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Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>/in/edgar/work/0001012870-00-005298/0001012870-00-005298.txt : 20001019
<SEC-HEADER>0001012870-00-005298.hdr.sgml : 20001019
ACCESSION NUMBER:		0001012870-00-005298
CONFORMED SUBMISSION TYPE:	6-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20000930
FILED AS OF DATE:		20001018

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			INFOSYS TECHNOLOGIES LTD
		CENTRAL INDEX KEY:			0001067491
		STANDARD INDUSTRIAL CLASSIFICATION:	 [7371
]		IRS NUMBER:				58176235
		FISCAL YEAR END:			0331
</COMPANY-DATA>

		FILING VALUES:
			FORM TYPE:		6-K
			SEC ACT:		
			SEC FILE NUMBER:	000-25383
			FILM NUMBER:		742141
</FILING-VALUES>

			BUSINESS ADDRESS:	
				STREET 1:		ELECTRONICS CITY HOSUR RD
				STREET 2:		BANGALORE KARNATAKA INDIA
				BUSINESS PHONE:		0119180852
</BUSINESS-ADDRESS>

				MAIL ADDRESS:	
					STREET 1:		ELECTRONIC CITY HOSUR RD
					STREET 2:		BANGALORE KARNATAKA INDIA
</MAIL-ADDRESS>
</FILER>
</SEC-HEADER>
<DOCUMENT>
<TYPE>6-K
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>REPORT OF FOREIGN ISSUER
<TEXT>

<PAGE>

                                 United States
                      Securities and Exchange Commission
- --------------------------------------------------------------------------------
                             Washington, DC 20549

                                   FORM 6-K

                           Report of Foreign Issuer

   Pursuant to Rule 13a-16 or 15d-16 of the Securities Exchange Act of 1934
                   For the quarter ended September 30, 2000

                       Commission File Number 333-72195

                         Infosys Technologies Limited
            (Exact name of Registrant as specified in its charter)


                                Not Applicable
                (Translation of Registrant's name into English)

                          Bangalore, Karnataka, India
                (Jurisdiction of incorporation or organization)


                         Electronics City, Hosur Road,
                             Bangalore, Karnataka
                                 India 561 229
                                +91-80-852-0261
                   (Address of principal executive offices)


Indicate by check mark registrant files or will file annual reports under cover
Form 20-F or Form 40-F.

    Form 20-F ...........x...........     Form 40-F .......................


Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g 3-2(b) under the Securities Exchange Act of
1934.

    Yes .............................     No ...........x..................


If "Yes" is marked, indicate below the file number assigned to registrant in
connection with Rule 12g 3-2(b).

    Not applicable.

                                                                               1
<PAGE>

Currency of Presentation and Certain Defined Terms

Unless the context otherwise requires, references herein to the "company" or to
"Infosys" are to Infosys Technologies Limited, a limited liability company
organized under the laws of the Republic of India. References to "U.S." or
"United States" are to the United States of America, its territories and its
possessions. References to "India" are to the Republic of India. Yantra
Corporation, a Delaware Corporation ("Yantra"), in which the company holds a
minority interest, is considered a subsidiary of the company for purposes of
Indian GAAP. "Infosys" is a registered trademark of the company in India and the
United States. All other trademarks or tradenames used in this Quarterly Report
on Form 6-K ("Quarterly Report") are the property of their respective owners.

In this Quarterly Report, references to "$" or "Dollars" or "U.S. Dollars" are
to the legal currency of the United States, references to "EUR" or "Euro" are to
the legal currency of the European Union and references to "Rs" or "Rupees" or
"Indian Rupees" are to the legal currency of India. The company's financial
statements are presented in Indian Rupees and translated into U.S. Dollars and
are prepared in accordance with United States generally accepted accounting
principles ("U.S. GAAP"). References to "Indian GAAP" are to Indian generally
accepted accounting principles. Except as otherwise specified, financial
information is presented in Dollars. References to a particular "fiscal" year
are to the company's fiscal year ended March 31 of such year.

Unless otherwise specified herein, financial information has been converted into
Dollars at the noon buying rate in New York City for cable transfers in foreign
currencies as certified for customs purposes by the Federal Reserve Bank (the
"Noon Buying Rate") as of September 30, 2000, which was Rs. 46.06 per $1.00. For
the convenience of the reader, this Quarterly Report contains translations of
certain Indian rupee amounts into U.S. Dollars which should not be construed as
a representation that such Indian Rupee or U.S. Dollar amounts referred to
herein could have been, or could be, converted to U.S. Dollars or Indian Rupees,
as the case may be, at any particular rate, the rates stated below, or at all.
Any discrepancies in any table between totals and sums of the amounts listed are
due to rounding.

Forward-Looking Statements May Prove Inaccurate

In addition to historical information, this quarterly report contains certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. The forward-looking statements contained herein are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those reflected in the forward-looking statements. Factors that
might cause such differences include but are not limited to, those discussed in
the section entitled "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this report. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
reflect management's analysis only as of the date hereof. In addition, readers
should carefully review the other information in this quarterly report and in
the company's periodic reports and other documents filed with the Securities and
Exchange Commission ("SEC") from time to time.

                                                                               2
<PAGE>

                        Part I - Financial Information
- --------------------------------------------------------------------------------

Item 1.   Financial Statements

<TABLE>
<CAPTION>
Balance Sheets as of
- ------------------------------------------------------------------------------------------------------------------
                                                      September 30, 2000   September 30, 1999       March 31, 2000
                                                             (Unaudited)          (Unaudited)            (Audited)
- ------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>                  <C>                      <C>
ASSETS

CURRENT ASSETS
Cash and cash equivalents                                  $ 116,475,448        $ 104,131,114        $ 116,599,486
Trade accounts receivable, net of allowances                  52,826,967           30,626,659           31,233,515
Prepaid expenses and other current assets                     13,255,567            7,482,365           11,256,295
==================================================================================================================
Total current assets                                         182,557,982          142,240,138          159,089,296

Property, plant and equipment - net                           79,371,264           32,221,795           47,554,772
Deferred income taxes                                          2,877,129            1,350,849            2,566,266
Investments                                                    8,270,443              177,938            3,177,938
Other assets                                                   6,809,063            5,225,443            6,894,598
- ------------------------------------------------------------------------------------------------------------------
Total assets                                               $ 279,885,881        $ 181,216,163        $ 219,282,870
==================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable                                           $      44,587        $      52,663        $     976,840
Client deposits                                                2,061,910               88,642              425,724
Other accrued liabilities                                     16,076,816           10,694,035           13,835,635
Income taxes payable                                           2,355,740            1,763,189            1,878,977
Unearned revenue                                              15,971,299            6,368,878            4,029,173
==================================================================================================================
Total current liabilities                                     36,510,352           18,967,407           21,146,349

- ------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY

Common stock, $ 0.16 par value; 100,000,000 equity
shares authorized, Issued and outstanding - 66,151,367,
66,138,800 and 66,150,700 as of September 30, 2000,
September 30, 1999 and March 31, 2000

                                                               8,593,585            8,592,137            8,593,510
Additional paid-in-capital                                   121,529,268          121,403,339          121,506,726
Accumulated other comprehensive income                       (26,112,795)         (14,033,267)         (14,137,933)
Deferred stock compensation                                  (15,047,221)         (20,173,346)         (17,598,813)
Retained earnings                                            154,412,692           66,459,893           99,773,031
==================================================================================================================
Total stockholders' equity                                   243,375,529          162,248,756          198,136,521

- ------------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity                 $ 279,885,881        $ 181,216,163        $ 219,282,870
==================================================================================================================
</TABLE>

See accompanying notes to financial statements


                                    Assets
                              September 30, 2000

<TABLE>
                    <S>                                <C>
                    Cash and cash equivalents          42%
                    Property, Plant and equipment      28%
                    Accounts receivable                19%
                    Others                             11%
</TABLE>

                     Liabilities and Stockholders' Equity
                              September 30, 2000
<TABLE>
                    <S>                                <C>
                    Current liabilities                13%
                    Stockholders' Equity               87%
</TABLE>

                                                                               3
<PAGE>

Statements of Income

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
                                                    Three months ended              Six months ended             Year ended
                                                      September 30,                   September 30,          March 31, 2000
                                                ------------------------------------------------------------
                                                        2000            1999            2000           1999
                                                 (Unaudited)     (Unaudited)     (Unaudited)    (Unaudited)       (Audited)
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>             <C>            <C>             <C>            <C>
REVENUES
Revenues                                        $ 97,939,050    $ 47,941,680   $ 178,196,883   $ 87,670,580    $203,443,754
Cost of revenues                                  50,198,315      26,103,672      92,160,476     46,723,936     111,080,546
- ---------------------------------------------------------------------------------------------------------------------------
Gross profit                                      47,740,735      21,838,008      86,036,407     40,946,644      92,363,208
- ---------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
Selling and marketing expenses                     4,994,025       1,665,122       9,191,540      4,154,480       9,643,970
General and administrative expenses                9,274,568       4,264,873      15,691,481      7,327,571      17,102,550
Amortization of stock compensation expense         1,275,796       1,293,002       2,551,592      2,543,102       5,117,635
- ---------------------------------------------------------------------------------------------------------------------------
Total operating expenses                          15,544,389       7,222,997      27,434,613     14,025,153      31,864,155
- ---------------------------------------------------------------------------------------------------------------------------
Operating income                                  32,196,346      14,615,011      58,601,794     26,921,491      60,499,053
Other income, net                                  4,292,181       2,205,581       7,695,238      5,416,282       9,038,792
===========================================================================================================================
Income before income taxes                        36,488,527      16,820,592      66,297,032     32,337,773      69,537,845
Provision for income taxes                         3,706,641       2,100,081       6,683,473      4,306,383       8,193,317
- ---------------------------------------------------------------------------------------------------------------------------
Net income                                      $ 32,781,886    $ 14,720,511   $  59,613,559   $ 28,031,390    $ 61,344,528
===========================================================================================================================
EARNINGS PER EQUITY SHARE
Basic                                           $       0.50    $       0.22    $       0.90   $       0.42    $       0.93
Diluted                                         $       0.49    $       0.22    $       0.89   $       0.42    $       0.93

WEIGHTED EQUITY SHARES USED IN COMPUTING
EARNINGS PER EQUITY SHARE
Basic                                             65,941,034      65,671,534      65,959,151     65,680,100      65,659,625
Diluted                                           66,912,722      65,671,534      67,097,321     65,680,100      65,863,990
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes to financial statements

                                                                               4
<PAGE>

<TABLE>
<CAPTION>
Statements of Stockholders' Equity
- --------------------------------------------------------------------------------------------------------------------------------
(Information as of and for the six months ended September 30, 2000 and September 30, 1999 is unaudited)

- --------------------------------------------------------------------------------------------------------------------------------
                                       Common Stock          Additional paid          Comp-     Accumulated       Deferred stock
- -----------------------------------------------------------
                                       Shares       Amount       -in capital     -rehensive     other comp-         compensation
                                                                                     income      -rehensive                   on
                                                                                                   income
- --------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>             <C>               <C>           <C>                <C>
Balance as of March 31, 1998       64,068,800  $ 4,545,811     $ 24,415,920                    $ (7,042,229)      $  (7,831,445)
- -------------------------------------------------------------------------------------------------------------------------------
Stock split                            -         3,800,949           -                                -                  -
Cash dividends declared                -            -                -                                -                  -
Common stock issued                 2,070,000      245,377       70,134,623                           -                  -
ADR issue expenses                                               (4,108,924)
Compensation related to stock
    option grants                      -            -            30,407,892                           -             (30,407,892)
Amortization of compensation
    related to stock option grants     -            -                -                                -              16,552,538
Comprehensive income
  Net income available for
    common stockholders                -            -                -        $ 17,446,088            -                  -
  Other comprehensive income
    Translation adjustment             -            -                -          (2,058,433)      (2,058,433)             -
                                                                              ------------
Comprehensive income                   -            -                -        $ 15,387,655            -                  -
                                                                              ============
Adjustment on de-consolidation         -            -                -                                -                  -
    of subsidiary
Repayment of loan to trust             -            -                -                                -                  -
- -------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 1999       66,138,800    8,592,137      120,849,511                      (9,100,662)        (21,686,799)
- -------------------------------------------------------------------------------------------------------------------------------
Common stock issued                    -            -              (475,821)                          -                  -
Cash dividends declared                -            -                -                                -                  -
Compensation related to stock
    option grants                      -            -             1,029,649                           -              (1,029,649)
Amortization of compensation
    related to stock option grants     -            -                -                                -               2,543,102
Comprehensive income
  Net income available for
    common stockholders                -            -                -        $ 28,031,390            -                  -
  Other comprehensive income
    Translation adjustment             -            -                -          (4,932,605       (4,932,605)             -
                                                                              ------------
Comprehensive income                   -            -                -        $ 23,098,785            -                  -
                                                                              ============
- -------------------------------------------------------------------------------------------------------------------------------
Balance as of September 30, 1999   66,138,800  $ 8,592,137     $121,403,339                    $(14,033,267)      $ (20,173,346)
- -------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
- ---------------------------------------------------------------------------------
                                                        in $ except share numbers
- ---------------------------------------------------------------------------------
                                      Loan to Trust     Retained            Total
- -----------------------------------
                                                        earnings    Stockholders'
                                                                           equity
- ---------------------------------------------------------------------------------
Balance as of March 31, 1998       $ (936,365)     $ 27,994,268      $ 41,145,960
- ---------------------------------------------------------------------------------
<S>                                <C>             <C>               <C>
Stock split                             -            (3,800,949)           -
Cash dividends declared                 -            (3,152,863)       (3,152,863)
Common stock issued                     -                 -            70,380,000
ADR issue expenses                                                     (4,108,924)
Compensation related to stock
    option grants                       -                 -                -
Amortization of compensation
    related to stock option grants      -                 -            16,552,538
Comprehensive income
  Net income available for
    common stockholders                 -            17,446,088        17,446,088
  Other comprehensive income
    Translation adjustment              -                 -            (2,058,433)
Comprehensive income                    -                 -                -
Adjustment on de-consolidation          -             2,468,831         2,468,831
    of subsidiary
Repayment of loan to trust             936,365            -               936,365
- ---------------------------------------------------------------------------------
Balance as of March 31, 1999            -            40,955,375       139,609,562
- ---------------------------------------------------------------------------------
Common stock issued                     -                 -              (475,821)
Cash dividends declared                              (2,526,872)       (2,526,872)
Compensation related to stock
    option grants                       -                 -                -
Amortization of compensation
    related to stock option grants      -                 -             2,543,102
Comprehensive income
  Net income available for
    common stockholders                 -            28,031,390        28,031,390
  Other comprehensive income
    Translation adjustment              -                 -            (4,932,605)
Comprehensive income                    -                 -                -
- ---------------------------------------------------------------------------------
Balance as of September 30, 1999        -           $66,459,893     $ 162,248,756
- ---------------------------------------------------------------------------------
</TABLE>

                                                                               5
<PAGE>

<TABLE>
<CAPTION>
Statements of Stockholders' Equity (contd.)
- ------------------------------------------------------------------------------------------------------------------------------------
(Information as of and for the six months ended September 30, 2000 and September 30, 1999 is unaudited)

- ------------------------------------------------------------------------------------------------------------------------------------
                                       Common Stock               Additional       Comp-   Accumulated    Deferred stock   Loan to
                                     -------------------
                                     Shares       Amount     paid-in capital  -rehensive   other comp-      compensation     Trust
                                                                                  income    -rehensive
                                                                                                income
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>         <C>           <C>              <C>          <C>            <C>              <C>
Balance as of September 30, 1999   66,138,800  $ 8,592,137   $ 121,403,339                  $(14,033,267) $ (20,173,346)        -
- ------------------------------------------------------------------------------------------------------------------------------------
Common stock issued                    11,900        1,373         881,310                             -              -         -
ADR issue expenses                                                (777,923)
Amortization of compensation
    related to stock option grants          -            -               -                             -      2,574,533         -
Comprehensive income
  Net income available for
    common stockholders                     -            -               -     $ 33,313,138            -              -         -
  Other comprehensive income
    Translation adjustment                  -            -               -         (104,666)    (104,666)             -         -
                                                                               ------------
Comprehensive income                        -            -               -     $ 33,208,472            -              -         -
- ------------------------------------------------------------------------------------------------------------------------------------
Balance as of March 31, 2000       66,150,700    8,593,510     121,506,726                   (14,137,933)   (17,598,813)        -
- ------------------------------------------------------------------------------------------------------------------------------------
Cash dividends                              -            -               -                             -              -         -
Common stock issued                       667           75          22,542                             -              -         -
Amortization of compensation
    related to stock option grants          -            -               -                             -      2,551,592         -
Comprehensive income
  Net income available for
    common stockholders                     -            -               -     $ 59,613,559            -              -         -
  Other comprehensive income
    Translation adjustment                  -            -               -      (11,974,862) (11,974,862)             -         -
                                                                               ------------
 Comprehensive income                       -            -               -     $ 47,638,697            -              -         -
- -------------------------------------------------------------------------------============-----------------------------------------
Balance as of September 30, 2000   66,151,367  $ 8,593,585   $ 121,529,268                  $(26,112,795) $ (15,047,221)        -
===============================================================================             ========================================

<CAPTION>
                                      in $ except share numbers
- ---------------------------------------------------------------
                                       Retained           Total

                                       earnings   stockholders'
                                                         equity

- ---------------------------------------------------------------
<S>                                <C>            <C>
Balance as of September 30, 1999   $ 66,459,893   $ 162,248,756
- ---------------------------------------------------------------
Common stock issued                           -         882,683
ADR issue expenses                                     (777,923)
Amortization of compensation
    related to stock option grants            -       2,574,533
Comprehensive income
  Net income available for
    common stockholders              33,313,138      33,313,138
  Other comprehensive income
    Translation adjustment                    -        (104,666)

Comprehensive income                          -               -
- ---------------------------------------------------------------
Balance as of March 31, 2000         99,773,031     198,136,521
- ---------------------------------------------------------------
Cash dividends                       (4,973,898)     (4,973,898)
Common stock issued                           -          22,617
Amortization of compensation
    related to stock option grants            -       2,551,592
Comprehensive income
  Net income available for
    common stockholders              59,613,559      59,613,559
  Other comprehensive income
    Translation adjustment                    -     (11,974,862)

 Comprehensive income                         -               -
- ---------------------------------------------------------------
Balance as of September 30, 2000   $154,412,692   $ 243,375,529
===============================================================
</TABLE>

     See accompanying notes to financial statements

                                                                               6
<PAGE>

<TABLE>
<CAPTION>
Statement of cash flows
- -----------------------------------------------------------------------------------------------------------
                                                             Six months ended                    Year ended
                                                             ----------------
                                                       September 30,      September 30,      March 31, 2000
                                                                2000               1999           (Audited)
                                                         (Unaudited)        (Unaudited)
- -----------------------------------------------------------------------------------------------------------
<S>                                                    <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                             $  59,613,559      $  28,031,390       $  61,344,528
Adjustments to reconcile net income to net cash
provided by operating activities
Loss/(gain) on sale of property, plant and
    equipment                                                  1,199            (10,749)            (20,153)
Depreciation                                               9,316,317          4,641,216          12,268,169
Deferred tax expense/(benefit)                              (310,863)           364,526            (850,891)
Amortization of deferred stock compensation
    expense                                                2,551,592          2,543,102           5,117,635
Changes in assets and liabilities
Trade accounts receivable                                (21,593,452)       (10,569,981)        (11,176,837)
Prepaid expenses and other current assets                   (910,657)        (1,747,042)         (2,390,039)
Income taxes                                                 476,763            807,392             923,180
Accounts payable                                            (932,253)           (22,642)            901,535
Client deposits                                            1,636,186             70,122             407,204
Unearned revenue                                          11,942,126          1,770,266            (569,439)
Other accrued liabilities                                  2,212,335          2,294,235           5,435,835
===========================================================================================================
Net cash provided by operating activities                 64,002,852         28,171,835          71,390,727
- -----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditure on property, plant and equipment             (41,139,302)       (12,965,199)        (35,926,030)
Proceeds from sale of property, plant and
    equipment                                                  5,294             13,250              23,555
Loans to employees                                        (1,003,080)        (2,028,437)         (6,828,525)
Purchase of investments                                   (5,092,505)                 -          (3,000,000)
===========================================================================================================
Net cash used in investing activities                    (47,229,593)       (14,980,386)        (45,731,000)
- -----------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of equity shares                       22,617           (475,821)            406,862
ADR issue expenses                                                 -                  -            (777,923)
Payment of cash dividends                                 (4,945,052)        (2,526,872)         (2,526,872)
===========================================================================================================
Net cash used in financing activities                     (4,922,435)        (3,002,693)         (2,897,933)
- -----------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash                  (11,974,862)        (4,932,605)         (5,037,271)
Net increase in cash and cash equivalents during
    the period                                              (124,038)         5,256,151          17,724,523
Cash and cash equivalents at the beginning of
    the period                                           116,599,486         98,874,963          98,874,963
===========================================================================================================
Cash and cash equivalents at the end of the            $ 116,475,448      $ 104,131,114       $ 116,599,486
period
===========================================================================================================

Supplementary information:
Cash paid towards taxes                                $   6,206,710      $   3,498,991       $   7,270,137
</TABLE>

See accompanying notes to financial statements

                                                                               7
<PAGE>

Notes to Financial Statements as of and for the six months ended
September 30, 2000
- --------------------------------------------------------------------------------

1    Company overview and significant accounting policies

1.1       Company overview

     Infosys Technologies Limited (the "company") is a publicly held company
     providing information technology ("IT") solutions principally to Fortune
     1000 and emerging new economy companies. Infosys' range of services
     includes IT consulting, IT architecture, application development, e-
     commerce and Internet consulting, and software maintenance. In addition,
     the company develops and markets certain software products. Headquartered
     in Bangalore, India, the company has 17 state-of-the-art offshore software
     development facilities located throughout India that enable it to provide
     high quality, cost-effective services to clients in a resource-constrained
     environment. The company also maintains offices throughout North America,
     Europe and Asia.

1.2       Basis of preparation of financial statements

     The accompanying financial statements are prepared in accordance with US
     Generally Accepted Accounting Principles ("GAAP"). All amounts are stated
     in US dollars, except as specified.

1.3       Principles of consolidation

     The financial statements of the company were consolidated with the accounts
     of its wholly owned subsidiary, Yantra Corporation ("Yantra") during fiscal
     1998. On October 20, 1998, the company's voting control of Yantra declined
     to approximately 47%. Accordingly, the company has followed the equity
     method of accounting for Yantra in fiscal 1999. On June 14, 1999, Yantra
     sold Series C Convertible Preferred Stock in the amount of US$ 15 million
     to unrelated existing and new investors, reducing the company's voting
     control to approximately 25%. In July 2000, Yantra sold Series D
     Convertible Preferred Stock amounting to $ 40 million, to unrelated
     existing and new investors, further reducing the company's voting control
     to approximately 16%.

     The company owns 63% of the outstanding common shares of Yantra but has no
     financial obligations or commitments to Yantra and does not intend to
     provide Yantra with financial support. Accordingly, the company recognized
     no losses of Yantra after October 20, 1998. The excess of the company's
     previously recognized losses over the basis of its investments in Yantra as
     of October 20, 1998 were credited to retained earnings.

     Yantra was incorporated in the United States in fiscal 1996 for the
     development of software products in the retail and distribution areas. All
     inter-company transactions between the company and Yantra are eliminated.

1.4       Use of estimates

     The preparation of financial statements in conformity with GAAP requires
     management to make estimates and assumptions that affect the reported
     amounts of assets and liabilities, the disclosure of contingent assets and
     liabilities on the date of the financial statements and the reported
     amounts of revenues and expenses during the period. Examples of estimates
     include accounting for contract costs expected to be incurred to complete
     software development, allowance for uncollectible accounts receivable,
     future obligations under employee benefit plans and useful lives of
     property, plant and equipment. Actual results could differ from those
     estimates.

1.5       Revenue recognition

     The company derives its revenues primarily from software services and also
     from the licensing of software products. Revenue for time-and-material
     contracts is recognized as the related costs are incurred. Revenue from
     fixed-price, fixed-time frame contracts is recognized upon the achievement
     of specified milestones identified in the related contracts, in accordance
     with the percentage-of-completion method. Provisions for estimated losses
     on uncompleted contracts are recorded in the period in which such losses
     become probable based on the current contract estimates. The company
     provides its clients with a fixed period warranty for corrections of errors
     and telephone support on all its fixed-price, fixed-time frame contracts.
     Costs associated with the support services are accrued at the time related
     revenues are recorded.

     Revenue from licensing of software products is recognized upon shipment of
     products and fulfillment of acceptance terms, if any, provided that no
     significant vendor obligations remain and the collection of the related
     receivable is probable. When the company receives advances for software
     products, such amounts are reported as client deposits until all conditions
     for revenue recognition are met. Maintenance revenue is deferred and
     recognized ratably over the term of the underlying maintenance agreement,
     generally 12 months. Revenue from client training, support and other
     services arising due to the sale of software products is recognized as the
     services are performed.

                                                                               8
<PAGE>

1.6       Cash and cash equivalents

     The company considers all highly liquid investments with a remaining
     maturity at the date of purchase/ investment of three months or less to be
     cash equivalents. Cash and cash equivalents consist of cash, cash on
     deposit with banks, marketable securities and deposits with corporations.

1.7       Property, plant and equipment

     Property, plant and equipment are stated at cost less accumulated
     depreciation. The company depreciates property, plant and equipment over
     their estimated useful lives using the straight-line method. The estimated
     useful lives of assets are as follows:

          Buildings                                   15 years

          Furniture and fixtures                      5 years

          Computer equipment                          2-5 years

          Plant and equipment                         5 years

          Vehicles                                    5 years

     The cost of software purchased for use in software development and services
     is charged to the cost of revenues at the time of acquisition. The amount
     of third party software expensed in the six months ended September 30, 2000
     and September 30, 1999 and in fiscal 2000 was $ 4,391,188, $ 2,150,559 and
     $ 3,816,840 respectively.

     Deposits paid towards the acquisition of property, plant and equipment
     outstanding at each balance sheet date and the cost of property, plant and
     equipment not put to use before such date are disclosed as "Capital work-
     in-progress".

1.8       Impairment of long-lived assets

     The company evaluates the recoverability of its long-lived assets and
     certain identifiable intangibles, if any, whenever events or changes in
     circumstances indicate that their carrying amounts may not be recoverable.
     Recoverability of assets to be held and used is measured by a comparison of
     the carrying amount of an asset to future undiscounted net cash flows
     expected to be generated by the asset. If such assets are considered to be
     impaired, the impairment to be recognized is measured by the amount by
     which the carrying value of the assets exceeds the fair value of the
     assets. Assets to be disposed are reported at the lower of the carrying
     value or the fair value less the cost to sell.

1.9       Research and development

     Research and development costs are expensed as incurred. Software product
     development costs are expensed as incurred until technological feasibility
     is achieved. Software product development costs incurred subsequent to the
     achievement of technological feasibility are not significant and are
     expensed as incurred.

1.10      Foreign currency translation

     The accompanying financial statements are reported in US dollars. The
     functional currency of the company is the Indian rupee ("Rs."). The
     translation of Rs to US dollars is performed for balance sheet accounts
     using the exchange rate in effect at the balance sheet date, and for
     revenue and expense accounts using a monthly average exchange rate for the
     respective periods. The gains or losses resulting from such translation are
     reported as "Other comprehensive income", a separate component of
     stockholders' equity. The method for translating expenses of overseas
     operations depends upon the funds used. If the payment is made from a rupee
     denominated bank account, the exchange rate prevailing on the date of the
     payment would apply. If the payment is made from a foreign currency, i.e.,
     non-rupee denominated account, the translation into rupees is performed at
     the average monthly exchange rate.

1.11      Foreign currency transactions

     The company enters into foreign exchange forward contracts to limit the
     effect of exchange rate changes on its foreign currency receivables. Gains
     and losses on these contracts are recognized as income or expense in the
     statements of income as incurred, over the life of the contract.

1.12      Earnings per share

     In accordance with Statement of Financial Accounting Standards ("SFAS") No.
     128, Earnings Per Share, basic earnings per share are computed using the
     weighted average number of common shares outstanding during the period.
     Diluted earnings per share is computed using the weighted average number of
     common and dilutive common equivalent shares outstanding during the period,
     using the treasury stock method for options and warrants, except where the
     result would be anti-dilutive.

