2.22 Contingent liabilities and commitments
Accounting policy
Contingent liability is a possible obligation arising from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity or a present obligation that arises from past events but is not recognized because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability.
Uncalled capital pertaining to investments
(1) As at March 31, 2021, claims against the Company not acknowledged as debts in respect of income tax matters amounted to Rs. 3,424 crore. The claims against the Company majorly represent demands arising on completion of assessment proceedings under the Income-tax Act, 1961. These claims are on account of multiple issues of disallowances such as disallowance of profits earned from STP units and SEZ units, disallowance of deductions in respect of employment of new employees under Section 80JJAA, disallowance of expenditure towards software being held as capital in nature, payments made to associated enterprises held as liable for withholding of taxes. These matters are pending before various appellate authorities and the Management including its tax advisors expect that its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s financial position and results of operations.
Amount paid to statutory authorities against the above tax claims amounted to Rs. 5,817 crore.
(2) Capital contracts primarily comprises commitments for infrastructure facilities and computer equipment.
Legal proceedings
The Company is subject to legal proceedings and claims, which have arisen in the ordinary course of business. The Company’s Management reasonably expects that these legal actions, when ultimately concluded and determined, will not have a material and adverse effect on the Company’s results of operations or financial condition.
Infosys has provided guarantee for performance of certain contracts entered into by its subsidiaries.
Registered on May 15, 2019
The Company’s material related party transactions during the years ended March 31, 2021 and March 31, 2020 and outstanding balances as at March 31, 2021 and March 31, 2020 are with its subsidiaries with whom the Company generally enters into transactions which are at arms length and in the ordinary course of business.
List of key managerial personnel
Whole-time directors
* Salil Parekh, Chief Executive Officer and Managing Director
* U.B. Pravin Rao, Chief Operating Officer
Non-whole-time directors
* Nandan M. Nilekani
* Michael Gibbs
* Kiran Mazumdar-Shaw
* Roopa Kudva (retired as member of the Board effective February 3, 2020)
* D.N. Prahlad (resigned as a member of the Board effective April 20, 2020)
* D. Sundaram
* Uri Levine (appointed as an independent director effective April 20, 2020)
* Bobby Parikh (appointed as an independent director effective July 15, 2020)
* Dr. Punita Kumar-Sinha (retired as member of the Board effective January 13, 2021)
* Chitra Nayak (appointed as an independent director effective March 25, 2021)
Transactions with key managerial personnel
(1) Total employee stock compensation expense for the year ended March 31, 2021 and March 31, 2020, includes a charge of Rs. 76 crore and Rs. 56 crore respectively, towards key managerial personnel.
(2) Does not include post-employment benefit based on actuarial valuation as this is done for the Company as a whole.
2.24 Corporate social responsibility (CSR)
As per Section 135 of the Companies Act, 2013, a company, meeting the applicability threshold, needs to spend at least 2% of its average net profit for the immediately preceding three financial years on corporate social responsibility (CSR) activities. The areas for CSR activities are eradication of hunger and malnutrition, promoting education, art and culture, healthcare, destitute care and rehabilitation, environment sustainability, disaster relief, COVID-19 relief and rural development projects. A CSR committee has been formed by the Company as per the Act. The funds were primarily allocated to a corpus and utilized through the year on these activities which are specified in Schedule VII of the Companies Act, 2013:
a) Gross amount required to be spent by the Company during the year is Rs. 372 crore.
Consequent to the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021, the Company intends to transfer its CSR capital assets created prior to January 2021 to a controlled subsidiary (“the Subsidiary”) to be established in accordance with Section 8 of the Companies Act, 2013 for charitable objects. The transfer will be undertaken upon obtaining the required approvals from regulatory authorities.
The carrying amount of the capital asset amounting to Rs. 283 crore has been impaired and included as CSR expense in the standalone financial statements because the Company will not be able to recover the carrying amount of the asset from its Subsidiary on account of prohibition on payment of dividend by this Subsidiary
2.25 Segment reporting
The Company publishes this financial statement along with the consolidated financial statements. In accordance with Ind AS 108, Operating Segments, the Company has disclosed the segment information in the consolidated financial statements.
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