close touch with key decision makers a
Slide 9: Cost management
Analyst Meet August 27, 2002 Cost management ■ Lowered fixed costs ■ Salary increase linked to attainment of company performance targets (70% of total increase linked to company performance last fiscal) ■ Percentage variable component paid during last fiscal Q1 - 100% Q2 - 68% Q3 - 0% Q4 - 0% ■ Redu
Slide 10: Cost management (Continued)
Analyst Meet August 27, 2002 Cost management (Continued) ■ Tight control on non-revenue related expenses ■ Reduced recruitment for support (ex-sales & marketing) departments during the year ■ Implemented GDM for non-revenue generating activities in high-cost economies ■ Others cost control initiativ
Slide 11: Results - the final cost structure
Analyst Meet August 27, 2002 Results - the final cost structure © 2002 Infosys Technologies Limited
Slide 12: ...recalibrated Capex spending…
Analyst Meet August 27, 2002 ...recalibrated Capex spending… 160 140 120 100 80 60 40 20 0 Q101 Q2 01 Q3 01 Q4 01 Q102 Q2 02 Q3 02 Q4 02 Capex (Rs.cr) 85.84 114.01 125.16 138.34 101.73 129.76 53.05 38.2 © 2002 Infosys Technologies Limited
Slide 13: …maintained liquidity to de-risk an uncertain environment…
Analyst Meet August 27, 2002 …maintained liquidity to de-risk an uncertain environment… 50.0% 45.0% 40.0% 35.0% 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% Q1 02 Q2 02 Q3 02 Q4 02 Cash & equivalents / revenues (%) 28.5% 30.3% 34.9% 39.4% Cash & equivalents / total assets (%) 39.5% 41.0% 44.4% 49.4% © 20
Slide 14: Corporate governance
Analyst Meet August 27, 2002 “Living up to the promise” Corporate governance © 2002 Infosys Technologies Limited
Slide 15: Audit committee
Analyst Meet August 27, 2002 Audit committee ■ Entirely comprised of independent directors ■ Have powers to recommend appointment/termination of auditors to the shareholders ■ Discuss various accounting issues directly with the auditors ■ Internal and external auditors have independent access to the
Slide 16: Executive compensation
Analyst Meet August 27, 2002 Executive compensation ■ Promoter directors are excluded from the stock option plans ■ Statute prohibits providing loans to directors ■ One of the lowest compensation for the senior management in the industry ■ Leadership by example © 2002 Infosys Technologies Limited
Slide 17: Operations and disclosure policies
Analyst Meet August 27, 2002 Operations and disclosure policies ■ Operate through branches worldwide – hence only one legal entity / financials ■ Subsidiaries created only for business and strategic reasons ■ Where the subsidiary requires a different strategy, culture, skill sets, cost structure, et
Slide 18: Acquisitions Vs. Alliances
Analyst Meet August 27, 2002 Acquisitions Vs. Alliances ■ Infosys has been searching for a strategic acquisition for 3 years ■ Have not made an acquisition to date because of valuation issues, lack of acquired management commitment, lack of revenue visibility, financial weakness / discipline / viabi
Slide 19: Current issues
Analyst Meet August 27, 2002 “Living up to the promise” Current issues © 2002 Infosys Technologies Limited
Slide 20: Crisis of confidence in the market
Analyst Meet August 27, 2002 Crisis of confidence in the market ■ Corporations re-stating their numbers ■ Accounting issues in large corporations ■ Disproportionate executive compensation ■ Questionable off-balance sheet items ■ Lack of basic corporate governance Infosys’ long history of principled
Slide 21: Stock option accounting
Analyst Meet August 27, 2002 Stock option accounting Views so far : ■ Unlike US companies, Indian corporates do not get tax benefits on employees exercising their options ■ Stock option accounting is a non-cash charge which does not alter the overall cash value of a company ■ Black-Scholes model bas
Slide 22: Sarbanes-Oxley Act
Analyst Meet August 27, 2002 Sarbanes-Oxley Act The act requires all CEOs / CFOs to personally swear to the veracity of their financial statements ■ Infosys fully complies with the act © 2002 Infosys Technologies Limited
Slide 23: Thank You
Analyst Meet August 27, 2002 “Living up to the promise” Thank You © 2002 Infosys Technologies Limited