Dividend Policy of Infosys Limited Case PDF

!
Dividend policy of Infosys Limited – To pay or not to pay, that is the question
Case%Study%%
Reference%no.%114408141%
This!case!was!written!by!Prof!Sanjay!Dhamija!of!International!Management!Institute,!New!Delhi.!
Purchased for use on the MSING023: Financial Management, at University College, London (UCL).
It!is!intended!to!be!used!as!a!basis!for!class!discussion!rather!that!to!illustrate!either!effective!or!
Usage permitted only within these parameters otherwise contact info@thecasecentre.org

ineffective!handling!of!a!management!situation.!The!case!was!compiled!from!published!sources.!
Taught by Leila Pinto Campillo, from 21-Sep-2017 to 21-Mar-2018. Order ref F304703.
©!Sanjay!Dhamija,!International!Management!Institute!
No!part!of!this!publication!may!be!copied!stored,!transmitted,!reproduced!or!distributed!in!any!
form!or!medium!whatsoever!without!the!permission!of!the!copyright!owner.!
Educational material supplied by The Case Centre
Copyright encoded A76HM-JUJ9K-PJMN9I
!
Order reference F304703
Distributed by The Case Centre North America Rest of the world

www.thecasecentre.org t +1 781 239 5884 t +44 (0)1234 750903
case centre All rights reserved f +1 781 239 5885
e info.usa@thecasecentre.org
f +44 (0)1234 751125
e info@thecasecentre.org
114-081-1
Dividend policy of Infosys Limited – To pay or not to pay, that is the question
“The task of rebuilding a desirable Infosys will take at least 36 months, even with a high
quality team. In the process there will be some tough decisions resulting in pain as we move
forward”1 said N R Narayana Murthy in the Annual General Meeting (AGM) of the
shareholders of the company after his re-induction in the company as the Executive Chairman
of the Board was ratified.
The life completed a full circle for 66 years old Murthy, who stepped down as the CEO of the
company 11 years ago. He was requested by the Board of Directors of the company to again
take and executive position as was appointed as the Executive Chairman of the Board with
effect from June 1 2013, after the company posted disappointing Q4 2012 results. The task of
putting the company back on track would neither be easy nor quick. Hard decisions would

have to be taken and that too with a sense of urgency if the company was to be brought back
to its old glory. There was also the pressure of high expectations of the shareholders of the
company that Murthy promoted more than 30 years back. "We had become victims in the last
two years. I have said that before as well - no Murthy, no Infosys. We are safe now. We are
breathing." said one of the shareholders in the AGM.2 The IT industry body NASSCOM also
welcomed the re-appointment of Murthy, saying his insights into the company and the
technology industry would be valuable.3

On a positive side, the company had no debt on its Balance Sheet for the financial year 2013
(FY2013) and had cash and cash equivalents and current investments in excess of Rs. 237
billion, 51 percent of its balance sheet and 62 percent of its net-worth. The large cash balance
however had also been one of common grievance amongst the shareholders. “The company
has Rs. 240 billion in cash and cash equivalents. If it is not being deployed for acquisition,
then payout higher dividends, issue bonus shares or at least announce a buyback,” said
another shareholder at the AGM.4 The company had a policy of distributing 30 percent of its
profits as dividends. High retention with inability to use the surplus cash resulted in large
cash balance in the balance sheet prompting the shareholders to demand higher dividends.
Such voices will grow louder if the cash remains on the balance sheet any longer. The
dividend policy which was last revised in 2008 surely needed a relook.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1
!http://businesstoday.intoday.in/story/narayana4murthy4returns4to4infosys4rescue/1/195862.html!retrieved!
on!15th!June!2013!
2
!ibid!
3
!http://articles.timesofindia.indiatimes.com/2013406401/software4services/39674049_1_nasscom4today4
narayana4murthy4infosys!retrieved!on!15th!June!2013!
4
!http://businessworld.in/en/storypage/4/bw/grievances4galore4at4infosys4
th
agm/r943268.0/page/0#sthash.Vcd9gHsg.dpuf!retrieved!on!15 !June!2013!
2
114-081-1
About the Company5
Infosys Limited with revenues of Rs. 403.52 billion and net profit of Rs. 94.21 billion for the
FY2013 was the second largest software exporter of India. It was listed on the National Stock
Exchange (NSE) and the Stock Exchange Mumbai (BSE) in India as well as on the New
York Stock Exchange (NYSE) in the US. With market capitalization of Rs. 1.40 trillion it
ranked sixth in the market index of the BSE with 7.25 percent weight. The company had over
155,000 employees and 798 active clients across the global which were served through 87
development centers out of which 55 were overseas. In addition it had 67 sales offices
outside India. The share of revenue earned by the company from the Indian operations in
FY13 was only 2 percent; rest of the revenue came from North America (62 percent), Europe
(23 percent) and Rest of the world (13 percent). 6

