Narendra K Patni, chairman of the board of directors of Patni Computer Systems, said today's appointment of Jeya Kumar as company CEO will put all speculations to rest regarding the succession plan of the company. Patni’s tenure as CEO expires this December, though he will continue as Chairman of the Board of Directors.
“The uncertainty and ambiguity at the senior management level did have some impact on the company’s image. But with this, we also show the unanimity of the shareholders on the decision. This also means that the disagreement among shareholders is a thing of the past now,” Patni told Business Standard. The Patni stock touched Rs 137.85 at the close of trading on the BSE — up 2.10 per cent over the previous day's closing. Jeya Kumar, ex-CEO Mphasis (an HP company) will come on board in February 2009. “He has to chart his own brief for the growth of the company. We have seen his background, while he has worked with Sun Microsystems—which is a hardware firm— and managed $5 billion a year services business. He is very services-oriented,” said Patni.
Loek van den Boog, who was appointed as Executive Director earlier this year, will hand over the operational responsibilities to Kumar and continue as a non-executive director on Patni’s board.
On asked whether the disagreement within the family and the issue of stake sale was also a thing of the past, Patni said, “Shareholders will always have the right to sell their shares. But the current economic conditions have brought the shareholder to focus on the growth of the company.”
The fight among the Patni brothers had reached its zenith last year, with rumours that two of the brothers wanted to sell their stake. Narendra Patni’s brothers - Ashok and Gajendra - together hold nearly 29 per cent stake in the company.
The deal, however, had reached a stalemate since Narendra Patni would not give up control, and any private equity (PE) investor that pumped in money in the company would not settle for anything less than management control.
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Patni also feels that son--Anirudh Patni, senior VP and head of strategy and corporate development-- will have to go up the ladder with the growth of the company. “Anirudh is a very significant member of the management. Like every other firm, we have good corporate governance in place,” he added. Anirudh Patni joined the company in March 2006 after a stint with McKinsey in the US.
Speaking on the current environment, Patni said that customers are being impacted. Going ahead, the visibility is low and price concerns continue. “It is going to be tough business environment. While there were expectations that in the next quarter or two, things will be fine but we think it will continue in 2009 as well,” said Patni.
However, he does see a few positives as well. Patni said that one of the good things is that the ‘company is cash rich’. He further added that the company is looking at captives and other good companies for acquisition. The company has cash reserves of $38.7 million (around Rs 182 crore), as of September 30, 2008.