The clean chit given to Infosys former CEO Vishal Sikka might have cleared the cloud over the company's acquisition of Israel-based Panaya, but the story is far from over as investors' concerns remain.
On Tuesday, during its quarterly results, the Nandan Nilekani-headed Infosys board stated that it found no wrong-doing in the Panaya acquisition and the Rs 17-crore severance paid to its former chief financial officer Rajiv Bansal.
The fact that these findings have not gone down well with Infosys founder N.R.N. Murthy raises more questions going ahead. Earlier, Murthy's statements had triggered a boardroom battle and eventually led to the exit of Sikka, putting the company in a tricky situation and resulted in Rs 21,683-crore erosion of market capitalisation in the past two months.
Reacting to the Infosys board's statement, Murthy on Tuesday said, “I stand by every question on poor governance raised in my speech to Infosys investors dated August 29, 2017. The fact remains that none of these questions have been answered by the Infosys board with the transparency it deserves. I am disappointed.” Criticising the board's severance payment decision, Murthy added, “The core question still is how and why the Infosys board approved an unusual and unprecedented severance payment agreement of 1000% (of the standard Infosys employment contracts) to the former CFO, and why the board did not disclose this information proactively much earlier. Sadly, it appears we will no longer know the truth,” Murthy added.
Murthy's allegations reveals that he is still unhappy with the current board and even Nilekani, feels Amit Chandra, IT analyst at Mumbai-based HDFC Securities.
However, experts say that the allegations no longer hold ground as the clean chit statement has come from none other than Nilekani, an Infosys insider who is also the co-founder. “Nilekani who has had held very senior positions and is known for his credibility would have definitely reviewed the past reports thoroughly and only then would have reached such a conclusion,” said Alok Shende of Mumbai-based Ascentius Consulting.
Industry observers feel that turning a blind eye to Murthy's repeated allegations and questions would be the way forward for Infosys. Apparently, Infosys former board chairman R. Seshasayee has observed that the company deserved a period of stability and undistracted focus on the business.
“Infosys has to move forward. Under the leadership of Nilekani, all the review was conducted, which found that proper processes were followed by the company during the deal and there were no lapses in it. Even the high severance package is justified because it is a very common thing in the US, though not in India. However, Infosys being a global company had just followed a global practice by giving a high severance package to Rajiv Bansal and David Kennedy,” say Chandra.
On the other hand, Murthy's explicit resentment and constant interference might not hold well for a company that is on a CEO-hunt. “Such allegations may make the task of finding a new CEO challenging for the company as any new person will like to stay away from such issues and would feel the pressure of such repeated allegations from Murthy in the future,” say Shende. “I feel that from now on, the Infosys board will start ignoring allegations which Murthy may raise. The company has to move on from the past baggage and move ahead in a challenging IT environment rather than stick on to past issues and allegations,” he adds.
No Infosys investor would want to crib about the past and the repeated allegations of Murthy. “Now, the aim of every investor at Infosys would be to see when and how soon growth would return to Infosys. Infosys, being a little conservative player, has given a timid outlook. That is fine as the industry itself is facing challenging times,” Chandra explains.
