Infosys changes due to the leadership, structure, strategic alliances

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