Infosys status in early 2017
Download as PPTX, PDF1 like255 views
1. The document discusses changes at Infosys in early 2017 due to leadership issues. It notes that Murthy cited three reasons for Infosys' decline: lack of adequate leadership as founders left, failure to change business models for automation, and poor capital allocation hurting the company. 2. Infosys planned a 12,000 crore share buyback amid pressure after TCS's buyback. Reasons for buybacks at IT firms included single-digit growth and high cash levels that weren't being used for acquisitions or growth. 3. As conflicts with founders continued, Infosys CEO Sikka met with investors while former CFOs urged them to ask about the large cash pile
Infosys status in early 2017
- 1. The Infosys -changes due to the structure, strategies and alliances during early 2017 Done By, M. Anitha Jesinth II MBA
- 2. 1. Murthy focused on only founders becoming leaders: Mohandas Pai, Ex CFO Under any leadership, nobody bothered to create share holder interest, he says. The proposed salary hike for CEO and two senior executives were defended. The next day it is approved only for CEO. He cited three top reasons for "the slide". One is "lack of adequate leadership as many people left because of Murthy's focus on only founders becoming leaders and that was a mistake". Second, "not changing the business model to face automation and change in the marketplace and (the change was) slow because of the leadership flux". Third, he said, was capital allocation and lack of capital efficiency, which are hurting the company.
- 3. 2. Infosys to come under big pressure after TCS share buyback Infosys is planning a Rs 12,000 crore share buyback. Infosys had liquid assets, including cash and cash equivalents and investments, worth Rs 35,697 crore (about $5.25 billion) on its books at the end of December 2016. Main reasons behind a clamour for buybacks at the IT companies is that these companies have had only single-digit growth recently, leading to low shareholder returns. Shareholders can be rewarded through other means such as a buyback.
- 4. Reasons… Cash is idling at Indian IT companies as they are neither making acquisitions nor investing in growth. A buyback displays a company's optimism in future. It indicates the company's shares are under-valued. Buybacks are also more tax-efficient than dividends. They also help put a floor under the share price.
- 5. 3. As conflict with founders rages, Infosys CEO to meet investors Sikka, along with some of the Board members, interacted with the media in the day to clear the air over various issues flagged by the founders. Two of Infosys former CFOs -- T V Mohandas Pai and V Balakrishnan -- exhorted institutional investors to raise questions about the huge cash pile on the company’s books, saying investors have an obligation to protect their investment. The pressure has grown further after Infosys industry peers Cognizant and Tata Consultancy Services announced their buyback offers worth USD 3.4 billion and Rs 16,000 crore, respectively.
- 6. 4. Infosys seeks shareholder nod for share buyback Infosys has sought shareholders’ approval to change the company’s Articles of Association, which includes a provision for buyback. “Power to purchase its own equity shares or other securities by way of a buy- back arrangement has been included and provisions relating to nomination facility for shares by a shareholder have been inserted,” the Infosys postal ballot notice, uploaded on the company’s website, said.
- 7. Whistle blower’s Panaya War An anonymous whistle-blower’s email has claimed that Infosys paid $200 million in February 2015 for the Panaya acquisition when the company had been valued at $162 million by Israel Growth Partners. Bansal, who was not a board member but attended the meeting in his capacity as the CFO, believed that the Panaya acquisition was ill-thought-out and would not offer much by way of value to Infosys, the person said on condition of anonymity. He thought the company was paying too much money and was also upset that as CFO, he had not been kept in the loop during the due diligence process, the person said.
- 9. Sources: Livemint.com Economictimes.indiatimes.com Scroll.com firstpost.com Gadgetsnow.com THANK YOU