INFOSYS

Infosys is a global leader in consulting, technology, and outsourcing solutions. Founded in

1981 by Narayana Murthy and six other entrepreneurs in Pune, India, Infosys started with an
initial capital of just $250. The company's humble beginning in a small apartment laid the
foundation for what would become one of India's most prominent and influential IT
companies.

In its early years, Infosys primarily focused on providing software development and
consultancy services to clients in the United States and Europe. One of the key factors behind
Infosys' success was its strong emphasis on quality, innovation, and customer satisfaction.
This commitment to excellence quickly earned the company a reputation for delivering high-
quality solutions, and it began to attract major clients from around the world.

Throughout the 1990s and early 2000s, Infosys experienced rapid growth, expanding its
service offerings and establishing a global presence with offices and development centers in
multiple countries. The company became known for its expertise in areas such as application
development, system integration, and outsourcing services.

Infosys went public in 1993, listing its shares on the Indian stock exchanges. The IPO was a
resounding success, and it marked the beginning of Infosys' journey as a publicly traded
company. Over the years, Infosys continued to deliver strong financial performance, with
steady revenue growth and increasing profitability.

In the early 2000s, Infosys emerged as a leading player in the global IT services industry,
competing with multinational giants like IBM, Accenture, and Tata Consultancy Services.
The company's success was fueled by its relentless focus on innovation, investment in
research and development, and a commitment to providing value to its clients.

As the IT industry evolved, Infosys adapted to changing market dynamics and technology
trends. It expanded its service offerings to include digital transformation, cloud computing,
artificial intelligence, and other emerging technologies. The company also embraced a more
agile and collaborative approach to working with clients, enabling it to deliver solutions
faster and more efficiently.

Today, Infosys is a Fortune 500 company with a diverse portfolio of clients across industries
such as banking, finance, healthcare, retail, and manufacturing. It employs thousands of
professionals worldwide and continues to be recognized for its commitment to excellence,
ethics, and corporate governance. Infosys remains at the forefront of the digital revolution,
helping organizations navigate complex challenges and seize new opportunities in a rapidly
changing world.

Financial risk management

Financial risk factors The Company's activities expose it to a variety of financial risks–market risk,
credit risk and liquidity risk. The Company's primary focus is to foresee the unpredictability of
financial markets and seek to minimize potential adverse effects on its financial performance. The
primary market risk to the Company is foreign exchange risk. The Company uses derivative financial
instruments to mitigate foreign exchange related risk exposures. The Company's exposure to credit
risk is influenced mainly by the individual characteristic of each customer and the concentration of
risk from the top few customers. The gross carrying amount of a financial asset is written off (either
partially or in full) when there is no realistic prospect of recovery. Market risk The Company operates
internationally and a major portion of the business is transacted in several currencies and
consequently the Company is exposed to foreign exchange risk through its sales and services in the
United States and elsewhere, and purchases from overseas suppliers in various foreign currencies.
The Company holds derivative financial instruments, such as foreign exchange forward and option
contracts to mitigate the risk of changes in exchange rates on foreign currency exposures. The
exchange rate between the Indian Rupee and foreign currencies has changed substantially in recent
years and may fluctuate substantially in the future. Consequently, the results of the Company’s
operations are adversely affected as the Rupee appreciates / depreciates against these currencies.

Derivative financial instruments

The Company holds derivative financial instruments, such as foreign currency forward and option
contracts, to mitigate the risk of changes in exchange rates on foreign currency exposures. The
counterparty for these contracts is generally a bank. These derivative financial instruments are
valued based on quoted prices for similar assets and liabilities in active markets or inputs that are
directly or indirectly observable in the marketplace.

