Infosys values brand at Rs 173 cr

Infosys Technologies Limited (ITL), the Bangalore-based software major, has joined the select band of international companies who value their corporate brands. ITL has valued the `Infosys' brand at Rs 172.83 crore which is 1.5 times the total tangible assets of the company.

ITL estimates its net worth to be Rs 564.22 crore including the value of intangibles. ITL has become the first company in the country to value its internally created brand and reflect it in its annual report as part of additional shareholders information.

By valuing its corporate brand name, ITL has continued its practice of valuing intangibles. In 1995-96, ITL valued its human resources - or `infoscions' as the company calls them - at Rs 188.85 crore and reflected the same in the annual report as additional information to share-holders.

In the additional information to shareholders, ITL observes that "the financial position of an enterprise is influenced by the economic resources it controls, the financial structure, liquidity and solvency, and its capacity to adapt to changes in the environment.

ITL has adapted the generic `brand-earnings-multiple' model to value its corporate brand `Infosys'. Mr T V Mohandas Pai, senior vice president - finance, ITL, says: "We have used a method which is not very subjectie and is based on cash flows." This method is widely used in UK, particularly by the Interbrand Company.

ITL's economic value added (EVA) for March 1997, at Rs 584.69 lakh, has increased multiplefold from Rs 9.41 lakh for March 1996. In fact, the EVA in the previous year had decreased from Rs 18.8 lakh in March 1995.

EVA is computed by taking the spread between the rate of return on capital and the cost of capital, and then multiplying the economic book value of the capital committed to the business.

(Courtesy The Economic Times)