The company along its subsidiary companies was engaged in IT consulting, design,
development, software re-engineering, maintenance, systems integration, package evaluation
and implementation and infrastructure management services. The company also offered
software products for the banking industry and business process management services.
During the FY2013 the company earned 63 percent of its revenue from business IT Services,
31 percent from consulting, package implementation and other related services and the
balance 6 percent from products, platforms and solutions (PPS). The company served clients
across different industries with Banking, Financial Services and Insurance (34 percent) as the
largest contributor followed by Retail and Life Sciences (24 percent), Manufacturing (22
percent) and Energy, Utilities, Communications and Services (20 percent).7
Infosys was established by Murthy and six engineers with a modest capital of Rs.10,000 in
1981 and signed up its first client Data Basics Corporation, New York. Twelve years later the
company went public with its maiden public issue of equity shares in 1993. With the IT
boom, it established itself as the leading software exporter of India and crossed revenue of
US$ 1 billion in 2004. Total revenue reached US$ 3 billion in 2007 and US$ 4 billion in
2008. By 2012 Infosys crossed US$ 7 billion in revenues.
After successfully leading the company on this growth journey, Murthy stepped down as the
CEO of Infosys in 2002 handing over the reins to Nandan M Nilekani, one of the co-
promoters of the company. He remained in the executive position in the company and was
appointed as the Chairman and Chief Mentor at the same time. Murthy retired from the
company in 2006 on attaining the age of 60; however he continued as the Chairman and
Chief Mentor of the company in a non-executive position. In 2011, Murthy handed over the
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
5
!http://www.infosys.com/about/Pages/history.aspx!retrieved!on!10!June!2013!
6
!http://www.infosys.com/investors/reports4filings/quarterly4results/201242013/q4/Documents/fact4sheet.pdf!
retrieved!on!12!June!2013!
7
!Ibid!
3
114-081-1
chairmanship of Infosys as well to K V Kamath, former CEO of ICICI Bank, India’s largest
private bank, only to be recalled two years later in a surprise move.
On June 1, 2013 Infosys announced the appointment of Murthy on the board as Executive
Chairman. Kamath made way for Murthy and was repositioned as the lead director. “The
Board has taken this step keeping in mind the challenges that the technology industry and the
Company faces and in the interest of all stakeholders, particularly shareholders large and
small, who have asked for strengthening of the executive leadership during this challenging
time. Murthy’s entrepreneurial and leadership record and the long experience he has had as a
technology pioneer makes him eminently qualified to lead the company and provide strategic
direction at this point in time” said Kamath.8
Capital History