                                                                               9
<PAGE>

1.13      Income taxes

     Income taxes are accounted for using the asset and liability method.
     Deferred tax assets and liabilities are recognized for the future tax
     consequences attributable to differences between the financial statement
     carrying amounts of existing assets and liabilities, and their respective
     tax bases and operating loss carry-forwards. Deferred tax assets and
     liabilities are measured using enacted tax rates expected to apply to
     taxable income in the years in which those temporary differences are
     expected to be recovered or settled. The effect of changes in tax rates on
     deferred tax assets and liabilities is recognized as income in the period
     that includes the enactment date. The measurement of deferred tax assets is
     reduced, if necessary, by a valuation allowance for any tax benefits of
     which future realization is uncertain.

1.14      Fair value of financial instruments

     The carrying amounts reflected in the balance sheets for cash, cash
     equivalents, accounts receivable and accounts payable approximate their
     respective fair values due to the short maturities of these instruments.

1.15      Concentration of risk

     Financial instruments that potentially subject the company to
     concentrations of credit risk consist principally of cash equivalents,
     trade accounts receivable and hedging instruments. By their nature, all
     such financial instruments involve risk including the credit risk of non-
     performance by counterparties. In management's opinion, as of September 30,
     2000, September 30, 1999 and March 31, 2000, there was no significant risk
     of loss in the event of nonperformance of the counterparties to these
     financial instruments. Exposure to credit risk is managed through credit
     approvals, establishing credit limits and monitoring procedures. The
     company's cash resources are invested with corporations, financial
     institutions and banks with high investment grade credit ratings.
     Limitations are established by the company as to the maximum amount of cash
     that may be invested with any such single entity.

1.16      Retirement benefits to employees

     1.16.1    Gratuity

     In accordance with Indian law, the company provides for gratuity, a defined
     benefit retirement plan (the "Gratuity Plan") covering all employees. The
     Gratuity Plan provides a lump sum payment to vested employees at retirement
     or termination of employment of an amount based on the respective
     employee's salary and the years of employment with the company. The company
     established the Infosys Technologies Limited Employees' Group Gratuity Fund
     Trust (the "Gratuity Fund Trust") on April 1, 1997. Liabilities with regard
     to the Gratuity Plan are determined by actuarial valuation, based upon
     which the company makes contributions to the Gratuity Fund Trust. Trustees
     administer the contributions made to the Gratuity Fund Trust. The funds
     contributed to the Gratuity Fund Trust are invested in specific securities
     as mandated by the law and generally consist of federal and state
     government bonds and the debt instruments of government-owned corporations.

     1.16.2    Superannuation

     Apart from being covered under the Gratuity Plan described above, the
     senior officers of the company are also participants in a defined
     contribution plan maintained by the company. The plan is termed the
     superannuation plan (the "plan") to which the company makes monthly
     contributions based on a specified percentage of each covered employee's
     salary. The company has no further obligations under the plan beyond its
     monthly contributions.

     1.16.3    Provident fund

     In addition to the above benefits, all employees receive benefits from a
     provident fund, which is a defined contribution plan. Both the employee and
     the company make monthly contributions to the plan, each equal to 12% of
     each covered employee's salary. The company established a provident fund
     trust in August 1996, to which a part of the contributions are made each
     month. The remainder of the contributions is made to the Government's
     provident fund. The company has no further obligations under provident fund
     beyond its monthly contributions.

1.17      Investments

     Investments where the company controls between 20% and 50% of the voting
     interest are accounted for using the equity method. Investment securities
     in which the company controls less than 20% voting interest are currently
     classified as "Available-for-sale securities".

     Investment securities designated as "available-for-sale" are carried at
     their fair value based on quoted market prices, with unrealized gains and
     losses, net of deferred income taxes, reported as a separate component of
     stockholders' equity. Realized gains and losses and declines in value
     judged to be other than temporary on

                                                                              10
<PAGE>

     available-for-sale securities are included in the statements of income. The
     cost of securities sold is based on the specific identification method.
     Interest and dividend income is recognized when earned.

1.18      Stock-based compensation

     The company uses the intrinsic value-based method of Accounting Principles
     Board ("APB") Opinion No. 25, Accounting for Stock Issued to Employees, to
     account for its employee stock-based compensation plan. The company has
     therefore adopted the pro forma disclosure provisions of SFAS No. 123,
     Accounting for Stock-Based Compensation.

1.19      Dividends

     Dividends are recognized on actual payment.

1.20      Notes to financial statements

     1.20.1    Cash and cash equivalents

     The cost and fair values for cash and cash equivalents as of September 30,
     2000 and 1999 and March 31, 2000, respectively are as follows:

<TABLE>
<CAPTION>
      --------------------------------------------------------------------------------------------- ----------------------
                                                                       As of September 30,                 As of March 31,
                                                              -----------------------------------------
                                                                            2000               1999                   2000
      ---------------------------------------------------------------------------------------------------------------------
      <S>                                                      <C>                 <C>               <C>
      Cost and fair values
         Cash and bank deposits                                     $ 92,216,742       $ 86,665,237           $ 99,035,223
         Deposits with corporations                                   24,258,706         17,465,877             17,564,263
      ---------------------------------------------------------------------------------------------------------------------
                                                              ------------------- ------------------ ----------------------
                                                                   $ 116,475,448      $ 104,131,114           $116,599,486
      =====================================================================================================================
</TABLE>

     1.20.2   Trade accounts receivable

     Trade accounts receivable, as of September 30, 2000 and 1999 and March 31,
     2000, net of allowance for doubtful accounts of $ 1,550,118, $ 724,337 and
     $ 507,487, respectively amounted to $ 52,826,967, $ 30,626,659 and $
     31,233,515, respectively. The age profile of trade accounts receivable is
     given below.

<TABLE>
<CAPTION>
                                                                                                                      in %
      --------------------------------------------------------------------------------------------------------------------
                                                                       As of September 30,                 As of March 31,
                                                              ---------------------------------------
      Period (in days)                                                      2000                1999                  2000
      ---------------------------------------------------------------------------------------------------------------------
      <S>                                                                   <C>                 <C>                   <C>
      0 - 30                                                                75.6                53.6                  64.7
      31 - 60                                                               13.6                33.0                  31.8
      61 - 90                                                                6.7                10.3                   1.8
      More than 90                                                           4.1                 3.1                   1.7
      ---------------------------------------------------------------------------------------------------------------------
                                                              ------------------  ------------------- ---------------------
                                                                           100.0               100.0                 100.0
      =====================================================================================================================
</TABLE>

     Trade accounts receivable includes accounts receivable from Yantra
     amounting to $ 389,460, September 30, 2000 and 1999 and March 31, 2000,
     respectively.

     1.20.3    Prepaid expenses and other current assets
     Prepaid expenses and other current assets consist of the following:

<TABLE>
<CAPTION>
      -------------------------------------------------------------------------------------------------------------------
                                                                       As of September 30,                 As of March 31,
                                                              ---------------------------------------
                                                                            2000                1999                 2000
      -------------------------------------------------------------------------------------------------------------------
      <S>                                                            <C>                 <C>                 <C>
      Prepaid expenses                                               $ 4,378,992         $ 2,291,132            3,602,334
      Rent deposits                                                    1,995,378           1,594,247            1,798,738
      Deposits with government organizations                             527,971             334,066              721,476
      Loans to employees                                               6,202,867           3,218,805            5,114,253
      Costs in excess of billings                                         70,729               -                    -
      Other advances                                                      79,630              44,115               19,494
      -------------------------------------------------------------------------------------------------------------------
                                                              ------------------    ------------------   ----------------
                                                                    $ 13,255,567         $ 7,482,365         $ 11,256,295
      ===================================================================================================================
</TABLE>

     Other advances represent advance payments to vendors for the supply of
     goods and rendering of services. Deposits with government organizations
     relate principally to leased telephone lines and electricity supplies.
     Costs in excess of billings represent costs incurred on fixed price
     contracts in respect of which milestones are yet to be achieved.

                                                                              11
<PAGE>

1.20.4  Property, plant and equipment - net

Property, plant and equipment consist of the following:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
                                          As of September 30,               As of March 31,
                                      ---------------------------------
                                               2000               1999                 2000
- --------------------------------------------------------------------------------------------
<S>                                     <C>                <C>                  <C>
 Land                                   $  6,507,118       $  2,590,065         $  4,833,786
 Buildings                                24,548,112          8,336,877           13,509,409
 Furniture and fixtures                   13,667,773          5,707,273            9,156,208
 Computer equipment                       32,139,230         21,312,132           25,742,780
 Plant and equipment                      17,816,936          8,192,230           11,871,138
 Vehicles                                     26,723             31,306               31,292
 Capital work-in-progress                 22,730,386          9,474,515           13,064,301
- --------------------------------------------------------------------------------------------
                                         117,436,278         55,644,398           78,208,914
 Accumulated depreciation                (38,065,104)       (23,422,603)         (30,654,142)
============================================================================================
                                        $ 79,371,264       $ 32,221,795         $ 47,554,772

============================================================================================
</TABLE>

Depreciation expense amounted $ 9,316,317, $ 4,641,216 and $ 12,268,169 for the
six months ended September 30, 2000 and September 30, 1999 and fiscal 2000,
respectively.

1.20.5 Investments

The amortized cost, gross unrealized holding gains, gross unrealized holding
losses and fair values of available-for-sale securities by major investment type
and class of investment are as follows:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
                                                                                      Gross            Gross
                                                                                 unrealized       unrealized
                                                             Amortized cost   holding gains   holding losses    Fair value
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>              <C>             <C>               <C>
 As of September 30, 2000
 M-Commerce Ventures Pte Ltd - 20 units, each unit
     representing 1 Ordinary Share of S$ 1 each at par
     and 9 Redeemable Preference Shares of S$ 1 each
     at par, with a premium of S$ 1,110 per
     Redeemable Preference Share                             $   112,235           -                -           $   112,235
 Asia Net Media BVI Limited - 30,000,000 Ordinary
     Shares, par value $ 0.01 each                             1,500,000           -                -             1,500,000
 Alpha Thinx Mobile Services AG - 27,790 Bearer
     Shares, par value EUR 1 each                                480,300           -                -               480,300
 EC Cubed Inc. - 1,300,108 Series D Convertible
     Preferred Stock, par value $ 0.0001 each                  3,000,000           -                -             3,000,000
 CiDRA Corporation - 33,333 Series D Convertible
     Preferred Stock, par value $ 0.01 each                    2,999,970           -                -             2,999,970
 JASDIC Park Company - 480 Common Stock, par
   value (Yen) 50,000 each                                       177,576           -                -               177,576
 Others                                                              362           -                -                   362
===========================================================================================================================
                                                             $ 8,270,443           -                -           $ 8,270,443

===========================================================================================================================

 As of September 30, 1999
 JASDIC Park Company - 480 Common Stock, par
   value (Yen) 50,000 each                                   $   177,576           -                -           $   177,576
 Others                                                              362           -                -                   362
===========================================================================================================================
                                                             $   177,938           -                -           $   177,938

===========================================================================================================================

 As of March 31, 2000
 EC Cubed Inc. - 1,300,108 Series D Convertible
     Preferred Stock, par value $ 0.0001 each                $ 3,000,000           -                -           $ 3,000,000
 JASDIC Park Company - 480 Common Stock, par
   value (Yen) 50,000 each                                       177,576           -                -               177,576
 Others                                                              362           -                -                   362
===========================================================================================================================
                                                             $ 3,177,938           -                -           $ 3,177,938

===========================================================================================================================
</TABLE>

1.20.6  Other assets

Other assets mainly represent the non-current portion of loans to employees.

                                                                              12
<PAGE>

1.20.7  Related parties

The company grants loans to employees for acquiring assets such as property and
cars. Such loans are repayable over fixed periods ranging from 1 to 100 months.
The rates at which the loans have been made to employees vary between 0% to 4%.
No loans have been made to employees in connection with equity issues. The loans
are generally secured by the assets acquired by the employees. As of September
30, 2000 and 1999 and March 31, 2000, amounts receivable from officers amounting
to $ 204,730, $ 421,608 and $ 309,835, respectively are included in prepaid
expenses and other current assets, and other assets in the accompanying balance
sheets.

The required repayments of loans by employees are as detailed below.

<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
                                       As of September 30,            As of March 31,
                                ---------------------------------
                                        2000                1999                 2000
- -------------------------------------------------------------------------------------
<S>                             <C>                  <C>              <C>
 2000                                       -        $ 3,218,805                    -
 2001                            $  6,202,867          1,427,633         $  5,114,252
 2002                               2,051,248          1,120,968            1,887,808
 2003                               1,415,237            726,489            1,383,397
 2004                                 826,563            567,179              861,752
 2005                                 640,456                  -              696,581
 Thereafter                         1,875,559          1,383,174            2,065,061
- -------------------------------------------------------------------------------------
 Total                           $ 13,011,930        $ 8,444,248         $ 12,008,851

=====================================================================================
</TABLE>

The estimated fair values of related party receivables amounted to $ 9,953,461,
$ 7,924,089 and $ 8,959,996 as of September 30, 2000, September 30, 1999 and
March 31, 2000, respectively. These amounts were determined using available
market information and appropriate valuation methodologies. Considerable
judgement is required to develop these estimates of fair value. Consequently,
these estimates are not necessarily indicative of the amounts that the company
could realize in the market.

1.20.8  Other accrued liabilities

Other accrued liabilities comprise the following:

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
                                                         As of September  30,             As of March 31,
                                                  ----------------------------------
                                                           2000                1999                  2000
- ---------------------------------------------------------------------------------------------------------
<S>                                               <C>                   <C>               <C>
 Accrued compensation to staff                      $  8,603,416        $ 4,284,300          $  7,747,965
 Accrued dividends                                        94,718          2,582,829                65,872
 Provision for post sales client support               1,374,475          1,189,182             1,265,849
 Employee withholding taxes payable                        -                  -                 1,530,832
 Others                                                6,004,207          2,637,724             3,225,117
- ---------------------------------------------------------------------------------------------------------
                                                    $ 16,076,816       $ 10,694,035          $ 13,835,635

=========================================================================================================
</TABLE>

1.20.9  Employee post retirement benefits

1.20.9.1   Gratuity

The company recognized net costs in relation to the Gratuity Plan in the
financial statements amounting to $ 1,653,699, $ 735,483 and $ 4,474,274 for the
six months ended September 30, 2000 and September 30, 1999 and fiscal 2000,
respectively.

1.20.9.2   Superannuation
The company contributed $ 387,397, $ 112,612 and $ 244,248 to the superannuation
plan in the six months ended September 30, 2000 and 1999 and fiscal 2000,
respectively.

1.20.9.3   Provident fund

The company contributed $ 1,010,547, $ 547,827 and $ 1,198,772 to the provident
fund in the six months ended September 30, 2000 and 1999 and fiscal 2000,
respectively.

1.20.10    Preferred stock of Yantra

In September 1997, Yantra, sold 5,000,000 shares of Series A Convertible
Preferred Stock, par value $ 0.01 per share ("Series A Convertible Preferred")
at $ 0.75 per share for $ 3,750,000 in cash. The related offering costs of
$ 49,853 were offset against the proceeds of the issue. Of these, 2,000,000
shares were issued to the company and 3,000,000 shares were issued to third
party investors. The preferred stock issued to the company was eliminated upon
consolidation. Preferred stock issued to third party investors was reported in
the balance sheet as preferred stock of subsidiary.

                                                                              13
<PAGE>

In August 1998, Yantra sold 4,800,000 shares of Series B Convertible Preferred
Stock, par value $ 0.01 per share ("Series B Convertible Preferred") at $ 1.25
per share for $ 6,000,000 in cash to venture capitalists. The related offering
costs of $ 44,416 were offset against the proceeds of the issue. In connection
with this sale, Yantra issued warrants to purchase 810,811 shares of Series B-1
Convertible Preferred Stock, par value $ 0.01 per share ("Series B-1 Convertible
Preferred"), at $ 0.01 per share for $ 8,108 in cash. Such warrants are
immediately exercisable and expire in seven years. The exercise price of the
warrants is based upon the then current market price of the Series B-1
Convertible Preferred at the time of exercise.

Holders of Series A Convertible Preferred vote with holders of common stock on
an as-converted basis, except as otherwise required by Delaware law. The Series
A Convertible Preferred are convertible into common stock at a 1:1 ratio
(subject to certain adjustments): (i) automatically in the event of an initial
public offering with gross proceeds of $ 10,000,000 or more; or (ii) at any time
at the holder's option. The holders of Series A Convertible Preferred are
entitled to a 6% cumulative dividend ($ 0.045 per share) and to receive
additional dividends at the same rate of dividends, if any, declared and paid on
the common stock, calculated on an as-converted basis. Upon a liquidation or
sale of Yantra, holders of the Series A Convertible Preferred are entitled to a
liquidation preference of $ 0.75 per share plus accrued and unpaid dividends;
and any remaining assets will be distributed to holders of the common stock. The
Series A Convertible Preferred is redeemable at the election of holders of 75%
of the outstanding shares of Series A Convertible Preferred at any time after
September 29, 2004 at a redemption price of $ 0.75 per share plus accrued but
unpaid dividends.

The holders of Series B and B-1 Convertible Preferred are entitled to similar
rights, privileges and restrictions as that of Series A Convertible Preferred.

In October 1998, Infosys sold 1,363,637 shares of Series A Convertible Preferred
in Yantra, having a cost basis of $ 879,042 to a third party investor for
$ 1,500,000 thereby recognizing a gain of $ 620,958 and reducing its voting
interest in Yantra to approximately 47%. The company accounted for Yantra by the
equity method. Deconsolidation of Yantra has resulted in a credit to the
company's retained earnings of an amount of $ 2,468,831 representing the excess
of Yantra's losses previously recognized by the company, amounting to
$ 4,445,903, over the company's residual investment basis in Yantra amounting to
$ 1,977,072.

1.20.11  Stockholders' equity

The company has only one class of capital stock referred to herein as equity
shares. In fiscal 1999, the board of directors authorized a two-for-one stock
split of the company's equity shares effected in the form of a stock dividend.
Also, in November 1999, the board of directors authorized a two-for-one stock
split of the company's equity shares, whereby each issued and outstanding equity
share, par value $ 0.32 each, was split into two equity shares, par value $ 0.16
each. All references in the financial statements to number of shares, per share
amounts and market prices of the company's equity shares have been retroactively
restated to reflect the stock splits.

1.20.12 Equity shares

1.20.12.1  Voting

Each holder of equity shares is entitled to one vote per share.

1.20.12.2  Dividends

Should the company declare and pay dividends, such dividends will be paid in
Indian Rupees and pro rata from the date of holding such shares. The company
declared a cash dividend of $ 4,973,898 during the six months ended September
30, 2000.

Indian law mandates that any dividend be declared out of distributable profits
only after the transfer of up to 10% of net income computed in accordance with
current regulations to a general reserve. Also, the remittance of dividends
outside India is governed by Indian law on foreign exchange. Such dividend
payments are also subject to applicable taxes.

1.20.12.3  Liquidation

In the event of any liquidation of the company, the holders of common stock
shall be entitled to receive all of the remaining assets of the company, after
distribution of all preferential amounts, if any. Such amounts will be in
proportion to the number of shares of equity shares held by the stockholders.

1.20.12.4  Stock options

There are no voting, dividend or liquidation rights to the holders of warrants
issued under the company's stock option plan.

1.20.13 Other income, net

Other income, net, consists of the following:

                                                                              14
<PAGE>

<TABLE>
<CAPTION>
     ----------------------------------------------------------------------------------------------------------------------
                                                                        Six months ended                        Year ended
                                                             ----------------------------------------
                                                              September 30, 2000      September 30, 1999    March 31, 2000
     ----------------------------------------------------------------------------------------------------------------------
     <S>                                                     <C>                      <C>                   <C>
      Interest income and others                                     $ 3,892,440         $ 2,849,746           $ 5,729,653
      Income from sale of special import licenses                         15,084             301,166               426,407
      Exchange gains                                                   3,787,714           2,265,370             2,882,732
      ---------------------------------------------------------------------------------------------------------------------
      ---------------------------------------------------      -----------------    ----------------     -----------------
                                                                     $ 7,695,238         $ 5,416,282           $ 9,038,792
     ======================================================================================================================
</TABLE>

     1.20.14  Operating leases

     The company has various operating leases for office buildings that are
     renewable on a periodic basis at its option. Rental expense for operating
     leases in the six months ended September 30, 2000 and 1999 and in fiscal
     2000 were $ 1,545,988, $ 1,025,112 and $ 2,387,334, respectively. The
     operating leases are cancelable at the company's option. The company leases
     some of its office space under several non-cancelable operating leases for
     periods ranging between three through ten years. The schedule of future
     minimum rental payments in respect of these leases is set out below.

<TABLE>
<CAPTION>
                     ---------------------------------------------------------------------
                     Year ending September 30,
                     ---------------------------------------------------------------------
                     <S>                                                      <C>
                     2001                                                     $ 1,270,307
                     2002                                                       1,174,686
                     2003                                                       1,201,407
                     2004                                                       1,124,559
                     2005                                                         636,333
                     Thereafter                                                 1,173,233
                     ---------------------------------------------------------------------
                                                                              $ 6,580,525
                     =====================================================================
</TABLE>

     1.20.15  Research and development

     General and administrative expenses in the accompanying statements of
     income include research and development expenses of $ 1,623,703, $ 899,586
     and $ 1,904,123 for the six months ended September 30, 2000 and 1999 and
     fiscal 2000, respectively.

     1.20.16  Employees' Stock Offer Plans ("ESOP")

     1994 Employees Stock Offer Plan (the "1994 Plan"): In September 1994, the
     company established the 1994 Plan which provided for the issuance of
     6,000,000 warrants (as adjusted for the stock split effective June 1997,
     December 1998 and December 1999) to eligible employees. The warrants were
     issued to an employee welfare trust (the "Trust") at Rs. 1 each and were
     purchased by the Trust using the proceeds of a loan obtained from the
     company. The Trust holds the warrants and transfers them to eligible
     employees at Rs. 1 each. Each warrant entitles the holder to purchase one
     of the company's equity shares at a price of Rs. 100 per share. The
     warrants and the equity shares received upon the exercise of warrants are
     subject to a five-year aggregate vesting period from the date of issue of
     warrants to employees. The warrants expire upon the earlier of five years
     from the date of issue or September 1999. The fair market value of each
     warrant is the market price of the underlying equity shares on the date of
     the grant.

     In 1997, in anticipation of a share dividend to be declared by the company,
     the Trust exercised all warrants held by it and converted them into equity
     shares with the proceeds of a loan obtained from the company. In connection
     with the warrant exercise and the share dividend, on an adjusted basis,
     3,011,200 equity shares were issued to employees of the company who
     exercised stock purchase rights and 2,988,800 equity shares were issued to
     the Trust for future issuance to employees pursuant to the 1994 Plan.
     Following such exercise, there were no longer any rights to purchase equity
     shares from the company in connection with the 1994 Plan. Only equity
     shares held by the Trust remained for future issues to employees, subject
     to vesting provisions. The equity shares acquired upon the exercise of the
     warrants vests 100% upon the completion of five years of service. The
     warrant holders were entitled to exercise early, but the shares received
     are subject to the five-year vesting period. As of September 30, 2000, the
     company's outstanding equity shares included 558,800 equity shares held by
     the Trust of which 334,200 equity shares were allotted to employees,
     subject to vesting provisions and are included in the calculation of basic
     and diluted earnings per share. The remaining 224,600 equity shares were
     not considered outstanding for purposes of calculating diluted earnings per
     share. The warrants allotted and the underlying equity shares are not
     subject to any repurchase obligations by the company.

     The company has elected to use the intrinsic value-based method of APB 25
     to account for its employee stock-based compensation plan. Accordingly, in
     the six months ended September 30, 2000 the company recorded no deferred
     compensation and for the six months ended September 30, 1999 and for fiscal
     2000, the company recorded deferred compensation of $ 1,029,649 and $
     1,029,649, respectively for the difference, on the grant date, between the
     exercise price and the fair value as determined by quoted market prices of
     the common stock

                                                                              15
<PAGE>

     underlying the warrants. The deferred compensation is amortized on a
     straight-line basis over the vesting period of the warrants/equity shares.

     In fiscal 1999, the company declared a stock split of two equity shares for
     each equity share outstanding to all its stockholders including
     participants in the 1994 Plan in the form of a stock dividend and
     consequently recognized an accelerated compensation charge at the time of
     the stock dividend amounting to $ 12,906,962.

     1998 Employees Stock Offer Plan (the "1998 Plan"). The company's 1998 Plan
     provides for the grant of non-statutory stock options and incentive stock
     options to employees of the company. The establishment of the 1998 Plan was
     approved by the board of directors in December 1997 and by the stockholders
     in January 1998. The Government of India has approved the 1998 Plan,
     subject to a limit of 1,470,000 equity shares representing 2,940,000
     American Depositary Shares ("ADS") to be issued under the 1998 Plan. Unless
     terminated sooner, the 1998 Plan will terminate automatically in January
     2008. All options under the 1998 Plan will be exercisable for equity shares
     represented by ADSs. The board of directors or a committee of the board may
     administer the 1998 Plan. All options under the 1998 Plan are exercisable
     for equity shares represented by ADSs.

     1999 Stock Offer Plan (the "1999 Plan"). In fiscal 2000, the company
     instituted the 1999 Plan. The stockholders and the Board of Directors
     approved the 1999 Plan in June 1999. The 1999 Plan provides for the issue
     of 6,600,000 equity shares to employees. The 1999 Plan is administered by a
     Compensation Committee comprising a maximum of seven members, the majority
     of whom are independent directors on the Board of Directors. Under the 1999
     Plan, options will be issued to employees at an exercise price, which shall
     not be less than the Fair Market Value ("FMV"). Under the 1999 Plan,
     options may also be issued to employees at exercise prices that are less
     than FMV only if specifically approved by the members of the company in a
     general meeting. The activity in the warrants/equity shares of the 1994,
     1998 and 1999 Employees Stock Offer Plans in the six months ended September
     30, 2000 and 1999 and in fiscal 2000 is set out below.

