Good morning and thank you all for joining us today to discuss the financial results for the quarter end, year ended March 31, 2006. I’m Sandeep from the Investor Relations team in Bangalore.

Joining us today on this conference room is CEO and President, Mr. Nandan Nilekani; COO, Mr.

Gopalakrishnan; and CFO, Mr. Mohandas Pai along with other members of the senior management.

We’ll start with a brief statement of the performance of the company, for the recently concluded quarter, an outlook for the quarter ending June 30th 2006, and the year ending March 31 2007. After that, we will open up the discussions for Q&A.

Before I pass into Mr. Nilekani, I’d like to remind you that anything that we state as an outlook for the future is a forward-looking statement, and not stated in conjunction with the risk of the consequences.

A full statement and explanation of these risks is available with our filings with the SEC, which can be found on www.sec.gov. I’d now like to pass on to Mr.

Nilekani, President and CEO.

Thank you, Sandeep, and I would like to welcome each and every one of you to this call. I am sorry that we are having this call on I guess the Friday morning for a lot of you and it’s a long weekend so our apologies for that.

I think this has been good year for us. Our revenues for the full year have come in at 2.5 billion with a year-to-year growth of 25%.

And our fourth quarter revenues have come in at $593 million, which is up 30% from the previous quarter, the corresponding last fiscal. The earnings per ATS has increased to $0.56 from $0.47 in the corresponding quarter last fiscal.

This year is also the 25th year of the formation of Infosys. So we have taken number of investor-oriented decisions one is we’ll have a stock dividend to shareholders including ATS shareholders in the ratio of two for one, that means one additional ATS for every ATS held, subject to the approval of shareholders.

Similarly, we have announced Silver Jubilee special dividend of Rs.30 per ATS which is equivalent to $ 0.67 per ATS at the prevailing rate of Rs.44.48, and also a final dividend of $0.19 per ATS, which are both again subject to the approval of the shareholder and these dividends are payable at the prevailing rate on the payment date on prevailing exchange rate. We also would like to share our outlook for the quarter June 30, and the year ending March’07.

We expect revenues between $628 million and $633 million for the quarter ending June 30th and between $2.76 billion to $2.80 billion for the fiscal year ending March 31st ’07. This translates into a quarter year-to-year growth of 31.9% to 33% and the year-to-year growth on an annual basis of 28% to 30%.

We also expect consolidated earnings per ATS to be between $0.56 and $0.57 for the quarter ended June 30th which is a year-to-year growth of 24% to 26% and between $2.57 and $2.61 for the fiscal year ending March ’07, which is between $0.26 to $0.28. I think this has been a very good year for us.

We have grown, it took us 23 years to reach our first billion and it’s taken us 23 months to reach our second billion. And we believe that the global IT service industry is showing types of stronger growth.

We are asking an uptick in discretionary spending, and its very clear to us that all our customers are fundamentally going to use a global model for all future delivery of IT services and therefore this puts us in a very strong position to take advantage of this opportunity as in the marketplace. I think at this point I’ll request my colleague first to speak about some of the other dimensions of our performance this quarter and the future.

Thank you Nandan, and good morning and good afternoon, good evening to every one of you. Let me give you some highlights on the client data.

We added 38 new clients this quarter taking the total number of active clients to 460, more importantly we have 221 million dollar clients, nine 50 million dollar clients, one client contributing revenue of more than $90 million. Our accounts receivable is a good 62 days, accounts receivable days is 62 days.

From an industry perspective banking and financial services Telecom have grown faster than the other groupings. So banking and financial service is 29.2% of our revenues and Telecom is 16.3% of revenues.

From a services perspective, we continue to see healthy momentum in our enterprise solutions for package implementation service. This is a service which is further to consulting and typically delivered at higher price points and rated it’s 17.1% of our revenue.

Our products are still doing well though it’s about 3.2% of our revenues, from a utilization perspective; utilization has come down to 77%. We have added more than 5,100 employees throughout this quarter of which 1,620 employees were at the experience level.

So, because of that our utilization has come down slightly to 77%, our utilization including trainees is 69.7. It is in the range, which we wanted to be high 70s to low 80s.

For the year, fiscal year 2007 we plan to add 25,000 gross number of employees and in the first quarter we plan to add 8000 gross employees. With this, I am going to hand it over to Mohan to talk about the numbers in detail.

Thank you Krish. Folks if you look at the fourth quarter figures, our gross property is 40.3% as against 43% the previous quarter.

SG&A is up at 14% as against 13.6. Operating income has come down at 26.3 as against 29.4; I want to explain the reasons for this.

