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Brave new dawn for billion-dollar bellwether
Profits to bonuses, Infy tops them all

Bangalore, April 13: Infosys chairman and chief mentor N. R. Narayana Murthy could not hide his emotions on Tuesday as he took the stage to announce a historic milestone: the rise of the firm he founded 23 years ago with $250, into a billion-dollar bellwether.

The company’s quarterly profit for January-March rose 30 per cent to Rs 337 crore from Rs 259 crore in the same period last year. This came on the back of a 28 per cent increase in income from software development services to Rs 1,308 crore from Rs 1,019 crore.

Full-year profits jumped 53.45 per cent from Rs 957.93 crore in 2002-03 to Rs 1,470 crore in the financial year ended March 2004. Revenues went up 31.41 per cent, from Rs 3,622.69 crore in 2002-03 to Rs 4,760.89. The earnings per share for the year has shot up to Rs.187.38 from Rs.144.68, an increase of 30 per cent.

The company topped the rosy scorecard with a 3:1 bonus and a one-time special dividend of Rs 100 per share. This will cost the firm close to Rs 666 crore. The special dividend is in addition to a final one of Rs 15 per share. This is 300 per cent of the par-value for the previous financial year, worth Rs 990 crore.

The Infosys share hit a high of Rs 6,000 on the BSE, but closed at 5,490.20, a gain of Rs 350.35, or 6.82 per cent.

Announcing the performance, the bonus and the special dividend for investors, Murthy said: “I am very pleased with our achievement of this historical milestone. The new journey has just begun and I am sure Nandan and his team will make it a great success.”

CEO Nandan Nilekani was ecstatic too. “We have grown from $121 million in 1999 to a consolidated revenue of $1 billion in 2004. Today, we have the required size, brand, compelling value proposition and ambition to build the next-generation software services and consulting company.”

The forecast for the current year was bright as well. Revenues are expected to rise 24 per cent to Rs 5,994 crore-Rs 6,041 crore. For the quarter ending June, income is likely to be between Rs 1,363 crore and Rs 1,371 crore — marking an increase of 25 per cent.

Murthy said the company added 38 new clients during January-March 2004. The head-count went up by 9,758 in all of the previous financial year, taking its total strength to 25,634 at the end of March.

Infosys has approved a one-time bonus for all employees amounting to $23 million, or an average of $1,000, each. It closed the full year with an employee attrition rate of 10 per cent, well below that of most of its peers, which are in mid-double digits.

Celebrations over turning into a billion-dollar powerhouse were heightened by messages from the Prime Minister and the President, congratulating the company on having scaled the peak not touched by its peers.

“I am delighted to see Infosys becoming a billion-dollar company today. This has been achieved against intense global competition in the information and communication technology sector. I am confident that Infosys has a tremendous future with respect to national development,” President A. P. J. Abdul Kalam said.

Prime Minister Atal Bihari Vajpayee called it a “wonderful achievement”. “It signifies the coming of age of the Indian IT industry, which contributes so much today to India’s GDP, to our exports and to the image that we enjoy in the world. I am confident that Infosys and the Indian IT industry will grow from strength to strength.”

Board member S. Gopalakrishnan said substantial investments have been made in raising end-to-end capacity and expansion into new markets like Australia and China. “Our investment in Infosys Consulting Inc will enable us to leverage our global delivery model in consulting,” Gopalakrishnan said.

Chief financial officer T. V. Mohandas Pai said the company managed to protect margins despite the drop in revenue per customer and an appreciating rupee. “We continue to balance the cash required for growth with that of enhancing returns to shareholders. Our special onetime dividend payment is a reflection of our focus in this direction.”

Apurva Shah, an IT analyst at Prabhudas Lilladher, said given the conservative stand often taken by Infosys, the actual growth is expected to be around 40 per cent in dollar terms. Under the US GAAP, Infosys projected net revenues at $ 1381 million and $ 1392 million, a growth of 30-31 per cent, for 2004-05.

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