Enthused by the performance, the board of directors on Friday declared an interim dividend of Rs 3 per share (30 per cent on an equity share of par value Rs 10), up from last year's 25 per cent. The record date for payment of dividend would be November 12, 1999.

During the second quarter under review, the company's total income increased by 80.90 per cent to Rs 217.88 crore against Rs 120.44 crore achieved during the corresponding period last year. Its expenditure has also gone up sharply to Rs 131.95 crore (Rs 78.38 crore) yet the company's operating profit has almost doubled to Rs 85.93 crore from Rs 42.06 crore. The company has made a tax provision of Rs 9.50 crore (Rs 6.25 crore),

During the quarter, fluctuations in the exchange rates have led to an increase in income from software development of Rs 5.24 crore and profit before tax of Rs 1.04 crore. Other income of Rs 9.58 crore for the quarter includes Rs 3.81 crore of interest on deployment of funds raised through issue of American Depository Shares (ADS), Rs 1.30 crore from sale of special import licenses, among others.

Infosys chairman and chief executive officer NR Narayana Murthy said the shift in the business towards e-commerce related work was rapid. ``We are committed to create knowledge infrastructure, hiring people with technical skills in the e-commerce area and `e-inventing' Infosys that may require the company to incur business restructuring cost. For the purpose, a provision of Rs 3.50 crore was made during the quarter,'' he added.

Meanwhile, Infosys co-founder and joint managing director NS Raghavan has sought the board approval to retire from the company positions with effect from February 7, 2000. This is to enable him to pursue charitable activities on a full-time basis.

For the half-year ended September 30, 1999, the company has clocked a net profit of Rs 126.32 crore (Rs 52.07 crore), an increase of 143 per cent. Its total income was Rs 401.94 crore (Rs 218.86 crore), a growth of 84 per cent during the period.

The rise in paid-up capital of Rs 17.05 crore during the fiscal ended March 31, 1999, was due to the issue of bonus shares with 1:1 ratio amounting to Rs 16.02 crore and Rs 1.03 crore issued under the ADS programme.

INSIGHT
E-commerce holds the key

Even though Infosys' financial performance in the first half has far exceeded market expectations, its shares closed about a per cent lower on the BSE at Rs 8,133.50. Analysts had been predicting a profit growth of 60-65 per cent over the corresponding period in the previous year. The company has actually posted a 94 per cent growth in operating profit and a 142 per cent growth in net profit. However, the much-expected improvement in operating margin in the quarter ending September over the quarter ending June has not materialised. In fact, operating margin declined from 37.67 per cent to 36.65 per cent. This is despite the fact that the contribution from e-commerce projects increased from 6.4 per cent in the quarter ending June to 10.3 per cent in the quarter ending September. Yet, it needs to be recognised that it is the e-commerce business that will drive the company's future profitability.

-- Sarad Saraf