The company made its maiden initial public offer (IPO) in 1993 at an issue price of Rs. 95
per share. The company later issued 550,000 equity shares on private placement basis to
institutional and corporate investors in 1994 at Rs. 450 each. It got listed on the NASDAQ
through issue of 2,070,000 American Depository Shares (equivalent to 1,035,000 equity
shares of par value of Rs. 10 each) at US $34 per ADS in 1999. Later the company made
secondary American Depository Receipts issue in 2003, 2005 and 2006, to raise US $294
million, US $1.07 billion and US $ 1.605 billion respectively. The company moved the
listing of its ADS in 2012 from the NASDAQ to the NYSE.
The shares of the company were widely held and traded. As on 31 March 2013, the company
had over 400,000 shareholders. The promoter holding was just 16 percent and the majority of
the shares (58 percent) were held by the institutional investors, both domestic and foreign
(Annexure-I). The company in the past has rewarded its employees through Employees Stock
Option Plans (ESOP 1998 and ESOP 1999). The expansion of equity base through overseas
listing and ESOP lead to reduction in the promoters’ holding in the company.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8
!http://www.infosys.com/newsroom/press4releases/Pages/NRN4executive4chairman.aspx!retrieved!on!10!
June!2013!
4
114-081-1
Financials
Infosys reported increasing revenue and profit year after year and became the leading IT
Company in India. The revenue grew from Rs.37.46 billion in the FY2003 to Rs.427.17
billion in FY2013 registering a CAGR of 28 percent. In the same period the PAT
increased from Rs.9.55 billion to Rs.94.29 billion with an equally impressive CAGR of 26
percent.
For the FY2013, Infosys reported total revenue of Rs.427.17 billion and PAT of Rs.94.29
billion compared to Rs.356.38 billion and Rs.83.32 billion respectively in the previous year.
The operating revenue grew by 19.6 percent whereas the PAT growth was a moderate 13.2
percent. The Balance Sheet size of the company as on 31st March 2013 was Rs.463.31 billion.
The company remained a zero debt company and shareholders’ funds constituted more than
82 percent of the balance sheet. Cash and cash equivalents accounted for more than 47

percent of the total assets with an additional 4 percent in short term investments. The
company generated Rs.73.73 billion from its operating activities in FY2013. It used Rs.30.2
billion in investing activities and Rs. 32.1 billion in financing activities and still added
Rs.12.41 billion to the cash balance. In the last there years the addition to cash and cash
equivalents amounted to Rs.97.21 billion. The summarized Profit and Loss Statement,
Balance Sheet and Cash Flow Statement of Infosys for the last three financial years are given
in Annexure II, III and IV respectively.

Infosys declared its Q4 2012 results and audited results for the FY2013 on 12 April 2013 and
missed the revenue as well as the earnings guidance (see Table 1 below). Since FY2002 (last
48 quarters) this was the first time that Infosys missed both its revenue and earnings guidance
and that too with a wide margin. In fact there were only 4 earlier instances where the
company missed its earnings guidance or revenue guidance.
Table 1: Underperformance against the guidance since FY20029
Quarter Revenue Earnings

Q4 2003 0.1%
Q4 2006 0.2%
Q4 2007 0.6%
Q1 2008 2.8%
Q4 2012 5.8% 3.8%
The market reaction was severe and the stock fell to Rs. 2,295 compared to Rs. 2,918 the
previous day, a fall of over 21 percent. The market reaction was not only due to flat revenue
and falling margins but also due to muted and wide guidance for the next year.10 The
guidance for revenue growth for the coming year was pegged at 6-10 percent which was
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9
!http://www.infosys.com/investors/financials/Pages/guidance4vs4actuals.aspx!!retrieved!on!20!June!2013!
10
!http://profit.ndtv.com/news/cheat4sheet/article4infosys4q44104reasons4why4shares4fell4224320831!retrieved!
on!22!June!2013!
5
114-081-1
lower than the expected industry growth. In view of the volatile and uncertain environment
the company felt that it was better not to give an EPS guidance.11 This was perceived by the
market as a sign of the lack of predictability of profits going forward. This probably
contributed to the recall of Murthy to Infosys.
Dividend Policy
The company regularly rewarded its shareholders in the past by a mix of cash dividend, stock
dividend (bonus shares) and stock split. The company followed a dividend policy of
distributing up to 30 percent of PAT as dividend. The dividend policy was last revised in the
year 2008 when it was decided to increase the payout from 20 percent of PAT to 30 percent.
The company paid dividend twice a year – interim dividend in October with the Q2 results
and final dividend in April with the annual results. The dividend rate increased in line with
profit in accordance with the dividend payout policy. The company had an uninterrupted