In this quarter the fourth quarter, the rupee-dollar exchange rate went the other way, the rupee appreciated and the average rupee-dollar rate was 44.22 as against 45.30 in the third quarter. This had an impact on the operating margin by 1.3%.

For the 26.3% on a normalized basis would have been 27.6%. Depreciation and amortization which is part of the cost of revenues, went up to 5.5% this quarter, primly because the last quarter before the end of the year from 4.6% for the increase on a comparative basis 0.9%.

And also since we reduce the utilization as planned, but we hired slightly more people than what we had planned compared to the guidance, we incurred an extra cost of 0.7%, if you add all three, you come to a more normalized margin for this quarter adopting income level of around 29%. The impact of the rupee appreciating was felt in a lower forex loss in the other income column, which also went up because of higher interest received, and we had a lower forex loss at about $3.5 million on account of translation, on account of forex differences.

In the previous quarter you will recall that we had a $10 million upswing in operating income because of the rupee depreciated at the same time we had a $12.5 million negative in the non-operating part of the income statement because of the forex differences on account of translation. If we strip out the rupee movement in the previous quarter and this quarter, the operating margin are almost similar.

We met our guidance of $0.56, we added on more people than we had stated because we want to build the momentum for the future and I think we have done well. The top ten customers are in good shape, the top ten customers grew by 10.2% sequentially compared to the growth rate in the third quarter higher than the revenue growth of about 6.1%.

And we are seeing that the top ten customers have come back, you will find another interesting trend in the BFSI sector, we find a positive growth this quarter, the same quarter last year we saw a decline in the BFSI compared to the previous quarter and this is again a good news. Like Krish said we have nine customers who give us more than a million dollar of customers, people keep asking us questions as to the big deal.

Big deals do not mean big customers. We have got nine customers who give us more than $50 million of business and we have grown that organically, the largest customer gives us more than $90 million of business, and if you anticipate even if they remain the same for the next 5 years, that’s $450 million of business and a pretty good value to us and to the customer.

So overall they built up a high quality client portfolio where million dollar customers makeup about 96.9% of the total revenues that we have, and about 327 customers or non million dollars make up 3.1% of the total revenue. That means even by increasing the revenue from the existing customers, we have an ability to grow in the next financial year.

We’ve also seen that our subsidiaries have done as for budget, Progeon has had revenue of $85.55 million and 24.7% net. Infosys Australia has $72.71 million and has done well for the full year in terms of profitability.

Infosys Consulting has done 32.35 on the standalone basis, they were expected to be profitable in the fourth quarter, but in the fourth quarter they didn’t make a loss because of assets that it is hiding. In Infosys China we had a loss again in the fourth quarter as again anticipated profits because some of the global business that we anticipated did not come up and they are putting in redouble efforts.

I will now hand over to Bala to give you some update on the guidance for fiscal year ’08. Bala please.

Hi, we are guiding revenue growth of 28% to 30% in fiscal ’07, and EPS growth between 26% to 28%. And we are giving the guidance for next year, we are assuming the billing rates to be stable, we are not factoring any price increases for the next full year.

We also factored in the increase in salaries between 14% to 15% offshore in India, and 3% outside India. We are factoring in a stable margin environment for the next full year to look at fiscal ’06, we have operating margin of 27.8% going forward into the next year for the full year, we are factoring in a stable margin.

Tax rate that we had assumed to be same because our effective tax rate today is between 11.5% to 12%, it will continue to be same. The difference between topline and the EPS growth is mainly due to some dilution due to ease of exercise and also due to the increased cost which comes into effect because of the stock compensation, at the moment we are entering into a new environment with FASB 123R, relating to charge to be taken for issue of stock options.

So next year we have to take a charge of something around $4 million, that is already factored in the guidance. So if you set off this, I think the topline growth is inline with our bottomline growth.

We are assuming investment, I mean CapEx of around $360 to $400 million for next year. The depreciation factors that, so overall next year we are talking about stable margins and a growth of 28% to 30%.

Now we can take questions from you.

Good evening gentlemen, and congratulations on a very good quarter you had. I was wondering if you could talk a little bit about some of the largest clients and their outlook for the new fiscal year, when we look through the metrics we see that the largest client actually became a larger percentage of revenue as did the top five and the top ten on an sequential basis.

And I was wondering if we would get some color as how you see them performing in the new fiscal year and is that one of the reasons we are seeing some strong guidance for the company for fiscal ’07?

So as Mohan already said, the top ten clients grew faster this quarter at 10.2% compared to the company growth of 6 point odd percentage. And for the entire year, last 12 months the top ten clients grew at 41.5%.

