The Infosys Saga -1
The Infosys saga disturbed a lot of Professionals and Stock Market watchers. Lot of Pink papers are getting filled with the proper nouns “Infosys”, “Vishal Sikka”, “Murthy”, Common Nouns “Company” “Partnership”, Collective nouns “Board”, “Committee” and Abstract nouns such as “Governance”, “Transparency” etc., and I thought let me put some of my thoughts on this topic interrupting my series for a few blogs and focus on the abstract nouns affecting the Infosys saga. This led me to do a brush of Corporate Governance Knowledge. The Introduction is a short write-up on the context of the battle that promises to last for a period longer than Mahabharata or the Daivasura Sangrama. The next few blogs will be on Transparency, the Philosophy of Governance, Legal implications and options and finally the ethical aspects of the imbroglio.
The ugly display of the cleavage between a set of Shareholders and the Board of Directors who are standing firm behind the current management in a blue-chip company listed in the Bourses is a dampener for the other-wise largely bullish trend in the market. This public spat is probably unprecedented. Infosys Limited became an iconic Indian corporate in the true sense of the word. This was the first large professionally managed company which came into limelight in a single generation and continued to maintain excellent Governance Standards through its entire journey. The Journey has been phenomenal.
The recent spat has its roots in the hiccups it has been facing in its succession plans after the abrupt exit of Mr. Nandan Nilakeni on call of national duty to pilot UIDAI which is now the ubiquitous “Aadhar”. Infy Limited growth has not been the headline news for quite some time and the company was just cruising at somewhat an auto-run speed after his exit. This, as it happens in an automobile, led to slackening and the performance looking jaded as the competing vehicles were speeding away. This was the time when NRN Murthy returned and tried his hands at the wheel and tried to take the support of his kin as is wont in any other Indian corporate. The beginning of the southward movement of the graph of governance of Infosys can be traced to this episode.
The next phase which is the immediate cause of the spat started in 2014 when the Board decided to accept the exit of NRN Murthy and his kin and decided to replace the management with fresh talent from outside the company. Here we need to pause to understand the theory of Corporate Governance.
The next part will be up within 24 hours on some substantive issue.