Passion for Excellence. Commitment to Delivery.

Acquisition of Lodestone

Holding AG by Infosys

Limited

– By

Bhuvan Ranade (09)

Cletus Rodrigues (13)

Mayuresh Gavankar (26)

Ashutosh Dive (08)

Sagar Dhake (41)

Flow of Presentation

What is Acquisition?

About Infosys Limited

About Lodestone Holding

Objectives behind the acquisition

Conditions under the acquisition

Acquisition Process

Benefits to the Infosys

Financial Statements

Ratios

Conclusion

Bibliography

Infosys Limited

An Indian MNC provides consulting,

technology, engineering and outsourcing

services

Co-ounded by N. R. Narayana Murthy,

Nandan Nilekani, N. S. Raghavan, S.

Gopalakrishnan, S. D. Shibulal, K.

Dinesh and Ashok Arora

19th most innovative companies in the

world as per Forbes

Ranked 1st for its Corporate Governance

by IRGR

Earlier acquisitions

Portland in 2011

McAmish in 2009

Expert Info in 2003

IQ Financial in 2002

Lodestone Holding AG

• Management consulting & IT consulting

company having head office in Zurich

• Founded in 2005 by Ronald Hafner,

Jürgen Bauer and Peter Odman

• Offers advice to international

corporations on devising innovative

business operating models, optimizing

processes and implementing new

technologies leveraging SAP

What is Acquisition?

• A corporate action in which a company buys most, if

not all, of the target company's ownership stakes in

order to assume control of the target firm.

• Acquisitions are often made as part of a company's

growth strategy whereby it is more beneficial to take

over an existing firm's operations and niche compared

to expanding on its own.

Objectives behind the Acquisition• To enhance Infosys' global presence, particularly in

Continental Europe and

Emerging markets like Latin America and Asia Pacific

• Excess cash balance

• It’s a step closer to its goal of becoming a software-and-services

giant, providing clients with higher value services and consulting

• To compete with the competitors

• Lodestone has been growing at 18 per cent CAGR

Conditions under the acquisition

• Infosys to pay an aggregate

enterprise value of Swiss francs

330 Million in cash

• Lodestone will bring over 850

employees to Infosys

• Lodestone will also add more

than 200 clients

• Infosys put the bid for acquisition on 10th September & the

process got completed on 22nd October, 2012

• Lodestone Holding AG acquired by Infosys for Rs.1,925 crore

(approx. $345 million)

• The transaction is going to be completed in cash

• Infosys paid the two-third amount, i.e. Rs.1,187 immediately in

cash and the balance will be paid after 3 years

• At present, consultancy businesses contribute 31 per cent of

Infosys’ revenues

Acquisition Process

• Lodestone brings 850 employees which 750 are front line delivery

personnel

• A profitable and strategic SAP customer base

• Six Sigma standards and SAP, ASAP improved the quality of

implementation outcomes

• Post-acquisition, the consulting and package implementation revenues of

Infosys are expected to be more than $1 billion

• Deal will bolster Infosys' presence in Europe, Middle East and Africa

• IDEA Methodology of Lodestone has helped Infosys for its betterment

Benefits to Infosys

Financial Statements

Some Important RatiosRatios Infosys Ltd

before

acquisition

Lodestone

Holding

AG

Infosys Ltd

after

acquisition

Profitability Ratios

1. Return on Equity = NPAT

Net Worth 26.59% 65.28% 24.82%

2. Return on Capital Employed = EBIT

T.C.E. 30.50% 29.96% 27.61%

3. EPS = NPAT – Pref. Dividend

No. of Equity shares Rs.145.83

A – Rs.3350

B –

Rs.29400

Rs.165.01

100

100

Continued…Ratios Infosys Ltd

before

acquisition

Lodestone

Holding

AG

Infosys Ltd

after

acquisition

4. Gross Profit Ratio = Gross Profit

Net Sales 95.76% 98.59% 94.46%

5. Net Profit Ratio = Net Profit

Net Sales 24.70% 88.42% 23.37%

6. Operating Ratio = COGS + Operating Expenses

Net Sales 66.93% 1.84% 70.28%

7. Operating Profit Ratio = Net Operating Profit

Net Sales 25.49% 94.62% 21.36%

100

100

100

100

Continued…

Ratios Infosys Ltd

before

acquisition

Lodestone

Holding

AG

Infosys Ltd

after

acquisition

Turnover Ratios

1. Fixed Assets Turnover Ratio = Net Sales

Average Fixed Assets 5.79 times 1.94 times 5.6 times

2. Capital Turnover Ratio = Net Sales

Average Capital Employed 0.96 times 0.34 times 0.95 times

Continued…Ratios Infosys

Ltd before

acquisition

Lodeston

e Holding

AG

Infosys

Ltd after

acquisiti

on

Liquidity Ratios

1. Current Ratio = Current Assets

Current Liabilities 4.38 times 1.51 times 4.36 times

2. Quick Ratio = Current Assets – Inventories – Prepaid Exps

Current Liabs – Bank O/d – Advance Income 4.28 times 1.51 times 4.27 times

3. Proprietary Ratio = Proprietors’ Funds

Total Assets 81.69% 45.77% 82.01%100

Bibliography

http://articles.economictimes.indiatimes.com/2012-09-10/news/33737321_1_infosys-gains-shashi-bhushan-lodestone

http://www.infosys.com/newsroom/features/Pages/infosys-to-acquire-lodestone-consultancy.aspx

http://en.wikipedia.org/wiki/Lodestone_Management_Consultants

http://www.thehindubusinessline.com/industry-and-economy/info-tech/infosys-completes-acquisition-of-lodestone/article4022689.ece

http://en.wikipedia.org/wiki/Infosys

http://www.infosys.com/newsroom/press-releases/Pages/corporate-governance-practices.aspx

http://www.lodestonemc.com/our_firm/our_milestones/