Typically we have churn within the top ten account because somebody may slow down, somebody may reach a flat through and get replaced by new set of names and that has happened in the last one year also, we have a new set of, not everyone of them but some churn in some of the clients but clearly each one of them is growing now and that’s why we are seeing this growth and we expect that these will form the kind of the basis for significant growth. In most of these clients we are delivering multiple services from consulting to package implementation to Application Development Maintenance through Infrastructure Management and in some cases business process outsourcing, also just to illustrate this for example, for one of an oil major we just got the first part of an order for a multi-year growth for Cygnus project, which if we get the complete projects could run into several million dollar, impact several more than $100 million actually.

So that’s the type of projects we are getting from these clients. Because of the long-term and large relationship we have a visibility into their budgets as usual and this is what is giving us the confidence to say that the environment today is positive towards outsourcing, towards offshore outsourcing and the fitness with the services Infosys has to their requirements.

Okay and then one follow-up question on the new guidance and the implied stable margins with the assumptions on certain amount of salary increases, are you assuming kind of the same amount of 2% to 3% increases to build rates in fiscal ’07 as part of the offset here or if maybe some of the other offset to get back to a stable margin here for fiscal ’07 as we kind of know that everyone in the offshore IT industry is staffing up a little bit faster and heavier than they have maybe in previous fiscal years? Thanks.

Well, I am Bala here. Right now we are seeing the pricing environment to be stable so going forward into next year, our guidance factors in the pricing to be stable, they are not assuming any increase in the prices and offset for the wage increase will come in terms of scale benefits we get from the G&A side.

So we are not factoring any increase in the prices for guidance for next fiscal, we are assuming the pricing environment to be stable.

Thank you.

Hi, how are you guys, yes, Rod Bourgeois here. You had originally guided the flat fiscal ’06 operating margin and it appears fiscal ’06 ended with margins down about 80 basis points and I guess the question here is what’s the main reasons the margin was a little weaker than what you had originally planned for in fiscal 2006?

The main reason lies in the fact that when you look at the rupee-dollar rate going forward, you’d normally take a flat rupee-dollar rate and your price will hedge during the course of the year, and we had guided to a flat rupee-dollar rate but if you look at the experience of the previous year, in terms of the rupee we have found that the rupee has - the impact of the rupee-dollar base for the entire fiscal as being about 1.95% of revenues, of which 0.85% is a non-operating income level, and the balance is of 1.10% is in the operating income level, so its basically the rupee which has been the key factor in shifting, and we also say that at any point of time the operating income would differ between a range of 50 to 150 basis points. And that’s the range that we are comfortable with for a year but not in the long-term cumulatively, because cumulatively we wanted to be in the narrowband, but this year it has been the rupee and average rupee-dollar rate has gone up, the rupee has appreciated, and this has hurt us somewhat.

Let me just make sure I understand that, because I wouldn’t factor the notice, it looks like the assumption at the beginning of the fiscal year for the rupee was 43.62. Could you tell me what the actual was for the full year?

Well, I think at the beginning of the year, the rupee was 43.68, yes you said that, and for the entire year it is 44.21 on an average, and this is how this impact.

Okay alright, and another thought on this year is, in the earlier call, for the Indian investors, it appears you talked about not meeting to win large deals in order to hit the guidance that you provide for fiscal ’07. And I guess the question that I have is, can you actually win large deals without sacrificing margins, because I think you’ve indicated that you would not win large deals if they would come in at the low corporate average margin, so can you actually win these larger deals that are put up out the bid without sacrificing margins, is that something that you can account for in your operating model?

So, on the first question, still there is not sufficient predictability on these large deals, its almost zero or one, you win or you don’t win, and so when we give guidance, we do not want to factor something which is quite uncertain at this point when we give guidance, so that’s why we said we do not factor in any large deals in the future. Of course, the ABM deal is already won, its in the, is already factored in our current numbers.

Now to the second question about can we win without sacrificing margins? So, we will be selective in what we go after, we will look at what is the impact of taking this project or taking this bill on or overall portfolio of income, income as a portfolio level based on services, based on customers, based on a bit stage of execution VR and things like that, you know when the customer came in, at what rate etc.

So based on that portfolio, based on what capacity we have, we’ll decide at that point whether we need to be selective or aggressive, I mean right now we feel that we need to be selective. We have one large deals in the past, and as Mohan was mentioning, if you look at the nine $50 million plus relationships we have and these are multi-year relationships, even though contractively they are not multi-year but we’ve had a history of holding on to clients for long-term, you know it can translate to $250 million you know five times, 50 each actually, and that’s the kind of a large deal, you can think of it as a large deal also.

I hope that answers your question. Mohandas has something to comment on.