Credit risk

Credit risk refers to the risk of default on its obligation by the counterparty resulting in a financial
loss. The maximum exposure to the credit risk at the reporting date is primarily from trade
receivables amounting to ₹20,773 crore and ₹18,966 crore as at March 31, 2023 and March 31, 2022,
respectively and unbilled revenue amounting to ₹12,384 crore and ₹9,279 crore as at March 31,
2023 and March 31, 2022, respectively. Trade receivables and unbilled revenue are typically
unsecured and are derived from revenue from customers majorly located in the US and Europe.
Credit risk has always been managed by the Company through credit approvals, establishing credit
limits and continuously monitoring the creditworthiness of the customers to which the Company
grants credit terms in the normal course of business. The Company uses the expected credit loss
model to assess any required allowances; and uses a provision matrix to compute the expected
credit loss allowance for trade receivables and unbilled revenues. This matrix takes into account
credit reports and other related credit information to the extent available. The Company's exposure
to credit risk is influenced mainly by the individual characteristic of each customer and the
concentration of risk from the top few customers. Exposure to customers is diversified and there is
no single customer contributing more than 10% of outstanding trade receivables and unbilled
revenues. The details in respect of percentage of revenues generated from top five customers and
top ten customers are as follows
TATA MOTORS

Tata Motors, the automotive division of the Tata Group, has a rich and storied
history that spans over seven decades. Established in 1945, Tata Motors has
grown from its humble beginnings in India to become one of the world's leading
automobile manufacturers. The company's early years were marked by the
production of commercial vehicles, including trucks and buses, which played a
crucial role in India's transportation infrastructure. In 1984, Tata Motors made a
significant leap into the passenger car segment with the launch of the Tata
Sierra, its first indigenously developed vehicle. This was followed by several
successful models, such as the Tata Sumo and Tata Indica, which solidified Tata
Motors' position in the Indian automotive market. In 2008, Tata Motors made
headlines worldwide with the acquisition of iconic British brands Jaguar Land
Rover (JLR), marking a significant milestone in its global expansion strategy.
Under Tata Motors' ownership, JLR has flourished, introducing a range of award-
winning vehicles and expanding its presence in key international markets. Today,
Tata Motors is a global automotive powerhouse, with a diverse portfolio of
products spanning commercial vehicles, passenger cars, and electric vehicles.
The company remains committed to innovation, sustainability, and driving
positive change in the automotive industry.

Financial risk management

In the course of its business, the Company is exposed primarily to fluctuations in foreign currency
exchange rates, interest rates, equity prices, liquidity and credit risk, which may adversely impact the
fair value of its financial instruments. The Company has a risk management policy which not only
covers the foreign exchange risks but also other risks associated with the financial assets and
liabilities such as interest rate risks and credit risks. The risk management policy is approved by the
board of directors. The risk management framework aims to: • Create a stable business planning
environment by reducing the impact of currency and interest rate fluctuations on the Company’s
business plan. • Achieve greater predictability to earnings by determining the financial value of the
expected earnings in advance

(i) Market risk

Market risk is the risk of any loss in future earnings, in realisable fair values or in future
cash flows that may result from a change in the price of a financial instrument. The value
of a financial instrument may change as a result of changes in the interest rates, foreign
currency exchange rates, equity price fluctuations, liquidity and other market changes.
Future specific market movements cannot be normally predicted with reasonable
accuracy.
(a) Foreign currency exchange rate risk:

The fluctuation in foreign currency exchange rates may have potential impact on the income
statement, statement of comprehensive income, balance sheet, statement of changes in equity
and statement of cash flows where any transaction references more than one currency or where
assets/liabilities are denominated in a currency other than the functional currency.

Considering the countries and economic environment in which the Company operates, its
operations are subject to risks arising from fluctuations in exchange rates in those countries. The
risks primarily relate to fluctuations in U.S. dollar, Euro and GBP against the respective functional
currencies of the Company.

The Company, as per its risk management policy, uses foreign exchange and other derivative
instruments primarily to hedge foreign exchange and interest rate exposure. Any weakening of
the functional currency may impact the Company’s cost of exports and cost of borrowings and
consequently may increase the cost of financing the Company’s capital expenditures.

The Company evaluates the impact of foreign exchange rate fluctuations by assessing its
exposure to exchange rate risks. It hedges a part of these risks by using derivative financial
instruments in accordance with its risk management policies.

The foreign exchange rate sensitivity is calculated for each currency by aggregation of the net
foreign exchange rate exposure of each currency and a simultaneous parallel foreign exchange
rates shift in the foreign exchange rates of each currency by 10% while keeping the other
variables as constant.

