Sikka to Meet Investors on Monday
Fund managers to seek clarity from CEO on issues highlighted by Murthy, others
Reena Zachariah & Nishanth Vasudevan
Mumbai: Vishal Sikka, the embattled Infosys chief executive, will meet global institutional investors in Mumbai on Monday amid the ongoing conflict between the company’s management and its founders. Fund managers will seek clarity from Sikka on the issues that have prompted Infosys co-founder NR Narayana Murthy and some former top officials to publicly speak out aga- inst the management.
In response to an email query from ET, an Infosys spokesperson confirmed the meeting will go ahead as per the schedule. The meeting between Sikka and the investors is part of a conference organised by Kotak Institutional Equities and was arranged much before the differences between the current board and founders came out into the open.
THE TASK AHEAD
While discussions would have been about Infosys’ business prospects, the dispute has turned the spotlight on the stability of the management.
“Investor participation will be higher now because everybody wants to hear it directly from Sikka,” said a fund manager with a large domestic mutual fund who plans to attend the meeting. Sikka will address investors for an hour between 10 and 11 am. After the speech, he will be meeting a group of investors, said a person in the know. ET could not ascertain the names of the foreign funds which will be part of the meeting on Monday. Infosys is among the top Indian holdings of large foreign portfolio investors.
Infosys founders led by Murthy have raised questions about corporate governance practices in the company. Murthy and Infosys’ former CFOs Mohandas Pai and V Balakrishnan have questioned the management’s decisions on Sikka’s pay packet and severance package to former CFO Rajiv Bansal.
In an interview to ET, Murthy said, “We have had a couple of eminent CFOs (e.g. Mohandas Pai and V Balakrishnan) who left the company and several key (former) employees (BG Srinivas and Ashok Vemuri) who had as important secrets as (Rajiv) Bansal, the former CFO (as claimed by the chairman R Seshasayee at the 2016 AGM) and they did not get any severance pay at all. Simply saying that the board did what was in the best interest of the company reinforces doubts that company was suppressing some information harmful to the company. If there was no harm done to the company, then it raises doubts about fiduciary responsibility.”
BUSINESS AS USUAL
Sikka is likely to impress upon investors that it is business as usual in the company and that it is on track to meet its target of touching $20 billion revenue by 2020. The views of institutional investors on the issues will matter as they hold 74.67% in the company. The promoter group owns 12.75%.
OppenheimerFunds, Infosys’ third-largest institutional investor, came out in support for Sikka and said the founders needed to accept that the software bellwether was no longer ‘their’ company.
Fund managers said stability in the management will be crucial as the stock price has floundered in the past due to concern over succession plan and exodus of senior executives. Sikka, a former SAP biggie, was appointed in mid-2014.
“We do not want to see a relapse of what happened in 2013-14 which not only impacted the stock price but also the business,” said the chief investment officer of a mutual fund.