I want to clarify what I said earlier. The clarification is that the distinction between what I gave on the Rupee was based upon the actuals for the previous year, and the actuals for the current year.

And the Rupee has impacted that. But if you look at the guidance for the year, at the beginning of ’06 and the actuals for this year, the decline in margin has been primarily because of the increase in depreciation by about 0.5%.

The depreciation charge has been higher than what we had given in the guidance by 0.5% and I think that explains the majority of the difference in the margin between the guidance and what you see here.

You are just saying that the actual for last year was different in the rupee guidance you were assuming when you guided to fiscal ’06 originally?

What I am seeing is the rupee difference that we just spoke about of 1.1% is based upon the actuals for ’05 compared to the actuals for ’06. In the guidance for ’06, we had taken a particular rupee figure, and the difference is not very material but within the guidance for ’06 and actuals for ’06, you will see a decline in the margin is because of - the main reason is because of an increase in amortization-depreciation charge by 0.5%, 50 basis points on the operating line.

And also if you go back to the data, you will find that we have increased the number of people that we’ve hired this year compared to the figures that we gave in the original guidance. We have done that primarily to make sure that we have enough people at the end of the year to ensure sufficient growth in fiscal ’07.

We have said in the guidance that we’ll hire about 12,600 people gross; we ended up with hiring about 22,800 people gross. So, the difference is also because of the fact that we hired more people and we could grow faster than what we said earlier in the guidance for ’06, and that also led to a higher employee cost, not on a per capita basis but on a total employment basis and that enables us to have a deeper bench to take care of revenues in the first quarter.

Got it. You clearly upbeat on revenues and that probably added some costs that make perfect sense.

Yeah, but it also means that end of the year, we had more people on the bench than what we had spread with beginning. So, you know, that’s why we don’t see any peculiar decline in margin.

Okay great. A question on the wage inflation, this is more from a market perspective that the wage inflation you are targeting for fiscal ’07 is inline with the prior year, so is that a normal level?

Do you think your competitors in the Indian market -- the Indian IT services firms will be able to keep their wage inflation to a normal level? Or do you think wage inflation for some of the other players in the industry might creep up this year?

I don’t want to comment on other people because we are competitors but all I could say is we pay wages in India and we pay wages outside. If you look at the offshore players, for the wages we pay outside, we probably are higher than where they are on an average.

And some of them have disclosed that they are trying to pay catch-up and that could impact the total wage costs. And for the next year too, we have taken an average, which we think will place us right at the top.

As far the offshore salaries are concerned, I think for a great majority of the people who are competing for us for offshore positions, excluding the MNCs, we are right at the top and with the wage increases in the month of April, the difference between us and the rest of the crowd would increase, and if they had to pay catch-up, they could see an increase in the wage costs.

Perfect, and I think perfect sense. Thank you guys.

Thank you and good execution in a very difficult situation. Two questions.

First on your assumptions for Rupee-Dollar exchange rates, what are you assuming for fiscal year ’07?

Well this is Bala here. We normally give the guidance in dollars, and translate it to Rupees, using the exchange rate at the end of the year.

We assume the Rupee rate at 44.48 for the guidance.

I think, don’t you think that was very conservative, and the reason I am saying that I’m running some models on my own and talking to a few economists, the costs of oil continues to rise, and India is totally insufficient when it comes to oil, and some people are saying it may reach 48 Rupees equals one dollar, if suppose, that is the case where does your fully diluted EPS estimates come in because by the way the $0.56 you mentioned was on basic share count on the fully diluted basis is for $0.54, and I believe your guidance is based on diluted, not basic share count?

No, no, our guidance is based on basic number of shares, not on diluted number of shares, and on the Rupee-Dollar rate, see, the market is very volatile, there are various factors which play in, not only the oil price, the Indian economy is growing strong, it’s attracting lot of capital so, the inflow is also make that difference. So, let’s say, we don’t try to be guard and try to predict the Rupee-Dollar rate for the whole year, we take what is this, reality as of March end, and nearest for guidance.

That is good. Also a few data points we collected, IBM Global Services becoming very, very aggressive and few of our contacts told that you missed a couple of deals to IBM Global Services.

I was wondering from execution and tactical point of view, what are you doing that such a thing doesn’t happen in future?

We compete very well with the multinational companies, we have one deal for instance, there have been projects there -- the client brought us into takeover in some cases. I don’t want to be specific about who were the competitors in those cases, and we do compete very well with these companies.

We are seeing that when the deal gets played between infrastructure and application, we have an upperhand on the application side, and more and more on the infrastructure side, also we are seeing that there is traction. When the client starts splitting further, definitely we have a very good chance.