track record of dividend payment since 1997. In addition to the regular dividend (interim and
final) the company also paid `special dividends’ from time to time on special occasions. The
company paid a special dividend at the rate of 200 percent in 2012 on the occasion of its back
office operations business completing 10 years. A special dividend at the rate of 300 percent
in 2010 on its 30th anniversary and 400 percent special dividend on crossing US$ 1 billion in
profit in 2008 were the earlier such payouts. (Annexure V)

In addition to the cash dividend, the company in the past rewarded its shareholders by issuing
bonus shares12 by capitalization of reserves. The company made five bonus issues since
going public in 1993. Over 97 percent of the share capital of the company was made up of
bonus shares. The last bonus issue was made in the ratio of 1:1 in 2006. In 1999, the
company also split13 each equity share of the face value of Rs.10 each into 2 equity shares of
the face value of Rs.5 each. As the shares started trading on ex-bonus or post split, the share
price came down proportionately at the same time increasing the number of shares available
for trading. The cum-bonus share price of Infosys on 12 July 2006 was Rs. 3,386. After the
bonus issue of 1:1, the ex-bonus price came down to Rs. 1,680 on the next day. Likewise the
previous bonus issue in the ratio of 3:1 resulted in the market price coming down from Rs.
5,523 (cum-bonus) to Rs. 1,409 (ex-bonus) on 1 July 2004. As a result of these bonus issues
and stock split, investor who was allotted one share in the IPO in 1993, held 128 equity
shares as on 30 June 2013. The details of bonus issues and split are given in Annexure-VI.
The other firms in the industry followed similar dividend policy. The dividend payout by
Wipro Limited (Wipro) and Tata Consultancy Services Limited (TCS), two of the closet
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
11
!http://www.infosys.com/investors/reports4filings/quarterly4results/20124
2013/q4/Documents/transcripts/evening4call.pdf!!retrieved!on!22!June!2013!
12
!Bonus!shares!also!called!stock!dividend!are!issued!to!the!existing!shareholders!in!proportion!of!existing!
holding!by!capitalization!of!reserves.!
13
!Stock!split!involves!dividing!the!existing!shares!of!higher!face!value!into!multiple!shares!with!proportionally!
lower!face!value,!without!altering!the!paid!up!share!capital.!
6
114-081-1
competitors of Infosys, for the year FY2013 was in the range of 30 percent to 35 percent.
TCS made its maiden IPO in 2004 with a face value of Rs.1each and since then made two
bonus issues in the years 2006 and 2009 in the ratio of 1:1 each. Wipro split its shares to the
face value of Rs.2 each. In the last ten years Wipro made 3 bonus issues in the ratio of 2:1
(2004), 1:1 (2005) and 2:3 (2010). Selective financial indicators of Infosys compared to
Wipro and TCS are given in Annexure-VII.
The market price of Infosys since its maiden issue increased many fold. The shareholders
reaped the benefits due to consequent increase in the market value of their holdings. The
unadjusted monthly closing price of the equity shares of the company on the BSE is given in
Annexure VIII. Each share allotted in the maiden IPO at the issue price of Rs.95, adjusted for
bonuses and split, multiplied to 128 shares by 30 June 2013. At the market price close to Rs.
2,500 per share, it translated into Rs. 320,000 in market value. The company surely had
created value for its shareholders by generating substantial capital appreciation besides