<TABLE>
<CAPTION>
      ---------------------------------------------------------------------------------------------------------------------
                                                  Six months ended          Six months ended             Year ended
                                                 September 30, 2000        September 30, 1999          March 31, 2000
                                              -----------------------------------------------------------------------------
                                                             Weighted                  Weighted                  Weighted
                                                    Shares   average         Shares    average          Shares   average
                                               arising out   exercise   arising out    exercise    arising out   exercise
                                                of options   price      of options     price       of options    price
      ---------------------------------------------------------------------------------------------------------------------
      <S>                                      <C>           <C>        <C>            <C>         <C>           <C>
      1994 Option plan:
      Outstanding at the beginning of the
         period                                    341,400                   328,000                   328,000
      Granted                                            -           -        30,000     $  1.15        30,000    $   1.15
      Forfeited                                     (7,200)   $   1.15       (10,200)    $  1.15       (16,600)   $   1.15
      Exercised                                          -           -             -           -             -           -
      ---------------------------------------------------------------------------------------------------------------------
      Outstanding at the end of the period         334,200                   347,800                   341,400
      ---------------------------------------------------------------------------------------------------------------------
      Exercisable at the end of the period         334,200                   347,800                   341,400
      Weighted-average fair value of grants
         during the period at less than
         market                                          -                               $ 35.48                  $  35.48
                                                                                         =======                  ========
      1998 Option plan:
      Outstanding at the beginning of the
         period                                    344,750                   213,000                   213,000
      Granted                                      116,000    $ 324.60             -           -       147,150    $ 228.60
      Forfeited                                    (24,350)   $ 124.80             -           -        (3,500)   $  34.00
      Exercised                                       (667)   $  34.00             -           -       (11,900)   $  34.00
      ---------------------------------------------------------------------------------------------------------------------
      Outstanding at the end of the period         435,733                   213,000                   344,750
      ---------------------------------------------------------------------------------------------------------------------
      Exercisable at the end of the period         435,733                   213,000                   344,750
      Weighted-average fair value of grants
         during the period                                    $ 324.60                         -                  $ 228.60
                                                                                                                  ========
      1999 Option plan:
      Outstanding at the beginning of the
         period                                  1,006,800                         -                         -           -
      Granted                                      954,100    $ 144.36             -           -     1,014,500    $  99.12
      Forfeited                                    (77,900)   $ 114.53             -           -        (7,700)   $ 127.98
      Exercised                                       -           -                -           -             -           -
      ---------------------------------------------------------------------------------------------------------------------
      Outstanding at the end of the period       1,883,000                         -                 1,006,800
      ---------------------------------------------------------------------------------------------------------------------
      Exercisable at the end of the period       1,883,000                         -                 1,006,800
</TABLE>
                                                                              16
<PAGE>

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                                      Six months ended            Six months ended               Year ended
                                                     September 30, 2000          September 30, 1999            March 31, 2000
                                                ------------------------------------------------------------------------------------
                                                                 Weighted                     Weighted                   Weighted
                                                        Shares    average             Shares   average           Shares   Average
                                                   arising out   exercise        arising out  exercise      arising out  exercise
                                                    of options      price         of options     price       of options     price
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                              <C>                                                    <C>
Weighted-average fair value of grants during                      $144.36                          -                      $ 99.12
 the period
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  The following table summarizes information about stock options outstanding as
  of September 30, 2000:

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
                                                  Outstanding                                       Exercisable
- ------------------------------------------------------------------------------------------------------------------------------
                          Number of            Weighted average                        Number of         Weighted
Range of                  shares  arising      remaining          Weighted average     shares arising    average exercise
exercise prices           out of options       contractual life   exercise price       out of options    price
- ------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>                <C>                 <C>                 <C>                  <C>
$ 1.15 - $ 324.36                  2,652,933        2.35 years          $116.62            2,652,933              $116.62
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  1.20.17  Income taxes

  The provision for income taxes comprises:

<TABLE>
<CAPTION>
                                                                  Six months ended September 30
                                                                --------------------------------   Year ended
                                                                      2000            1999B       March 31, 2000
- ----------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>            <C>
Current taxes
  Domestic taxes                                                      $1,831,956      $1,182,557      $2,505,952
  Foreign taxes                                                        5,162,380       2,759,300       6,538,256
- ----------------------------------------------------------------------------------------------------------------
                                                                       6,994,336       3,941,857       9,044,208
Deferred taxes
  Domestic taxes                                                        (310,863)        364,526        (850,891)
  Foreign taxes                                                                -               -               -
- -----------------------------------------------------------------------------------------------------------------
                                                                        (310,863)        364,526        (850,891)
================================================================================================================
                                                                    ------------      ----------     -----------
Aggregate taxes                                                       $6,683,473      $4,306,383      $8,193,317
================================================================================================================
</TABLE>

  The tax effects of significant temporary differences that resulted in deferred
  tax assets and liabilities and a description of the financial statement items
  that created these differences are as follows:


<TABLE>
<CAPTION>
                                                                                   As at
                                                                -----------------------------------------            As at
                                                                  September 30, 2000   September 30, 1999   March 31, 2000
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>                  <C>                  <C>
Deferred tax assets:
Property, plant and equipment                                             $2,835,241           $2,037,849       $2,480,883
Others                                                                       596,795                    -          195,383
- --------------------------------------------------------------------------------------------------------------------------
                                                                           3,432,036            2,037,849        2,676,266
Less: Valuation allowance                                                   (554,907)            (687,000)        (110,000)
==========================================================================================================================
Net deferred tax assets                                                   $2,877,129           $1,350,849       $2,566,266
==========================================================================================================================
</TABLE>

  In assessing the realizability of deferred tax assets, management considers
  whether it is more likely than not that some portion or all of the deferred
  tax assets will not be realized. The ultimate realization of deferred tax
  assets is dependent upon the generation of future taxable income during the
  periods in which the temporary differences become deductible. Management
  considers the scheduled reversal of the projected future taxable income, and
  tax planning strategies in making this assessment. Based on the level of
  historical taxable income and projections for future taxable income over the
  periods in which the deferred tax assets are deductible, management believes
  that it is more likely than not the company will realize the benefits of those
  deductible differences, net of the existing valuation differences at September
  30, 2000. The amount of the deferred tax assets considered realizable,
  however, could be reduced in the near term if estimates of future taxable
  income during the carry forward period are reduced.

  All deferred tax expenses (benefits) are allocated to the continuing
  operations of the company.

  A reconciliation of the income tax provision to the amount computed by
  applying the statutory income tax rate to the income before provision for
  income taxes is summarized below.

                                                                              17
<PAGE>

<TABLE>
<CAPTION>
                                                                   Six months ended September 30,     Year ended
                                                                ---------------------------------
                                                                       2000             1999        March 31, 2000
- ------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>              <C>              <C>
Net income before taxes                                             $ 66,297,032     $ 32,337,773     $ 69,537,845
Enacted tax rates in India                                                  38.5%            38.5%            38.5%
- ------------------------------------------------------------------------------------------------------------------
Computed expected tax expense                                         25,524,357       12,450,043       26,772,070
Less: Tax effect due to non-taxable export income                    (25,226,339)     (12,290,413)     (24,019,942)
      Others                                                             911,820          217,339       (1,121,972)
Effect of tax rate change                                                      -        1,131,822          (29,771)
Effect of prior period tax adjustments                                   311,255           38,292           54,676
- ------------------------------------------------------------------------------------------------------------------
Provision for domestic income taxes                                    1,521,093        1,574,083        1,655,061
Effect of tax on foreign income                                        5,162,380        2,759,300        6,538,256
==================================================================================================================
Aggregate taxes                                                     $  6,683,473     $  4,306,383     $  8,193,317
==================================================================================================================
</TABLE>

  The provision for foreign taxes is due to income taxes payable overseas,
  principally in the United States. The company benefits from certain
  significant tax incentives provided to software firms under Indian tax laws.
  These incentives presently include: (i) an exemption from payment of Indian
  corporate income taxes for a period of ten consecutive years of operation of
  software development facilities designated as "Software Technology Parks" (the
  "STP tax holiday"); and (ii) a tax deduction for profits derived from
  exporting computer software (the "Export deduction"). All but one of the
  company's software development facilities are located in designated Software
  Technology Parks ("STP"). The Government of India has recently amended the tax
  incentives available to companies set up in designated STPs.  The period of
  the STP tax holiday available to such companies is restricted to ten
  consecutive years beginning from the financial year, when the unit started
  producing computer software or March 31, 2000, whichever is earlier.
  Additionally the export deduction will be phased out equally over a period of
  five years starting from the fiscal 2001.  The benefits of these tax incentive
  programs have historically resulted in an effective tax rate for the company
  well below statutory rates.

  1.20.18 Earnings per share

  A reconciliation of the equity shares used in the computation of basic and
  diluted earnings per equity share is set out below.

<TABLE>
<CAPTION>

                                                                 Six months ended September 30    Year ended
                                                               -------------------------------
                                                                           2000           1999  March 31, 2000
- --------------------------------------------------------------------------------------------------------------
<S>                                                              <C>             <C>            <C>
Basic earnings per equity share - weighted average number of
 common shares outstanding excluding unallocated shares of ESOP
 Bffect of dilutive common equivalent shares - stock options         65,959,151     65,680,100      65,659,625
 outstanding                                                          1,138,170              -         204,365
Diluted earnings per equity share - weighted average number of
 common shares and common equivalent shares outstanding              67,097,321     65,680,100      65,863,990
- --------------------------------------------------------------------------------------------------------------
</TABLE>

  1.20.19 Lines of credit

  The company has a line of credit from its bankers for its working capital
  requirement of $ 1,086,720 bearing interest at prime lending rates as
  applicable from time to time.  The prime lending rate of interest as of
  September 30, 2000 was 15.8%.  This line of credit is secured by inventories
  and accounts receivable. The line of credit contains certain financial
  covenants and restrictions on indebtedness and is renewable every 12 months.
  As of September 30, 2000, the company had no balance outstanding under this
  facility.

  1.20.20 Financial instruments

  Foreign exchange forward contracts

  The company enters into foreign exchange forward contracts to offset the
  foreign currency risk arising from the accounts receivable denominated in
  currencies other than the Indian rupee, primarily the US dollar.  The counter
  party to the company's foreign currency forward contracts is generally a bank.
  Management believes that the risks or economic consequences of non-performance
  by the counter party are not material to its financial position or results of
  operations. There were no significant foreign exchange gains and losses on
  foreign exchange forward contracts during the six months ended September 30,
  2000 and 1999 and fiscal 2000. There were no open foreign exchange forward
  contracts as of September 30, 2000, September 30, 1999 and March 31, 2000,
  respectively.

                                                                              18
<PAGE>

1.20.21  Segment reporting

1.20.21.1    Revenue by geographic area

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
                                                        Six months ended September 30,                   Year ended
                                                       ----------------------------------------
                                                                      2000               1999          March 31, 2000
- --------------------------------------------------------------------------------------------------------------------------
<S>                                                          <C>                 <C>                   <C>
North America                                                $ 133,191,257       $ 68,293,247          $  158,723,649
Europe                                                          31,540,046         13,607,735              30,064,939
India                                                            2,080,597          1,116,200               2,912,091
Rest of the world                                               11,384,983          4,653,398              11,743,075
- --------------------------------------------------------------------------------------------------------------------------
                                                             $ 178,196,883       $ 87,670,580          $  203,443,754
===========================================================================================================================
</TABLE>


SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information requires that an enterprise report a measure of profit or loss and
total assets for each reportable segment. Certain expenses such as personnel
costs, communication, depreciation on plant and machinery, etc., which form a
significant component of total expenses, are not specifically allocable to these
geographic segments as the underlying services are used interchangeably between
reportable segments. Management believes that it is not practical to provide
segment disclosures relating to segment costs and expenses, and consequently
segment profits or losses, since a realistic allocation cannot be made. The
fixed assets used in the company's business are not identifiable to any
particular reportable segment and can be used interchangeably among segments.
Consequently, management believes that it is not practical to provide segment
disclosures relating to total assets since a realistic analysis among the
various geographic segments is not possible.

1.20.21.2    Significant clients

No client accounted for more than 10% of the revenues in the six months ended
September 30, 2000 and 1999 and fiscal 2000, respectively.

1.20.22  Commitments and contingencies

The company has outstanding performance guarantees for various statutory
purposes totaling $ 1,415,562, $ 364,485 and $ 1,207,110 as of September 30,
2000, September 30, 1999 and March 31, 2000, respectively. These guarantees are
generally provided to governmental agencies.

1.20.23  Litigation

The company is subject to legal proceedings and claims, which have arisen, the
ordinary course of its business. These actions, when ultimately concluded and
determined, will not, in the opinion of management, have a material effect on
the results of operations or the financial position of the company.

1.20.24  Non-monetary transaction

During the six months ended September 30, 2000, the company transferred certain
Intellectual Property Rights ("IPR") that it had developed and owned in a
product called OnScan to OnScan Inc. OnScan is a comprehensive web-enabled
wireless notification product. In exchange for the transfer, the company
received consideration in the form of securities including 100,000 Common Stock,
par value $ 0.01 each, 100,000 Series A Voting Convertible Preferred Stock, par
value $ 0.0001 each and 4,400,000 Series A Nonvoting Convertible Preferred
Stock, par value $ 0.0001 each. Convertible Preferred Stock is convertible into
Common Stock automatically upon the closing of an Initial Public Offering by
OnScan Inc.

As of September 30, 2000, the company's controlling interest in OnScan Inc. was
approximately 12%. The transfer was recorded at historic cost and, accordingly,
no gain was recognized on this transaction as of the date of transfer of the
IPR.

1.20.25  Recent accounting pronouncements

In December 1999, the SEC issued Staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements," which provides guidance related to revenue
recognition based on interpretations and practices followed by the SEC. The
company's management believes that its revenue recognition policy is in
compliance with SAB 101 and does not believe that adoption of this Staff
Accounting Bulletin has had a material impact on the company's financial
position or results of operations.

In June 1998, SFAS No. 133, "Accounting for Derivative Financial Instruments and
for Hedging Activities," was issued which will be effective for the year ending
March 31, 2001. This statement was amended by SFAS No. 138 in June 2000 to
further clarify SFAS No. 133. These statements establish accounting and
reporting standards requiring that every derivative instrument, including
certain derivative instruments embedded in other contracts, be recorded in the
balance sheet as either an asset or liability measured at its fair value. These
statements also require that changes in the derivative's fair value be
recognized in earnings unless specific hedge accounting

                                                                              19
<PAGE>

criteria are met. SFAS 133 and SFAS 138 are not anticipated to have a
significant impact on the company's financial position or results of operations
when adopted, since the company currently does not engage in hedging activities.

                                                                              20
<PAGE>

Item 2. Management Discussion and Analysis of Financial Conditions and Results
of Operations

Investors are cautioned that this discussion contains forward-looking statements
that involve risks and uncertainties. When used in this discussion, the words
"anticipate", "believe", "estimate", "intend", "will" and "expect" and other
similar expressions as they relate to the company or its business are intended
to identify such forward-looking statements. The company undertakes no
obligation to publicly update or revise any forward-looking statements, whether
as a result of new information, future events, or otherwise. Actual results,
performances or achievements could differ materially from those expressed or
implied in such forward-looking statements. Factors that could cause or
contribute to such differences include those described under the heading "Risk
Factors" in the Prospectus filed with the SEC, the factors discussed in the Form
20-F filed with the SEC, and those factors discussed elsewhere in this report.
Readers are cautioned not to place undue reliance on these forward-looking
statements that speak only as of their dates. The following discussion and
analysis should be read in conjunction with the company's financial statements
included herein and the notes thereto.

2.1     Overview

     Infosys Technologies Limited (the "company") is a publicly held company
     providing information technology ("IT") solutions to Fortune 1000 and
     emerging new economy companies. Infosys' range of services includes IT
     consulting, IT architecture, application development, e-commerce and
     Internet consulting, and software maintenance. In addition, the company
     develops and markets certain software products. From fiscal 1995 through
     fiscal 2000, total revenue increased from $ 18.1 million to $ 203.4
     million, the number of the company's software professionals worldwide
     increased from approximately 585 to approximately 4,625 and the number of
     its India-based software development centers increased from two to
     seventeen. The company also operationalized one global development center
     at Toronto, Canada in fiscal 2000 and another global development center in
     the United Kingdom during the quarter ended September 30, 2000.

     The company's revenues are generated principally from software services
     provided either on a fixed-price, fixed-time frame or a time-and-materials
     basis. Revenues from services provided on a time-and-materials basis are
     recognized in the month that services are provided and related costs are
     incurred. Revenues from services provided on a fixed-price, fixed-time
     frame basis are recognized upon the achievement of specified milestones
     identified in the related contracts, in accordance with the percentage of
     completion method. Cost of completion estimates are subject to periodic
     revisions. Although the company has revised its project completion
     estimates from time to time, such revisions have not, to date, had a
     material adverse effect on the company's operating results or financial
     condition. Since the company bears the risk of cost overruns and inflation
     with respect to its fixed-price, fixed-time frame projects, the company's
     operating results could be adversely affected by inaccurate estimates of
     contract completion costs and dates, including wage inflation rates and
     currency exchange rates that may affect cost projections. The company also
     develops and markets certain software products, including banking software
     that is licensed primarily to clients in Asia and Africa. Such software
     products represented 2.7% of total revenue during the three months ended
     September 30, 2000. The company derived 75.0% of its total revenue from
     North America, 18.1% from Europe, 1.1% from India and 5.8% from the rest of
     the world during the three months ended September 30, 2000.

     During the three months ended September 30, 2000 and September 30, 1999,
     the company derived 31.4% and 10.3% of its total revenue, respectively,
     from internet and e-commerce projects. Due to shorter time-to-market
     considerations, e-business projects necessitate higher interaction with
     clients. This results in a higher proportion of services being performed at
     client sites. Services performed at a client site typically generate higher
     per capita revenues, but lower gross margins, than the same quantum of
     services performed at the company's own facilities. Consequently, any
     increase in work at client sites can decrease gross margins of the company.

     Cost of revenue consists, primarily, of salary and other compensation
     expenses, depreciation, data communication expenses, computer maintenance,
     cost of software purchased for internal use, certain pre-opening expenses
     for new software development centers, and foreign travel expenses. The
     company depreciates personal computers and servers over two years and
     mainframe computers over three years. Third party software is expensed in
     the period in which it is acquired.

     The company assumes full project management responsibility for each project
     that it undertakes. Approximately 64% of the work on a project is performed
     at the company's facilities in India, and the balance of the work is
     performed at the client site. The proportion of work performed at company
     facilities and at client sites varies from quarter to quarter. The company
     charges higher rates and incurs higher compensation expenses for work
     performed at a client site. Services performed at a client site typically
     generate higher revenues per capita, but at a lower gross margin, than the
     same quantum of services performed at company facilities in India. As a
     result, total

                                                                              21
<PAGE>

     revenues, cost of revenues and gross profit in absolute terms, and as a
     percentage of revenue, fluctuate from quarter to quarter based on the
     proportions of work performed offshore at company facilities and at client
     sites.

                                                                              22
<PAGE>

     Revenue and gross profits are also affected by employee utilization rates.
     Utilization rates depend, among other factors, on the number of employees
     enrolled for in-house training programs, particularly the 14-week classroom
     training course provided to new employees. Since a large percentage of new
     hires begin their training in the second quarter, utilization rates have
     historically been lower in the second and third quarters of a fiscal year.

     Selling and marketing expenses primarily consist of expenses relating to
     advertising, brand building, sales and marketing office leasing, salaries
     of marketing personnel and travel. General and administrative expenses
     consist of expenses relating to communications, finance and administration,
     legal and professional charges, management, rent, salary and other
     compensation, travel and miscellaneous administrative costs.

     Other income includes interest income and foreign currency exchange gains.

     The company also intends to substantially expand its software development
     infrastructure in India. The company had committed $26.4 million towards
     various capital acquisitions as of September 30, 2000. The company has not
     yet made contractual commitments for the majority of its budgeted capital
     expenditure. The company intends to spend an amount of approximately $ 32.6
     million on various capital acquisitions for the rest of fiscal 2001 and
     intends to use its internal accruals to fund this expansion.

2.2       Results of operations

     2.2.1    Three months ended September 30, 2000 compared to three months
              ended September 30, 1999

     Revenue. Total revenues were $ 97.9 million for the three months ended
     September 30, 2000, representing an increase of 104.3% over total revenues
     of $ 47.9 million during the same period in the fiscal 2000. Revenues
     continued to increase in all segments of the company's services. Custom
     software development, re-engineering, maintenance and software development
     through OSDCs formed a majority of the company's revenues. The increase in
     revenues was attributable, in part, to a substantial increase in business
     from certain existing clients and from certain new clients, particularly in
     the insurance, banking and financial services, and telecommunications
     industries. Net sales of Finacle(TM) and other products represented 2.7% of
     total revenues for the three months ended September 30, 2000 as compared to
     4.2% in the corresponding period in fiscal 2000. Revenue from services
     represented 97.3% of total revenues for the three months ended September
     30, 2000 as compared to 95.8% in the corresponding period in fiscal 2000.
     Revenue from fixed-price, fixed-time frame and time-and-materials contracts
     represented 27.6% and 72.4%, respectively, of total revenues in the three
     months ended September 30, 2000 as compared to 29.5% and 70.5%,
     respectively, in the three months ended September 30, 1999. Revenue from
     North America and Europe represented 75.0% and 18.1%, respectively, of
     total revenue for the three months ended September 30, 2000 as compared to
     78.2% and 14.8%, respectively, during the same period in fiscal 2000.

     Cost of Revenues. Cost of revenues was $ 50.2 million for the three months
     ended September 30, 2000, representing an increase of 92.3% over the cost
     of revenues of $ 26.1 million for the same period in fiscal 2000. Cost of
     revenues represented 51.3% and 54.4% of total revenues for the three months
     ended September 30, 2000 and September 30, 1999, respectively. This
     decrease in costs as a percentage of revenues was attributable to an
     increase in blended billed rates to clients during the three months ended
     September 30, 2000 as compared to the quarter ended September 30, 1999 as
     well as a decrease in data communication expenses which have decreased to
     1.2% of revenues as compared to 2.7% of revenues during the three months
     ended September 30, 2000 and 1999, respectively. The decrease is partially
     offset by an increase in personnel costs from annual salary increments
     effective April 1, 2000, increase in onsite living costs effective
     September 1, 2000 and increased personnel costs for new hires. Cost of
     revenues for services represented 51.4% and 55.0% of revenues from services
     for the three months ended September 30, 2000 and September 30, 1999,
     respectively. Cost of revenues for product sales represented 45.8% and
     41.8% of revenues for product sales for the quarters ended September 30,
     2000 and September 30, 1999, respectively.

     Gross Profit. Gross profit was $ 47.7 million for the three months ended
     September 30, 2000 representing an increase of 118.6% over gross profit of
     $ 21.8 million for the three months ended September 30, 1999. This increase
     was attributable to a favorable business mix. As a percentage of total
     revenues, gross profit increased to 48.7% for the three months ended
     September 30, 2000 from 45.6% for the corresponding period in fiscal 2000.
     This increase in gross margins was attributable to an increase in blended
     billed rates to clients during the three months ended September 30, 2000 as
     compared to the quarter ended September 30, 1999 as well as a decrease in
     data communication expenses which have decreased to 1.2% of revenues as
     compared to 2.7% of revenues during the three months ended September 30,
     2000 and 1999, respectively. The decrease is partially offset by an
     increase in personnel costs from annual salary increments effective April
     1, 2000, increases in onsite living costs effective September 1, 2000 and
     increased personnel costs for new hires. Gross profit from services was $
     46.3 million for the three months ended September 30, 2000, an increase of
     123.7% over gross profit of $ 20.7 million for the three months ended
     September 30, 1999. The gross profit from the sales of Finacle(TM) and
     other products was $ 1.4 million for the three months ended September 30,
     2000, an increase of 27.3% over gross profit of $ 1.1

                                                                              23
<PAGE>

     million for the corresponding period in fiscal 2000. As a percentage of
     service revenues, gross profit from services increased to 48.6% for the
     three months ended September 30, 2000 from 45.0% for the three months ended
     September 30, 1999. Gross profit from product sales, as a percentage of
     product revenues, was 54.2% for the three months ended September 30, 2000
     as compared to a gross profit of 58.2% for the corresponding period in
     fiscal 2000.

     Selling and marketing expenses. Sales and marketing expenses were $ 5.0
     million in the three months ended September 30, 2000, an increase of 199.9%
     over sales and marketing expenses of $ 1.7 million in the three months
     ended September 30, 1999. As a percentage of total revenues, sales and
     marketing expenses increased to 5.1% in the three months ended September
     30, 2000 from 3.5% for the three months ended September 30, 1999 due to a
     general increase in the scale of operations, salaries of sales and
     marketing personnel and an increase in brand building expenses which
     amounted to 0.9% of revenues for the three months ended September 30, 2000
     when compared to no sales and marketing expenses for the three months ended
     September 30, 1999. The number of sales offices increased to 22 as of
     September 30, 2000, from 18 as of September 30, 1999. As of September 30,
     2000, the number of sales and marketing personnel increased to 87, up from
     58 as of September 30, 1999.

     General and administrative expenses. General and administrative expenses
     were $ 9.3 million for the three months ended September 2000, representing
     an increase of 117.5% over general and administrative expenses of $ 4.3
     million for the three months ended September 30, 1999. General and
     administrative expenses were 9.5% and 8.9% of total revenues for the three
     months ended September 30, 2000 and 1999, respectively. This increase in
     general and administrative expenses as a percentage of revenues was
     primarily attributable to an increase in the provision for doubtful debts,
     which comprised 1.1% of revenues during the three-month period ended
     September 30, 2000 as compared to 0.4% in the corresponding previous
     period. The increase in general and administrative expenses is also partly
     due to a general increase in management, finance and administrative costs.

     Amortization of Deferred Stock Compensation Expense. Amortization of
     deferred stock compensation expense was $ 1.3 million in each of the three
     months ended September 30, 2000 and 1999. Deferred stock compensation
     expense reflects the continued amortization of compensation expense from
     stock purchase rights granted in prior periods.

     Operating Income. Operating income was $32.2 million for the three months
     ended September 30, 2000, an increase of 120.3% over the operating income
     of $14.6 million for the corresponding period in fiscal 2000. As a
     percentage of revenues, operating income increased to 32.9% for the three
     months ended September 30, 2000 from 30.4% for the corresponding period in
     fiscal 2000.

     Other Income. Other income was $4.3 million for the three months ended
     September 30, 2000 as compared to $2.2 million for the corresponding period
     in fiscal 2000. Other income during the three months ended September 30,
     2000 includes $2.1 million arising from exchange differences on translation
     of foreign currency deposits, interest income of $2.0 million earned on
     proceeds from the issue of American Depositary Shares and income of $
     15,000 from the sale of Special Import Licenses. Other income for the three
     months ended September 30, 1999 includes $ 0.4 million from exchange
     differences on translation of foreign currency deposits, interest income of
     $0.9 million earned on proceeds from the issue of American Depositary
     Shares and income from the sale of Special Import Licenses of $0.3 million.

     Provision for Income Taxes. Provision for income taxes was $3.7 million for
     the three months ended September 30, 2000 as compared to $2.1 million for
     the corresponding period in fiscal 2000. The company's effective tax rate
     decreased to 10.2% for the three months ended September 30, 2000 as
     compared to 12.5% for the corresponding period in fiscal 2000. The
     effective tax rate decreased as additional company operations became
     eligible for Government of India sponsored tax holidays and tax exemptions.

     Net Income. Net income was $ 32.8 million for the three months ended
     September 30, 2000, an increase of 122.7% over net income of $14.7 million
     for the corresponding period in fiscal 2000. As a percentage of total
     revenues, net income increased to 33.5% for the three months ended
     September 30, 2000 from 30.7% for the corresponding period in fiscal 2000.

2.3       Liquidity and capital resources

     The growth of the company has been financed largely from cash generated
     from operations and, to a lesser extent, from the proceeds of equity issues
     and borrowings. In 1993, the company raised approximately $ 4.4 million in
     gross aggregate proceeds from its initial public offering of equity shares
     on Indian stock exchanges. In 1994, the company raised an additional $7.7
     million through private placements of its equity shares with foreign
     institutional investors. In 1999, the company raised $66.3 million through
     the issue of American Depositary Shares (ADSs). As of September 30, 2000,
     the company had $ 116.5 million in cash and cash equivalents, $ 146.1
     million in working capital and no outstanding bank borrowings. As of
     September 30, 2000, the company also had an aggregate of $1.1 million in
     working capital lines of credit with two commercial banks.

     Net cash provided by operating activities was $ 64.0 million and $ 28.2
     million in the six months ended September 30, 2000 and 1999, respectively.
     Net cash provided by operations consisted primarily of net income

                                                                              24
<PAGE>

     offset, in part, by an increase in accounts receivable. Accounts receivable
     as a percentage of total revenues, represented 14.8% and 17.5% as of
     September 30, 2000 and 1999, respectively. Further, the average days
     outstanding of accounts receivable has increased in the 0-30 and greater
     than 90 day aging periods and decreased in the 31-60 and 61-90 day aging
     periods. The company believes that this is due to improved account
     collection practices. The company's policy on accounts receivable includes
     a periodic review of its accounts receivable, including a review of the
     age, amount, and quality of each account receivable; the relationship with,
     size of, and history of the client; the quality of service delivered by the
     company to the client and the current economic environment, to determine
     the classification of an account receivable. Should the review so demand,
     the company will classify the accounts into secured and unsecured accounts,
     and further subclassified between good or doubtful accounts. The company
     makes provisions for all accounts receivable classified as unsecured or
     doubtful and for all accounts receivable that are outstanding more than 180
     days. Prepaid expenses and other current assets increased by $ 1.9 million
     and $ 1.7 million during the six months ended September 30, 2000 and 1999,
     respectively. The increases in both periods were primarily due to increases
     in loans to employees.

     Unearned revenue as of September 30, 2000 was $ 16.0 million compared to
     $ 6.4 million as of September 30, 1999 and consists primarily of advance
     client billings on fixed-price, fixed-time frame contracts for which
     related costs were not yet incurred. The proportion of fixed-price
     contracts under which the company was entitled to bill clients in advance
     increased as of September 30, 2000 over the prior year.

     Net cash used in investing activities was $ 47.2 million and $15.0 million
     in the six months ended September 30, 2000 and 1999, respectively. Net cash
     used in investing activities in the six months ended September 30, 2000 and
     1999 consisted primarily of $ 41.1 million and $ 13.0 million,
     respectively, for property, plant and equipment. Additionally, the company
     purchased units of common stock and convertible preferred stock of M-
     Commerce Ventures Pte Ltd for an aggregate purchase price of US$ 0.1
     million, common stock in Alpha Thinx Mobile Phone Services AG for an
     aggregate purchase price of US$0.5 million and common stock in Asia Net
     Media BVI Ltd., for an aggregate purchase price of US$1.5 million during
     the three months ended September 30, 2000.

