‘The board failed in governance’

Former Infosys CFO TV Mohandas Pai has been one of the strident critics of the current Infosys management’s style of functioning. He has, over a period of time, raised issues of lack of governance at the board level. In an interview with BusinessLine , he shares his views on Vishal Sikka’s resignation as the CEO and the road ahead for the ITcompany. Edited excerpts:

How do you view the latest developments at Infosys?

What has happened is very unfortunate. The board has failed to exercise proper governance. The shareholders led by NR Narayana Murthy (co-founder and former Chairman) have raised certain issues and the board has not answered them. It appears that the board has not applied its mind independently because the CEO is driving the board. The co-Chairman in an interview, criticised the CEO; he himself said Sikka had not attained the numbers. He said the first two years were good and the third year was not. Now, he is trying to blame Murthy for Vishal’s resignation whereas Murthy has raised only governance issues.

There is the whole issue of how the Panaya deal was executed. It keeps coming back all the time. The statement from Infosys says that Murthy’s letter contains factual inaccuracies, rumours and so on...

This is clearly a governance issue and when it gets raised, the shareholders get criticised. The co-Chair, in one of his interviews, said the board committed a mistake over Rajiv Bansal, and the fact that Sikka claims that he has been thinking about resigning for sometime clearly shows that it had nothing to do with the latest letter. You must read the letter by Murthy and it will show who is right. Why are they not releasing the Panaya probe report. They have spent shareholders’ money to set up a probe and therefore, the shareholders have a right to know.

At the investors’ call, Infosys co-Chairman, Ravi Venkatesan has said he is withdrawing his offer to Murthy a seat on the board...

Who is the co-Chair to decide whether Murthy should become Chairman emeritus or not. The shareholders have to decide. He is not a shareholder. Tomorrow the shareholders can call an EGM and do that. Infosys is a shareholders’ company and not a personal company. Some of them think that it is their personal property.

Do you think these developments have damaged the reputation of Infosys?

It has certainly damaged the reputation of the board. The board has no stake in this company. The institutional shareholders and the founders have to come together and discuss the future and put a board in place which is among the best. This board has demonstrated very poor governance standards. The shareholders have to come together. They are maligning Murthy...blaming their incompetence on him. The co-Chair said, in the interview, that Rajiv Bansal’s compensation was wrong. How can you blame Murthy when you admit that you have committed a mistake? They are playing games here.

The letter from Infosys claims that Sikka resigned because of the malicious campaign against him by Murthy...

Murthy did not have any issues over the CEO’s performance. He has never raised it any time. But Sikka has been saying it.

The board says that it has engaged in a dialogue with the founder to resolve his concerns without compromising its independence…

Who has compromised on independence? Murthy is a large shareholder. Cognizant Elliot Capital had 4 per cent stake. They wrote to the company and Cognizant worked out something. Here, Murthy and his colleagues have 13 per cent.

Infosys has said that it has grown its revenues from $2.1 billion in Q1FY15 to $2.65 billion this past Q1. Do you agree with that?

It is different from what you are claiming. Vishal (Sikka) took over on August 1. The first quarter is always a good quarter. Whatever Sikka did during the second quarter did not have an impact on the revenues. You should look at the October quarter and and take the latest quarter which is very different from what they are claiming.

The company has claimed that the revenues per employee of the company has grown for six quarters in a row. It clearly shows that Infosys under Sikka has been doing well, at least this is what the company claims. Even the attrition has fallen...

Totally wrong. They are taking the wrong figures. They must look at per capita billed revenues and that is what the company has been doing for the last 20 years.

They are taking total employees and if they hire less, then it will automatically go up. You take per capita for the last 16 quarters which has come down, except one quarter in September two years ago and the latest quarter where it has gone up marginally. They don’t even know what they are talking about. Attrition has gone up 21 per cent quarterly compounded. Utilisation will go up if you don’t hire more people.

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