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Infosys fears long-term effect of border tensions

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The Infosys CEO, Mr Nandan Nilekani, listening to the Chief Mentor, Mr N.R. Narayana Murthy's speech at the company's AGM in Bangalore on Saturday.

BANGALORE June 8

SOFTWARE major Infosys Technologies Ltd today said that there is no short-term impact from cancellation of client visits due to the prevailing tensions at the border, but warned of possible long-term consequences.

Addressing shareholders at the company's 21st annual general meeting, Mr S. Gopalakrishnan, Chief Operating Officer and Deputy Managing Director, said some client visits have been cancelled. The general sentiment about business with India is getting affected, he said.

"There is no short-term impact as we see it today. But it could be possible that there may be a long-term impact if the situation persists," he said.

The company is ready with a robust business continuity plan, which is being enhanced further, he said. "We are in touch with our clients to reassure them about the situation and we are prepared even if we have to move a project overseas,'' Mr Gopalakrishnan said.

Responding to the shareholders' demand, Mr Nandan Nilekani, President, CEO and Managing Director, said Infosys does not have any plans to come out with a buyback offer or issue bonus shares. The company has leveraged its global delivery model to successfully overcome the challenging economic situation, he said. The shareholders approved an increase in the limit on the aggregate foreign institutional investors (FII) holding in the company from the present 49 per cent to 100 per cent of the paid-up equity share capital of the company. Allaying fears aired against the move by a shareholder, the Chief Mentor, Mr N.R. Narayana Murthy, said, "In the days of globalisation, one has to compete with one's strength and not with one's fears and one cannot shy away from globalisation."

Agruing in favour of the move to increase the FII limit, Mr Murthy gave an assurance that it is not in the interest of any of the board member to sell and `run away'. "We are here to run the company and have to make it sure that shareholders get better and better returns," Mr Murthy said.

The shareholders also approved the final dividend of Rs 12.50 per share (250 per cent on par value of Rs 5) as recommended by the board earlier. The total dividend for the year stands at Rs 20 per share (400 per cent on par value of Rs 5). The shareholders also approved the appointment of Mr Claude Smadja as an independent member of the board of Infosys. The AGM also adopted the balance sheet and the profit and loss account for the year-ended March 31, 2002. Infosys had reported a 29.6 per cent increase in net profits at Rs 807.96 crore and a 37 per cent increase in revenues at Rs 2,603.59 crore for FY 2001-02 over previous year.

Promise less, deliver more

THE Infosys Chief Mentor, Mr N.R. Narayana Murthy, preferred to dwell upon the company's culture rather than the business details at the 21st AGM.

Mr Murthy told shareholders that performance of Infosys during the year and that of Infoscians on various counts during his tenure has gladdened his heart.

The company has shown that it has the best forecasting system in the industry in India. "When we had projected a growth of 30 per cent last year, the whole industry differed with us saying that we were underestimating the growth. However, today we know that the industry has grown by only 18 per cent and we grew by 31.7 per cent exceeding the projections." This aligns with the company's philosophy of `under-promise and over-deliver,' he said.

According to Mr Murthy, Infosys has lived up to the highest standards of corporate governance even if it meant possible short-term loss of market capitalisation.

Recognising the contribution of each Infoscian, Mr Murthy told shareholders that every employee has stood by his words to live up to the promises made to every stakeholder no matter what the costs are and worked in very challenging economic environment even willing to forgo salary hikes. "Infosys represents to me what civilised society is all about, he added." The company has taken a lead in starting new strategic initiatives in areas of BPO and IT outsourcing during the year, he said.

Mr Murthy, who stepped down during the year as CEO and donned the new role of Chief Mentor, told the shareholders, "I see a great band of leaders at Infosys and believe that the new CEO, Mr Nandan Nilekani, will achieve much more for the organisation than I have been able to."

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