     Publicly-traded Indian companies customarily pay dividends. The company
     paid cash dividends of $ 4.7 million and $ 2.5 million in the six months
     ended September 30, 2000 and 1999, respectively. In fiscal 2000, the
     company declared a dividend of $ 7.26 million, which was paid partly in
     fiscal 2000.

     As of September 30, 2000, the company had contractual commitments for
     capital expenditure of $ 21.2 million.

2.4       Reconciliation between the US and the Indian GAAP

     There are material differences between the financial statements prepared in
     Indian and U.S. GAAP. The material differences primarily attributable to
     provision for deferred taxes, accounting for stock-based compensation and
     valuation of short-term investments, (which are marked to market and
     adjusted against retained earnings) and the consolidation of accounts of
     subsidiary, as required by U.S. GAAP. Indian GAAP does not require a
     provision for deferred taxes, amortization of deferred stock compensation,
     the consolidation of accounts of subsidiaries and only requires a provision
     for diminution in the value of current investments.

<TABLE>
<CAPTION>
     ----------------------------------------------------------------------------------------------------------------------
     Reconciliation of net income                     Three months ended                       Six months ended
                                           --------------------------------------------------------------------------------
                                         September 30, 2000   September 30, 1999    September 30, 2000  September 30, 1999
     ----------------------------------------------------------------------------------------------------------------------
     <S>                                 <C>                  <C>                   <C>                 <C>
     Net profit as per Indian GAAP               33,865,614        $ 15,238,792           62,431,499         29,358,517
     Adjustments:
     Amortization of deferred stock              (1,275,796)         (1,293,002)          (2,551,592)        (2,543,102)
        compensation
     Deferred income taxes                          192,068             (28,400)            (310,863)          (364,326)
     Provision for contingencies                         -                   -                    -             777,180
     Provision for e-inventing the                       -              803,121              (87,387)           803,121
        company
     Provision for retirement benefits                   -                   -               741,000                 -
        to employees
     Transfer of intellectual property                   -                   -            (1,230,824)                -
        rights
     Net income as per US GAAP                   32,781,886          14,720,511           59,613,559         28,031,390
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

2.5       Investments

     2.5.1 Yantra Corporation

     Prior to October 20, 1998, the company owned a majority of the voting stock
     of Yantra. As a result, all of Yantra's operating losses through October
     20, 1998 were recognized in the company's consolidated financial

                                                                              25
<PAGE>

     statements. For fiscal 1998 and fiscal 1999, Yantra's losses recognized in
     the company's financial statements were $ 1.6 million and $ 2.0 million,
     respectively. On October 20, 1998, the company sold a portion of Yantra's
     shares held by it, thereby reducing its interest to less than one-half of
     the voting stock of Yantra. As of October 20, 1998, the company owned all
     of the outstanding common stock of Yantra, but had no financial obligations
     or commitments to Yantra and did not intend to extend Yantra with any
     financial support. Accordingly, Yantra's results after October 20, 1998
     were not recognized in the company's financial statements under U.S. GAAP.
     Yantra's revenues were $ 1.3 million and $ 2.0 million for fiscal 1998 and
     for the period ended October 20, 1998, respectively, while gross profits
     were $ 574,000 and $ 546,000, respectively, for these same periods.
     Yantra's revenues were 1.9% and 2.3% of the company's revenues for fiscal
     1998 and for the period ended October 20, 1998, respectively. Its gross
     profits were 2.0% and 1.4% of the company's gross profits for these same
     periods. Yantra currently provides e-commerce operations solutions through
     PureEcommerce(TM), a scalable web-based solution that facilitates real-time
     transaction management across the extraprise. In June 1999, Yantra sold
     Series C Convertible Preferred Stock in the amount of $ 15 million to
     unrelated existing and new investors, reducing the company's voting control
     to approximately 25%. In July 2000, Yantra sold Series D Convertible
     Preferred Stock amounting to $ 40 million, to unrelated existing and new
     investors, further reducing the company's voting control to approximately
     16%.

     2.5.2    Other Investments

     During the three months ended September 30, 2000, the company committed to
     invest $ 0.6 million in M-Commerce Ventures Pte Ltd ("M-Commerce"), a
     Singapore venture fund corporation, equivalent to Singapore Dollar ("S$")
     1,000,000 and purchase 100 units in the fund. The company made an
     investment of US$0.1 million (equivalent to S$ 200,000) and acquired 20
     units of M-Commerce, pursuant to a 20% capital call notice issued by M-
     Commerce. Each unit represents one share of Common Stock of nominal value
     S$ 1 per share and 9 Shares of Redeemable Preferred Stock of nominal value
     S$1 at a premium of S$ 1,100 per share.

     During the same period, the company also invested in Alpha Thinx Mobile
     Phone Services AG, ("Alpha Thinx"), a company incorporated under Austrian
     Law by purchasing 27,790 shares of Common Stock of par value EUR 1 per
     share for an aggregate investment of $480,300.

     During the three months ended September 30, 2000 the company also invested
     inAsia Net Media BVI Ltd, ("Asia Net Media"), a British Virgin Islands
     registered corporation by purchasing 30 million shares of Common Stock of
     Asia Net Media, par value $ 0.01 per share for an aggregate investment of $
     1,500,000.

2.6       Principles of Currency Translation

     In the three months ended September 30, 2000, 95.9% of the company's
     revenues were generated in U.S. dollars and European currencies. A majority
     of the company's expenses were incurred in rupees, and the balance was
     incurred in U.S. dollars and European currencies. The functional currency
     of the company is the Indian rupee. Revenues generated in foreign
     currencies are translated into Indian rupees using the exchange rate
     prevailing on the dates revenues are recognized. Expenses of overseas
     operations incurred in foreign currencies are translated into Indian rupees
     at either the monthly average exchange rate or the exchange rate on the
     date the expense is incurred, depending on the source of payment. Assets
     and liabilities of foreign branches held in foreign currency are translated
     into Indian rupees at the end of the applicable reporting period. For U.S.
     GAAP reporting, the financial statements are translated into U.S. dollars
     using the average monthly exchange rate for revenues and expenses and the
     period end rate for assets and liabilities. The gains or losses from such
     translation are reported as "Other comprehensive income", a separate
     component of stockholders' equity. The company expects that a majority of
     its revenues will continue to be generated in U.S. dollars for the
     foreseeable future and that a significant portion of the company's
     expenses, including personnel costs as well as capital and operating
     expenditures, will continue to be denominated in rupees. Consequently, the
     company's results of operations will be adversely affected to the extent
     that the rupee appreciates against the U.S. dollar.

2.7       Income Tax Matters

     The company benefits from certain significant tax incentives provided to
     software firms under Indian tax laws. These incentives presently include:
     (i) an exemption from payment of Indian corporate income taxes for a period
     of ten consecutive years of operation of software development facilities
     designated as "Software Technology Parks" (the "STP Tax Holiday"); and (ii)
     a tax deduction for profits derived from exporting computer software (the
     "Export Deduction"). All but one of the company's software development
     facilities are located in a designated Software Technology Park ("STP").
     The Government of India has recently amended the tax incentives available
     to companies set up in designated STPs. The period of the STP tax holiday
     available to such companies is restricted to 10 consecutive years beginning
     from the financial year when the unit started producing computer software
     or March 31, 2000, whichever is earlier. Additionally, the export deduction
     will be phased out equally over a period of five years starting from fiscal
     2001. The benefits of these tax incentive programs have historically
     resulted in an effective tax rate for the company well below statutory
     rates. There is no assurance that the

                                                                              26
<PAGE>

     Government of India will continue to provide these incentives. The company
     pays corporate income tax in foreign countries on income derived from
     operations in those countries.

2.8       Effects of Inflation

     The company's most significant costs are salaries and related benefits for
     its employees. Competition in India and the United States for IT
     professionals with the advanced technological skills necessary to perform
     the services offered by the company have caused wages to increase at a rate
     greater than the general rate of inflation. As with other IT service
     providers, the company must adequately anticipate wage increases and other
     cost increases, particularly on its long-term contracts. Historically, the
     company's wage costs in India have been significantly lower than prevailing
     wage costs in the United States for comparably-skilled employees, although
     wage costs in India are presently increasing at a faster rate than in the
     United States. There can be no assurance that the company will be able to
     recover cost increases through increases in the prices that it charges for
     its services in the United States.

2.9       Year 2000 Compliance

     The company has evaluated each of its IT services and software products and
     believes that each is substantially Year 2000 compliant. The company
     believes that its internal systems are substantially Year 2000 compliant.
     As of the date of this Quarterly Report, the company has not experienced
     any material Year 2000 related problems. However, there can be no assurance
     that modifications and upgrades made to its internal systems will be able
     to anticipate all of the problems resulting from the actual impact of the
     Year 2000 problem. There can also be no assurance that the company may not
     face any problems in the future.

2.10      Accounting Pronouncements

     In December 1999, the SEC issued Staff Accounting Bulletin 101, "Revenue
     Recognition in Financial Statements," which provides guidance related to
     revenue recognition based on interpretations and practices followed by the
     SEC. The company's management believes that its revenue recognition policy
     is in compliance with SAB 101 and does not believe that adoption of this
     Staff Accounting Bulletin has had a material impact on the company's
     financial position or results of operations.

     In June 1998, SFAS No. 133, "Accounting for Derivative Financial
     Instruments and for Hedging Activities," was issued which will be effective
     for the year ending March 31, 2001. This statement was amended by SFAS No.
     138 in June 2000 to further clarify SFAS No. 133. These statements
     establish accounting and reporting standards requiring that every
     derivative instrument, including certain derivative instruments embedded in
     other contracts, be recorded in the balance sheet as either an asset or
     liability measured at its fair value. These statements also require that
     changes in the derivative's fair value be recognized in earnings unless
     specific hedge accounting criteria are met. SFAS 133 and SFAS 138 are not
     anticipated to have a significant impact on the company's financial
     position or results of operations when adopted, since the company currently
     does not engage in hedging activities.

2.11      Risk factors

     2.11.1   Management of growth

     The company has experienced significant growth in recent periods. The
     company's revenues in the three months ended September 30, 2000 grew by
     104.3% over the three months ended September 30, 1999. As of September 30,
     2000, the company employed approximately 6,940 software professionals
     worldwide with 17 software development facilities in India as compared to
     approximately 4,120 with 11 facilities as of September 30, 1999. The
     company's growth is expected to place significant demands on its management
     and other resources and will require it to continue to develop and improve
     its operational, financial and other internal controls, both in India and
     elsewhere. In particular, continued growth increases the challenges
     involved in: recruiting and retaining sufficient skilled technical,
     marketing and management personnel; providing adequate training and
     supervision to maintain the company's high quality standards; and
     preserving the company's culture and values and its entrepreneurial
     environment. The company's inability to manage its growth effectively could
     have a material adverse effect on the quality of the company's services and
     projects, its ability to attract clients as well as skilled personnel, its
     business prospects, and its results of operations and financial condition.

     2.11.2   Potential fluctuations in future operating results

     Historically, the company's operating results have fluctuated, and may
     continue to fluctuate in future, depending on a number of factors,
     including: the size, timing and profitability of significant projects; the
     proportion of services that are performed at client sites rather than at
     the company's offshore facilities; the accuracy of estimates of resources
     and time required to complete ongoing projects, particularly projects
     performed under fixed-price, fixed-time frame contracts; a change in the
     mix of services provided to its clients or in the relative proportion of
     services and product revenues; the timing of tax holidays and other
     Government of India incentives;

                                                                              27
<PAGE>

     the effect of seasonal hiring patterns and the time required to train and
     productively utilize new employees; the size and timing of facilities
     expansion; unanticipated increases in wage rates; the company's success in
     expanding its sales and marketing programs; currency exchange rate
     fluctuations and other general economic factors. A high percentage of the
     company's operating expenses, particularly personnel and facilities, are
     fixed in advance of any particular quarter. As a result, unanticipated
     variations in the number and timing of the company's projects or in
     employee utilization rates may cause significant variations in operating
     results in any particular quarter. The company believes that period-to-
     period comparisons of its results of operations are not necessarily
     meaningful and should not be relied upon as indications of future
     performance. Due to all of the foregoing factors, it is possible that in
     some future quarter the company's operating results may be below the
     expectations of public market analysts and investors. In such event, the
     market price of the company's equity shares and ADSs are likely to be
     materially adversely affected.

     2.11.3   Risks related to investments in Indian securities

     The company is incorporated in India and substantially all of its assets,
     and a substantial majority of its employees are located in India.
     Consequently, the company's performance may be affected by changes in
     exchange rates and controls, interest rates, Government of India policies,
     including taxation policy, as well as political, social and economic
     developments affecting India.

     Political and economic environment. During the past decade and particularly
     since 1991, the Government of India has pursued policies of economic
     liberalization, including significant relaxations of restrictions on the
     private sector. Nevertheless, the role of the Indian central and state
     Governments in the Indian economy as producers, consumers and regulators
     has remained significant. Additionally, since 1996, the Government of India
     has changed three times. The current Government of India, formed in October
     1999, has announced policies and taken initiatives that support the
     continuation of the economic liberalization policies pursued by previous
     governments and has, in addition, set up a special IT task force to promote
     the IT industry. However, the speed of economic liberalization could
     change, and specific laws and policies affecting IT companies, foreign
     investment, currency exchange rates and other matters affecting investment
     in the company's securities could change as well. Further, there can be no
     assurance that the liberalization policies will continue in the future. A
     significant change in the Government of India's economic liberalization and
     deregulation policies could adversely affect business and economic
     conditions in India generally and the company's business in particular.
     South Asia has from time to time experienced instances of civil unrest and
     hostilities among neighboring countries. Events of this nature in the
     future could influence the Indian economy and could have a material adverse
     effect on the market for securities of Indian companies and on the business
     of the company.

     In recent years, financial turmoil in certain Asian countries, Russia and
     elsewhere in the world have affected market prices in the world's
     securities markets, including the United States and Indian markets. Events
     of this nature could cause decreases in the securities prices on United
     States and Indian stock exchanges, including the market prices of the
     company's equity shares and ADSs.

     Government of India incentives and regulation. The company benefits from a
     variety of incentives given to software firms in India, such as relief from
     import duties on hardware, a tax exemption for income derived from software
     exports, and tax holidays and infrastructure support for companies, such as
     Infosys, operating in specially designated "Software Technology Parks".
     There can be no assurance that these incentives will continue in future.
     Further, there is a risk that changes in tax rates or laws affecting
     foreign investment, currency exchange rates or other regulations will
     render the Government of India's regulatory scheme less favorable to the
     company and could adversely affect the market price of the company's equity
     shares and its ADSs. Should the regulations and incentives promulgated by
     the Government of India become less favorable to the company, the company's
     results of operations and financial condition could be adversely affected.

     Restrictions on foreign investment. Foreign investment in Indian securities
     is generally regulated by the Foreign Exchange Management Act, 1999. In
     certain emerging markets, including India, Global Depositary Shares and
     ADSs may trade at a discount or premium, as the case may be, to the
     underlying shares, in part because of restrictions on foreign ownership of
     the underlying shares. In addition, under current Indian laws and
     regulations, the Depositary cannot accept deposits of outstanding equity
     shares and issue ADRs evidencing ADSs representing such equity shares.
     Therefore, a holder of ADSs who surrenders ADSs and withdraws equity shares
     is not permitted subsequently to deposit such equity shares and obtain ADSs
     nor would a holder to whom such equity shares are transferred be permitted
     to deposit such equity shares. This inability to convert equity shares into
     ADSs increases the probability that the price of the ADSs will not trade on
     par with the price of the equity shares as quoted on the Indian stock
     exchanges. Holders who seek to sell in India any equity shares withdrawn
     from the depositary facility and to convert the rupee proceeds from such
     sale into foreign currency and repatriate such foreign currency from India
     will have to obtain Reserve Bank of India ("RBI") approval for each such
     transaction. Further, under current Indian regulations and practice, the
     approval of the RBI is required for the sale of equity shares underlying
     ADSs by a non-resident of India to a resident of India as well as for
     renunciation of rights to a resident of India. There can be no assurance
     that any such approval can be obtained.

                                                                              28
<PAGE>

     Exchange rate fluctuations. The exchange rate between the rupee and the
     U.S. dollar has changed substantially in recent years and may fluctuate
     substantially in the future. During the five-year period from March 31,
     1995 through March 31, 2000, the value of the rupee against the U.S. dollar
     declined by approximately 38.9%. For the six months ended September 30,
     2000 and for fiscal 2000 and 1999, the company's U.S. dollar-denominated
     revenues represented 89.8%, 88.3% and 88.1%, respectively, of total
     revenues. The company expects that a majority of its revenues will continue
     to be generated in U.S. dollars for the foreseeable future and that a
     significant portion of the company's expenses, including personnel costs as
     well as capital and operating expenditures, will continue to be denominated
     in rupees. Consequently, the company's results of operations will be
     adversely affected to the extent the rupee appreciates against the U.S.
     dollar. The company has in the past sought to reduce the effect of exchange
     rate fluctuations on operating results by purchasing foreign exchange
     forward contracts to cover a portion of outstanding accounts receivable on
     a need basis. These contracts typically mature within three months, must be
     settled on the day of maturity and may be cancelled subject to the payment
     of any gains or losses in the difference between the contract exchange rate
     and the market exchange rate on the date of cancellation. The company uses
     these instruments only as a hedging mechanism and not for speculative
     purposes. As of September 30, 2000, the company had no outstanding forward
     contracts and is currently not actively hedging against exchange rate
     fluctuations. There can be no assurance that the company will purchase
     contracts adequate to insulate itself from foreign exchange currency risks
     or that any such contracts will perform adequately as a hedging mechanism.
     Devaluation of the rupee will result in foreign currency translation
     losses. For example, for the six months ended September 30, 2000 and for
     fiscal 2000 and fiscal 1999, the company's foreign currency translation
     losses were approximately $ 12.0 million, $ 5.0 million and $ 2.1 million,
     respectively.

     Fluctuations in the exchange rate between the rupee and the U.S. dollar
     also will affect the U.S. dollar conversion by the Depositary of any cash
     dividends paid in rupees on the equity shares represented by the ADSs. In
     addition, fluctuations in the exchange rate between the Indian rupee and
     the U.S. dollar will affect the U.S. dollar equivalent of the Indian rupee
     price of equity shares on the Indian Stock Exchanges and, as a result, are
     likely to affect the market prices of the ADSs in the United States, and
     vice versa. Such fluctuations will also affect the dollar value of the
     proceeds a holder would receive upon the sale in India of any equity shares
     withdrawn from the Depositary under the Depositary Agreement. There can be
     no assurance that holders will be able to convert rupee proceeds into U.S.
     dollars or any other currency or with respect to the rate at which any such
     conversion could occur.

     2.11.4   Substantial investment in new facilities

     As of September 30, 2000, the company had contractual commitments of $ 26.4
     million for capital expenditure and has budgeted for significant expansion
     of infrastructure in the near future. Since such an expansion will
     significantly increase the company's fixed costs, the company's results of
     operations will be materially adversely affected if the company is unable
     to grow its business proportionately. Although the company has successfully
     developed new facilities in the past, there can be no assurance that the
     company will not encounter cost overruns or project delays in connection
     with any or all of the new facilities. Furthermore, there can be no
     assurance that future financing for additional facilities, whether within
     India or elsewhere, would be available on attractive terms or at all.

     2.11.5   Restrictions on US immigration

     The company's professionals who work on-site at client facilities in the
     United States on temporary and extended assignments are typically required
     to obtain visas. As of September 30, 2000, substantially all of the
     company's personnel in the United States were working pursuant to H-1B
     visas (860 persons) or L-1 visas (271 persons). Although there is no limit
     to new L-1 petitions, there is a limit to the number of new H-1B petitions
     that the United States Immigration and Naturalization Service may approve
     in any government fiscal year. In years in which this limit is reached, the
     company may be unable to obtain the H-1B visas necessary to bring its
     critical Indian IT professionals to the United States on an extended basis.
     This limit was reached in March 2000 by the U.S. Government for its fiscal
     year ended September 30, 2000 and in May 1999 for the fiscal year ended
     September 30, 1999. While the company anticipated that such limit would be
     reached prior to the end of the US government's fiscal year and made
     efforts to plan accordingly, there can be no assurance that the company
     will continue to be able to obtain a sufficient number of H-1B visas.
     Changes in existing U.S. immigration laws that make it more difficult for
     the company to obtain H-1B and L-1 visas could impair the company's ability
     to compete for and provide services to clients and could have a material
     adverse effect on the company's results of operations and financial
     condition.

     2.11.6   Risks related to international operations

     While most of the company's software development facilities are currently
     located in India, the company intends to develop new software development
     facilities in other regions, including potentially South-East Asia, Latin
     America and Europe. The company has not yet made substantial contractual
     commitments to develop such new

                                                                              29
<PAGE>

     software development facilities, and there can be no assurance that the
     company will not significantly alter or reduce its proposed expansion
     plans. The company's lack of experience with facilities outside of India
     subject the company to further risk with regard to foreign regulation and
     overseas facilities management. Increasing the number of software
     development facilities and the scope of operations outside of India
     subjects the company to a number of risks, including, among other things,
     difficulties relating to administering its business globally, managing
     foreign operations, currency exchange rate fluctuations, restrictions
     against the repatriation of earnings, export requirements and restrictions,
     and multiple and possibly overlapping tax structures. Such developments
     could have a material adverse effect on the company's business, results of
     operations and financial condition.

     2.11.7   Dependence on skilled personnel; risks of wage inflation

     The company's ability to execute project engagements and to obtain new
     clients depends, in large part, on its ability to attract, train, motivate
     and retain highly skilled IT professionals, particularly project managers,
     software engineers and other senior technical personnel. An inability to
     hire and retain additional qualified personnel will impair the company's
     ability to bid for or obtain new projects and to continue to expand its
     business. The company believes that there is significant competition for IT
     professionals with the skills necessary to perform the services offered by
     the company. There can be no assurance that the company will be able to
     assimilate and manage new IT professionals effectively. Any increase in the
     attrition rates experienced by the company, particularly the rate of
     attrition of experienced software engineers and project managers, would
     adversely affect the company's results of operations and financial
     condition. There can be no assurance that the company will be successful in
     recruiting and retaining a sufficient number of replacement IT
     professionals with the requisite skills to replace those IT professionals
     who leave. Further, there can be no assurance that the company will be able
     to redeploy and retrain its IT professionals to keep pace with continuing
     changes in IT, evolving standards and changing client preferences.
     Historically, the company's wage costs in India have been significantly
     lower than wage costs in the United States for comparably skilled IT
     professionals. However, wage costs in India are presently increasing at a
     faster rate than those in the United States. In the long-term, wage
     increases may have an adverse effect on the company's profit margins unless
     the company is able to continue increasing the efficiency and productivity
     of its professionals.

     2.11.8   Client concentration

     The company has derived, and believes that it will continue to derive, a
     significant portion of its revenues from a limited number of large
     corporate clients. For the three months ended September 30, 2000 and for
     fiscal 2000 and 1999, the company's largest client accounted for 7.7%, 7.2%
     and 6.4%, respectively, of the company's total revenues and its five
     largest clients accounted for 24.9%, 30.2% and 28.4%, respectively, of the
     company's total revenues. The volume of work performed for specific clients
     is likely to vary from year to year, particularly since the company is
     usually not the exclusive outside software service provider for its
     clients. Thus, a major client in one year may not provide the same level of
     revenues in a subsequent year. The loss of any large client could have a
     material adverse effect on the company's results of operations and
     financial condition. Since many of the contracted projects are critical to
     the operations of its clients' businesses, any failure to meet client
     expectations could result in a cancellation or non-renewal of a contract.
     However, there are a number of factors other than the company's performance
     that could cause the loss of a client and that may not be predictable. For
     example, in 1995, the company chose to reduce significantly the services
     provided to its then-largest client rather than accept the price reductions
     and increased company resources sought by the client. In other
     circumstances, the company reduced significantly the services provided to
     its client when the client either changed its outsourcing strategy by
     moving more work in-house and reducing the number of its vendors, or
     replaced its existing software with packaged software supported by the
     licensor. There can be no assurance that the same circumstances may not
     arise in future.

     2.11.9   Fixed-price, fixed-time frame contracts

     As a core element of its business strategy, the company continues to offer
     a significant portion of its services on a fixed-price, fixed-time frame
     basis, rather than on a time-and-materials basis. Although the company uses
     specified software engineering processes and its past project experience to
     reduce the risks associated with estimating, planning and performing fixed-
     price, fixed-time frame projects, the company bears the risk of cost
     overruns, completion delays and wage inflation in connection with these
     projects. The company's failure to estimate accurately the resources and
     time required for a project, future rates of wage inflation and currency
     exchange rates or its failure to complete its contractual obligations
     within the time frame committed could have a material adverse effect on the
     company's results of operations and financial condition.

     2.11.10  Infrastructure and potential disruption in telecommunications

     A significant element of the company's business strategy is to continue to
     leverage its various software development centers in Bangalore,
     Bhubaneswar, Chennai, Mangalore, Pune, Hyderabad, Mohali and Mysore, India
     and to expand the number of such centers in India as well as outside India.
     The company believes that the

                                                                              30
<PAGE>

     use of a strategically located network of software development centers will
     provide the company with cost advantages, the ability to attract highly
     skilled personnel in various regions, the ability to service clients on a
     regional and global basis, and the ability to provide 24-hour service to
     its clients. Pursuant to its service delivery model, the company must
     maintain active voice and data communication between its main offices in
     Bangalore, the offices of its clients, and its other software development
     facilities. Although the company maintains redundant software development
     facilities and satellite communications links, any significant loss of the
     company's ability to transmit voice and data through satellite and
     telephone communications would have a material adverse effect on the
     company's results of operations and financial condition.

     2.11.11  Decreased demand for Year 2000 services

     Year 2000 conversion projects represented 0%, 6.3% and 19.8% of the
     company's total revenue for the three months ended September 30, 2000 and
     for fiscal 2000 and 1999, respectively. The high demand for these time-
     sensitive projects resulted in pricing and margins that were favorable to
     the company. There is no assurance that the company will be successful in
     generating additional business from its Year 2000 clients for other
     services, that the company will be successful in replacing Year 2000
     conversion projects with other projects as the Year 2000 business declines
     or that margins from any such future projects will be comparable to those
     obtained from Year 2000 conversion projects. There is an additional risk
     that the company may be unable to retrain and redeploy IT professionals who
     were assigned to Year 2000 conversion projects involving legacy computer
     systems after such projects are completed. Furthermore, since Year 2000
     conversion projects are now essentially completed, there is a likelihood of
     increased competition for other types of projects from firms formerly
     dependent on Year 2000 business.

     2.11.12  Competition

     The market for IT services is highly competitive. Competitors include IT
     services companies, large international accounting firms and their
     consulting affiliates, systems consulting and integration firms, temporary
     employment agencies, other technology companies and client in-house MIS
     departments. Competitors include international firms as well as national,
     regional and local firms located in the United States, Europe and India.
     The company expects that future competition will increasingly include firms
     with operations in other countries, potentially including countries with
     lower personnel costs than those prevailing in India. Historically, one of
     the company's key competitive advantages has been a cost advantage relative
     to service providers in the United States and Europe. Since wage costs in
     India are presently increasing at a faster rate than those in the United
     States, the company's ability to compete effectively will become
     increasingly dependent on its reputation, the quality of its services, and
     its expertise in specific markets. Many of the company's competitors have
     significantly greater financial, technical and marketing resources and
     generate greater revenue than the company, and there can be no assurance
     that the company will be able to compete successfully with such competitors
     and will not lose existing clients to such competitors. The company
     believes that its ability to compete also depends in part on a number of
     factors outside its control, including the ability of its competitors to
     attract, train, motivate and retain highly skilled IT professionals, the
     price at which its competitors offer comparable services, and the extent of
     its competitors' responsiveness to client needs.

     2.11.13  Dependence on key personnel

     The company's success depends to a significant degree upon continued
     contributions of members of the company's senior management and other key
     research and development and sales and marketing personnel. The company
     generally does not enter into employment agreements with its senior
     management and other key personnel that provide for substantial
     restrictions on such persons leaving the company. The loss of any of such
     persons could have a material adverse effect on the company's business,
     financial condition and results of operations.

