Ad Here  
May
June
July
August
September
October
 
 
Aurobindo Pharmacy: good turnaround AL introduces Guru & Partner Smooth sailing of SAIL V-Guard launches app-enabled water heater system Singur minus Nano – victory or folly? ITC – steep excise hike It takes two to tango Titan Company – sales recovery to kick in LVB posts 31 per cent growth in Q1 net profit L&T profit up by 11 per cent Solar installations exceed 2015 capacity in five months Mercedes-Benz sales continue to zoom Sivasankaran enters taxi space to take on Uber and Ola Tata Motors joins compact SUV bandwagon with Nexon PSU non-life firms seek to protect share Eyes strong growth in 2016-17 New India Assurance posts impressive show Last stages Daimler’s truck exports from Chennai cross 5000 units Preparing for the next growth curve Carnival Films acquiring 3000 screens pan India Smartphone onslaught by Chinese brands E.I.D Parry (India) Ltd: another sweet year Daimler grows sales and share in India Emami – a new growth mantra CAPITAL NOTES L & T’s floating dock for navy L & T set bigger ambitions in defence business AL secures orders for 3600 buses Right to privacy – now it’s fundamental! The unexpected exit Hindalco – re-rating Back in growth mode TN government keen on revival of operations at Nokia complex Forging industry worried over lower supply of steel and its price He excels in the nuts and bolts of entrepreneurship Michelin to double Chennai capacity Is this a generation gap? RoC in the dock... IOB on turnaround path M & M unveils driverless technology for tractors Bajaj Finserv – Q1: fare well Land wars From the toughest to the best year Maruti – for young buyers A welcome initiative-even critics are recognised Tata Motors aims to be among the Top 3 global CV & PV firm Yamaha unveils scooter boutique Tata gets 4-star rating for Zest Tata Motors bets on new launches Hyundai India achieves 7 mn production at Chennai factory Gamesa to set up a plant in Nellore Rane targets Rs.5500 crore topline by 2018-19 The gainers and the losers Are they really independent? PPP model for infrastructure development Dish TV – subscriber additions encouraging Welcome focus to improve rural India... Wabco launches safety system Nissan exit shouldn’t affect ALL Chinese smart phones flourish in small towns too! Hyundai to focus on SUVs and AMT variants Vellayan is back, after 150 days TVS Srichakra plans capacity expansion Record two-wheeler sales Tata Motors charts investments in PV and CV businesses AL wins Deming prize again Ode to Ratan Tata Consolidating leadership position in smartphones TVS Automobile invests Rs.75 crore in start-up firms ITC chairman calls for policy impetus to transform agriculture When small is not so beautiful… Housing demand revival Kone India eyes further growth in elevator market TI Cycles plans retail expansion to drive sales for premium bicycles Shriram Life clocks more than Rs.1000 crore premium in 2015-16 Tata Steel, ThyssenKrupp sign MoU to merge European units 29 per cent jump in TCS revenues Sundram Fasteners rejigs international HPCL plans Rs.61,000 crore capex over 5-years Toyota and Suzuki to introduce EVs in India by 2020 Ponni Sugars (Erode) Ltd: not so sweet 2012-13 L&T bags the Mumbai Trans-harbour link order A niche in FMCG business... Increasing market share
 
The unexpected exit
Infosys is again in the limelight with Vishal Sikka opting to quit his position as CEO and MD.

The announcement sent ripples across the stock exchange and the stock registered an over 5 per cent drop in the value of its shares on 21 August. The company has lost nearly Rs 34,000 crore in market capitalisation (around Rs 2 lakh crore on 21 August). Infosys’ shares closed down 5.37 per cent at Rs 873.50 on the BSE that day, the lowest in three years. Meanwhile, Infosys approved a USD 2 billion share repurchase, to improve the returns of shareholders. However, the company’s buyback offer at Rs 1150 per share failed to impress investors.

Sikka gave several reasons in his resignation letter for his exit. He said that several distractions and disruptions over recent months are taking away the momentum and passion from achieving the desired transformation of the company. In his letter, he wrote that there was an increasing amount of false, baseless, malicious and personal attacks of late from people whom he expected to support which further hit breaks on the transformation goal.

 

Founders vs. Board

The growing gap in policy issues and administration between the founder-members and the non-founder board members was a major factor in Sikka’s exit. Sikka was apparently unhappy with Ravi Venkatesan’s appointment as co-chairman. There were rumours of the increasing gap between the founders and Sikka since then. Further, after the Panama report was out,  founder Narayana Murthy requested the board to give the full report to the shareholders. He also raised a query if the board could categorically say that no Infosys employee benefitted from the transaction, which Sikka apparently felt was a personal attack. 

On the other side of the story, Murthy was apparently unhappy with the salary hike given to the top management. The board granted Sikka 55 per cent pay hikes increasing the base compensation to USD 1 million and overall compensation of USD 11 million. Further, Murthy, Nandan Nilekani and Kris Gopalakrishnan were apparently not too comfortable about the issues concerning corporate governance, Sikka’s pay hike, severance packages to employees and induction of Punit Sinha, wife of Union Minister Jayant Sinha. 

Murthy, unlike founders of another corporate in the west, has been watching the happenings at Infosys after his exit. In the West, most founders moved on and let the successors take over with full steam, without commenting on any of their decisions. Another opinion is that if the successors are unable to provide transparency to the shareholders, any founder should have the right to question them. He, however, called the allegations baseless and said that as a shareholder; he has every right to ask the board on the deteriorating standard of corporate governance.

 

Sikka’s contribution

Sikka took over in a challenging environment in 2014, with high attrition rates and low growth. His leadership focused on innovation, entrepreneurship and delivering value turned things around over the last three years. Revenue and margins grew over new services, AI platform (Nia) and software business. His breakthrough products included ‘Zero Distance,’ ‘Design Thinking training,’ and ‘Zero Bench.’  

Zero Distance intended to drive grassroots innovation at a massive scale, through every employee; ‘Design Thinking training,’ was meant to drive creative confidence and problem finding in every Infosys employee. In Zero Bench, the bench is leveraged to drive additional value for clients.

Infosys’ quarterly revenue increased from USD 2.1 billion to USD 2.65 billion since he took over in August 2014. Under his tenure, the company’s utilisation rate rose to 85 per cent in 1Q18, the highest in 15 years. Attrition rates dropped.

 

Support from staff

Despite being on the board only for three years, there is a sense of uncertainty among young employees who looked up to him for values, new ideas and making them a valuable part of the transformative journey. His expertise in AI, passion for robots, machines and innovative thought leadership acted as a magnet to the younger generation. Further, the employees welcomed the Silicon Valley culture and appreciated his casual attitude, whether be his natural dressing sense or taking selfies with them! 

Ultimately, the road will not be smooth for the new CEO to take over, despite the sound basis of change laid by Sikka. He can only build upon these and take the company to new heights. 

Author :
Reported On :
Sector :
Shoulder :
RELATED NEWS
ABOUT IE
IE, the business magazine from south was launched in 1968 and pioneered business journalism in south. Through the 45 years IE has been focusing on well-presented and well-researched articles. When giants in the industry stumbled to keep pace with the digital revolution, IE stayed affixed embracing technology.
Read more
 
PRIVACY POLICY
Economist Communications Ltd is committed to ensuring that your privacy is protected.
Read more
TERMS AND CONDITIONS
You agree that your use of this Website and the purchase of the magazine will be governed by these terms and conditions.
Read more
 
CONTACT US
S-15, Industrial Estate,
Guindy,
Chennai - 600 032.
PHONE: +91 44 22501236
EMAIL: indecom1968@gmail.com