Now, we compete using a specific strategy, we look at what is the total value delivered by Infosys, it’s just not rates with the clients to look at, they should look at the quality of the deliverables, the maintenance costs, they should look at how fast the project is completed or cycle time they should look at the implementation support required, the implementation costs etc., the total cost of ownership, and the value delivered by including that project and there we are very, very competitive and we believe that we provide one of the lowest risk options to our client with the high degree of predictability we have in delivering on-time and within budget. So, we compete very well with these multinational corporations.

That is good, also internally, last time Mohan mentioned that there was some skills mismatch between what they have on bench and what the customers are wanting, two questions. Has that been fixed, and other data point we are collecting is that the project management layout internally within Infosys is the weak spot in terms of execution.

Are we doing anything to strengthen back within the corporation? Thanks and all the best.

The mismatch was essentially between the kind of work that was happening and what was inside. I think most of it has been fixed.

You would have seen affiliated degree of hiring for people in the second quarter, third quarter, and the fourth quarter. If you look at the figures, you’ll find that in the fourth quarter, we brought on utilization.

We have more people available to meet customer demand and as per the project management layer is concerned, we do have adequate people, one analyst put on the report, and we gave a clarification on the use of data for that. We are a role-based organization where we have mapped competencies for each role and that competencies ensure that the person who plays the role meets the capabilities required of that particular role.

And we have an algorithm in terms of the number of people required at a senior level, the middle level and at the developer level. And we are well within that.

The challenges for companies as it grow is that when business becomes extremely complex, you have a number of verticals and horizontals and you keep getting projects from time-to-time finding the right skill base to meet the right kind of requirement, and typically as Shibu said in our conference call in the afternoon, we have a success rate of 98% to 99% in finding these matches. And we normally do about 4,500 to 5,000 projects a year, about 6 to 7 projects could go wrong in a year, which is a very, very insignificant percentage compared to the industry overall.

This issue sometimes gets to overblown when people talk about, we don’t see this as a genuine issue.

Very good, all the best, thank you.

Hi, yeah, hello, I actually wanted to dwell on two aspects. One is on the pricing environment we have had some discussion even in the call in the morning.

I just wanted to understand how would you compare the pricing environment today versus let’s say about a year back, and also in terms of, just on a like-to-like basis and also in terms of the kind of increases that you might be seeing from your existing customers when they come up for renegotiation?

This is Shibulal. The pricing environment continues to be a stable with an effort by it.

What we said in the previous calls, the goals were. The newer contract that we are signing up coming at about 2% to 5% above Infosys average.

Also on the renegotiations we are doing for the current basis, we are getting 2% to 3% higher rate in most cases. This quarter, we have seen an up tick in the revenue productivity 0.7% on a standalone basis.

So, the pricing continues to be stable within a point base.

If you were to look at it about a year back, I mean, would you say that the environment is actually a little stronger in terms of pricing power or would you say it’s just coming up?

A little stronger, I would say that it will be little stronger.

Right, and this is only if you are trying to sort of pass on, let’s say like a wage hike or even made from a demand perspective the bar is actually improving?

I don’t believe it is something with a wage hike, I think it is something to do with demand and also the cost of living going up and things like that. The demand also is robust.

Okay that’s very helpful, and then secondly, I just wanted to understand was on the client mining where Infosys has shown very superior client mining in the industry. And two things there, one is the top ten, the growth that you mentioned Mohan, you said something, has the top ten changed between Q3 and Q4?

That’s one question.

Actually, if you look at our top five customers, it is gone up in percentage from 17.6 to 18.6 from Q3 to Q4 and top ten clients, it has gone up from 29.9% to 31% in Q4 which means that and our repeat business is strong 92% in Q4, which means that we have been able to mine our existing customers and that the large customers which we have, the top five and the top ten customers are increasing in percentage, precisely but that means we are growing strongly. As far the names in these customers you know, who are the top five and the top ten is changing quarter to quarter.

Okay, so even between Q2 to Q4 has changed it seems?

Yes.

Okay, do you track the statistics which will say that let’s say what’s your top ten customers were in Q3, how that set has grown in Q4?

They have grown in Q4.

At above for a company average?

They have grown probably because the number of changes in these customers base top ten cannot be more than two or three, so in that sense, they have grown above the company average.

Okay.

In the top ten, only one client has declined sequentially. I think there is much more stability in the top ten.

You know, we have said earlier that changes in the top ten at a normal feature apply, every quarter in the top ten, some clients could decline sequentially most clients would grow and it gives us a good growth rate, and we also said that we can manage a churn in the top ten in any quarter but last year, we had top ten churn and also we had a decline in one vertical in financial service in North America and that’s what made the first quarter of this year much less than the normal growth rate. We don’t see that happening now.