     2.11.14  Potential liability to clients; risk of exceeding insurance
              coverage

     Many of the company's contracts involve projects that are critical to the
     operations of its clients' businesses and provide benefits that may be
     difficult to quantify. Any failure in a client's system could result in a
     claim for substantial damages against the company, regardless of the
     company's responsibility for such failure. Although the company attempts to
     limit its contractual liability for damages arising from negligent acts,
     errors, mistakes or omissions in rendering its services, there can be no
     assurance the limitations of liability set forth in its service contracts
     will be enforceable in all instances or will otherwise protect the company
     from liability for damages. The company maintains general liability
     insurance coverage, including coverage for errors or omissions; however,
     there can be no assurance that such coverage will continue to be available
     on reasonable terms or will be available in sufficient amounts to cover one
     or more large claims, or that the insurer will not disclaim coverage as to
     any future claim. The successful assertion of one or more large claims
     against the company that exceed available insurance coverage or changes in
     the company's insurance policies, including premium increases or the

                                                                              31

<PAGE>

     imposition of large deductible or co-insurance requirements, could
     adversely affect the company's results of operations and financial
     condition.

     2.11.15  Risks associated with possible acquisitions

     The company intends to evaluate potential acquisitions on an ongoing basis.
     As of the date of this Quarterly Report, however, the company has no
     understanding, commitment or agreement with respect to any material future
     acquisition. Since the company has not made any acquisitions in the past,
     there can be no assurance that the company will be able to identify
     suitable acquisition candidates available for sale at reasonable prices,
     consummate any acquisition, or successfully integrate any acquired business
     into the company's operations. Further, acquisitions may involve a number
     of special risks, including diversion of management's attention, failure to
     retain key acquired personnel and clients, unanticipated events or
     circumstances, legal liabilities and amortization of acquired intangible
     assets, some or all of which could have a material adverse effect on the
     company's results of operations and financial condition. Under Indian law,
     except in certain limited circumstances, the company may not make any
     acquisition of, or investment in, a non-Indian company without RBI and, in
     most cases, Government of India approval. Even if the company does
     encounter an attractive acquisition candidate, there can be no assurance
     that RBI and, if required, Government of India approval can be obtained.

     2.11.16  Risks associated with strategic investments

     The company has made, and continues to make, strategic investments in
     various companies. However, there can be no assurance that the company will
     be successful in its investments and will benefit from such investments.
     The loss of any of such investments could have a material adverse effect on
     the company's business, financial condition and results of operations.

     2.11.17  Risks associated with incubation

     The company incubates employee ideas that it expects to be commercially
     viable. The company may incur significant expenditures until the successful
     commercialization of these ideas. The company may also hold equity in these
     incubation ventures in return for transfers of intellectual property rights
     related to incubated ideas. However, there can be no assurance that the
     company will be successful in incubating ideas, will be successful in
     commercializing such ideas, or will benefit from such incubation ventures.
     The failure of any of such incubation ventures could have a material
     adverse effect on the company's reputation, business, financial condition
     and results of operations.

     2.11.18  Risks related to software product sales

     The company derived 2.7%, 2.6% and 3.2% of its total revenue from the sale
     of software products in the three months ended September 30, 2000, fiscal
     2000 and fiscal 1999, respectively. The development of the company's
     software products requires significant investments. The markets for the
     company's primary software product are competitive and currently located in
     developing countries, and there can be no assurance that such a product
     will continue to be commercially successful. In addition, there can be no
     assurance that any new products developed by the company will be
     commercially successful or that the costs of developing such new products
     will be recouped. A decrease in the company's product revenues or margins
     could adversely affect the company's results of operations and financial
     condition. Additionally, software product revenues typically occur in
     periods subsequent to the periods in which the costs are incurred for
     development of such products. There can be no assurance that such delayed
     revenues will not cause periodic fluctuations of the company's results of
     operations and financial condition.

     2.11.19  Restrictions on exercise of preemptive rights by ADS holders

     Under the Indian Companies Act, 1956 ("Indian Companies Act"), a company
     incorporated in India must offer its holders of equity shares preemptive
     rights to subscribe and pay for a proportionate number of shares to
     maintain their existing ownership percentages prior to the issuance of any
     new equity shares, unless such preemptive rights have been waived by three-
     fourths of the company's shareholders. U.S. holders of ADSs may be unable
     to exercise preemptive rights for equity shares underlying ADSs unless a
     registration statement under the Securities Act of 1933, as amended (the
     "Securities Act"), is effective with respect to such rights or an exemption
     from the registration requirements of the Securities Act is available. The
     company's decision to file a registration statement will depend on the
     costs and potential liabilities associated with any such registration
     statement as well as the perceived benefits of enabling the holders of ADSs
     to exercise their preemptive rights and any other factors the company
     considers appropriate at the time. No assurance can be given that the
     company would file a registration statement under these circumstances. If
     the company issues any such securities in the future, such securities may
     be issued to the Depositary, which may sell such securities for the benefit
     of the holders of the ADSs. There can be no assurance as to the value, if
     any, the Depositary would receive upon the sale of such securities. To the

                                                                              32

<PAGE>

     extent that holders of ADSs are unable to exercise preemptive rights
     granted in respect of the equity shares represented by their ADSs, their
     proportional interests in the company would be reduced.

     2.11.20  Intellectual property rights

     The company relies upon a combination of non-disclosure and other
     contractual arrangements and copyright, trade secrets and trademark laws to
     protect its proprietary rights. Ownership of software and associated
     deliverables created for clients is generally retained by or assigned to
     the client, and the company does not retain an interest in such software
     and deliverables. The company also develops foundation and application
     software products, or software "tools", which are licensed to clients and
     remain the property of the company. The company has obtained registration
     of INFOSYS as a trademark in India and the United States, and does not have
     any patents or registered copyrights in the United States. The company
     currently requires its IT professionals to enter into non-disclosure and
     assignment of rights agreements to limit use of, access to, and
     distribution of its proprietary information. There can be no assurance that
     the steps taken by the company in this regard will be adequate to deter
     misappropriation of proprietary information or that the company will be
     able to detect unauthorized use and take appropriate steps to enforce its
     intellectual property rights.

     Although the company believes that its services and products do not
     infringe upon the intellectual property rights of others, there can be no
     assurance that such a claim will not be asserted against the company in the
     future. Assertion of such claims against the company could result in
     litigation, and there can be no assurance that the company would be able to
     prevail in such litigation or be able to obtain a license for the use of
     any infringed intellectual property from a third party on commercially
     reasonable terms. There can be no assurance that the company will be able
     to protect such licenses from infringement or misuse, or prevent
     infringement claims against the company in connection with its licensing
     efforts. The company expects that the risk of infringement claims against
     the company will increase if more of the company's competitors are able to
     obtain patents for software products and processes. Any such claims,
     regardless of their outcome, could result in substantial cost to the
     company and divert management's attention from the company's operations.
     Any infringement claim or litigation against the company could, therefore,
     have a material adverse effect on the company's results of operations and
     financial condition.

     2.11.21  Control by principal shareholders, officers and directors; anti-
              takeover provisions

     The company's officers and directors, together with members of their
     immediate families, in the aggregate, beneficially own approximately 25.2%
     of the company's issued equity shares. As a result, such persons, acting
     together, will likely still have the ability to exercise significant
     control over most matters requiring approval by the shareholders of the
     company, including the election and removal of directors and significant
     corporate transactions. Such control by the company's officers and
     directors could delay, defer or prevent a change in control of the company,
     impede a merger, consolidation, takeover or other business combination
     involving the company, or discourage a potential acquiror from making a
     tender offer or otherwise attempting to obtain control of the company.

     The Indian Companies Act and the company's Articles of Association (the
     "Articles") require that: (i) at least two-thirds of the company's
     directors shall serve for a specified term and shall be subject to re-
     election by the company's shareholders at the expiration of such terms; and
     (ii) at least one-third of the company's directors who are subject to re-
     election shall be up for re-election at each annual meeting of the
     company's shareholders. In addition, the company's Articles provide that
     Mr. N. R. Narayana Murthy, one of the company's principal founders and its
     Chairman of the Board and Chief Executive Officer, shall serve as the
     company's Chairman of the Board and shall not be subject to re-election as
     long as he and his relatives, own at least 5% of the company's outstanding
     equity securities. Furthermore, any amendment to the company's Articles
     would require the affirmative vote of three-fourths of the company's
     shareholders. Finally, foreign investment in Indian companies is highly
     regulated. These provisions could delay, defer or prevent a change in
     control of the company, impede a business combination involving the company
     or discourage a potential acquiror from attempting to obtain control of the
     company.

Item 3.   Quantitative and Qualitative Disclosure About Market Risk

3.1       Foreign Currency Market Risk

     This information is set forth under the caption "Exchange rate
     fluctuations" under item 2.11.3, Risks related to Investments in Indian
     securities, above, and is incorporated herein by reference.

                                                                              33

<PAGE>

                          Part II - Other Information
- --------------------------------------------------------------------------------

Item 1.   Legal Proceedings

     The company, its directors, senior executive officers and affiliates are
     not currently a party to any material legal proceedings.

Item 2.   Changes in Securities and Use of Proceeds

     As of September 30, 2000, the net proceeds of the company's ADS offering in
     March 1999 were completely deployed as capital expenditures incurred in the
     construction of the company's software development facilities in Pune,
     Mangalore, Bhubaneshwar and construction of Infosys Park, Phase I & II,
     adjacent to the company's headquarters in Electronics City Bangalore.

Item 3.   Default upon senior securities

     None

Item 4.   Submission of matters to a vote of security holders

     None

Item 5.   Other Information

     None

     The Board in its meeting held on October 10, 2000, appointed Professor
     Jitendra Vir Singh, as an Additional Director of the company effective
     October 10, 2000, pursuant to Section 260 of the Companies Act, 1956. He
     will hold office until the date of the next Annual General Meeting, when
     his appointment, as a non-executive director will be placed for the
     approval of the members.

     Professor Jitendra Vir Singh is the Vice Dean, International Academic
     Affairs at the Wharton School, University of Pennsylvania, since 1998.
     Earlier, Professor Singh was Director of the Emerging Economies Program at
     Wharton from 1996-98. From 1991-1995, he was Research Director,
     Entrepreneurship at the Sol C. Snider Entrepreneurial Center at Wharton.
     Professor Singh has been a faculty member at Wharton since 1987 prior to
     which, he was at the University of Toronto, Canada where he was an
     Associate Professor in the (now) Rotman School of Business. Professor Singh
     received his Ph.D. from Stanford Business School in 1983. In 1991, he
     received an M.A. (h.c.) from University of Pennsylvania. His earliest
     education was in natural and mathematical sciences and he received his
     B.Sc. from Lucknow University in India in 1972. Professor Singh received
     his MBA from the Indian Institute of Management, Ahmedabad, India in 1975.

     Professor Singh serves as advisor for several high technology startup
     firms, including, San Francisco based Esurance, an integrated online
     insurance company and Seattle based vCustomer, which, provides online
     customer support to e-Commerce firms. He is also on the advisory board of
     EurIndia, a London based marketing accelerator for small Indian software
     companies and other high tech firms in India and the US. Professor Singh
     has published several papers in leading management journals and currently
     serves on the editorial boards of Asia Pacific Journal of Management,
     Strategic Management Journal and Organization Science. He has edited two
     books - Organizational Evolution: New Directions (Sage Publications, 1990),
     and Evolutionary Dynamics of Organizations (co-authored with Joel Baum,
     Oxford University Press, 1994).

Item 6.   Exhibits and Reports

     Infosys filed no reports on Form 8-K during the quarter ended September 30,
     2000.

                                                                              34
<PAGE>

EXHIBIT INDEX
     ---------------------------------------------------------------------------
          Exhibit Number      Description of Document
     ---------------------------------------------------------------------------
                    19.1      Infosys Quarterly report to the shareholders for
                              the quarter ended September 30, 2000.

                    27.1      Financial Data Schedule.
     ---------------------------------------------------------------------------

                                                                              35

<PAGE>

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the
     registrant has duly caused this report to be signed on its behalf by the
     undersigned, thereunto duly organized.

     Dated: October 18, 2000.             Infosys Technologies Limited

                                   By:    /s/ Narayana N. R. Murthy
     ---------------------------------------------------------------------------
                                          Narayana N. R. Murthy,
                                          Chairman and Chief Executive Officer

                                          /s/ Nandan M. Nilekani
     ---------------------------------------------------------------------------
                                          Nandan M. Nilekani,
                                          Managing Director, President and
                                          Chief Operating Officer

                                                                              36

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-19.1
<SEQUENCE>2
<FILENAME>0002.txt
<DESCRIPTION>INFOSYS QUARTERLY REPORT TO THE SHAREHOLDERS
<TEXT>

<PAGE>

                                                                    Exhibit 19.1


                         INFOSYS TECHNOLOGIES LIMITED
               Report for the half year ended September 30, 2000



                               [LOGO INFOSYS(R)]
<PAGE>

<TABLE>
<CAPTION>
At a glance - Indian GAAP
- -----------------------------------------------------------------------------------------------------------------------
                                                                                  Rs. in crores, except per share data
- ----------------------------------------------------------------------------------------------------------------------
                                                             Quarter ended          Half year ended         Year ended
                                                             September 30             September 30       March 31,2000
                                                        ------------------------------------------------
                                                                  2000      1999        2000      1999
- ----------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>      <C>       <C>       <C>           <C>
For the period

Total revenue                                                     465.67   217.88      836.32     401.94        921.46
Export revenue                                                    441.26   205.07      792.32     373.69        869.70
Operating Profit (PBIDT)                                          196.00    85.93      348.75     163.86        378.88
Profit after tax (PAT) from ordinary activities                   154.01    65.71      275.31     126.32        285.95
PBIDT as a percentage of total revenue                             42.09%   39.44%      41.70%     40.77%        41.12%
PAT (from ordinary activities) as a percentage of total            33.07%   30.16%      32.92%     31.43%        31.03%
revenue
Earnings per share (from Ordinary activities)*                     23.28     9.93       41.62      19.10         43.23
Dividend per share                                                    NA       NA        2.50       1.50          4.50
Dividend amount                                                       NA       NA       16.54       9.92         29.76
Capital investment                                                114.01    38.56      199.85      59.76        159.87

At the end of the period
Total assets                                                                          1094.04     687.68        833.30
Fixed assets-net                                                                       365.19     140.42        207.34
Cash and equivalents                                                                   535.90     453.80        508.37
Working capital                                                                        683.12     546.51        612.13
Total debt                                                                                  -          -             -
Net worth                                                                             1094.04     687.68        833.30
Equity                                                                                  33.08      33.07         33.08
Market capitalization                                                                48695.68  23,589.06     59,338.17
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

Note:

Market  capitalization  is calculated by considering the Indian market price for
shares outstanding at the period / year end outstanding at the period / year end

* EPS figures have been calculated for the period and have not been annualized.

                                 TOTAL REVENUE
                                (Rs. in crores)

                Year ended March 31, 2000              921.46
                Half year ended September 30, 1999     401.94
                Half year ended September 30, 2000     836.32
                Quarter ended September 30, 1999       217.88
                Quarter ended September 30, 2000       465.67

                                   EXPORTS
                                (Rs. in crores)

                Year ended March 31, 2000                869.7
                Half year ended September 30, 1999      373.69
                Half year ended September 30, 2000      792.32
                Quarter ended September 30, 1999        205.07
                Quarter ended September 30, 2000        441.26


                                  NET PROFIT
                                (Rs. in crores)

                Year ended March 31, 2000               285.95
                Half year ended September 30, 1999      126.32
                Half year ended September 30, 2000      275.31
                Quarter ended September 30, 1999         65.71
                Quarter ended September 30, 2000        154.01
<PAGE>

Letter to the shareholders
- --------------------------------------------------------------------------------
Dear shareholders:

We are pleased to report on another strong quarter. Under Indian GAAP, revenues
grew by 113.7% over Q2FY2000 while net profits witnessed an increase of 134.4%.
Net of separations, we added nearly 1500 employees in the quarter --highlighting
the continued vigorous growth in our business. A key driver of this performance
is the de-risked nature of the Infosys business model. Prudent risk management
policies, strong processes to monitor various risk factors, and a focus on
diversification continue to guide our business strategy. Our strong
relationships with Fortune 1000 corporations, our in-depth understanding of
their decision cycles, and our track record of customer satisfaction enabled us
to maintain topline predictability while ceaselessly improving overall revenue
productivity.

As transformation partners to traditional economy corporations, we help them
build next-generation information infrastructure for the new economy. These
engagements constitute the bulk of our e-business revenues, which, at 31.4% of
total revenues, continue to be a high-growth segment of our business. Further,
with a view to capitalizing on the unprecedented opportunities offered by the
present day environment, we continued to build expertise in high-potential
technology areas such as wireless, broadband and optical networking.

The quarter saw a strategic alliance with Microsoft Corporation to jointly
deliver e-business solutions to help companies migrate to the new economy. Our
client base continues to increase -- we partnered with 27 new clients during the
quarter. These included Eastman Chemicals, one of the top 10 global suppliers of
custom-manufactured chemicals; Fritz companies, a specialist in global
integrated logistics; ABB Alstom, global specialist in energy and transport
infrastructure; Publix Supermarkets, one of the largest supermarket chains in
the US; SignalSoft, a leading platform and applications developer of Wireless
Location Services (R); Last Mile Solutions, a spread spectrum wireless solutions
provider; NightFire Software, a leading e-infrastructure software provider for
broadband service fulfilment; and Riverstone Networks, a leading manufacturer of
switches and routers. We also continued to build long-term symbiotic
partnerships -- evidenced by our repeat business rate of 84.5% in the quarter.

Our endeavor to have access to cutting-edge technologies and business models led
us to make three strategic investments in the quarter. We invested in Vienna-
based Alpha Thinx Mobile Phone Services, which hosts interactive services for
mobile users across Europe; in Singapore-based M-Commerce Ventures, a wireless-
focussed fund promoted by the Economic Development Board, Singapore; and in Asia
Net Media, which intends to build a synergistic network of companies that
leverage under-exploited offline brands in media and entertainment by delivering
them online.

We continued to globalize our operations -- our software development center in
London became operational during the quarter, as did our marketing offices in
Hong Kong and Sydney. Our Infosys City facility in Bangalore is nearing
completion and we continue to build capacity in our other development centers in
India and abroad.

We inducted Professor Jitendra Vir Singh, Vice Dean, International Academic
Affairs, The Wharton School, University of Pennsylvania, onto the board of
directors. On your behalf, we welcome him on board and also extend our
appreciation to our fellow Infoscions who contributed to yet another successful
quarter in our history.

                                                Sd.                          Sd.
Bangalore                        Nandan M. Nilekani        N. R. Narayana Murthy
October 10, 2000       Managing Director, President           Chairman and Chief
                        and Chief Operating Officer            Executive Officer
<PAGE>

Auditors' report to the members of Infosys Technologies Limited
- --------------------------------------------------------------------------------

We have audited the attached Balance Sheet of Infosys Technologies Limited (the
Company) as at September 30, 2000 and the Profit and Loss Account of the Company
for the half year and quarter ended on that date, annexed thereto, and report
that:

1    As required by the Manufacturing and Other Companies (Auditor's Report)
     Order, 1988, issued by the Company Law Board in terms of Section 227(4A) of
     the Companies Act, 1956, we enclose in the Annexure a statement on the
     matters specified in paragraphs 4 and 5 of the said Order.

2    Further to our comments in the Annexure referred to in paragraph 1 above:

     (a)  we have obtained all the information and explanations which to the
          best of our knowledge and belief were necessary for the purpose of our
          audit;

     (b)  in our opinion proper books of account as required by law have been
          kept by the Company so far as appears from our examination of these
          books;

     (c)  the Balance Sheet and Profit and Loss Account dealt with by this
          report are in agreement with the books of account;

     (d)  in our opinion, the Balance Sheet and Profit and Loss Account dealt
          with by this report are prepared in compliance with the accounting
          standards referred to in Section 211(3C) of the Companies Act, 1956,
          to the extent applicable;

     (e)  in our opinion and to the best of our information and according to the
          explanations given to us, the said accounts give the information
          required by the Companies Act, 1956, in the manner so required and
          give a true and fair view:

          (i)  in the case of the Balance Sheet, of the state of affairs of the
               Company as at September 30, 2000; and

          (ii) in the case of the Profit and Loss Account, of the profit for the
               half year and quarter ended on that date.

3    We have also examined the attached Cash Flow Statement of the Company for
     the half year and quarter ended September 30, 2000. The Statement has been
     prepared by the Company in accordance with the requirements of Clause 32 of
     the listing agreements entered into with the Stock Exchanges.

                                                        for Bharat S Raut & Co.

                                                        Chartered Accountants


Bangalore                                               Balaji Swaminathan

October 10, 2000                                                    Partner
<PAGE>

<TABLE>
<CAPTION>
Balance Sheet as at
- ----------------------------------------------------------------------------------------------------------------
                                                                                                       in Rs.

- -------------------------------------------------------------------------------------------------------------
                                               September 30, 2000     September 30, 1999       March 31, 2000
- -------------------------------------------------------------------------------------------------------------
<S>                                            <C>                    <C>                      <C>
   SOURCES OF FUNDS

   SHAREHOLDERS' FUNDS
   Share capital                                     33,07,58,335           33,06,95,500         33,07,55,000
   Reserves and surplus                            1060,95,95,077          654,61,29,197        800,22,73,248
- -------------------------------------------------------------------------------------------------------------
                                                   1094,03,53,412          687,68,24,697        833,30,28,248
=============================================================================================================
   APPLICATION OF FUNDS
   FIXED ASSETS
   Gross block                                      435,74,18,072          201,20,83,575        284,03,05,143
   Less: Depreciation                               175,13,71,312          102,07,57,018        133,65,20,594
- -------------------------------------------------------------------------------------------------------------
   Net block                                        260,60,46,760           99,13,26,557        150,37,84,549
   Add: Capital work-in-progress                    104,58,25,080           41,28,99,285         56,96,03,505
- -------------------------------------------------------------------------------------------------------------
                                                    365,18,71,840          140,42,25,842        207,33,88,054

   INVESTMENTS                                       45,73,06,737              75,48,469         13,83,48,469

   CURRENT ASSETS, LOAN AND ADVANCES

   Sundry debtors                                   243,05,68,746          133,47,09,804        136,17,81,253
   Cash and bank balances                           424,28,92,315          377,68,71,030        431,79,35,730
   Loans and advances                               288,54,93,594          164,28,14,672        210,12,77,161
- -------------------------------------------------------------------------------------------------------------
                                                    955,89,54,655          675,43,95,506        778,09,94,144

   Less: Current liabilities                        150,82,14,077           58,78,14,181         67,15,06,459
     Provisions                                     121,95,65,743           70,15,30,939         98,81,95,960
   NET CURRENT ASSETS                               683,11,74,835          546,50,50,386        612,12,91,725
- -------------------------------------------------------------------------------------------------------------
                                                   1094,03,53,412          687,68,24,697        833,30,28,248
=============================================================================================================

<CAPTION>
This is the Balance Sheet referred
to in our report of even date.
for Bharat S Raut & Co.
Chartered Accountants
<S>                             <C>                           <C>                               <C>               <C>
Balaji Swaminathan              N. R. Narayana Murthy         Nandan M. Nilekani                Deepak M.
Partner                         Chairman and                  Managing Director, President      Satwalekar
                                Chief Executive Officer       and Chief Operating Officer       Director

                                Prof. Marti G. Subrahmanyam   S. Gopalakrishnan                 K. Dinesh         S. D. Shibulal
                                Director                      Deputy Managing Director          Director          Director

Bangalore                       T. V. Mohandas Pai            Phaneesh Murthy                   Srinath Batni     V. Viswanathan
October 10, 2000                Director and                  Director                          Director          Company Secretary
                                Chief Financial Officer
</TABLE>
<PAGE>

Profit and Loss Account
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                                          in Rs.
- ---------------------------------------------------------------------------------------------------------------------------------
                                                            Quarter ended                    Half year ended          Year ended
                                                     -----------------------------   -----------------------------
                                                     September 30,   September 30,   September 30,   September 30,  Mar 31, 2000
                                                         2000            1999            2000            1999
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>             <C>             <C>             <C>            <C>
INCOME

Software development services and products
   Overseas                                          441,25,85,913   205,07,22,424   792,31,64,336   373,69,33,425  869,69,80,931
   Domestic                                            4,83,71,864     3,22,64,605     9,30,93,590     4,87,60,599   12,62,56,042
Other income                                          19,57,87,617     9,58,18,435    34,68,95,149    23,37,31,680   39,14,11,095
- ---------------------------------------------------------------------------------------------------------------------------------
                                                     465,67,45,394   217,88,05,464   836,31,53,075   401,94,25,704  921,46,48,068
=================================================================================================================================

EXPENDITURE

Software development expenses                        226,44,95,150   113,07,67,428   415,84,00,416   202,26,48,720  466,26,84,578
Administration and other expenses                     43,22,60,118    15,37,31,464    71,72,72,067    28,98,70,425   69,48,50,282
Provision for contingencies                                      -               -               -     3,33,00,000    3,33,00,000
Provision for e-inventing the Company                            -     3,50,00,000               -     3,50,00,000    3,50,00,000
- ---------------------------------------------------------------------------------------------------------------------------------
                                                     269,67,55,268   131,94,98,892   487,56,72,483   238,08,19,145  542,58,34,860

Operating profit (PBIDT)                             195,99,90,126    85,93,06,572   348,74,80,592   163,86,06,559  378,88,13,208

Interest                                                         -               -               -               -              -
Depreciation                                          24,23,67,547    10,72,23,769    41,97,39,264    20,04,41,918   53,23,27,389

Profit before tax and extraordinary items            171,76,22,579    75,20,82,803   306,77,41,328   143,81,64,641  325,64,85,819
Provision for tax - earlier periods                              -       17,00,000     1,40,00,000       17,00,000      24,00,000
                  - current period                    17,75,00,000     9,33,00,000    30,06,00,000    17,33,00,000   39,46,00,000
Profit after tax before extraordinary items          154,01,22,579    65,70,82,803   275,31,41,328   126,31,64,641  285,94,85,819
Effect of extraordinary item - provision no longer               -               -               -               -    7,56,70,846
required
Extraordinary income (net of tax)                                -               -     5,49,44,000               -              -

Net profit after tax and extraordinary items         154,01,22,579    65,70,82,803   280,80,85,328   126,31,64,641  293,51,56,665
- ---------------------------------------------------------------------------------------------------------------------------------
AMOUNT AVAILABLE FOR APPROPRIATION                   154,01,22,579    65,70,82,803   280,80,85,328   126,31,64,641  293,51,56,665
- ---------------------------------------------------------------------------------------------------------------------------------
Dividend

   Interim                                            16,53,78,418     9,92,08,200    16,53,78,418     9,92,08,200    9,92,08,200
   Final                                                         -               -               -               -   19,84,18,210
   Dividend Tax                                        3,63,83,252     1,09,12,902     3,63,83,252     1,09,12,902    3,27,38,905
Amount transferred - general reserve                             -               -               -               -  260,47,91,350
- ---------------------------------------------------------------------------------------------------------------------------------
Balance in Profit & Loss Account                     133,83,60,909    54,69,61,701   260,63,23,658   115,30,43,539              -
- ---------------------------------------------------------------------------------------------------------------------------------
                                                     154,01,22,579    65,70,82,803   280,80,85,328   126,31,64,641  293,51,56,665
=================================================================================================================================
</TABLE>

This is the Profit & Loss Account
referred to in our report of even date.
for Bharat S Raut & Co.
Chartered Accountants

<TABLE>
<S>                    <C>                           <C>                                <C>            <C>
Balaji Swaminathan     N. R. Narayana Murthy         Nandan M. Nilekani                 Deepak M.
Partner                Chairman and                  Managing Director, President and   Satwalekar
                       Chief Executive Officer       Chief Operating Officer            Director

                       Prof. Marti G. Subrahmanyam   S. Gopalakrishnan                  K. Dinesh      S. D. Shibulal
                       Director                      Deputy Managing Director           Director       Director

Bangalore              T. V. Mohandas Pai            Phaneesh Murthy                    Srinath Batni  V. Viswanathan
October 10, 2000       Director and                  Director                           Director       Company Secretary
                       Chief Financial Officer
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
Schedules to the Profit and Loss Account for the
- -----------------------------------------------------------------------------------------------------------------------------------

