Sikka to Meet In­vestors on Mon­day

Fund man­agers to seek clar­ity from CEO on is­sues high­lighted by Murthy, oth­ers

The Economic Times - - Front Page -

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.

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