The exposure as indicated below is mitigated by some of the derivative contracts entered into by
the Company as disclosed in (iv) derivative financial instruments and risk management below.
The following table sets forth information relating to foreign currency exposure (other than risk
arising from derivatives disclosed at clause (iv) below) as of March 31, 2022:
(b) Interest rate risk

Interest rate risk is the risk that changes in market interest rates will lead to changes in fair
value of financial instruments or changes in interest income, expense and cash flows of the
Company. The Company is subject to variable interest rates on some of its interest bearing
liabilities. The Company’s interest rate exposure is mainly related to debt obligations. The
Company also uses a mix of interest rate sensitive financial instruments to manage the
liquidity and fund requirements for its day to day operations like short term loans.

As at March 31, 2022 and 2021, financial liabilities of `5,954.82 crores and `5,843.60 crores,
respectively, were subject to variable interest rates. Increase/decrease of 100 basis points in
interest rates at the balance sheet date would result in decrease/increase in profit/(loss) before
tax of `59.55 crores and `58.44 crores for the year ended March 31, 2022 and 2021, respectively.

The model assumes that interest rate changes are instantaneous parallel shifts in the yield curve.
Although some assets and liabilities may have similar maturities or periods to re-pricing, these
may not react correspondingly to changes in market interest rates. Also, the interest rates on
some types of assets and liabilities may fluctuate with changes in market interest rates, while
interest rates on other types of assets may change with a lag.

The risk estimates provided assume a parallel shift of 100 basis points interest rate across all
yield curves.This calculation also assumes that the change occurs at the balance sheet date and
has been calculated based on risk exposures outstanding as at that date. The period end
balances are not necessarily representative of the average debt outstanding during the period.
This analysis assumes that all other variables, in particular foreign currency rates, remain
constant.

(ii) Credit risk

Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt
according to the contractual terms or obligations. Credit risk encompasses both the direct risk of
default and the risk of deterioration of creditworthiness as well as concentration risks. Financial
instruments that are subject to concentrations of credit risk, principally consist of investments
classified as fair value through profit and loss, trade receivables, loans and advances and
derivative financial instruments. The Company strives to promptly identify and reduce concerns
about collection due to a deterioration in the financial conditions and others of its main
counterparties by regularly monitoring their situation based on their financial condition. None of
the financial instruments of the Company result in material concentrations of credit risks
Trade receivables consist of a large number of various types of customers, spread across
geographical areas. Ongoing credit evaluation is performed on the financial condition of these
trade receivables and where appropriate allowance for losses are provided. Further the
Company, groups the trade receivables depending on type of customers and accordingly credit
risk is determined

(iv) Derivative financial instruments and risk management

The Company has entered into a variety of foreign currency, interest rates and commodity
forward contracts and options to manage its exposure to fluctuations in foreign exchange rates,
interest rates and commodity price risk. The counterparty is generally a bank. These financial
exposures are managed in accordance with the Company's risk management policies and
procedures. The Company also enters into interest rate swaps and cross currency interest rate
swap agreements, mainly to manage exposure on its fixed rate or variable rate debt. The
Company uses interest rate derivatives or currency swaps to hedge exposure to exchange rate
fluctuations on principal and interest payments for borrowings denominated in foreign
currencies. Specific transactional risks include risks like liquidity and pricing risks, interest rate
and exchange rate fluctuation risks, volatility risks, counterparty risks, settlement risks and
gearing risks. Fair value of derivative financial instruments are determined using valuation
techniques based on information derived from observable market data. The fair value of
derivative financial instruments is as follows

v) Commodity Price Risk

The Company is exposed to commodity price risk arising from the purchase of certain raw
materials such as aluminium, copper, platinum and palladium. This risk is mitigated through the
use of derivative contracts and fixed-price contracts with suppliers. The derivative contracts are
not hedge accounted under Ind AS 109 but are instead measured at fair value through profit or
loss. The (gain)/loss on commodity derivative contracts, recognised in the statement of profit
and loss was `17.96 crores and `(40.39) crores for the years ended March 31, 2022 and 2021,
respectively.