The Hindu Business Line : Infosys brand value soars 73 pc to Rs 14,153 crore

THE value of the Infosys brand zoomed 73 per cent in fiscal 2005, even as its market capitalisation soared 85 per cent during the year over the previous year.

Brand Infosys was valued at Rs 14,153 crore in fiscal 2005, compared to Rs 8,185 crore in the 2004 fiscal.

Infosys' market capitalisation increased to Rs 61,073 crore in 2005, compared to Rs 32,909 crore in 2004, the company said in its annual report for 2004-05.

The value of the Infosys brand was 23.17 per cent of its market cap during 2005.

Infosys had adopted the generic brand earnings-multiple model to value its corporate brand, the company said. The concept finds mention in Valuation of Trademarks and Brand Names by Mr Michael Birkin in Brand Valuation, edited by Mr John Murphy.

Using the brand earnings-multiple model, Infosys based its valuation on the following assumptions: the total revenues excluding other income after adjusting the cost of earnings, the annual inflation at 6.8 per cent, 5 per cent of the average capital employed used for purposes other than promotion of the brand and a tax rate of 36.59 per cent.

Infosys annual report said the company had used various models for evaluating assets off the balance sheet to bring certain advances in financial reporting.

Goodwill is a nebulous accounting concept that is defined as the premium paid to tangible assets of a company. It is an umbrella concept that transcends components such as brand equity and human resources. Infosys believes the client base was its most valuable intangible asset.

Marqué clients or image enhancing clients accounted for 50 per cent of Infosys' total revenues. "Marqué clients give stability to our revenues and reduce our marketing costs," Infosys said.

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