                                                                                                                             in Rs.
- -----------------------------------------------------------------------------------------------------------------------------------
                                                            Quarter ended                Half year ended                 Year ended
                                                      -----------------------------------------------------------
                                                      September 30,  September 30,   September 30,  September 30,    March 31, 2000
                                                               2000           1999            2000           1999
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                   <C>            <C>             <C>            <C>              <C>
OTHER INCOME

Interest received on deposits with banks and others     9,12,38,406    6,52,40,572    16,58,03,106   11,94,36,323      26,68,79,106
(Tax deducted at source Rs. 42,26,973; Rs. 37,61,871;
Rs. 1,11,29,180; Rs. 52,48,295; Rs. 1,67,51,195
respectively)
Sale of special import licenses                            6,77,431    1,29,96,393        6,77,431    1,29,96,393       2,02,31,549
Profit on sale of fixed assets                                    -       4,16,230               -       4,63,777          8,73,015
Miscellaneous income                                      70,50,359       7,08,917       94,17,211      30,76,486         41,00,350
Exchange differences *                                  9,68,21,421    1,64,56,323    17,09,97,401    9,77,58,701       9,93,27,075
- -----------------------------------------------------------------------------------------------------------------------------------
                                                       19,57,87,617    9,58,18,435    34,68,95,149   23,37,31,680      39,14,11,095
===================================================================================================================================
* arising on translation of foreign currency deposits maintained abroad includes a realized gain of
Rs. 3,53,92,000 during the quarter ended September 30, 2000. (Prior periods/ year: Rs. Nil)

SOFTWARE DEVELOPMENT EXPENSES

Salaries and bonus including overseas staff expenses  158,42,78,274   73,71,21,957   290,01,81,382  132,43,61,020     307,54,46,295
Staff welfare                                           1,73,06,377    1,01,02,147     3,24,11,865    1,97,02,371       4,93,07,308
Contribution to provident and other funds               7,43,79,574    4,04,04,539    16,93,51,595    6,09,67,314      22,08,36,923
Foreign travel expenses                                35,90,06,400   19,44,34,563    66,11,53,479   37,35,69,658      84,09,02,293
Consumables                                             1,04,12,879      47,39,041     1,95,07,075    1,06,07,532       2,70,06,251
Cost of software packages
   for own use                                         12,25,78,520    6,00,62,634    19,79,84,826    9,28,54,660      16,53,57,382
   for banking product                                    49,60,448      24,53,002     1,33,11,277      40,65,059       2,84,48,397
Computer maintenance                                    1,23,01,888      61,45,308     2,71,11,288    1,00,78,359       3,27,43,350
Communication expenses                                  5,24,77,651    5,64,28,375     9,94,83,388    9,47,60,089      17,31,23,718
Consultancy charges                                     1,85,64,421      79,52,464     2,98,55,683    1,40,86,504       2,85,50,034
Provision for post-sales client support                   82,28,718    1,09,23,398       80,48,558    1,75,96,154       2,09,62,627
- -----------------------------------------------------------------------------------------------------------------------------------
                                                      226,44,95,150  113,07,67,428   415,84,00,416  202,26,48,720     466,26,84,578
===================================================================================================================================

ADMINISTRATION AND OTHER EXPENSES

Travelling and conveyance                               4,97,87,265    1,64,00,037     7,70,39,464    2,71,78,379       7,68,26,394
Rent                                                    3,68,42,809    2,37,09,030     6,95,37,037    4,42,39,431      10,34,93,593
Telephone charges                                       3,59,58,729    1,07,93,680     6,50,89,763    2,45,99,217       5,93,95,252
Professional charges                                    3,86,42,679    1,69,66,773     6,42,07,750    2,94,93,829       7,55,68,079
Office maintenance                                      2,94,09,238      97,79,872     5,67,21,754    1,81,88,757       5,81,01,381
Brand building                                          3,92,19,123              -     5,01,77,269              -         99,17,816
Provision for bad and doubtful debts                    4,51,07,005      70,23,453     4,91,94,461    1,90,43,237         94,03,099
Power and fuel                                          2,51,75,524    1,00,90,670     4,58,26,006    2,01,08,110       5,01,41,466
Printing and stationery                                 1,10,57,396      70,99,944     3,61,24,297    1,53,91,827       2,76,70,902
Donations                                               1,70,01,694    1,01,86,367     3,28,09,063    1,41,86,367       3,49,27,871
Advertisements                                          1,75,71,241      68,68,674     2,88,75,539    1,12,36,927       2,12,41,343
Marketing expenses                                      1,75,21,259      53,93,530     2,28,51,535    1,30,53,262       3,14,93,837
Repairs to building                                       58,28,166      13,87,841     1,40,82,937      40,04,836       1,13,44,232
Insurance charges                                         72,76,793      49,72,795     1,25,66,191      90,30,631       2,41,35,289
Rates and taxes                                           62,78,668      37,24,887       98,42,999      57,43,646       1,03,80,848
Postage and courier                                       47,28,893      25,29,800       96,06,851      61,99,736       1,37,56,638
Commission charges                                        67,61,132              -       90,25,721      34,84,800         64,70,454
Books and periodicals                                     50,60,324       8,34,026       89,14,545      21,48,750         77,13,886
Repairs to plant and machinery                            39,97,679      27,39,781       73,83,941      41,49,262         84,12,905
Research grants                                           25,00,000      25,00,000       50,00,000      25,00,000       1,03,00,000
Managerial remuneration                                   24,00,000       6,00,000       48,00,000      12,00,000         48,17,800
Bad debts written off                                     27,70,254              -       27,70,254              -       1,59,20,938
Bank charges and commission                                3,94,040       8,08,085        9,24,343      17,62,932         42,21,668
Bad loans and advances written off                                -       3,46,577               -       3,46,577          3,13,050
Auditor's remuneration
     - audit fees                                          4,47,000       4,67,500        8,93,250       8,92,500         17,85,000
     - certification charges                                      -              -               -              -          2,00,000
     - other services                                             -              -               -              -          4,50,000
     - out-of-pocket expenses                                50,000         50,000        1,00,000       1,00,000          2,00,000
Other miscellaneous expenses                            2,04,73,207      84,58,142     3,29,07,097    1,15,87,412       1,62,46,541
- -----------------------------------------------------------------------------------------------------------------------------------
                                                       43,22,60,118   15,37,31,464    71,72,72,067   28,98,70,425      69,48,50,282
===================================================================================================================================
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
   Statement of Cash Flows
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                                                                             in Rs.
- -----------------------------------------------------------------------------------------------------------------------------------
                                                         Quarter ended September 30,   Half year ended September 30,   Year ended
                                                        ------------------------------------------------------------
                                                                 2000           1999            2000           1999  March 31, 2000
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                     <C>            <C>             <C>            <C>            <C>
Cash flows from operations
Profit before tax                                       171,76,22,579   75,20,82,803   306,77,41,328  143,81,64,641   325,64,85,819
Other Income                                            (18,80,59,827)  (8,16,96,895)  (33,68,00,507) (21,71,95,024)  (36,62,06,181)
Loss (profit) on sale of fixed assets                           8,720      (4,16,230)         53,829      (4,63,777)      (8,73,015)
Increase (decrease)in provision for contingencies                   -              -               -    3,33,00,000    (6,66,00,000)
Increase (decrease) in provision for e-inventing the
Company                                                             -    3,50,00,000      (39,00,977)   3,50,00,000       39,00,977
Depreciation, depletion and amortization                 24,23,67,547   10,72,23,769    41,97,39,264   20,04,41,918    53,23,27,389
Decrease (increase) in sundry debtors                   (14,65,76,914) (26,71,34,722) (106,87,87,493) (48,95,21,379)  (51,65,92,828)
Decrease (increase) in loans and advances                (5,07,48,178)  (8,30,09,030)  (13,17,94,697) (17,73,97,884)  (41,49,70,588)
Increase (decrease) in current liabilities and
provisions                                               34,84,56,392    4,17,59,020    76,19,16,176   17,70,67,854    42,26,37,450
Income taxes paid                                       (23,58,99,316) (10,92,26,480)  (32,25,31,791) (13,84,37,481)  (35,53,53,877)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash from operations                                168,71,71,003   39,45,82,235   238,56,35,132   86,09,58,868   249,47,55,146
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from financing
Proceeds from conversion of options                                 -              -       10,01,506              -     1,76,25,277
Expenses relating to issue of American Depositary
Shares                                                              -      (3,26,400)              -   (2,05,30,090)   (2,35,06,514)
Expenses relating to issue of ADS linked stock options              -              -               -              -    (1,01,93,113)
Dividends paid (including dividend tax)                             -              -   (22,02,44,213)  (8,91,36,007)  (19,92,57,109)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used for financing                                         -      (3,26,400)  (21,92,42,707) (10,96,66,097)  (21,53,31,459)
- -----------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing
Income from investments                                   9,12,38,406    6,52,40,572    16,58,03,106   11,94,36,323    26,68,79,106
Proceeds of sale of fixed assets                             1,87,023       4,20,448        2,37,761       5,71,709       10,20,400
Purchase of fixed assets                               (114,01,44,667) (38,55,70,016) (199,85,14,640) (59,76,16,481) (159,87,03,617)
Other long-term investments                              (9,56,09,608)             -   (22,96,18,268)             -   (13,08,00,000)
- -----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing                            (114,43,28,846) (31,99,08,996) (206,20,92,041) (47,76,08,449) (146,16,04,111)
- -----------------------------------------------------------------------------------------------------------------------------------

Effect of exchange differences on translation of
foreign currency deposit maintained abroad                9,68,21,421    1,64,56,323    17,09,97,401    9,77,58,701     9,93,27,075
Total increase (decrease) in cash and cash equivalents
during the period                                        63,96,63,578    9,08,03,162    27,52,97,785   37,14,43,023    91,71,46,651
Cash and cash equivalents at the beginning of the
period                                                  471,93,71,802  444,72,30,805   508,37,37,595  416,65,90,944   416,65,90,944
- -----------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at the end of the period      535,90,35,380  453,80,33,967   535,90,35,380  453,80,33,967   508,37,37,595
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

  Note: During the half year ended September 30, 2000, the Company transferred
  intellectual property rights in Onscan - a web focussed wireless-enabled
  notification product, to Onscan Inc., USA, a company incubated by Infosys as
  part of its ongoing effort to encourage and promote entrepreneurs amongst its
  employees. The product was transferred for a gross consideration of Rs. 8.93
  crore (US$ 2 million) received as equity, preferred voting and preferred non-
  voting securities in Onscan Inc. and accordingly, is not considered in this
  statement of cash flows.

  This is the Cash Flow Statement referred
  to in our report of even date.
  for Bharat S Raut & Co.
  Chartered Accountants

<TABLE>
  <S>                       <C>                      <C>                                <C>                   <C>
  Balaji Swaminathan        N. R. Narayana Murthy    Nandan M. Nilekani                 Deepak M. Satwalekar
  Partner                   Chairman and             Managing Director, President and   Director
                            Chief Executive Officer  Chief Operating Officer


                            Prof. Marti G.           S. Gopalakrishnan                  K. Dinesh             S. D. Shibulal
                            Subrahmanyam             Deputy Managing Director           Director              Director
                            Director

  Place: Bangalore          T. V. Mohandas Pai       Phaneesh Murthy                    Srinath Batni         V. Viswanathan
  Date: October 10, 2000    Director and             Director                           Director              Company Secretary
                            Chief Financial Officer
</TABLE>

                                                                               8
<PAGE>

<TABLE>
<CAPTION>
Statement of Cash Flows
- -------------------------------------------------------------------------------------------------------------------------
                                                                                                                               in Rs
- ------------------------------------------------------------------------------------------------------------------------------------
                                                         Quarter ended September 30,   Half year ended September 30,   Year ended
                                                       --------------------------------------------------------------
                                                           2000          1999            2000           1999          March 31, 2000
- ------------------------------------------------------------------------------------------------------------------------------------
Reconciliation of Balance Sheet items with cash flow items
<S>                                                  <C>              <C>            <C>             <C>              <C>
1. Loans and advances
   As per Balance sheet                               288,54,93,594   164,28,14,672   288,54,93,594  164,28,14,672    210,12,77,161
   Less: Deposits with financial institutions/body   (111,61,43,065)  (76,11,62,937) (111,61,43,065) (76,11,62,937)   (76,58,01,865)
         corporate, included in cash equivalents
         Advance income taxes considered separately   (84,61,76,889)  (32,78,45,496)  (84,61,76,889) (32,78,45,496)   (54,40,96,353)
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow      92,31,73,640    55,38,06,239    92,31,73,640   55,38,06,239     79,13,78,943
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
2. Additions to fixed assets
   As per Balance sheet                                62,47,78,371    11,48,32,169   152,22,93,065   33,35,52,996    117,79,35,912
   Add:  Closing capital work-in-progress             104,58,25,080    41,28,99,285   104,58,25,080   41,28,99,285     56,96,03,505
   Less: Opening capital work-in-progress             (53,04,58,784)  (14,21,61,438)  (56,96,03,505) (14,88,35,800)   (14,88,35,800)
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow     114,01,44,667    38,55,70,016   199,85,14,640   59,76,16,481    159,87,03,617
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
3. Cash and cash equivalents
   As per Balance sheet                               424,28,92,315   377,68,71,030   424,28,92,315  377,68,71,030    431,79,35,730
   Add:  Deposits with financial institutions/body    111,61,43,065    76,11,62,937   111,61,43,065   76,11,62,937     76,58,01,865
         corporate (as per 1 above)
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow     535,90,35,380   453,80,33,967   535,90,35,380  453,80,33,967    508,37,37,595
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
4. Income taxes paid
   As per Profit and Loss Account                      17,75,00,000     9,50,00,000    31,46,00,000   17,50,00,000     39,70,00,000
   Add:  Provision for tax on sale of intellectual                -               -     3,43,96,000              -
         property rights
         Decrease(increase) in balance in provision   (15,70,48,745)   (9,50,05,897)  (32,85,44,745) (17,33,27,793)   (39,46,62,254)
         for taxes account
         Increase(decrease) in balance in advance      21,54,48,061    10,92,32,377    30,20,80,536   13,67,65,274     35,30,16,131
         income tax account
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow      23,58,99,316    10,92,26,480    32,25,31,791   13,84,37,481     35,53,53,877
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
5. Other income
   As per Profit and Loss Account                      19,57,87,617     9,58,18,435    34,68,95,149   23,37,31,680     39,14,11,095
   Less: Income from operating activities                (77,27,790)   (1,37,05,310)   (1,00,94,642)  (1,60,72,879)    (2,43,31,899)
         Profit on sale of fixed asset considered                 -       (4,16,230)              -      (4,63,777)       (8,73,015)
         separately
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow      18,80,59,827     8,16,96,895    33,68,00,507   21,71,95,024     36,62,06,181
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
6. Current liabilities and provisions
   As per Balance sheet                               272,77,79,820   128,93,45,120   272,77,79,820  128,93,45,120    165,97,02,419
   Less: Provision for taxation considered
         separately                                   (95,45,64,487)  (40,46,85,281)  (95,45,64,487) (40,46,85,281)   (62,60,19,742)
         Provision for dividend considered
         separately                                   (16,53,78,418)   (9,92,08,200)  (16,53,78,418)  (9,92,08,200)   (19,84,18,210)
         Provision for dividend tax considered          (363,83,252)   (1,09,12,902)    (363,83,252)  (1,09,12,902)    (2,18,26,003)
         separately
         Provision for contingencies                              -    (9,99,00,000)              -   (9,99,00,000)

         Provision for e-inventing the company                    -    (3,50,00,000)              -   (3,50,00,000)      (39,00,977)
   ---------------------------------------------------------------------------------------------------------------------------------
   Balance considered for preparing the cash flow     157,14,53,663    63,96,38,737   157,14,53,663   63,96,38,737     80,95,37,487
   statement
   ---------------------------------------------------------------------------------------------------------------------------------
This is the Cash Flow Statement referred
to in our report of even date.
for Bharat S Raut & Co.
Chartered Accountants
Balaji Swaminathan                N. R. Narayana Murthy    Nandan M. Nilekani                  Deepak M. Satwalekar
Partner                           Chairman and             Managing Director, President and    Director
                                  Chief Executive Officer  Chief Operating Officer

                                  Prof. Marti G.           S. Gopalakrishnan                   K. Dinesh          S. D. Shibulal
                                  Subrahmanyam             Deputy Managing Director            Director           Director
                                  Director

Place: Bangalore                  T. V. Mohandas Pai       Phaneesh Murthy                     Srinath Batni      V. Viswanathan
Date: October 10, 2000            Director and             Director                            Director           Company Secretary
                                  Chief Financial Officer
</TABLE>


                                                                               9
<PAGE>

1.   Significant accounting policies and notes on accounts
________________________________________________________________________________


     Company overview

     Infosys Technologies Limited ("Infosys" or "the Company") is a publicly
     held company providing information technology ("IT") solutions principally
     to Fortune 1000 and emerging new economy companies. Infosys' range of
     services includes IT consulting, IT architecture, application development,
     e-commerce and Internet consulting, and software maintenance. In addition,
     the Company develops and markets certain software products. Headquartered
     in Bangalore, India, Infosys has 17 state-of-the-art offshore software
     development facilities located throughout India that enables it to provide
     high quality, cost-effective services to clients in a resource-constrained
     environment. The Company also maintains offices in North America, Europe
     and Asia.

1.1  Significant accounting policies

     1.1.1  Basis of preparation of financial statements

     The financial statements are prepared under the historical cost convention,
     in accordance with Indian Generally Accepted Accounting Principles ("GAAP")
     comprising the accounting standards issued by the Institute of Chartered
     Accountants of India and the provisions of the Companies Act, 1956, as
     adopted consistently by the Company. All income and expenditure having a
     material bearing on the financial statements are recognized on the accrual
     basis.

     The preparation of the financial statements in conformity with GAAP
     requires that the management of the Company ("Management") make estimates
     and assumptions that affect the reported amounts of revenue and expenses of
     the period, reported balances of assets and liabilities and disclosures
     relating to contingent assets and liabilities as of the date of the
     financial statements. Examples of such estimates include expected contract
     costs to be incurred to complete software development, provision for
     doubtful debts, future obligations under employee retirement benefit plans
     and the useful lives of fixed assets. Actual results could differ from
     those estimates.

     1.1.2  Revenue recognition

     Revenue from software development on time-and-materials contracts is
     recognized based on software developed and billed to clients as per the
     terms of specific contracts. On fixed-price contracts, revenue is
     recognized based on milestones achieved as specified in the contracts on
     the percentage-of-completion basis. Revenue from rendering Annual Technical
     Services ("ATS") is recognized proportionately over the period in which
     services are rendered. Revenue from the sale of licenses for the use of
     software applications is recognized on transfer of the title in the user
     license. Interest on deployment of surplus funds is recognized using the
     time-proportion method, based on interest rates implicit in the
     transaction. Dividend income is recognized when the right to receive
     dividend is established. Revenue from the sale of special import licences
     is recognized when the licences are transferred.

     1.1.3  Expenditure

     The cost of software purchased for use in software development and services
     is charged to revenue in the year the software is acquired. Project costs
     in the nature of salaries, travel and other expenses incurred on fixed
     price contracts, where milestones are yet to be reached are classified as
     "Costs in excess of billings" in the balance sheet. Provisions are made for
     all known losses and liabilities. Provisions are made for future
     unforeseeable factors that may affect the profit on fixed-price software
     development contracts. The leave encashment liability of the Company is
     provided on the basis of an actuarial valuation. Provisions are made
     towards likely expenses for providing post-sales client support on fixed-
     price contracts.

     1.1.4  Fixed assets

     Fixed assets are stated at cost, after reducing accumulated depreciation
     until the date of the balance sheet. Direct costs are capitalized until the
     assets are ready for use and include financing costs relating to any
     specific borrowing attributable to the acquisition of the fixed assets.

     1.1.5  Capital work-in-progress

     Advances paid to acquire fixed assets and the cost of assets not put to use
     before the period-end, are disclosed under capital work-in-progress.

     1.1.6  Depreciation

     Depreciation on fixed assets is determined using the straight-line method
     based on useful lives of assets as estimated by Management. Depreciation
     for assets purchased/ sold during the period is proportionately charged.
     Individual assets acquired for less than Rs. 5,000 are entirely depreciated
     in the year of acquisition. Management estimates the useful lives for the
     various fixed assets as follows:
      ________________________________________________
       Buildings                             15 years

       Plant and machinery                    5 years
       Computer equipment                   2-5 years

       Furniture and fixtures                 5 years
       Vehicles                               5 years
      ________________________________________________

                                                                              10
<PAGE>

1.1.7   Retirement benefits to employees

1.1.7a  Gratuity

In accordance with the Payment of Gratuity Act, 1972, Infosys provides for
gratuity, a defined benefit retirement plan (the "Gratuity Plan") covering all
employees. The Gratuity plan provides a lump sum payment to vested employees at
retirement, death or termination of employment, of an amount based on the
respective employee's salary and the years of employment with the Company.

The Company established the Infosys Technologies Limited Employees' Gratuity
Fund Trust (the "Trust") in 1997, until which the Company made contributions to
a gratuity plan managed by the Life Insurance Corporation of India. Liabilities
with regard to the Gratuity Plan are determined by actuarial valuation, based
upon which, the Company contributes to the Trust. Trustees administer the
contributions made to the Trust. The funds contributed to the Trust are invested
in specific designated securities as mandated by law and generally comprise
central and state government bonds and debt instruments of government-owned
corporations.

1.1.7b  Superannuation

Apart from being covered under the Gratuity Plan described above, the senior
officers of Infosys are also participants of a defined contribution plan. The
Company makes monthly contributions to the superannuation plan (the "plan")
based on a specified percentage of each covered employee's salary. The Company
has no further obligations under the Plan beyond its monthly contributions.

1.1.7c  Provident  fund

In addition to the above benefits, all employees receive benefits from a
provident fund, which is a defined contribution plan. Both the employee and the
Company make monthly contributions to this provident fund plan equal to a
specified percentage of the covered employee's salary.

Infosys established a Provident Fund Trust in 1996 to which a part of the
contributions are made each month. Prior thereto, the Company made contributions
to the provident fund plan administered by the Government of India. The
remainders of the contributions are made to the Government administered
provident fund. The Company has no further obligations under the provident fund
plan beyond its monthly contributions.

1.1.8   Research and development

Revenue expenditure incurred on research and development is charged off as
incurred. Capital expenditure incurred on research and development is
depreciated over the estimated useful lives of the related assets.

1.1.9   Foreign currency transactions

Sales made to overseas clients and collections deposited in foreign currency
bank accounts are recorded at the exchange rate as of the date of the respective
transactions. Expenditure in foreign currency is accounted at the exchange rate
prevalent when such expenditure is incurred. Disbursements made out of foreign
currency bank accounts are reported at a rate that approximates the actual
monthly rate. Exchange differences are recorded when the amount actually
received on sales or actually paid when expenditure is incurred is converted
into Indian Rupee. The exchange differences arising on foreign currency
transactions are recognized as income or expense in the period in which they
arise.

Fixed assets purchased at overseas offices are recorded at cost, based on the
exchange rate as of the date of purchase. The charge for depreciation is
determined as per the Company's accounting policy. Current assets and current
liabilities denominated in foreign currency are translated at the exchange rate
prevalent at the date of the balance sheet. The resulting difference is also
recorded in the profit and loss account. In the case of forward contracts, the
difference between the forward rate and the exchange rate on the date of the
transaction is recognized as income or expense over the life of the contract.

1.1.10  Investments

Investments are classified as current investments or long-term investments.
Current investments are carried at the lower of cost and fair value. Cost for
overseas investments comprises the Indian Rupee value of the consideration paid
for the investment. Provisions are recorded for any decline in the carrying
value as of the balance sheet date.

Long-term investments are carried at cost and provisions recorded to recognize
any decline, other than temporary, in the carrying value of such investment.

1.1.11  Investment in subsidiary

The investment in the subsidiary is accounted on the cost method, whereby, the
investment is carried at cost and the Company recognizes only dividends received
from the subsidiary as income in the profit and loss account. Provisions are
recorded to recognize any decline, other than temporary, in the carrying value
of the investment.

1.1.12  Income tax

Provision is made for income tax annually based on the tax liability computed
after considering tax allowances and exemptions. Provisions are recorded as
considered appropriate for matters under appeal due to disallowances or for
other reasons.

                                                                              11
<PAGE>

1.2    Notes on accounts

     The previous period's figures have been recast / restated, wherever to
conform to the current period's classification.

     1.2.1 Capital commitments and contingent liabilities

           a.  The estimated amount of contracts remaining to be executed on
               capital account, and not provided for (net of advances) is Rs.
               121,56,43,540 as at September 30, 2000. The amount of such
               contracts as at September 30, 1999 was Rs. 61,66,53,437 and as at
               March 31, 2000 was Rs. 80,31,29,007.
           b.  The Company has outstanding guarantees and counter guarantees of
               Rs. 6,51,30,000 as at September 30, 2000, to various banks, in
               respect of the guarantees given by the banks in favor of various
               government authorities and a customer. The guarantees and counter
               guarantees outstanding as at September 30, 1999 were
               Rs.1,58,84,263 and as at March 31, 2000 were Rs. 5,26,30,000.
           c.  Claims against the Company, not acknowledged as debts, amounted
               to Rs. 8,75,532 as at September 30, 2000. Such claims, as at
               September 30, 1999 were Rs. 17,91,814 and as at March 31, 2000
               were Rs. 32,89,661.

     1.2.2 Quantitative details

     The Company is engaged in the development and maintenance of computer
     software. The production and sale of such software cannot be expressed in
     any generic unit. Hence, it is not possible to give the quantitative
     details of sales and certain information as required under paragraphs 3, 4C
     and 4D of part II of Schedule VI to the Companies Act, 1956.

     1.2.3 Managerial remuneration paid to the chairman, managing director and
whole-time directors

<TABLE>
<CAPTION>
                                                                                                in Rs.
- ------------------------------------------------------------------------------------------------------
                                         Three months ended        Six months ended         Year ended
                                            September 30,           September 30,            March 31,
                                       ---------------------------------------------------------------
                                          2000*        1999        2000*         1999             2000
- ------------------------------------------------------------------------------------------------------
<S>                                    <C>          <C>         <C>           <C>            <C>
Salary                                 43,77,541    9,73,800    66,42,509     19,47,600      38,00,059
Contribution to provident fund and      4,87,061    3,09,780     8,70,466      6,19,560      12,08,855
other funds
Perquisites                            10,88,801    6,32,970    18,28,674     15,78,369      37,32,482
- ------------------------------------------------------------------------------------------------------
</TABLE>

  *  includes the remuneration paid to three directors who were co-opted into
     the board on May 27, 2000.

1.2.4  Managerial remuneration paid to non-whole-time directors

<TABLE>
<CAPTION>
                                                                                          in Rs.
- ------------------------------------------------------------------------------------------------
                                  Three months ended       Six months ended           Year ended
                                    September 30,            September 30,             March 31,
                               -----------------------------------------------------------------
                                  2000       1999         2000           1999               2000
- ------------------------------------------------------------------------------------------------
<S>                             <C>        <C>          <C>           <C>             <C>
Commission                             -          -            -             -        48,17,800
Sitting fees                      25,000      4,000     1,37,000        44,000           92,000
Reimbursement of expenses       2,94,513   2,25,891     4,98,674      4,56,605        10,13,703
- ------------------------------------------------------------------------------------------------
</TABLE>

1.2.5  Imports on CIF basis

<TABLE>
<CAPTION>
                                                                                         in Rs.
- -----------------------------------------------------------------------------------------------
                           Three months ended            Six months ended            Year ended
                              September 30,                September 30,              March 31,
                       ------------------------------------------------------------------------
                           2000          1999            2000          1999                2000
- -----------------------------------------------------------------------------------------------
<S>                    <C>            <C>           <C>            <C>             <C>
Capital goods          26,43,63,022   7,75,09,947   43,20,09,442   15,38,94,938    37,47,31,691
Software packages         30,54,632   1,67,09,821      92,38,916    2,08,06,798     2,54,95,652
- -----------------------------------------------------------------------------------------------
</TABLE>

1.2.6  Expenditure in foreign currency (on the payments basis)

<TABLE>
<CAPTION>
                                                                                                               in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                                              Three months ended      Six months ended                     Year ended
                                                September 30,            September 30,                      March 31,
                                          ---------------------------------------------------------------------------
                                               2000           1999            2000           1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>             <C>            <C>            <C>
Travel expenses                            27,94,50,302   14,18,36,600    45,64,90,402   31,35,70,860    70,29,13,532
Professional charges                        3,08,42,822      58,93,140     3,80,49,742    1,20,76,246     4,51,95,637
Other expenditure incurred overseas for   116,22,63,533   58,00,33,181   197,01,42,528   92,16,15,097   221,74,57,133
software development
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

1.2.7  Earnings in foreign exchange (on the receipts basis)

<TABLE>
<CAPTION>
                                                                                                               in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                                              Three months ended      Six months ended                     Year ended
                                                September 30,            September 30,                      March 31,
                                          ---------------------------------------------------------------------------
                                               2000           1999            2000           1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>            <C>             <C>
Income from software development          431,24,42,409   182,51,55,780  735,52,73,359  348,81,42,974   833,29,73,465
</TABLE>

                                                                              12
<PAGE>

<TABLE>
<CAPTION>
                                                                                                               in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                                              Three months ended      Six months ended                     Year ended
                                                September 30,            September 30,                      March 31,
                                          ---------------------------------------------------------------------------
                                              2000           1999            2000           1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>            <C>             <C>
services and products
Interest received on deposits with banks  5,19,94,463     4,31,26,392    10,69,20,563   8,55,70,358     18,42,65,368
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

1.2.8  Depreciation on assets costing less than Rs. 5,000 each

During the six months ended September 30, 2000, the Company charged depreciation
at 100% in respect of assets costing less than Rs. 5,000 each, amounting to Rs.
10,04,17,795 (Rs. 2,27,08,905). For the three months ended September 30, 2000
the charge is Rs. 6,63,81,667 (Rs. 1,50,93,874) and for the previous year March
31, 2000 is Rs. 13,21,59,074.