paying regular dividends.
Infosys, a zero-debt company, had large cash and cash equivalents in its Balance Sheet. With
a dividend payout of 30 percent, it kept on adding to the cash pile year after year. Analysts
and investors in the past demanded the company to give back the surplus cash by increasing
the payout or by using the cash for buy-back of shares. "We see a lot of merit in the company
pursuing a structured buyback program as opposed to letting the excess cash sit idle on the
balance sheet, awaiting that elusive large, 'palatable to the company', acquisition,"14
There were other voices suggesting that Infosys with such high cash to market capitalization
ratio and with low promoters’ shareholding was a ripe case for potential acquisition. “The
larger proportion of cash aggregating over Rs 220 billion reduces the enterprise value of
companies such as Infosys, which do not have any debt burden, thus making them attractive
takeover targets.”15
Infosys defended such questions by saying that the cash was needed for funding large
acquisitions and therefore it was strategic in nature. "It is a good problem to have” was the
reply given by the then CFO to a question by a shareholder at the Annual General Meeting in
2012.16 Likewise when asked by an analyst as to whether the company intend to return the
surplus cash to the shareholders while discussing the financial results for the year 2013, the
CFO said “ We are in the execution phase of our PPS (Products, Platforms and Solutions)
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
14
!http://articles.economictimes.indiatimes.com/2012406412/news/32270156_1_buyback4program4
infosys4shares4crore4cash4pile!retrieved!on!22!June!2013!
15
!http://articles.economictimes.indiatimes.com/2013404416/news/38586603_1_infosys4stock4cash4
pile4market4cap!retrieved!on!22!June!2013!
16
!http://articles.economictimes.indiatimes.com/2012406412/news/32270156_1_buyback4program4
infosys4shares4crore4cash4pile!retrieved!on!22!June!2013!
7
114-081-1
strategy and our aspiration is to have one third of our revenues coming from PPS. We
understand that the one-third target would not be met only through organic means because
that would take decades to meet because other businesses also are growing. We have to look
at acquisitions in that space in a big way. The space is where the multiples are very high.
During the execution phase of the strategy, the cash is more strategic to use today that it has
ever been before.”17
Infosys did not have a great track record of large acquisitions whereas other competitors have
overtaken it through acquisition route. For example Cognizant Limited which was founded in
the year 1994 (13 years later than Infosys) overtook it in revenue in Q1 2012. “In short,
Cognizant was firing on all cylinders – on the basic robustness of the market, increasingly
bold acquisitions, and ability to grab market share. Infosys was relying on just one – the
robustness of the market. And when that failed, it simply let Cognizant run past it.”18 The

company did complete two acquisitions in the last two years. Infosys BPO acquired 100
percent voting rights in Portland Group Pty Limited, Sydney Australia in January 2012 for a
cash consideration of Rs. 2 billion. It also acquired 100 percent shareholding of Lodestone
Holding AG, Zurich in October 2012 for an upfront cash consideration of Rs.11.87 billion
and deferred consideration of Rs. 6.08 million.19 These acquisitions used only a small
fraction of the cash balance of over Rs. 237 billion in its balance sheet.
Way forward
The road ahead was not going to be easy as Murthy said to the shareholders in the AGM and
tough decisions would have to be taken. Having surplus cash may not prove to be `a good
problem’ to have as the pressure from the shareholders and analysts will keep on mounting.
Market was looking at Murthy with expectations and waiting for the concrete steps being
taken within the time frame indicated by him. If no major acquisition materialized in near
future, Infosys will be forced to return the excess cash to the shareholders.
For many years the analysts and investors had demanded return of excess cash by way of
dividend or buy back of shares. Either of the alternatives will result in getting rid of the
excess cash however with different effects on the company’s financials. Annexure IX shows
the actual 2013 results and restated financials assuming that the company decided to return
the excess cash either by way of a one-time `special dividend’ or through buy-back of shares.
These restatements assumed that the company decided to maintain cash equal to 2 months of
revenue and return the balance to the shareholders. With a zero-debt status, the future
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
17
!http://www.infosys.com/investors/reports4filings/quarterly4results/201244
2013/q4/Documents/transcripts/evening4call.pdf!retrieved!on!21!June!2013!
18
! http://forbesindia.com/blog/technology/how4cognizant4overtook4infosys/! retrieved! on! 8! July!
2013!
19
!Annual!Reports!of!Infosys!Limited!for!the!years!2011412!and!2012413!
8
114-081-1
acquisition, if any, could easily be financed by a mix of future cash generation and future
borrowings.
Given the challenges that Infosys was facing, it was unlikely that dividend policy will be on
the top priority for Murthy in the short run. However once the euphoria surrounding Murthy’s
re-induction in Infosys die down, the demands for returning the excess cash will get louder.
Relooking the dividend policy could be delayed but will have to be on Murthy’s agenda very
soon.