This quarter, we are seeing only one sequential decline in the top ten. I think the top ten is in good shape.

Okay, that’s what and just one final question if I may. In terms of the training capacity, Mohan, if you could give us some update you know what are the kind of numbers, how much you are investing in training etc.,?

Well, we are expanding the training facility in Mysore by adding another centre which can train up to about 9,000 people in a single sitting in addition to the 4,500 people-training center we have. We also building 7,750 rooms, work on the training center has started and the rooms would start because they need to get some statutory approvals and I think by the end of this fiscal ’07 both would be in place and we would have substantially added to a training capacity.

Okay, thank you very much.

We will be spending about $150 million on both of them.

Yes, good evening. Could you break out the performance of your subsidiaries?

I believe in the last quarter, you disclosed a combined deficit of 2.4 million on revenue of 28, what might be the comparable number for this quarter?

The combined revenue of the subsidiaries this quarter, that is our fourth quarter is about $54 million, last quarter was about 28, I think it’s much more than that, $54 million. And we had a net income on that of approximately $3.6 million.

The $3.6 million on $54 million is about 6%, slightly more than 6%. So, if we take 6% and the fact that we have a net income of close to 26%, it meant that 20% of $54 million is about $10 million is a profitable gain in the core business.

And in your fiscal ’06…

It is made up for the subsidiary.

Right, and in your fiscal ’07 guidance, what assumptions might you have made implicitly for the subsidiaries?

Bala here. I think fiscal ’07 we are assuming that Progeon in Australia will continue to make profit, and China Consulting was still in the investment and growth phase, so they may be incurring losses, so we assumed something around $8 million loss from both of the subsidiaries.

For the last two subsidiaries, okay. And what kind of headroom do you see in specifically in offshore revenue mix, which was 51% and utilization which is at 77% over the next year, what might the assumptions on those two specific metrics?

Well, on offshore we currently are running at 32% onsite and 68% offshore from an effort basis, this number would stay around the same, it may go up or down little bit but our target today, our goal today is to keep it around the same number. Then the second part of the question was on utilization.

We deliberately brought the utilization down to 77% by increasing hiring so that we are prepared for fiscal ’07. We are in a better business environment today and if let’s say the business picture we should have sufficient number of people to take advantage of that situation.

Clearly, the business environment is better and we decided that we will run at a slightly low utilization so that if need be we can accelerate growth.

Okay, thank you.

Hi gentlemen, good quarter. My first question is on human resources.

What plan do you have in place and what do you have in place right now to sort of bring the trainees in and get them trained, the fact that they are going to get On-the-Job well, and do you see the pool is being very stable?

When a trainee joins, they go through a 16-week training program. During the training in the first six, seven weeks, they are taught the foundations of computer science, the fundamentals of computer science and the remaining eight, nine weeks they are taught specific technologies and specific methodologies, for example, microsoft.net architecture and technology or JAVA, J2E Technology and things like that, and during this training they further are tested and about 2% to 3% of people don’t make it to the training right now.

So, it’s a very rigorous training program. After the training, they are then added to the billable pool and then they get absolved into projects overtime even when they joined the projects they are mentored and they are supervised to make sure that they are indeed delivering to the expectations.

Typically, the first full year, that is the 18-week training plus remaining 36 weeks, they are “in training” in some sense. So, we have a very rigorous program and then on an ongoing basis, we have training on technology on project management on industry vertical knowledge as well as leadership training.

So, training in Infosys, learning at Infosys is a lifelong journey.

My second question, as far as recruiting, can you give us a rough idea what the split is versus campus and middle management where maybe going where these maybe headed in ’07?

We recruit 70% of our requirement from campuses and 30% at experience level.

Okay, and just one last question on sort of the competitive environment. This year, it shows being continually asked to participate in larger deals and do you have any strategic plan as far as mergers and acquisitions or concern sort of going forward, do you have your eyes on anything in the US?

We find ourselves making the first cut in almost all large deals, in several of them making the final 2, 3 and especially, if it is an application outsourcing situation. We do make the final, the 2, 3 and then depending on how we are able to meet the requirement of the client based on the terms and conditions etc., how the clients’ expectations need our expectations and then we will get decided, we win some, we lose some.

The second part of the question was on mergers and acquisitions. We are constantly on the look out for companies to acquire.

We look at acquisitions as a way to fill its strategic needs of the company such as accelerating our growth in continental Europe, which requires local language skill or spreading out of portfolio in an industry vertical like insurance or life plans or financial services or something that there, we can buy somebody who is doing a niche consulting in that industry or who has got a solution for that industry but we are also cautious in the sense that we have laid out certain parameters and only if those parameters are met, we will go through the acquisition.