1.2.9  Exchange differences

<TABLE>
<CAPTION>
                                                                                                               in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                                              Three months ended      Six months ended                     Year ended
                                                September 30,            September 30,                      March 31,
                                          ---------------------------------------------------------------------------
                                               2000           1999            2000           1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>            <C>             <C>
Gains on the translation of Foreign        6,14,29,421    1,64,56,323    17,09,97,401    9,77,58,701      9,93,27,075
currency deposits
Net realized and unrealized exchange      13,21,48,664    5,24,43,677    17,31,28,032    8,86,41,299      8,76,31,024
gains - others
Total net realized and unrealized gains   19,35,78,085    6,89,00,000    34,41,25,433   18,64,00,000     18,69,58,099
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

The gains on the translation of foreign currency deposits are separately
disclosed under "Other income" in the financial statements. Net realized and
unrealized exchange gains have been included in "Income from software
development services and products -overseas", except for an amount of Rs.
3,53,92,000 relating to the translation gains realized on repatriation of
certain ADS proceeds, which is also classified in the financial statements as
"Other income".

1.2.10 Research and development expenditure

<TABLE>
<CAPTION>
                                                                                                               in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                                              Three months ended      Six months ended                     Year ended
                                                September 30,            September 30,                      March 31,
                                          ---------------------------------------------------------------------------
                                               2000           1999            2000           1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                       <C>             <C>            <C>            <C>             <C>
Capital                                     48,26,181             -        68,28,231              -         15,27,500
Revenue                                   4,00,76,886   2,26,17,590      7,16,59,376    3,88,51,990       8,07,35,940
Total research and development expenses   4,49,03,067   2,26,17,590      7,84,87,607    3,88,51,990       8,22,63,440
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

1.2.11 Provision for contingencies

The Company had instituted a contingency plan effective October 1, 1998 and made
a total provision of Rs. 9,99,00,000 to meet any possible disruption in client
support due to the Year 2000 impact on the technology and communication
infrastructure provided to the Company by its vendors. For the year ended March
31, 2000, Rs. 2,42,29,154 was spent towards the Year 2000 transition effort,
which was set off against the provision and the remainder of Rs. 7,56,70,846 was
written back to the profit and loss account.

1.2.12 Provision for e-inventing the Company

The Company made a provision of Rs. 3,50,00,000 for the quarter ended September
30, 1999 towards e-inventing the Company. Until March 31, 2000 the Company had
incurred Rs. 3,10,99,023 towards e-inventing Infosys, which was set-off against
the provision earlier made. The remainder of Rs. 39,00,977 was incurred and set-
off against this provision during the first quarter of the current year.

1.2.13 Unearned revenue

Unearned revenue as of September 30, 2000 amounting to Rs. 73,48,39,451
(previous period Rs. 27,75,55,705 and previous year Rs. 17,56,71,963) primarily
consists of client billings on fixed-price, fixed-time-frame contracts for which
the related costs have not yet been incurred.

1.2.14 Dues to small-scale industrial undertakings

As of September 30, 2000, the Company had no outstanding dues to small-scale
industrial undertakings (previous period Rs. nil; previous year Rs. nil).

1.2.15 Balance of unutilized money raised by issue of American Depositary Shares

During the year ended March 31, 1999, Infosys made an Initial Public Offering of
American Depositary Shares ("ADS"), of US$ 70,380,000, equivalent to Rs.
296,86,00,000. The issue expenses amounted to Rs. 19,68,00,000 and the amount
utilized for capital investments until date is Rs. 277,18,00,000. The unutilized
money as on September 30, 1999 was Rs. 140,99,00,000, which was maintained in
foreign currency deposit accounts with various banks outside India.

                                                                              13
<PAGE>

1.2.16  Stock option plans

The Company currently has three stock option plans. These are summarized below.

1994 Stock Option Plan ("the 1994 Plan")

As of September 30, 2000, 3,34,200 options to acquire 3,34,200 shares were
outstanding with the employees under the 1994 Plan. These options were granted
at an exercise price of Rs. 50 per option. In addition to the above, the number
of shares earlier issued to employees subject to lock-in-period is 16,94,600
shares.

1998 Stock Option Plan ("the 1998 Plan")

The Company's 1998 Stock Option Plan ("the 1998 Plan") provides for the grant of
non-statutory stock options and incentive stock options to employees. The
establishment of the 1998 Plan was approved by the Board of Directors in
December 1997 and by the Company's shareholders in January 1998. The Government
of India approved the 1998 Plan, subject to a limit of 14,70,000 equity shares
representing 29,40,000 ADSs to be issued under the plan. A total of 16,00,000
equity shares corresponding to 32,00,000 ADSs are currently reserved for issue
pursuant to the 1998 Plan. These options may be issued at an exercise price that
is not less than 90% of the fair market value of the underlying equity share on
the date of the grant. The 1998 Plan will terminate in January 2008, unless
terminated earlier. All options under the 1998 Plan are exercisable for ADSs
representing equity shares. A committee of the Board of Directors administers
the 1998 Plan.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Number of options granted, exercised and        Three months ended         Six months ended               Year ended
forfeited                                         September 30,              September 30,                 March 31,
                                           --------------------------------------------------------------------------
                                             2000         1999              2000         1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>          <C>               <C>           <C>                <C>
Options outstanding,                       8,23,366     4,19,000          6,89,500      4,19,000           4,19,000
Beginning of period/year
Granted                                      85,300            -          2,32,000             -           2,94,300
Exercised                                       Nil            -             1,334             -             23,800
Forfeited                                    37,200            -            48,700             -                  -
- ---------------------------------------------------------------------------------------------------------------------
Options outstanding,                       8,71,466     4,19,000          8,71,466      4,19,000           6,89,500
end of period/year
- ---------------------------------------------------------------------------------------------------------------------
Weighted average                          US$ 83.40    US$ 17.00         US$ 83.40     US$ 17.00          US$ 58.53
Exercise price                           (Rs. 3,837)    (Rs. 741)       (Rs. 3,837)     (Rs. 741)        (Rs. 2,552)
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

1999 Stock Option Plan ("the 1999 Plan")

In fiscal 2000, the Company instituted the 1999 Plan. The shareholders and the
Board of Directors approved the 1999 Plan in June 1999. The 1999 Plan provides
for the issue of 66,00,000 equity shares to the employees. The 1999 Plan is
administered by a Compensation Committee comprising a maximum of seven members,
the majority of whom are independent directors on the Board of Directors. Under
the 1999 Plan, options will be issued to employees at an exercise price, which
shall not be less than the Fair Market Value. Fair Market Value is the closing
price of the Company's shares in the stock exchange where there is the highest
trading volume on a given date and if the shares are not traded on that day, the
closing price on the next trading day. Under the 1999 Plan, options may be
issued to employees at exercise prices that are less than Fair Market Value only
if specifically approved by the members of the Company in a general meeting.


<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Number of options granted, exercised and        Three months ended         Six months ended               Year ended
forfeited                                         September 30,              September 30,                 March 31,
                                           --------------------------------------------------------------------------
                                              2000         1999              2000         1999                2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                                        <C>           <C>              <C>            <C>               <C>
Options outstanding, beginning of          16,41,850        -             10,06,800         -                      -
period/year
Granted                                     2,95,450        -              9,54,100         -              10,14,500
Exercised                                          -        -                     -         -                      -
Forfeited                                     54,300        -                77,900         -                  7,700
- ---------------------------------------------------------------------------------------------------------------------
Options outstanding, end of period/year    18,83,000        -             18,83,000         -              10,06,800
- ---------------------------------------------------------------------------------------------------------------------
Weighted average exercise price            Rs. 5,343     N.A.             Rs. 5,343      N.A.              Rs. 4,268
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

1.2.17  Pro-forma disclosures relating to the Employee Stock Option Plans
("ESOPs")

The Securities and Exchange Board of India (SEBI) recently issued the (Employee
Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 which
is applicable to all stock option schemes established after June 19, 1999. In
accordance with these guidelines, the excess of the market price of the
underlying equity shares as of the date of the grant of the options over the
exercise price of the options, including up-front payments, if any is to be
recognized and amortized on a straight line basis over the vesting period. All
options under the 1998 and 1999 stock option plans have been issued at fair
market value, hence there are no compensation costs.

The Company's 1994 stock option plan was established prior to the SEBI
guidelines on stock options.

Had the stock compensation costs for this stock option plan been determined as
per the guidelines issued by SEBI, the Company's reported net profit would have
been reduced to the proforma amounts indicated below.

                                                                              14
<PAGE>

<TABLE>
<CAPTION>
                                                                                                            in Rs.
- ------------------------------------------------------------------------------------------------------------------
                                       Three months ended                Six months ended             Year ended
                                          September 30,                    September 30,               March 31,
                                  --------------------------------------------------------------------------------
                                       2000           1999            2000              1999             2000
- ------------------------------------------------------------------------------------------------------------------
<S>                               <C>              <C>             <C>              <C>              <C>
Net profit:
- - As reported                     154,01,22,579    65,70,82,803    280,80,85,328    126,31,64,641    293,51,56,665
- - Adjusted pro forma              148,20,22,829    60,09,10,468    269,34,93,331    115,34,29,790    271,34,60,717
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
1.2.18  Provision for taxation

The Company's profits from export activities are deductible from taxable income.
Moreover, most of Infosys' operations are conducted through 100% Export Oriented
Units ("EOU"), which are entitled to a tax holiday for a period of ten years
from the date of commencement of operations. The provision for taxation includes
taxes payable in respect of domestic income and income arising from the
Company's overseas operations. The Government of India has recently amended the
tax incentive available to companies operating through export oriented units.
The period of tax exemption available to such companies has been restricted to
10 consecutive years commencing from the fiscal year in which the unit commences
software development or March 31, 2000, whichever is earlier. Additionally,
export related tax deductions apart from the 100% EOU scheme earlier described
are being phased out over a period of five years ending fiscal 2004.

1.2.19  Cash and bank balances

The cash and bank balances include interest accrued but not due on fixed
deposits amounting to Rs. 1,44,56,954 for the six month period ended September
30, 2000 (previous period Rs. 23,63,996 and previous year Rs. 94,92,514).

1.2.20  Loans and advances

"Advances recoverable in cash or kind or for value to be received" mainly
comprises prepaid travel and per-diem expenses and advances to vendors for
current assets.

Deposits with financial institutions and a body corporate comprise:



<TABLE>
<CAPTION>
                                                                                                            in Rs.
- ------------------------------------------------------------------------------------------------------------------
                                           Six months ended September 30,             Year ended March 31,
                                           ------------------------------------------------------------------
                                                         2000                 1999                       2000
- ------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                  <C>                        <C>
Deposits with financial institutions:

   Housing Development Finance                   10,16,06,063         25,47,68,334               25,50,19,994
   Corporation Limited
   ICICI Limited                                 50,84,73,016         25,32,64,877               25,75,52,742
Deposits with body corporate:
   G E Capital Services India Limited            50,60,63,986         25,31,29,726               25,32,29,129
- ----------------------------------------------------------------------------------------------------------------
</TABLE>

The above amounts include interest accrued but not due amounting to Rs.
1,61,10,876 (corresponding previous period Rs. 1,11,30,744 and previous year Rs.
1,58,01,863).

The financial institutions and the body corporate have AAA rating from Credit
Rating and Information Services of India Limited ("CRISIL").

Mr. Deepak M Satwalekar, Director, is the Managing Director of HDFC. Mr. N R
Narayana Murthy, Chairman and CEO, and Professor Marti G. Subrahmanyam,
Director, are also directors in ICICI Limited. Except as directors in these
financial institutions, these persons have no direct interest in these
transactions.

1.2.21  Current liabilities

Sundry creditors for other liabilities represent mainly the retention amounts
payable to the vendors, and amounts accrued for various other operational
expenses.

1.2.22  Fixed assets

The Company has entered into lease-cum-sale agreements to acquire certain
properties. In accordance with the terms of these agreements, the Company has
the option to purchase the properties outright at the expiry of the lease
period. The Company has already paid 99% of the value of the properties at the
time of entering into the lease-cum-sale agreements. These amounts are disclosed
as "Land - leasehold" under "Fixed assets" in the financial statements.

1.2.23  Transfer of intellectual property rights

During the first quarter of the current fiscal, the Company transferred its
intellectual property rights in Onscan - a web-focussed wireless-enabled
notification product, to Onscan Inc., USA, a company incubated by Infosys as
part of its ongoing effort to encourage and promote budding entrepreneurs among
its employees. The product was transferred for a gross consideration of Rs.
8,93,40,000 (US$ 2 million), received as equity, preferred voting and preferred
non-voting securities in Onscan Inc. The income arising out of the transfer of
Rs. 5,49,44,000 (net of tax) is disclosed as an extraordinary item.

                                                                              15
<PAGE>

1.2.24  Investments

Alpha Thinx Mobile Phone Services AG, Austria

During the current quarter, the Company invested Rs. 2,20,98,608 (equivalent to
(Euro)555,800) and acquired 27,790 bearer shares of nominal value (Euro)1 each,
at an issue price of (Euro)20 per share in Alpha Thinx Mobile Phone Services AG
("Alpha Thinx"), a Vienna-based company. Alpha Thinx operates in the wireless
Internet space and plans to host interactive services for mobile users across
Europe.

Asia Net Media BVI Ltd., the British Virgin Islands

During the current quarter, the Company invested Rs. 6,84,75,000 (equivalent to
US$ 1,500,000) and acquired 3,00,00,000 Ordinary Shares of par value US$ 0.01
each, at an issue price of US$ 0.05 per Ordinary Share in Asia Net Media BVI
Limited ("Asia Net"). Asia Net intends to leverage under-exploited offline
brands in media and entertainment by delivering them through online channels and
to establish a synergistic network of companies in this space.

                                                                              16
<PAGE>

CiDRA Corporation, USA

During the first quarter of the current fiscal the Company made a strategic
investment of Rs. 13,40,08,660 comprising 33,333 fully paid Series D Convertible
Preferred Stock, par value of US$ 0.01 each, at US$ 90 each in CiDRA
Corporation, USA. CiDRA Corporation is a developer of photonic devices for high-
precision wavelength management and control for next-generation optical
networks.

M-Commerce Ventures Pte. Ltd., Singapore

During the period, the Company agreed to invest Singapore $ ("S$") 1,000,000 in
M-Commerce Ventures Pte. Ltd ("MCV"), a Singapore based venture fund. As at
September 30, 2000, the Company made an investment of Rs. 50,36,000 (equivalent
to S$ 200,000), and acquired 20 capital units in MCV. Each unit in MCV
represents one ordinary share of S$ 1 each, issued at par, and nine redeemable
preference shares at a par value of S$ 1 each, with a premium of S$ 1,110 per
redeemable preference share. MCV is promoted by the Economic Development Board,
Singapore and intends to focus on companies offering mobile portals, personal
information management and messaging, bandwidth optimization and other key
enablers of m-commerce.

1.2.25 Segment reporting

The Company's operations predominantly relate to providing IT services, which is
delivered to globally located customers.

The accounting principles that have been consistently used to record revenue,
expenditure, assets and liabilities in the individual segments are as set out in
the note on significant accounting policies.

While the primary segment reporting is already set out in detail in the
Company's balance sheet, statement of profit and loss and the various schedules
and notes thereto, the secondary disclosures are as follows:

<TABLE>
<CAPTION>
                                                                                                             in Rs.
- ---------------------------------------------------------------------------------------------------------------------
                               Three months ended September 30,    Six months ended September 30,        Year ended
                                                                                                           March 31,
                          -------------------------------------------------------------------------------------------
                                        2000             1999               2000             1999               2000
- ---------------------------------------------------------------------------------------------------------------------
<S>                          <C>               <C>               <C>                <C>               <C>
North America                  348,68,10,776    167,18,09,460      625,81,64,972    310,82,51,725      713,27,33,054
Europe                          80,94,58,817     30,84,40,362      142,00,38,934     58,76,58,900      129,09,73,822
Rest of the world               25,97,02,570     11,09,73,267       51,21,11,714     19,98,18,838       52,40,04,100
India                           10,07,73,231      8,75,82,375       17,28,37,455     12,36,96,241       26,69,37,092
- ---------------------------------------------------------------------------------------------------------------------
Total                          465,67,45,394    217,88,05,464      836,31,53,075    401,94,25,704      921,46,48,068
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

Certain expenses such as personnel costs, communication, depreciation on plant
and machinery, etc., which form a significant component of total expenses, are
not specifically allocable to these geographical segments as the underlying
services are used interchangeably between reportable segments. Management
believes that it is not practicable to provide segment disclosures relating to
segment costs and expenses, and consequently segment profits or losses, since a
realistic allocation can not be made.

Moreover the fixed assets used in the Company's business or the liabilities
contracted are not identifiable to any particular reportable segment as the
fixed assets and services can be used interchangeably among segments.
Consequently, management believes that it is not practicable to provide segment
disclosures relating to total assets since a meaningful analysis based on the
available data among the various geographic segments is not possible.

1.2.26 Related party transactions

The Company entered into related party transactions during the half year with
Yantra Corporation, USA, the subsidiary of the Company and key management
personnel.

The transactions with Yantra comprise sales of Rs. 10,37,00,336 during the six
months ended September 30, 2000. The corresponding amounts for the six months
ended September 30, 1999 and the year ended March 31, 2000 were Rs. 4,80,87,782
and Rs. 11,40,18,372 respectively. The outstanding dues from the subsidiary as
set out in schedule 5, Sundry Debtors, to the financial statements.

Key management personnel are non-director officers of the Company, who have the
authority and responsibility for planning, directing and controlling the
activities of the Company. The loans and advances receivable from non-director
officers is stated in schedule 7, Loans and advances, to the financial
statements.

1.2.27 Provisions for doubtful debts

The Company normally provides for all debtor dues outstanding for 180 days or
longer after considering its historical experience, the individual
creditworthiness of the debtors and the current economic environment. In the
second quarter of fiscal 2001, the Company provided for doubtful debts of Rs.
3,64,00,351 for dues from two of its customers although these dues were less
than 180 days old, as the amounts were considered doubtful of recovery.
Management continues pursuing the parties for recovery of the dues, in part or
full.

                                                                              17
<PAGE>

<TABLE>
<CAPTION>
At a glance - US GAAP
- ---------------------------------------------------------------------------------------------------------------------------------
                                                                                      US$ in millions, except as otherwise stated
- ---------------------------------------------------------------------------------------------------------------------------------
                                                 Three months ended September 30     Six months ended September 30     Year ended
                                              --------------------------------------------------------------------
                                                           2000          1999             2000          1999       March 31, 2000
- ---------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                    <C>          <C>              <C>         <C>
   For the period
   Revenues                                                97.94         47.94           178.20         87.67              203.44
   Export revenues                                         96.87         47.20           176.12         86.53              200.54
   Operating income                                        32.20         14.62            58.60         26.92               60.50
   Net income                                              32.78         14.72            59.61         28.03               61.34
   Operating income as a percentage of total
   revenues                                                32.88%        30.48%           32.89%        30.71%              29.74%
   Net income as a percentage of total                     33.48%        30.70%           33.46%        31.97%              30.15%
   revenues
   Basic earnings per share                                $0.50         $0.22            $0.90         $0.42               $0.93
   Dividend declared per equity share                         NA            NA            $0.05         $0.03               $0.10
   Capital investments                                     22.99          8.72            41.14         12.97               35.93

   At the end of the period
   Total assets                                                                          279.89        181.22              219.28
   Property, plant and equipment - net                                                    79.37         32.22               47.55
   Cash and cash equivalents                                                             116.48        104.13              116.60
   Working capital                                                                       146.05        123.27              137.94
   Total debt                                                                                --            --                  --
   Stockholders' equity                                                                  243.38        162.25              198.14
   Common stock                                                                            8.59          8.59                8.59
   Market capitalization                                                              10,583.72      5,412.82           13,609.67
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Note:

Market capitalization is calculated by considering the Indian market price for
the shares outstanding at the period / year end.

                                 TOTAL REVENUE
                              (US$ in millions)

               Year ended March 31, 2000                   203.44
               Half year ended September 30, 1999           87.67
               Half year ended September 30, 2000          178.20
               Quarter ended September 30, 1999             47.94
               Quarter ended September 30, 2000             97.94


                                    EXPORTS
                               (US$ in millions)

               Year ended March 31, 2000                   200.54
               Half year ended September 30, 1999           86.53
               Half year ended September 30, 2000          176.12
               Quarter ended September 30, 1999             47.20
               Quarter ended September 30, 2000             96.87


                                  NET INCOME
                               (US$ in millions)

               Year ended March 31, 2000                    61.34
               Half year ended September 30, 1999           28.03
               Half year ended September 30, 2000           59.61
               Quarter ended September 30, 1999             14.72
               Quarter ended September 30, 2000             32.78

                                                                              18
<PAGE>

Shareholder information
- --------------------------------------------------------------------------------
1.  Listing on stock exchanges         Bangalore Stock Exchange Ltd.
    in India at                        Stock Exchange Towers, No. 51, 1st Cross,
                                       J.C. Road, Bangalore - 560 027, India.
                                       Tel.: +91-80-299 5234, Fax: +91-80-299
                                       5242

                                       The Stock Exchange, Mumbai
                                       Phiroze Jeejeebhoy Towers, Dalal Street,
                                       Mumbai - 400 001, India.
                                       Tel.: +91-22-265 5581, Fax: +91-22-265
                                       8121

                                       National Stock Exchange of India Ltd.
                                       Trade World, Senapati Bapat Marg, Lower
                                       Parel, Mumbai - 400 013, India.
                                       Tel.: +91-22-497 2950, Fax: +91-22-491
                                       4275 / 85

2.  Listing fees                       Paid for all the above stock exchanges
                                       for 2000-2001.

3.  Listing on stock exchanges         NASDAQ National Market in the United
    outside India                      States
                                       33 Whitehall Street, New York, NY-1004-
                                       4087
                                       Tel.: +1-212-709-2400, Fax: +1-212-709-
                                       2496

4.  Registered office                  Electronics City, Hosur Road, Bangalore
                                       - 561 229, India.
                                       Tel.: +91-80-852 0261, Fax: +91-80-852
                                       0362
                                       Homepage: www.infy.com
                                                 ------------

5.  Stock market data relating to shares listed in India

    a. The company's market capitalization is included in the computation of the
       BSE-30 Sensitive Index (Sensex), the BSE Dollex and S&P CNX NIFTY Index.

    b. Monthly high and low quotations as well as the volume of shares traded at
       Mumbai, National and Bangalore Stock Exchanges for the three-month period
       ended September 30, 2000 are:

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
                                 BSE                                NSE                                 BgSE
               --------------------------------------------------------------------------------------------------------------
                   High          Low        Volume        High      Low        Volume         High       Low         Volume
                    Rs.          Rs.         Nos.          Rs.       Rs.        Nos.           Rs.        Rs.         Nos.
- -----------------------------------------------------------------------------------------------------------------------------
<S>               <C>          <C>        <C>            <C>        <C>       <C>            <C>        <C>         <C>
July               8,815        6,401        91,78,299    8,812      6,355       88,47,755      8,790     6,400        44,147
August             8,617        6,255      1,00,98,169    8,603      6,256     1,26,23,716      8,500     6,230        64,163
September          8,930        6,950      1,40,65,483    8,949      6,975     1,33,52,783      8,998     6,985        74,460
- -----------------------------------------------------------------------------------------------------------------------------
Total                                      3,33,41,951                         3,48,24,254                           1,82,770
% of volume traded to average
shares outstanding for the
period                                           52.04% **                          54.35% **                            0.29% **
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

**  The number of shares outstanding is 6,40,68,800. The equity shares
    underlying the American Depositary Shares (ADSs) have been excluded for the
    purpose of this calculation.

6.  Par value of equity shares             Rs. 5 each fully paid-up

7.  Share transfers in physical form       Karvy Consultants Limited
    and other communication regarding      Registrars and Share Transfer Agents
    share certificates, dividends,         T.K.N. Complex, No. 51/2, Vanivilas
    change of address, etc., in India      Road, Opp. National College,
    may be addressed to                    Basavanagudi, Bangalore - 560 004,
                                           India. Tel.: +91-80-662 1184/92/93,
                                           Fax: +91-80-662 1169
                                           E-mail: bangalore@karvy.com

8.  Share transfer system

    Shares sent for physical transfer are generally registered and returned
    within a period of 15 days from the date of receipt, if the documents are
    clear in all respects. The share transfer committee of the company meets as
    often as required.

    The total number of shares transferred in physical form during the three-
    month period ended September 30, 2000 was 2,620 (previous year - 2,87,568).
    100.00% of transfers (previous year - 99.79%) were completed within 15 days.
<PAGE>

<TABLE>
<CAPTION>
    --------------------------------------------------------------------------------------------------------------------
                                                 Three-month period ended September 30,
    ------------------------------------------------------------------------------------------------------------------------------
                                          2000                                              1999
    ------------------------------------------------------------------------------------------------------------------------------
    Transfer                 No. of               No. of                        No. of               No. of
    period            transferees (folios)        shares            %    transferees (folios)        shares           %
    in days               New Existing                                        New Existing
    ------------------------------------------------------------------------------------------------------------------------------
    <S>              <C>     <C>                 <C>           <C>       <C>      <C>             <C>            <C>
       1 - 10             3          1             2,620       100.00         25        12         2,86,168       99.51
      11 - 15             0          0                 0         0.00          6         0              800        0.28
      16 - 20             0          0                 0         0.00          2         0              200        0.07
    * 21 and above        0          0                 0         0.00          1         2              400        0.14
    ------------------------------------------------------------------------------------------------------------------------------
                          3          1             2,620       100.00         34        14         2,87,568      100.00
    ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    * Delays beyond 21 days were due to compliance with legal requirements

9.  Investors' services - complaints received during

<TABLE>
<CAPTION>
    ------------------------------------------------------------------------------------------------------------------------------
                                                              Three-month period ended September 30,
    ------------------------------------------------------------------------------------------------------------------------------
    Nature of complaints                                         2000                        1999
    ------------------------------------------------------------------------------------------------------------------------------
                                                        Received     Attended to      Received   Attended to
    ------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>          <C>              <C>         <C>
    1.  Non-receipt of share certificates                      0               0             0             0
    2.  Non-receipt of bonus shares                            2               2            22            22
    3.  Letters from Stock Exchanges, SEBI, etc.               0               0             0             0
    4.  Non-receipt of dividend                               22              22            16            16
    ------------------------------------------------------------------------------------------------------------------------------
                                                              24              24            38            38
    ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    The company has attended to most of the investors' grievances/correspondence
    within a period of 10 days from the date of receipt of the same, during the
    three-month period ended September 30, 2000 except in cases of disputes or
    legal impediments.

10. Legal proceedings

    The company is responding to various petitions, relating to the title to its
    shares, filed by certain parties. These are unlikely to have a significant
    effect on the affairs of the company.