9
114-081-1
Annexure I: Shareholding Pattern as on 31 March 201320
Category of Shareholders No of Number of %

Shareholders Shares Shareholding
Promoters 19 92,085,078 16.04
Institutions
Domestic 573 100,592,530 17.51
Foreign 800 232,653,231 40.52
Non Institutions 414,451 78,022,104 13.59

Custodians on behalf of ADR 1 70,883,217 12.34
holders
Total 415,844 574,236,166 100.00

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
20
!Source:!Case!writer!based!upon!the!information!in!Annual!Report!of!Infosys!Limited!for!2012413!
10
114-081-1
Annexure II: Profit and Loss Statement for the financial year ended 31st March21
(Rs. Million)
DESCRIPTION 2013 2012 2011

INCOME :
Operating Income 403,520 337,340 275,010
Other Income 23,650 19,040 12,110
Total Income 427,170 356,380 287,120
EXPENDITURE :
Employee Cost 225,650 183,400 148,560
Cost of sub contractors 14,590 7,770 6,030
Travel Expenses 15,090 11,220 9,540
Software Packages 7,770 6,540 4,890
Communication 3,610 2,740 2,370

Professional Charges 5,060 4,830 3,440
Other Expenses 16,420 13,610 10,500
Depreciation 10,990 9,280 8,540
Total Expenses 299,180 239,390 193,870
Profit Before Tax 127,990 116,990 93,250
Provision for Tax 33,700 33,670 24,900

Profit After Tax 94,290 83,320 68,350

Appropriations
Equity Dividend 24,120 26,990 34,450
Tax on Dividend 4,030 4,380 5,680
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
21
!Source!:!Case!writer!based!upon!Annual!Reports!of!Infosys!for!the!year!2011412!and!2012413!
11
114-081-1
Annexure III: Balance Sheet of Infosys Limited as on 31st March22
DESCRIPTION 2013 2012 2011

EQUITY AND LIABILITIES
Share Capital 2,860 2,860 2,860
Total Reserves 377,080 310,460 256,900
Shareholder's Funds 379,940 313,320 259,760
Deferred Tax Liabilities 560 - -
Other Long Term Liabilities 1,820 1,230 930
Total Non-Current Liabilities 2,380 1,230 930
Current Liabilities
Trade Payables 1,890 230 440
Other Current Liabilities 39,410 30,590 25,400
Short Term Provisions 39,690 38,200 26,400
Total Current Liabilities 80,990 69,020 52,240

Total Liabilities 463,310 383,570 312,930
ASSETS
Net Block 71,390 55,550 52,350
Capital Work in Progress 11,400 5,900 2,640
Non Current Investments 3,770 40 40
Deferred Tax Assets 4,690 2,650 3,210

Long Term Loans & Advances 18,320 16,670 14,460
Other Non Current Assets 310 150 200

Total Non-Current Assets 109,880 80,960 72,900
Current Assets Loans & Advances
Currents Investments 17,390 3,680 1,400
Sundry Debtors 70,830 58,820 46,530
Cash and Bank 218,320 205,910 166,660
Short Term Loans and Advances 46,890 34,200 25,440
Total Current Assets 353,430 302,610 240,030
Total Assets 463,310 383,570 312,930
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
22
!
12
114-081-1
Annexure IV: Cash Flow Statement of Infosys Limited for the financial year ended 31st
March23
Rs. Million
Description 2013 2012 2011

