Have ‘Warm Relationship’ With Murthy, Says Sikka

The battle between the founders and management of Infosys has been diffused, at least for now. Hours after co-founder NR Narayana Murthy told Bloomberg that he's ending his battle with the board, chief executive officer Vishal Sikka told investors at Kotak Institutional Securities' Chasing Growth conference that he has a "deep heartfelt relationship" with Murthy. Sikka added that the "drama" in the media surrounding Infosys is distracting.

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Sikka was tightlipped about Infosys' buyback strategy, saying only that the board will consider its capital allocation policy from time-to-time.

The CEO told investors that the company managed to keep operating margins steady despite the challenging environment. He added that programmes initiated by the management, like "Zero Bench" and "Zero Distance" had helped bring down attrition significantly.

Sikka and other members of the Infosys board are scheduled to hold a press conference at 6 p.m. in Mumbai.

Shortly after Sikka’s statement to BloombergQuint, where he said he took the CEO’s job due to the respect he had for Murthy, another Infosys board member made an attempt to bury the hatchet.

Chairman R Seshasayee said he had the highest regard for Murthy and that the Infosys co-founder’s inputs are "always taken with respect".

When asked regarding a possible buyback of shares, Sikka said that the company had still not made a decision. The board will “from time to time will consider capital allocation policies,” and report in case of any developments, he added.

Given the disappointing rate of growth in the IT industry, Sikka did not imagine Infosys’ Zero Distance programme to pick up the way it did he admitted.

The IT giant is “marching down” the path of achieving its vision for 2020, he said.

Sikka downplayed the battle with the founders of Infosys saying that he had a "wonderful" relationship with Narayana Murthy. The CEO added that he won't let the corporate governance standards at Infosys "slip even an iota" under his watch, in a separate statement he gave BloombergQuint.

Sikka added that the drama in the media surrounding Infosys is "very distracting" and that it takes away attention.

Earlier in the day, Murthy told Bloomberg that he's calling off the battle with the Infosys board, even as he urged them to address the corporate governance concerns raised by him.

With new frontiers being broken with the help of intelligent infrastructure, it is clear that a lot of jobs will be replaced with Automation, he said. The purpose of automation is to improve productivity and focus on innovation which should be applied to all sectors including education.

“The only future I see is one which is fueled by automation and it enables innovation, he said, adding that technology such as the artificial intelligence will solve well articulated problems “ within our lifetime”.

At the same time, he insisted that the world needs to take advantage of improving productivity using software.

The world is seeing a rapid transformation with users being far better connected, Sikka said. Industries are going through a digitisation and AI (artificial intelligence) revolution, which have been powered by computing.

"New AI technologies are now becoming possible."

While Sikka is happy with the company’s innovative performance in the last few years, the journey ahead is more “challenging and exciting” to him, he said.

The 'Mana' platform has improved efficiency in automation, Sikka said. The company has continued to see good momentum in acquisitions like Panaya, Skava and Noah, he added.

Mana is a knowledge based artificial intelligence platform developed to drive automation and innovation. “It captures the knowledge and know-how of people across fragmented and complex systems, and simplifies the continuous renovation of core business processes,” according to Infosys’ website.

Infosys has been focusing on the 'Zero Distance' programme for the last nine months creating more than 34,000 jobs in the internal market place. The programme is expected to bring innovation in "every single project' he added.

Sikka starts off by speaking about the company's financial metrics adding that he wants to address the "bigger picture".

Infosys' relative revenue performance compared to the information technology industry has distinctly improved and the company has managed to keep operating margins steady despite challenging environment, said Sikka.

Here are the key points addressed:

• Employee costs as percentage of revenue has reduced.
• Attrition has come down significantly.
• Company has focused on high perfromer attrition, which has come down to single digit.
• Continuing shift towards high value businesses.

Rajiv Bansal, former chief financial officer of Infosys had resigned from his position in October, 2015 - more than two months prior to the end of his term.

While Sikka said that Bansal was a "brilliant CFO" who would be missed, what he didn't say was that Bansal had been asked to go.

Furthermore, over a year after his resignation, an Infosys statement said that Bansal would receive 24 months of pay amounting to Rs 17.38 crore. The agreement also allowed Bansal to “report to the regulatory authorities in future any matter of impropriety that he became aware of that happened during his tenure”. It was this severance package that raised eyebrows.

Also Read: Infosys Hires Cyril Amarchand Mangaldas To Review Governance Standards

Another thorny issue was the appointment of Punita Kumar Sinha and reappointment of Jeffery Sean Lehman as independent directors of the IT giant. Sinha, wife of Civil Aviation Minister Jayant Sinha, had joined as additional director on January 24, 2016.

Lehman was reappointed even though Infosys’ current policy bars reappointing independent directors beyond two consecutive terms, unless passed by a special resolution.

Also Read: Kiran Mazumdar-Shaw Says Infosys Board Did Everything By The Book

In early 2016, Sikka’s contract was renegotiated to increase his remuneration and extend his tenure by two years. Under the new terms, Sikka is eligible for a compensation of $11 million, including base pay, variable, stock compensation and performance equity, compared to the previous $7 million.

The agreement caps the maximum compensation at $16 million in case Sikka exceeds his targets, at $11 million if his meets them and sets a floor of $3 million if he fails to meet the targets.

Also Read: Infosys Founders Said to Question Payments for CEO, Managers

• Severance paid to former Infosys chief financial officer Rajiv Bansal and compliance head David Kennedy.
• Re-appointment and increased remuneration of Vishal Sikka.
• Appointment of Punita Kumar Sinha, wife of Union Minister Jayant Sinha, and re-appointment of Jeffrey Sean Lehman as non-executive directors on the board.

Also Read: Why Infosys Founders, Board Are At Loggerheads

Infosys Ltd. Chief Executive Officer Vishal Sikka is set to respond to concerns raised by Infosys’ founders hours after NR Narayana Murthy called off the battle against the board. In an interview with Bloomberg, Murthy warned that the board would have to deal with the lapses in the corporate governance by themselves.

Sikka is scheduled to deliver a keynote address at Kotak Institutional Equities’ Chasing Growth conference at 10 a.m. The board, including Sikka, will address a press conference at 6 p.m. in Mumbai.

Also Read: Murthy Calls Off Battle With Infosys’ Board