Infosys, India's second-biggest software services exporter, today reported a better-than- expected 3.3 per cent rise in the second quarter net profit to Rs 3,726 crore but slashed annual revenue forecast.
The first quarterly results since Vishal Sikka quit as chief executive in August following public spat with co- founders led by N R Narayana Murthy, also saw Infosys, under its new chairman Nandan Nilekani, giving a clean chit to USD 200 million Panaya acquisition done under previous management.
The company said it agreed with previous findings of an external probe that there was no merit in the allegations of wrongdoing with regard to the deal.
Infosys said in a statement that its net profit rose to Rs 3,726 crore in the July-September quarter of the current fiscal, from Rs 3,606 crore a year earlier.
It cut revenue growth forecast to 5.5-6.5 per cent for the year to March 31, 2018, from 6.5-8.5 per cent previously projected.
Revenue from operations rose 1.5 per cent to Rs 17,567 crore during the second quarter ended September 30, 2017-18.
In dollar terms, net profit stood at USD 578 million for the September quarter, 7.3 per cent higher a year ago.
The revenue at USD 2.7 billion came in 5.4 per cent higher year-on-year. The company has declared an interim dividend of Rs 13 per share.
Infosys also said it did not find anything wrong in the disclosures made on severance package paid to ex-CFO Rajiv Bansal, which along with allegations of wrong doing in Panaya acquisition were a cornerstone of Murthy's offensive against Sikka.
"After careful consideration led by our Chairman, the Board reaffirms the previous findings of external investigations that there is no merit to the allegations of wrongdoing," the Infosys statement said.
After Sikka's exit, Nilekani, a co-founder and a former CEO, was named its chairman in a bid to stabilise the embattled tech giant.
Offering a detailed outline of Panaya deal review, Nilekani said, "In light of my review of these matters, I am fully persuaded, as is the entire Board, that the conclusions of the independent investigations are correct."
Infosys founder NR Narayana Murthy had demanded that the full report by Gibson, Dunn and Crutcher on whistleblower allegations pertaining to the Panaya deal, be made public.
But Infosys today said that after a "careful re- consideration" it has concluded that putting out more details of the probe would "inhibit the company's ability to conduct effective investigations into any matter in the future".
Terming confidentiality as being "critical" in ensuring the co-operation of whistleblowers in any investigative process, Infosys cautioned a precedent of releasing the full probe report may well impair such a co-operation in future.
Further, the company asserted that its review confirmed that "appropriate" and "timely disclosures" were indeed made on severance payments to the former CFO - another issue that had been the flashpoint between founders and the previous management.
Acknowledging Murthy's role in building Infosys and in corporate governance matters, Nilekani said the endeavour, going forward, will be to build a "trusting relationship" with the founder.
"The Board notes that the questions and scrutiny in relation to these matters were fuelled in part by the strong feelings that various stakeholders have for the company and its success. Questions were raised by stakeholders who have a deeply held passion for Infosys," the company statement said.
Infosys has started the process of looking for replacement of Sikka, under whom the company had clocked 25 per cent sales growth in three years.
"The process of identifying the next CEO and shareholder consultation outreach have been initiated and are progressing well," Infosys statement said without elaborating.
India's largest software services company, Tata Consultancy Services last week reported a 2.1 per cent drop in net profit to Rs 6,446 crore for the just ended quarter.
Infosys said it has appointed D Sundaram as the chairperson of the audit committee with effect from October 24.
The company also said its management team had undertaken a comprehensive strategy review over the past weeks.
The exercise entailed a look at all programs across the company, acceleration of execution plans and prioritising key areas of investments across services and software portfolios.
"An important outcome of the exercise is a reassertion that our strategic direction will continue to be driven with a portfolio of market relevant design, consulting and technology services, enabled by software," Infosys said.
Commenting on the performance - announced after the close of market hours - UB Pravin Rao, Interim CEO of Infosys said that during the quarter, the company had "responded quickly to the management and Board changes through proactive communication with all stakeholders minimising any negative impact to the business" and allowing for growth across all large industry units.
Infosys stock closed 1.37 per cent lower at Rs 926.75 on BSE.
Disclaimer: No Business Standard Journalist was involved in creation of this content
