Infosys governance row: Mohandas Pai asks investors to question company's huge cash pile

Infosys’s former CFO T V Mohandas Pai on Sunday exhorted institutional investors to raise questions about the huge cash pile on the company’s books and on governance issues, saying investors have an obligation to protect their investment.

“Capital allocation is very important. Institutional investors should raise those questions. They have a duty... institutional investors should raise questions on governance because it concerns the company’s reputation,” Pai said.

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.

He asserted that founders, who hold 13 percent stake in the Bengaluru-based company, had raised these questions like any other investor would.

T V Mohandas Pai, former CFO, Infosys. Courtesy: Twitter

T V Mohandas Pai, former CFO, Infosys. Courtesy: Twitter

Pai, along with former colleague V. Balakrishnan, had sought a $1.8 billion buy-back in 2014. Pai explained that shareholders all over the world ask questions about capital allocation when growth slows down for listed companies that have too much cash on the books. Last week, Cognizant’s board approved a plan to return $3.4 billion to shareholders over the two years through share buy-backs and dividend, following investor activism.

Infosys has recently come under fire from founders like N R Narayana Murthy who have publicly raised concerns on alleged corporate governance lapses at the company.

Interim chair suggested

Balakrishnan on Sunday said an interim chairman should be appointed at the earliest to ‘effectively’ engage with Infosys’ co-founders.

“I think the founders had raised certain issues on governance, which had happened in the last two years and I said the right way for the not to take a confrontation approach. Somebody has to take responsibility for all the lapses. That is why I had suggested chairman stepping down, getting an interim chairman and effectively engaging with founders and come to a conclusion,” he said.

Sebi keeping watch

Meanwhile, markets regulator Sebi said it was keeping a “close watch” on all developments with a “special focus” to ensure that minority investors’ interests were safeguarded.

“Sebi is keeping a close watch on the developments at Infosys and has asked stock exchanges to seek clarifications on various media reports relating to the company, its founders and top management team,” a senior official said.

Sebi will also take into account the views of proxy advisory firms and various institutional investors to understand the issue and before making any direct intervention in the matter.

Updated Date: Feb 13, 2017 07:23 AM

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