Former Infosys officers call for $1.8 billion buyback

Concerns over the pace of change at India’s second-biggest software services company have spurred three former officers of Infosys Ltd to seek Rs 112 billion (1.83 billion US dollars) in the form of a buyback for all shareholders.

Former officers V Balakrishnan, TV Mohandas Pai and DN Prahlad are seeking Rs 3,850 a share, which is a premium of 9.6 per cent over the company's closing price of Rs 3,513 on Tuesday.

Both Pai and Balakrishnan are former chief financial officers at Infosys and served as directors, while Prahlad was a senior vice president.

The demand comes at a time when Infosys is in the middle of the biggest leadership transition in its history. On Aug. 1, former SAP AG executive Vishal Sikka took charge as the first non-founder CEO at the company, while all founders, led by N.R. Narayana Murthy, either retired or took up non-executive roles with the board.

"Infosys today is seeing a major transition from a founder-driven company to a non-founder driven company...While the change is inevitable, the abrupt nature of the change raises some serious concerns not only in our minds but also with many stakeholders," the three said in the letter dated June 29.

They've also suggested Infosys should announce an ongoing buyback program to the extent of 40 percent of the previous year’s net profits on a consistent basis.

The buyback, if executed, will be the company's first since Infosys went public in 1993.

"The Infosys board and the management receives requests on a variety of subjects from shareholders and investors on an on-going basis...Should there be any development that will impact our shareholders, we will immediately inform the regulatory bodies and shareholders on priority," Infosys spokesperson Sarah Gideon said in an emailed statement.

In the letter to the board, the investors said while Infosys has close to 300 billion rupees in cash and cash equivalents, the company has not articulated its strategy for use of its cash effectively.

"Given this massive net cash position and robust net income generation, Infosys is perhaps the most over-capitalized company in the Indian corporate history, from our perspective.

"Irrespective of the liquidity Infosys may require with respect to any investment in innovation or M&A going forward, we strongly believe that the company is clearly over capitalized," the letter said.

Infosys shares were trading up 1.2 percent at Rs 3556.15 at 0417 GMT.

(1 US dollar = Rs 61.1525)

Post new comment

E-mail ID will not be published
CAPTCHA
This question is for testing whether you are a human visitor and to prevent automated spam submissions.

EDITORIAL OF THE DAY

  • Sebi must not be lax in weeding out mutual fund houses

    Last May, capital market regulator Securities and Exchange Board of India (Sebi) amended the Sebi (mutual funds) regulations, 1996, directing all fund

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

Chander Mohan Sethi

CMD, Reckitt Benckiser India

COLUMNIST

Arun Kumar Jain

Customer orientation needs human touch

In the mid-1990s, while researching drivers of corporate excellence, we ...

Kuruvilla Pandikattu SJ

Can religion help us protect our planet?

Though not factually true, in popular imagination, the relationship between ...

Shona Adhikari

Pop art is truly a feast for the eyes

The internationally reknowned Bruno Art Group’s presence in India had ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture