INFOSYS

Murthy should lie low for some time: experts

infosys-narayana-murthy-reuters [File] N.R. Narayana Murthy | Reuters

Experts feel there is nothing new in Murthy's statement to the investors

Infosys co-founder N.R. Narayana Murthy should now lie low for some time and stop repeatedly questioning the board till the time Nandan Nilekani is there, said experts. They said that there was nothing new in his statement to the investors and it, in fact, repeated the same thing which he had been saying about Infosys and the importance of corporate governance all these days. 

Experts such as Kris Lakshmikanth of Head Hunters India Limited feels that Murthy's address to the investors is rather self congratulatory and how he had brought in corporate governance in the company and how after his return to the company had boosted the performance of the company. 

“Murthy came back after S.D.Shibulal and tired to bring in new changes in the company and that is what his statement to the investors says. He has tried to praise his efforts and how the performance of the company revived under him and that how under him corporate governance took shape in the company. There is nothing new in Murthy's statement which talks mainly about lapses in corporate governance in the company under the previous board,” said Lakshmikanth.

Lakshmikanth feels that Nilekani is a very diplomatic person and has successfully worked under the Congress as well as with the BJP governments. “I feel Nilekani can handle any difficult situation very tactfully and I feel that till Nilekani stays Murthy is expected to keep quiet. I feel that though he will get new additional directors to the board, further resignations of the board members may not happen immediately. I feel that Ravi Venkatesan will remain in the board as he is close to the ruling BJP government,” he adds. 

This expert further feels that no major changes are expected in the company in the next few months. He also feels that in case the company looks for an external candidate it might take at least 5-6 months.

Prof. Arvind Jadhav of TAPMI Manipal feels that investors have lost confidence in Infosys and this can be seen in the restricted rebound even after the appointment of Nilekani as the chairman. “Nilekani is the only one who is expected to mend the relationships between NRN and the Board. Nilekani also has the confidence of the institutional investors and is expected to sooth the frayed nerves of the investors. Yet the restricted rebound is due to the fact that Nilekani has to fill the big shoes of Murthy. The shadow of Murthy will always loom large over Nilekani in the near future and he will have two constituencies to satisfy—institutional shareholders who are unhappy with public spat and Murthy whose focus may be more on board behaviour. A parallel can be drawn during Indian independence when Jawaharlal Nehru had the continuous extra-constitutional shadow of Mahatma Gandhi to look after when setting up India’s first free government,” Jadhav told THE WEEK. 

Jadhav also feels that for the benefit of Infosys and to regain its reputation it will be good if Murthy lies low for some time and allows Nilekani to lead the company as he deems fit. “Murthy should give-up the role of activist shareholder for some time as he has publicly acknowledged Nilekani's capabilities to bring back good governance practices to Infosys. Continuous questioning by Murthy will be viewed as Murthy's unhappiness of not being able to come back and control the board which may not be true,” adds Jadhav. 

Apparently Murthy had made it clear in his statement that when he was requested by the board in 2013 to return to the helm of the company, he had fulfilled the objectives of his return. He has stated that during his brief tenure of 15 months, the company's revenue growth rate doubled from 5.8 percent in 2012 – 2013 to 11.6 percent in 2013 – 2014 (not achieved since then). 

Murthy had also stated that he had introduced innovations and enhanced productivity to improve the operating margin by 200 basis points by Q4 of 2013 – 2014 (not achieved since then) and had successfully completed the first project using machine-learning based automation for a European telecom customer in March 2014. At the same time he said that he had provided a dignified and courteous exit for people not seeing a bright future for themselves in the new direction of the company.

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Topics : #Infosys

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