Infosys Ltd, which is facing turbulence over governance issues raised by founders including NR Narayana Murthy, has announced the appointment of Bank of Baroda chairman Ravi Venkatesan as non-executive co-chairman on the board alongside Chairman R Sheshasayee. The company delivered a flat performance in FY17 fourth quarter with revenue worth Rs 17,120 crore, a decline of 0.9 per cent over Q3 and a year-on-year growth of 3.4 per cent. Net profit stood at Rs 3,603 crore, a decline of 2.8 per cent over Q3 and a growth of 0.2 per cent over last year. After a long delay, the Infosys board also announced Rs 13,000 crore ($2 billion) to be paid out to shareholders in FY18 as dividend or share buyback.
However, Infosys shares fell 3.86 per cent to Rs 931.40 on the BSE as investors were disappointed by the results, shareholder payout and guidance.
The appointment of Venkatesan, a former Microsoft India chairman and an Infosys director since 2011, as non-executive co-chairman comes after co-founder Narayana Murthy raised red flags over the board allowing huge salary hikes to be given to CEO Vishal Sikka and COO U B Pravin Rao as well as large severance packages to executives.
However, senior management at Infosys who referred to the recent governance issues as “distractions’’ chose not to comment on the appointment of the co-chairman. “ Ravi Venkatesan’s appointment was based on the recommendation of the Nomination and Remuneration committee. Beyond that it is a board matter,’’ COO Pravin Rao said.
Infosys officials said the management was informed about the move on Wednesday night and that the impact of the move will be known in the coming days. “There will be more clarity in the coming days,’’ Rao said.
In an official statement, chairman of the board R Sheshasayee said the appointment of Ravi Venkatesan will help “enhance the board engagement in supporting the management in execution of company’s strategy”.
“This is an exciting time for the technology industry and I am delighted to have the opportunity to work more closely with Sesh and with Vishal and his leadership team in their transformational journey,” Venkatesan said. Asked for his comments on the new appointment, CEO Vishal Sikka said that it would not have a bearing on the management.
“The job of the management team is setting the strategy, executing the strategy and the operations of the company. The board’s job is governance. There is a clear separation. We have a very cohesive board and I have always appreciated the feedback, the guidance, the advice from the board. In the end it is job of the management to run the company,’’ Sikka said.
Sikka said the performance last year was affected by factors like geo-politics, overall business environment and “other distractions which we have had to deal with over the course of the year and especially in the last quarter’’.
On the philosophy of compassionate capitalism professed by Murthy, Sikka said the company is trying to shift to a paradigm of ownership among all and to create an entrepreneurial culture a purposeful reward structure is needed to meet these ends and to be competitive. “Unanticipated execution challenges and distractions in a seasonally soft quarter affected our overall performance. At the same time, we continued to see many positive signs of our strategy execution,’’ Sikka said.
For FY17, Infosys reported revenue of Rs 68,484 crore, a YoY growth of 9.7 per cent and a net profit of Rs 14,353 crore, an annual growth of 6.4 per cent.
The firm projected revenues to grow between 6.5 per cent and 8.5 per cent in 2017-18. “It is a challenging environment with what is going in the world around us. Also the Q4 performance has an impact on how we see evolution of the year,’’ Sikka said.
Infosys will be hiring strongly in the US to overcome visa issues, the company said.