Ex-CFO clarifies on Infy founders' buyback plan

Founders have made it very clear that their only interest lies in protecting core values of the company and do not have any interest in running the company, he pointed out.

Infosys founders participating in the Rs 13,000 crore (Rs 130 billion) buyback offer does not give any wrong signal to shareholders, the IT giant's former chief financial officer V Balakrishnan has said.

Infosys on Monday had said that some of the members of the promoter and promoters group of the company have communicated their intention to participate in the proposed buyback.

"One can have some concern only if founders sell their holding in normal circumstances. Buyback is another form of dividend which is tax efficient in Indian context and hence the founders participating in that does not give any wrong signal to shareholders," Balakrishnan told PTI.

He was replying to a question whether founders participating in the buyback offer would send a wrong signal that promoters are taking a bleak view on the company’s future.

"Buyback is a pro-rata right given to all shareholders and if exercised by all of them will ensure the economic interests levels of all shareholders remaining at same levels," he added.

Infosys plans to buy back 11.3 crore shares at Rs 1,150 apiece. The founders and their families between them hold some 12.75 per cent (29.28 crore shares) of Infosys.

The promoters' keenness to participate in the buyback comes within days of upheaval at the Infosys board, which first saw CEO Vishal Sikka quiting citing slander by founders.

Over the next few days, Murthy-and co installed fellow founder Nandan Nilekani as the chairman.

Balakrishnan also said that it looked unusual that the Infosys board announced a buyback offer just prior to CEO's resignation.

"Under that circumstances, for outsiders like me that the board announced buyback just prior to CEO’s (Sikka) resignation is very unusual," he said.

Balakrishnan noted that even when the founders were running the company, they never looked at controlling shareholding to exercise control on the company.

They depended on their performance and track record to sway hold on the company and strongly believed as long as performance is good and shareholders value is enhanced, the shareholders will support them, Balakrishnan said.

Also, founders have made it very clear that their only interest lies in protecting core values of the company and do not have any interest in running the company, he pointed out.

"They never talked about the CEO, the company performance or its strategies and they never meddled in the affairs of the company. Exercising a shareholders right to information cannot by any stretch be termed as meddling in affairs," he argued.

Asked whether Panaya deal report will ever be made public, Balakrishnan said, "I think the disparagement clause is standard one whenever a senior management personnel leaves the company.

Unless we see the actual clause I will not be able to comment.

Having said that, such clause does not restrict the company’s ability to publish the investigation report or seek accountability and take action if they find any wrong doing."

Photograph: Reuters