Okay, thank you.

Good morning, this question maybe for Mohan or Bala, I guess actually congratulations to both of you guys, well done for a job, well done, and all efforts for your future endeavors here. I guess let me just get right into the first part of my question is related to margins and the decline in margin that is, that we saw in the current March quarter, can you decompose the components that drilled decline in margins and in your prepared statements I think you talked about of the rupee having 1.3% margin drive, can you kind of walk us through the other elements, and then related to that how should you think about the margin profile of the company as we go through the quarters in fiscal year 2007, it seems to me like you will still see some pressure out at June with the assumption that we would get a lot of recovery as we go through the back half of fiscal year ’07.

I was wondering to understand how that progression looks?

Yes, let me explain this change. The impact of the rupee has been 1.3% negative; increase in depreciation is 0.9% because in the fourth quarter, we had a higher depreciation charge compared to the third quarter.

In the fourth quarter, the depreciation charge -- I will just read out the number to you, in the fourth quarter the depreciation charge was 5.5% of revenues, in the third quarter, it was 4.6% of revenues. We have 1.3% and 0.9%.

And then, we had an increase in personal costs of 0.7%, not on a per capita basis, but just because we hired more people earlier than what we had given in the guidance, and we built up a number of people to take care going forward and that was 0.7% of costs. So, if we add up all that you get about 3% of costs and the 3% of costs makes up most of the decline in the margin of 3.1%.

And going forward for the next year, is it going to be made up in the first quarter? I will ask the new CFO, Bala to answer that because he will have to answer you back after the first quarter.

Well, Bala here. In the first quarter, we assumed operating margins to slightly come down maybe 100, 150 basis points due to the factor that we had increased wages in India, and also outside India, that will allow some impact on the margins, but over the year, it gets normalized and on year-on-year basis, we assume that the margins should be stable.

And that’s an area where it is flat year-over-year operating margins for fiscal year in ’07 versus fiscal year ’06.

Yes, you are right.

Okay, and can you talk about the levers that are available to improve margins as we go through the course of the year, obviously I understand the growth is a big part of it and as I sort of when we look at it, how much more can you benefit on the SG&A side, cannot go down, if there are opportunity to really I guess improve utilization pricing, talk about the dynamics, are still available to you to help you offset the wage increase in the June quarter as you go though the next three quarters in fiscal ’07?

There are multiple factors, one is the onsite-offshore made, as to know the margins offshore is higher than onsite, so any shift in that will give us some benefit. Number two even though we talk about increase in wages in India, between 14% and 15%, if you look at year-on-year since we are adding some 25,000 people at a gross level for next year, which consists of around 66% freshers so, the average per capita costs is not going to grow at the same level, that’s due to some benefit.

And second on the G&A side, the absolute value is not going to grow in tandem with the revenues. That gives us some benefit, and utilization rate any improvement that will give us some 30, 40 basis points benefit on the margins.

So, we have lot of levers. G&A is the biggest thing, and pricing we assume to be stable, and if the mix changes due to increase in value-added services like package implementation or consulting that may give us some benefits.

So, we have several levers and all these levers put together we assume that the margins will be stable for next year.

Okay great, and I guess just from my last question is related to the tax rate, the assumption for the tax rate it looks like it’s a little lower than what I had, what’s driving the changes in the tax rate in fiscal ’07 versus fiscal ’06?

In fiscal ’06, this effective tax rate is something around 11.4%, we had some tax write-back in the third quarter of fiscal ’06, if you discount that it will be around 11.5% to 11.9%. Going forward in fiscal ’07, we assume that to be stable and with effective tax rate of something around 11.5%.

Some of the units which are operating under the STP scheme may go out of tax holiday at the end of fiscal ’07, that will have some impact on fiscal ’08, but it’s not a mettle impact, majority of the units will get out of that holiday in end of fiscal ’09, so I think for next year, we assume that effective tax rate to be in the region of 11.5% to 12%.

Okay great, and then I guess just finally this is more of just a broader strategic question, given that a majority of your people are studying and becoming from the campus levels, do you run a risk and this is longer-term strategic question about the type of, so far that you are hiring and the kind of work that you would like to get meaning that, it’s truly want to get to the higher end work, it’s the current base of employees that you are hiring, the right base.

Let me deconstruct the model for you. At the very top of the pyramid, we have Infosys Consulting which has 170 people, and which is ramping up very rapidly.

It’s a top of the line consultant will get paid $220 plus for consulting one. At the next level, we have an Enterprise Solutions Group, we did about $330 million of revenue, who are into SAP and Oracle implementation work, and they have 2,500 MBAs in the 4,500.