Cash Generated from Operating Activities 73,730 63,080 47,520
Cash Flow from Investing Activities
Capital Expenditure (20,950) (15,310) (13,050)
Sale of Fixed Assets 60 - -
Acquisition of business (11,570) (1,990) (30)
Other Investments (17,440) (2,280) 35,580
Interest and dividend received 19,700 18,110 11,480
(30,200) (1,470) 33,980
Cash Used in Financing Activities

Repayment of borrowings (890) - -
Issue of Share Capital 10 60 240
Dividend Paid (26,840) (20,010) (31,400)
Dividend Tax Paid (4,380) (3,270) (5,240)
(32,100) (23,220) (36,400)
Exchange Difference on Translation 980 860 450

Change in Cash and Cash Equivalents 12,410 39,250 45,550

Cash and Cash Equivalents – Beginning 205,910 166,660 121,110
Cash and Cash Equivalents – End 218,320 205,910 166,660
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
23
!
13
114-081-1
Annexure V: Dividend History of Infosys Limited24
Date Type Rate (%) Comments

12/4/2013 Final 540
24/09/2012 Interim 300
Includes 200% as Special Dividend - BPO
13/04/2012 Final 640 Operations completing 10 years
22/09/2011 Interim 300
15/04/2011 Final 400
Includes 600% as Special Dividend - 30th
29/09/2010 Interim 800 Anniversary of the Company
13/04/2010 Final 300
22/09/2009 Interim 200
15/04/2009 Final 270
25/09/2008 Interim 200
Includes 400% Special Dividend - Profit crossing

15/04/2008 Final 545 US$ 1 billion.
26/09/2007 Interim 120
13/04/2007 Final 130
28/09/2006 Interim 100
includes 600% Special Dividend - Silver Jubilee of
14/04/2006 Final 770 the Company

23/09/2005 Interim 130

14/04/2005 Final 130

1/10/2004 Interim 100
Includes 2000% Special dividend – Revenue
13/04/2004 Final 2300 crossing US$ 1 billion
17/09/2003 Interim 290
10/4/2003 Final 290
30/09/2002 Interim 250
10/4/2002 Final 250
5/10/2001 Interim 150
11/4/2001 Final 150
10/10/2000 Interim 50
26/04/2000 Final 60
8/10/1999 Interim 30
20/04/1999 Final 50
13/10/1998 Interim 25
10/4/1998 Final 45
16/10/1997 Interim 15
16/04/1997 Final 40
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
24
!http://economictimes.indiatimes.com/infosys4ltd/infocompanydividends/companyid410960.cms!
14
25
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Year
2005-06
2003-04
1998-99
1996-97
1993-94
1999-2000
15
Annexure VI: Details of bonus and stock split25
1:1
3:1
1:1
1:1
1:1
Bonus
!http://www.infosys.com/investors/investor4services/Pages/FAQs.aspx#equity!
Split
2 for 1
114-081-1
114-081-1
Annexure VII: Financial Indicators for the financial year ended 31st March 201326
Rs. Million
TCS WIPRO Infosys

Revenue 641,680 388,705 427,170
Profit Before Minority Interest 140,750 61,823 94,290
Minority Interest 1,580 322 0
Profit for the year 139,170 61,501 94,290

Preference Dividend 190 0 0
Total Equity Dividend 43,060 17,247 24,120
Tax on Dividend 7,270 2,892 4,030

Total Assets 522,670 436,739 463,310
Cash, Cash Equivalents and Short Term 76,980 152,484 235,710
Investments
Shareholders’ Funds 386,460 265,646 379,940
Minority Interest 6,950 1,171 0
Borrowed Funds 2,110 43,092 0

Current Market Price (30 June 2013) 1518 350 2493

Number of Equity Shares (Million) 1,957.22 2,461.32 571.40
Face Value per share (Rs.) 1 2 5
Promoters' Stake (%) 73.75 78.28 16.04
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
26
!Source!:!Case!writer!based!upon!Annual!Reports!of!Infosys,!Wipro!and!TCS!for!the!year!2012413!
!
16
114-081-1
Annexure VIII: Monthly closing price of Infosys Limited on BSE27
16000.00!
14000.00!
Stock!split!4!2!for!1!
12000.00!
10000.00!
8000.00!

