Infosys ups debt MF exposure to record high

Bank deposits dip

The country's most cash-rich IT firm Infosys has ramped up its investments in debt mutual funds to an all-time high of Rs 7,365 crore, while paring its bank deposits to the lowest level since June 2010.

The tech major's investments in debt MFs increased during the last quarter ended December 31, 2012, even as its total cash chest remained almost unchanged stood at Rs 22,501 crore from the previous quarter level.

After rising sharply in the July-September 2012 quarter to Rs 4,986 crore, Infosys' investments in debt-focussed liquid MF schemes rose even further to Rs 7,365 crore as on December 31, 2012.

Large corporates use liquid debt MFs to park cash for short-term and also earn good returns, while waiting to deploy the funds for future projects.

At over Rs 7,000 crore, Infosys' current investment level in liquid mutual funds is the highest-ever for the debt-free firm. The previous record high level for its exposure to liquid MFs was Rs 5,200 crore in December 2009, data shows.

On the other hand, Infosys' bank deposits fell from Rs 14,569 crore as on September 30, 2012, to Rs 11,943 crore at the end of December, as per the latest quarterly financial accounts. This excludes funds in current accounts.

At the current level, Infosys' money in bank deposits is at the lowest level since Rs 11,732 crore as in June 2010.

Liquid mutual funds are estimated to have given a three-month return of 1.5-2.5% in December quarter.

Besides liquid MFs offering better yields than bank deposits, the fall in bank deposits could also be due to Infosys' Rs 2,000-crore Lodestone buy-out, experts said.

The company considers all highly liquid investments with a remaining maturity at the date of purchase of three months or less and that are readily convertible to known amounts of cash to be cash equivalents.