11. Distribution of shareholding as on September 30

<TABLE>
<CAPTION>
    ------------------------------------------------------------------------------------------------------------------------------
                                                     2000                                           1999
    ------------------------------------------------------------------------------------------------------------------------------
    No. of equity               No. of        % of          No. of      % of      No. of      % of           No. of        % of
    shares held                 share-       share-         shares     share-     share-     share-          shares       share-
                                holders      holders                  holding    holders    holders               #      holding
    ------------------------------------------------------------------------------------------------------------------------------
<S>                           <C>           <C>         <C>          <C>        <C>        <C>           <C>            <C>
               1 -   100         53,505        81.46      7,42,468       1.16      6,864      44.92         4,21,642        0.66
             101 -   200          2,446         3.72      4,21,787       0.66      2,060      13.48         7,92,106        1.24
             201 -   500          3,097         4.71     10,94,882       1.71      2,626      17.18        19,70,820        3.08
             501 -  1000          2,701         4.11     20,06,191       3.13      2,051      13.42        31,02,220        4.84
            1001 -  5000          3,032         4.62     64,39,382      10.05      1,297       8.49        52,52,610        8.20
            5001 - 10000            363         0.55     25,97,345       4.05        153       1.00        22,01,626        3.44
           10001 and above          542         0.83   5,01,18,322      78.23        231       1.51      4,97,09,866       77.58
    Shares in transit in NSDL         -            -      6,48,423       1.01          -          -         6,17,910        0.96
    ------------------------------------------------------------------------------------------------------------------------------
                                 65,686       100.00   6,40,68,800     100.00     15,282     100.00      6,40,68,800      100.00
    Equity shares underlying          1*                 20,82,567                     1*                  20,70,000
    American Depositary Shares
    ------------------------------------------------------------------------------------------------------------------------------
    Total                        65,687                6,61,51,367                15,283                 6,61,38,800
    ------------------------------------------------------------------------------------------------------------------------------
</TABLE>

    * Held by beneficial owners outside India.

    # Shares have been restated consequent to the 2-for-1 stock-split in
      February 2000.
<PAGE>

12. Categories of shareholders as on September 30

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
                                                             2000                                       1999
- ------------------------------------------------------------------------------------------------------------------------------------
    Category                             No. of         Voting     No. of shares         No. of         Voting    No. of shares
                                   shareholders   strength (%)              held   shareholders   strength (%)           held #
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                                <C>            <C>             <C>             <C>            <C>             <C>
    Individuals                          61,943          25.55      1,69,02,158          14,272          25.18      1,66,54,480
    Companies                             2,679           2.30        15,18,671             646           1.37         9,08,042
    FIIs                                    346          25.27      1,67,16,870             154          25.58      1,69,18,686
    OCBs and NRIs                           499           0.75         4,93,441              88           0.74         4,89,816
    Founders and their families              23          29.24      1,93,45,960              18          29.58      1,95,64,200
    Mutual Funds, Banks, FIs                196          12.76        84,43,277             104          13.48        89,15,666
    Shares in transit in NSDL                 -           0.98         6,48,423               _           0.94         6,17,910
    Equity shares underlying                  1*          3.15        20,82,567               1*          3.13        20,70,000
    American Depositary Shares
- ------------------------------------------------------------------------------------------------------------------------------------
    Total                                65,687         100.00      6,61,51,367          15,283         100.00      6,61,38,800
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

   * Held by beneficial owners outside India.

    # Shares  have been  restated  consequent  to the  2-for-1  stock-split  in
    February 2000.

13. Shares under lock-in

    Employees Stock Offer Plan (ESOP) 1994

    Details of shares of par value of Rs. 5 each held by employees under the
    Employee Stock Offer Plan (ESOP) 1994 subject to lock-in are given below.
    These shares are also included in the categories of shareholders given in
    (12) above.

    No. of shares subject to lock-in as on September 30,

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
                                                2000                                   1999
- -----------------------------------------------------------------------------------------------------------
    Period of lock-in               No. of shares   No. of employees    No. of shares #  No. of employees
- -----------------------------------------------------------------------------------------------------------
<S>                                <C>             <C>                 <C>              <C>
    4-5 years                                   -                  -           7,90,400             1,052
    3-4 years                            7,63,000              1,006           5,04,800               342
    2-3 years                            4,89,200                335           2,06,400               152
    1-2 years                            1,95,200                147           2,61,200               106
    0-1 years                            2,47,200                103           2,14,200                75
- -----------------------------------------------------------------------------------------------------------
</TABLE>

    # Shares have been restated consequent to the 2-for-1 stock-split in
    February 2000.

    As on September 30, 2000, 547 employees hold rights to 3,34,200 shares of
    par value of Rs. 5 each which are subject to a lock-in of 3-4 years.
    Currently, 1,573 employees hold shares under the 1994 Stock Offer Plan.
    Shares subject to lock-in held by the employees will be transferred back to
    the ITL Employees Welfare Trust if such employees leave the services of the
    company before the vesting period. As on September 30, 2000, the ITL
    Employees Welfare Trust holds 2,24,600 shares of par value of Rs. 5 each.
    The 1994 Stock Offer Plan has since been terminated.

    Employees Stock Offer Plan (ESOP) 1998

    The company established the 1998 Stock Offer Plan which provides for the
    grant of non-statutory stock options and incentive stock options to the
    employees of the company. This plan was approved by the board of directors
    in December 1997 and by the shareholders in January 1998. The Government of
    India has approved the 1998 plan, subject to a limit of 14,70,000 equity
    shares of par value of Rs. 5 each representing 29,40,000 ADSs to be issued
    under the plan. During the three-month period ended September 30, 2000,
    options were granted to 52 employees to acquire 85,300 ADSs corresponding to
    42,650 equity shares of par value of Rs. 5 each. During the three-month
    period ended September 30, 2000, there was no exercise of stock options. As
    on September 30, 2000, 170 employees hold options to acquire 8,71,466 ADSs
    corresponding to 4,35,733 equity shares of par value of Rs. 5 each. Details
    of the number of ADSs options granted and exercised are given below.

    No. of options granted and exercised

<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
                                                        Granted               Exercised
                                         ----------------------------------------------------------
                                                No. of      ADSs Options        No. of                  Balance ADSs
       Period                                employees             (Net)     employees       ADSs            options
- -----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>              <C>            <C>           <C>         <C>
       Year ended March 31, 1999                    33          4,04,200            19     24,734           3,79,466
       Year ended March 31, 2000                    67          2,73,500             -          -           2,73,500
       Quarter ended June 30, 2000                  56          1,33,200             -          -           1,33,200
       Quarter ended September 30, 2000             53            85,300             -          -             85,300
- -----------------------------------------------------------------------------------------------------------------------
       Total                                                    8,96,200                   24,734           8,71,466
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>

    Employees Stock Offer Plan (ESOP) 1999

    The 1999 plan was approved by the board of directors and the shareholders in
    June 1999 and was instituted in fiscal 2000. The plan provides for the issue
    of 66,00,000 equity shares of par value of Rs. 5 each to the employees.
    During the three-month period ended September 30, 2000, options were granted
    to 2,226 employees to acquire 2,95,450 equity shares of par value of Rs. 5
    each. As on September 30, 2000, 7,107 employees hold options to acquire
    18,83,000 shares of par value of Rs. 5 each. Details of options held by
    employees under the Employee Stock Offer Plan (ESOP) 1999 are given below.

    No. of options granted and forfeited

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
         Period                                           Granted                      Forfeited          Balance
                                            -------------------------------------------------------
                                                   No. of         No. of        No. of     No. of
                                                employees        options     employees    options
- ------------------------------------------------------------------------------------------------------------------
<S>                                            <C>            <C>           <C>          <C>           <C>
       Year ended March 31, 2000                    1,228      10,14,500            52     40,600        9,73,900
       Quarter ended June 30, 2000                  4,227       6,58,650           258     39,850        6,18,800
       Quarter ended September 30, 2000             2,226       2,95,450            23      5,150        2,90,300
- ------------------------------------------------------------------------------------------------------------------
       Total                                                   19,68,600                   85,600       18,83,000
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

14. Dematerialization of shares and liquidity

    Your company was the first in India to pay a one-time custodial fee of Rs.
    44.43 lakh to National Securities Depositary Limited (NSDL). Consequently,
    the company's shareholders do not have to pay depositary participants, the
    custodial fee charged by the NSDL on their holding. Over 97% of the
    company's shares are now held in electronic form.

15. Financial calendar (tentative and subject to change)

    Interim dividend payment                      November 2000
    Financial reporting for the third quarter
     ending December 31, 2000                     January 9, 2001
    Financial results for the year
     ending March 31, 2001                        April 11, 2001
    Annual General Meeting for the year
     ending March 31, 2001                        May 2001

<TABLE>
<S>                                                        <C>
16. Investors' correspondence in India                      Any queries relating to the financial statements
    may be addressed to:                                    of the company may be addressed to:
    The Company Secretary,                                  Mr. T. V. Mohandas Pai,
    Investors' Service Cell,                                Director (F&A) and CFO,
    Infosys Technologies Ltd., Electronics City,            Infosys Technologies Ltd., Electronics City,
    Hosur Road, Bangalore - 561 229, India.                 Hosur Road, Bangalore - 561 229, India.
    Tel.: +91-80-852 1518, Fax: +91-80-852 0362             Tel.: +91-80-852 0396, Fax: +91-80-852 0362

    (e-mail address: invest@infy.com)                       (e-mail address: mdpai@infy.com)
</TABLE>

<TABLE>
<S>                                        <C>                                   <C>
17. Reuters code - INFY.BO (BSE)            Bridge code - IN;INF (BSE)            Bloomberg code - INFO IN (BSE)
                 - INFY.NS (NSE)                        - IN;INFN (NSE)                          - NINFO IN (NSE)
                 - INFY.O (NASDAQ)                      - US;INFY (NASDAQ)
</TABLE>

18. Stock market data relating to American Depositary Shares (ADSs)

   a. ADS listed at                  NASDAQ National Market in the United States

   b. Ratio of ADS to equity shares  2 ADS for one equity share

   c. ADS symbol                     INFY
<PAGE>

d. The American Depositary Shares issued under the ADS program of the company
   were listed on the NASDAQ National Market in the United States on March 11,
   1999. The monthly high and low quotations as well as the volume of ADSs
   traded at the NASDAQ National Market for the three-month period ended
   September 30, 2000 are:

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
                                      High                          Low                 Volume
                ----------------------------------------------------------------------------------------
                        $                   Rs.          $                Rs.           Nos.
- --------------------------------------------------------------------------------------------------------
<S>                     <C>                 <C>          <C>              <C>            <C>
   July                 186.94               16,776       120.00           10,769         25,33,000
   August               169.13               15,475        96.50            8,830         37,00,100
   September            164.00               15,091       121.00           11,134         20,45,300
- --------------------------------------------------------------------------------------------------------
   Total                                                                                  82,78,400
- --------------------------------------------------------------------------------------------------------
% of volume traded to total float                                                           198.75%*
</TABLE>

* 2 ADS = 1 equity share
$ have been converted into Indian rupees at the monthly closing rates

e. Premium of American Depositary Shares over the shares traded on
   the Indian stock exchanges

   The ADS price quoted below is in Indian rupees and has been  converted into
   $ at the monthly closing rates.

Price (INR)
% Premium

<TABLE>
<CAPTION>
           07-Jul 14-Jul 21-Jul 28-Jul 04-Aug 11-Aug 18-Aug 25-Aug 30-Aug 08-Sep 15-Sep 22-Sep 29-Sep
- -----------------------------------------------------------------------------------------------------
<S>        <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>    <C>
  Series2  16243  14493  13280  11666  10591  11678  13405  14457  13245  14367  13067  11687  12147
- -----------------------------------------------------------------------------------------------------
  Series1   8488   7770   7349   6845   6325   7236   7971   8156   7852   8583   8498   7041   7361
- -----------------------------------------------------------------------------------------------------
  Series3  91.36  86.53  80.71  70.43  67.45  61.38  68.17  77.26  68.68  67.38  53.76  65.98  65.01
- -----------------------------------------------------------------------------------------------------
</TABLE>
     * 2 ADS = 1 equity share                               (Source: Bloomberg)

f. Investor correspondence in   P. R. Ganapathy
   the US may be addressed to   Investor Relations Officer
                                Infosys Technologies Limited
                                34760, Campus Drive,
                                Fremont CA 94555, USA.
                                Tel.: +1-510-742-3030, Mobile: +1-510-872-4412,
                                Fax: +1-510-742-2930, E-mail: guns@infy.com
                                                              -------------

g. Name and address of the      Deutsche Bank A.G.
   depositary bank              Corporate Trust and Agency Services
                                4 Albany Street
                                New York, NY 10006, USA.
                                Tel.: +1-212-250-8500, Fax: +1-212-250-5644.

                                Corporate Trust and Agency Services
                                Deutsche Bank A.G.
                                1 st Floor, Kodak House
                                222, Dr. D. N. Road.
                                Fort, Mumbai - 400 001, India.
                                Tel.: +91-22-207 3262, Fax: +91-22-207 9614

i. Name and address of the      ICICI Limited
   custodian in India           ICICI Towers
                                Bandra Kurla Complex
                                Mumbai - 400 051, India.
                                Tel.: +91-22-653 1414, Fax: +91-22-653 1164/65.

                                       23
<PAGE>

Segment Information
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                                     Rs. in lakhs
- -------------------------------------------------------------------------------------------------------------------
Revenue by                    Quarter ended September 30,        Half year ended September 30,        Year ended
                         -----------------------------------------------------------------------
                               2000               1999              2000               1999         March 31, 2000
- -------------------------------------------------------------------------------------------------------------------
<S>                            <C>               <C>                <C>                <C>           <C>
Geographical segments
North America                     34,868.11       16,718.10           62,581.65         31,082.52      71,327.35
Europe                             8,094.59        3,084.40           14,200.39          5,876.59      12,909.74
Rest of the world                  2,597.03        1,109.73            5,121.12          1,998.19       5,240.03
India                              1,007.72          875.82            1,728.37          1,236.95       2,669.36
- -------------------------------------------------------------------------------------------------------------------
                                  46,567.45       21,788.05           83,631.53         40,194.25      92,146.48
- -------------------------------------------------------------------------------------------------------------------

Business segments
Branded services                          -        2,096.91                   -          4,243.18       5,895.00
Products                           1,205.70          875.41            2,063.27          1,132.33       2,290.12
Software development and
maintenance                       43,403.87       17,857.55           78,099.30         32,481.43      80,047.26
Treasury                           1,957.88          958.18            3,468.96          2,337.31       3,914.10
- -------------------------------------------------------------------------------------------------------------------
                                  46,567.45       21,788.05           83,631.53         40,194.25      92,146.48
- -------------------------------------------------------------------------------------------------------------------
</TABLE>

Note:

Exchange differences arising on translation of foreign currency deposits kept
abroad has been included under treasury.

<TABLE>
<CAPTION>
     Geographical segment                             Business segment
quarter ended September 30, 2000              quarter ended September 30, 2000
<S>                           <C>             <C>                          <C>
North America                 74.9%           Treasury                     4.2%
Europe                         2.2%           Products                     2.6%
India                         17.3%           Software development
Rest of the world              5.6%           and maintenance             93.2%
</TABLE>

                                       24
<PAGE>

<TABLE>
<CAPTION>
Ratio analysis
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                    Quarter ended        Half year ended      Year ended
                                                                    September 30,          September 30,      March 31,
                                                               ------------------------------------------
                                                                    2000     1999         2000     1999           2000
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>     <C>          <C>      <C>            <C>
Ratios - Financial performance
Export revenue / total revenue (%)                                  94.76   94.12        94.74    92.97          94.38
Domestic revenue / total revenue (%)                                 1.04    1.48         1.11     1.21           1.37
Other income / total revenue (%)                                     4.20    4.40         4.15     5.82           4.25
Employee costs / total revenue (%)                                  35.99   36.15        37.09    34.96          36.31
Administration expenses / total revenue (%)                          9.28    7.06         8.58     7.21           7.54
Operating expenses / total revenue (%)                              57.91   60.56        58.30    59.23          58.88
Depreciation / total revenue (%)                                     5.20    4.92         5.02     4.99           5.78
Tax / total revenue (%)                                              3.81    4.36         3.76     4.35           4.31
Tax / PBT (%)                                                       10.33   12.63        10.26    12.17          12.19
EBIDTA / total revenue (%)                                          42.09   39.44        41.70    40.77          41.12
PAT from ordinary activities / total revenue (%)                    33.07   30.16        32.92    31.43          31.03
PAT from ordinary activities / average net worth (%) (LTM)          48.82   45.62        48.82    45.62          40.63
ROCE (PBIT/Average capital employed) (%) (LTM)                      54.85   52.48        54.85    52.48          46.27
Return on invested capital (%) (LTM)                               104.97  101.48       104.97   101.48         111.68
Capital output ratio (LTM)                                           1.47    1.48         1.47     1.48           1.31
Invested capital output ratio (LTM)                                  3.30    3.43         3.30     3.43           3.82

Ratios - Balance sheet
Debt-Equity ratio                                                      --                    -       --
Debtors turnover (Days)*                                               55      64           55       64             56
Current ratio                                                        3.50    5.24         3.50     5.24           4.69
Cash and equivalents / total assets (%)                             48.98   65.99        48.98    65.99          61.00
Cash and equivalents / total revenue (%) (LTM)                      39.53   65.22        39.53    65.22          55.17
Depreciation / average gross block (%) (LTM)                        23.60   26.06        23.60    26.06          23.50
Technology investment / total revenue (%) (LTM)                      6.17    6.71         6.17     6.71           5.86

Ratios - Growth**
Export revenue (%)                                                    115      74          112       74             74
Total revenue (%)                                                     114      81          108       84             80
Operating expenses (%)                                                104      68          105       64             69
Operating profit (%)                                                  128     104          113      122             98
Net profit (from ordinary activities) (%)                             134     131          118      143            115

Per - share data (Period End)
Earnings per share from ordinary activities (Rs.)                   23.28    9.93        41.62    19.10          43.23
Earnings per share (including extraordinary items) (Rs.)            23.28    9.93        42.45    19.10          44.37
Cash earnings per share from ordinary activities (Rs.)              26.95   11.55        47.96    22.13          51.27
Cash earnings per share (including extraordinary items) (Rs.)       26.95   11.55        48.79    22.13          52.42
Book value (Rs.)                                                   165.38  103.96       165.38   103.96         125.97
Price / earning (LTM)                                              111.96  113.89       111.96   113.89         207.50
Price / cash earnings (LTM)                                         95.46   94.09        95.46    94.09         174.96
Price / book value                                                  44.51   34.31        44.51    34.31          71.21
EPS growth (%)                                                     134.39  131.39       117.96   142.59         115.07
PE / EPS Growth                                                      0.83    0.87         0.95     0.80           1.80
Dividend per share                                                   2.50    1.50         2.50     1.50           4.50
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.
** Denotes growth compared with figures of the corresponding period in the
previous year.
Note: The ratio calculations are based on Indian GAAP and have
been adjusted for Stock split.
LTM- Last twelve months

                                                                              25
<PAGE>

Infosys Technologies Limited
- ----------------------------------------------
United States

Addison
15305 Dallas Parkway
Suite 210
Addison, TX 75001
Tel.: 972 770 0450
Fax: 972 770 0490

Bellevue
10900 NE 4th St, #2300
Bellevue, WA 98004
Tel.: 425 990 1028
Fax: 425 990 1029

Cranford
20 Commerce Drive
Cranford,  NJ 07016
Tel.: 908 497 1710
Fax: 908 497 1770

Fremont
34760 Campus Drive
Fremont, CA 94555
Tel.: 510 742 3000
Fax: 510 742 3090

Marietta
1950 Spectrum Circle, #400
Marietta, GA 30067
Tel.: 770 857 4428
Fax: 770 857 2258

Newport Beach
4590 MacArthur Suite 500
Newport Beach, CA 92660
Tel.: 949 475 0196
Fax: 949 475 0198

Oakbrook Terrace
One Tower Lane, #1700
Oakbrook Terrace, IL
60181
Tel.: 630 573 6050
Fax: 630 573 6051

Quincy
Two Adams Place
Quincy, MA 02169
Tel.: 781 356 3109
Fax: 781 356 3150

Troy
100 Liberty Center,
#200 West Big Beaver
Troy, MI 48084
Tel.: 248 524 0320
Fax: 248 524 0321

Australia

Melbourne
Level 7, 505 St. Kilda Road
Melbourne, Victoria 3004
Tel.: 613 9868 1607
Fax: 613 9868 1652
Fax: 613 9820 0777

Sydney
Level 4, 90 Mount Street,
North Sydney, NSW 2060
Tel.: 612 9954 0036
Fax: 612 8904 1344

Belgium

Dreve Richelle 161,
Building N
1410 Waterloo, Brussels
Tel.: 322 352 8743
Fax: 322 352 8844

Canada

5140 Yonge Street
Suite 1400
Toronto, Ontario M2N 6L7
Tel.: 416 224 7420
Fax: 416 224 7449

Germany

TOPAS 2
Mergenthalerallee, 79-81
65760 Eschborn/Frankfurt
Tel.: 49 6196 920 2115
Fax: 49 6196 920 2320

Hong Kong

16F Cheung Kong Centre
2 Queen's Road Central
Central, Hong Kong
Tel.: 852 2297 2806
Fax: 852 2297 0066

Japan

4F Madre Matsuda Bldg.
4-13, Kioi-Cho,
Chiyoda-Ku Tokyo 102-0094
Tel.: 813 3234 3597
Fax: 813 3239 3300

Sweden

Stureplan 4C, 4tr,
114 35, Stockholm
Tel.: 468 463 1112
Fax: 468 463 1114

UK

10/th/ Floor, Emerald House
7-15 Lansdowne Road
Croydon, Surrey
CR0 2BX
Tel.: 44 20 8774 3329
Fax: 44 20 8686 6631

India

Bangalore
Electronics City
Hosur Road, Bangalore 561 229
Tel.: 080 852 0261
Fax: 080 852 0362

Reddy Building
K-310, 1st Main, 5th Block
Koramangala,
Bangalore 560 095
Tel.: 080 553 0392
Fax: 080 553 0391

Pavithra Complex, #1, 27th
Main, 2nd Cross, 1st Stage
BTM Layout,
Bangalore 560 068
Tel.: 080 668 1755
Fax: 080 668 0181

Infosys Towers
No. 27, Bannerghatta Road,
3rd Phase
J. P. Nagar,
Bangalore 560 076
Tel.: 080 6588668
Fax: 080 6588676

Bhubaneswar
Plot #N-1/70, Nayapalli,
Adjoining Planetarium on
NH5, Post RRL,
Bhubaneswar 751 013
Tel.: 0674 584068 - 71
Fax: 0674 583991

Plot No. E/4 Infosys City
Chandaka
Bhubaneswar 751 014
Tel.: 0674 442 194

Chennai
1st & 2nd Floor,
Alexander Square,
35 Sardar Patel Road,
Guindy,
Chennai 600 032
Tel.: 044 2300031- 40
Fax: 044 2300091

No. 138 Sholinganallur
Old Mahabalipuram Road
Chennai 600 119
Tel.: 044 496 4304
Archbishop Arokia Swamy
Building
145, Santhome High Road
Mylapore (Santhome)
Chennai 600 004
Tel.: 044 4612021
Fax: 044 4956958

Hyderabad
#1Q3-A1, First Floor,
Cyber Tower, Hitec City
Madhapur,
Hyderabad 500 033
Tel.: 040 3100242
Fax: 040 3100243

Mangalore
#16/403 Star of Bombay
Complex
3/rd/ Floor, Kankanady
Mangalore 575 002
Tel.: 0824 439401-7 &
434401-06
Fax: 0824 439430

Kuloor Ferry Road,
Kottara Cross,
Mangalore 575 006
Tel.: 0824 451485-88
Fax: 0824 451504

Mohali (Chandigarh)
B100, Phase VIII, Industrial
Area, SAS Nagar
Mohali 160 059
Tel.: 0172 254191/92/94
Fax: 0172 254193

Mumbai
85, 'C', Mittal Towers,
8th Floor
Nariman Point,
Mumbai 400 021
Tel.: 022 2846490
Fax: 022 2846489

Mysore
Sree Jayachamarajendra
College of Engineering -
Science and Technology
Entrepreneurs Park (SJCE-
STEP), Manasagangothri
Mysore 570 006
Tel.: 0821 500001-06
Fax:  0821 511614

New Delhi
K30, Green Park Main,
Behind Green Park Market
New Delhi 110 066
Tel.: 0116514829/ 30
Fax: 011 6853366

Pune
3/rd/ Floor, 321/A/3 TPS III
Shankar Seth Road
MAhatma Phule Peth
Pune 411 042
Tel.: 0212 647420/21
Fax: 0212 648226
Plot #1, Infotech Park

MIDC
Hijawadi, Taluka Mulshi,
Pune 411 027
Tel.: 02139 32801 - 03
Fax: 02139 32832

- ------------------------------------------------------------------------------
   -------------------------------------------------------------------------
   Bankers

   ICICI Bank Ltd.                   Visit Infosys at www.infy.com

   Hongkong and Shanghai Banking
    Corporation Ltd.                 Send e-mail to infosys@infy.com
   Bank of America
                                       Call us at:
   Company secretary                  within the U.S.
   V. Viswanathan                   1-800-ITL INFO outside the U.S.

   Auditors                         91-80-852 0261
   Bharat S Raut and Co.
   Chartered Accountants

   Independent auditors
   (US GAAP)
   KPMG
   ------------------------------------------------------------------------

      (C) 2000 Infosys Technologies Limited, Bangalore, India

      Infosys acknowledges the proprietary rights in the trademarks and
      product names of other companies mentioned in this document.
- -----------------------------------------------------------------------------

                                                                              26
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27.1
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>FINANCIAL DATA SCHEDULE
<TEXT>

<TABLE> <S> <C>

<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED MARCH 31, 2000 AND UNAUDITED
FINANCIAL STATEMENT AS OF AND FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND
1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>

<S>                             <C>                     <C>                     <C>
<PERIOD-TYPE>                   6-MOS                   6-MOS                   YEAR
<FISCAL-YEAR-END>                          MAR-31-2001             MAR-31-2001             MAR-31-2000
<PERIOD-START>                             APR-01-2000             APR-01-1999             APR-01-1999
<PERIOD-END>                               SEP-30-2000             SEP-30-1999             MAR-31-2000
<CASH>                                     116,475,448             104,131,114             116,599,486
<SECURITIES>                                 8,270,443                 177,938               3,177,938
<RECEIVABLES>                               54,377,085              31,350,996              31,741,002
<ALLOWANCES>                                 1,550,118                 724,337                 507,487
<INVENTORY>                                          0                       0                       0
<CURRENT-ASSETS>                           182,557,982             142,240,138             159,089,296
<PP&E>                                     117,436,278              55,644,398              78,208,914
<DEPRECIATION>                              38,065,104              23,422,603              30,654,142
<TOTAL-ASSETS>                             279,885,881             181,216,163             219,282,870
<CURRENT-LIABILITIES>                       36,510,352              18,967,407              21,146,349
<BONDS>                                              0                       0                       0
<PREFERRED-MANDATORY>                                0                       0                       0
<PREFERRED>                                          0                       0                       0
<COMMON>                                     8,593,585               8,592,137               8,593,510
<OTHER-SE>                                 234,781,944             153,656,619             189,543,011
<TOTAL-LIABILITY-AND-EQUITY>               279,885,881             181,216,163             219,282,870
<SALES>                                    178,196,883              87,670,580             203,443,754
<TOTAL-REVENUES>                           185,892,121              93,086,862             212,482,546
<CGS>                                       92,160,476              46,723,936             111,080,546
<TOTAL-COSTS>                              119,595,089              60,749,089             142,944,701
<OTHER-EXPENSES>                                     0                       0                       0
<LOSS-PROVISION>                             1,042,631                 422,407                 205,557
<INTEREST-EXPENSE>                                   0                       0                       0
<INCOME-PRETAX>                             66,297,032              32,337,773              69,537,845
<INCOME-TAX>                                 6,683,473               4,306,383               8,193,317
<INCOME-CONTINUING>                         59,613,559              28,031,390              61,344,528
<DISCONTINUED>                                       0                       0                       0
<EXTRAORDINARY>                                      0                       0                       0
<CHANGES>                                            0                       0                       0
<NET-INCOME>                                59,613,559              28,031,390              61,344,528
<EPS-BASIC>                                       0.90                    0.42                    0.93
<EPS-DILUTED>                                     0.89                    0.42                    0.93


</TABLE>
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