Bonus!Issue!4!1:1!
6000.00!
Bonus!Issue!4!3:1!
4000.00!
Bonus!Issue!4!1:1!
2000.00!
Bonus!Issue!4!1:1!
0.00!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
27
!Source:!Case!writer!using!monthly!closing!prices!on!the!BSE!from!!www.bseindia.com!
17
114-081-1
Annexure IX: Restated Financials of Infosys Limited with return of cash28
Rs.
Million
Restated 2013 for

Special Buy Back
Particulars Actual 2013 Dividend of Shares
Cash, Cash Equivalents and Short Term Investments 235,710 71,195 71,195
Total Assets 463,310 298,795 298,795
Shareholders' Funds 379,940 215,425 215,425
Net Profit 94,290 84,419 84,419
Number of Equity Shares (Million) 571.4 571.4 508.1
Promoters' Holding (Million) 92.1 92.1 92.10
Earnings Per Share (Rs.) 165.02 147.74 166.14

Return on Equity 24.8% 39.2% 39.2%
Promoters' Holding 16.1% 16.1% 18.1%
Assumptions:
1. The cash balance to be maintained taken as equivalent to two months of annual

income (Rs.71,195 million). Excess cash (Rs.164,515 million) thus returned either as
dividend or through buy-back of shares. There will be equivalent reduction in the

Shareholders’ Funds.
2. The post-tax return on excess cash assumed to be 6% per annum. Therefore the PAT
reduced by Rs. 9,871 million (6% of Rs. 164,515).
3. The buy-back price assumed to be Rs. 2,600 per share i.e. 4% above the market price
as on 30 June 2013. The total number of shares bought back 63.3 million. The
promoters assumed not to tender their shares for the buy-back. The number of equity
shares outstanding reduced consequently to 508.1 million post buy-back.
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
28
!Case!writer!
18

Dividend Policy of Infosys Limited Case PDF

Uploaded by

Copyright:

Available Formats

You might also like

Dividend Policy of Infosys Limited Case PDF

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Dividend Policy of Infosys Limited Case PDF

Uploaded by

Copyright:

Available Formats

!

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Distributed by The Case Centre North America Rest of the world

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

technology industry would be valuable.3

About the Company5

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

in Annexure II, III and IV respectively.

Table 1: Underperformance against the guidance since FY20029

Quarter Revenue Earnings

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

profit in 2008 were the earlier such payouts. (Annexure V)

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Annexure I: Shareholding Pattern as on 31 March 201320

Category of Shareholders No of Number of %

Non Institutions 414,451 78,022,104 13.59

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

DESCRIPTION 2013 2012 2011

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Provision for Tax 33,700 33,670 24,900

Profit After Tax 94,290 83,320 68,350

Annexure III: Balance Sheet of Infosys Limited as on 31st March22

DESCRIPTION 2013 2012 2011

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Deferred Tax Assets 4,690 2,650 3,210

Other Non Current Assets 310 150 200

Description 2013 2012 2011

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Exchange Difference on Translation 980 860 450

Change in Cash and Cash Equivalents 12,410 39,250 45,550

Annexure V: Dividend History of Infosys Limited24

Date Type Rate (%) Comments

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

14/04/2006 Final 770 the Company

23/09/2005 Interim 130

14/04/2005 Final 130

TCS WIPRO Infosys

Minority Interest 1,580 322 0

Profit for the year 139,170 61,501 94,290

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Borrowed Funds 2,110 43,092 0

Current Market Price (30 June 2013) 1518 350 2493

Annexure VIII: Monthly closing price of Infosys Limited on BSE27

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

Annexure IX: Restated Financials of Infosys Limited with return of cash28

Restated 2013 for

Usage permitted only within these parameters otherwise contact info@thecasecentre.org

1. The cash balance to be maintained taken as equivalent to two months of annual

dividend or through buy-back of shares. There will be equivalent reduction in the

You might also like