And they are certainly growing at about 50% plus of thereabouts on an average over the last many years, and they have superior margins, and their rates are much higher, and they are going to grow very aggressively. At the next level, we have a solution design group.

The solution design group is also helping enrich the vertical and the horizontals so that we could add better value to our customers, and they are a small group, but they are driving the value add part of the work. It is true that we are adding a lot of people at the bottom of the food chain because that is what is available.

At the middle level, when the industry grows at 30% a year for more than 12 years, consequently, there are going to be some stresses, that is why we are focusing on hiring of the top, and the near top, and this will disproportionately add to our revenues, because they are growing faster, and they have higher per capita revenues, and from the middle and the bottom we are driving the capabilities of people up by certification programs, by training programs, by a richer mix of experience, and the job rotation etc., so we have developed a model, which takes scale of the issue and gives us enough room for growth as we go along.

Okay, thank you Mohan. I guess final question related to attrition.

Attrition in terms of it looks like going up, can you talk about where the people is going, are they going to competitors, multinationals, captives or back to school?

Well 45% of the people go to other companies, and we tracked the number of companies, names of companies that more than tell us. We don’t see any large number, maybe the largest number of people is 100 who would go to any particular company, and in all, we are not worried about that, we don’t see some other names you talk about at the top of the list.

Julio, 25% of the people go for higher education and the balance dropout of the way or don’t tell us where they are going. So, we don’t know about that, so that’s a residual amount.

If you look at attrition, it’s 11.2% and the bottom 5% has got an attrition of about 50% so that is 2.5%, the balance we have an attrition of 8.7%, which is very good, and we count attrition from the day a person joins either as a trainee or on probation till the person leaves, unlike companies which do not pay at the period of probation or the period of training for counting attrition. Anyone in the training program maybe 2% of people who joined do not pass with the training program and they leave and they add to that.

If you look at the number of years experience and when people leave, people who’ve been with us more than six years, leave us maybe 6.5% and people who have been with us within 1 to 3 years have about 14%, and people between 1 to 3 years typically have a higher attrition base because they would have finished the training and someone they might want to go for higher education, someone may want to change location, apart they go elsewhere. So, overall it is a pretty comfortable scenario.

We have a very tough metrics collection in a sense that our standards are very, very high. If you compare us with other companies, you have to make sure that the standards for all of the companies are high.

We take it on the rolling average basis for the full year on a LTM basis, we don’t take the yearend figures or figures like that which is the larger based to calculate the attrition.

Okay great, thank you very much.

Yes thank you, a little follow-up on the attrition question. The 6.5% rate for more experienced people, how does that trended throughout the fiscal ‘06 and what are your expectations for overall attritions especially at the higher end level for fiscal ’07?

I think our expectations for attrition at higher levels would be that they would be less in the company average because that is the cost. Higher levels have a lesser attrition than for the entire company, because most of the attrition is in the 1-to-3 year level.

For example at the level of 1 to 3 years, we have 14% like I have said earlier and with higher levels the attrition comes down, and we would expect the same level of attrition going forward. In the quarter just gone by, we hired about 1,200 laterals in the service of business, which is a basic business, up from 740 the previous quarter.

We have a large lateral attraction program, which is working very well, the engine has been turned on, the engine is trucking well, and I think we are going to effect a lot more lateral. I think this is an issue, which has been slightly overdone because we discussed the issue three quarters back, and we have passed any of these challenges.

Okay great, so what does makes into your guidance for fiscal ’07 for a total attrition?

Well I would expect maybe 9% to 11% is the range that we would expect, which is building the remodel.

Okay great, thank you very much.

Folks we have to end this conference now and I want to make a personal statement. I’ll be stepping down as CFO with effect from the end of this month on the 30th of April.

My colleague Bala will be taking over from the 1st of May. I want to thank all of you for the wonderful time that I have spent talking to you and discussing with you and answering all your questions, and for taking your call on all the quarterly shows that we had.

It’s been a very enjoyable experience. I want to thank you for your kindness and for putting up with me and spending time, I do hope I’ve answered all your questions to the best of my ability.

Thank you, good-bye. And I do hope that we will continue the wonderful relationship that we have in terms of being able to answer your questions and carry on with my colleague Bala who’ll succeed me on 1st of May.

Thank you very much.

Let me also thank all of you for taking the trouble to come on the Easter weekend for this call and we are indeed grateful and we are sorry for any inconvenience caused to you. And we look forward to talking to you next quarter, and also if any other further questions please email them, we will be happy to get back to you.

Thank you very much and good night and good afternoon.