Investors welcome Narayana Murthy's comeback; concern over performance

Infosys shareholders on Saturday welcomed the re-appointment of company's co-founder N R Narayana Murthy as executive chairman, but expressed disappointment over the firm's performance.

Worried over falling profits, the shareholders raised concerns over rising attrition rate and the company losing focus to make profit as some of the other IT companies were doing.

At the 32nd Annual General Meeting in Bangalore, K Narayan, a shareholder, was critical of the company's "failure" to identify an eligible candidate to be appointed as executive chairman but forced the return of Mr Murthy who was planning a peaceful retired life.

He said Infosys was paying more salary to their employees compared to some other leading software companies.

"You have raised the salaries but are the employees delivering? Infosys should bring down its cost on employees to make profits," the shareholder said.

C N Gopalakrishnan, another investor, said Infosys was not making enough acquisition to strengthen its business despite having huge liquid assets. He demanded more dividend payout and complained that the company had not issued bonus shares since last six years.

Another investor said Infosys had lost its strength of attracting top talent and sought a reply on the reason for 5,000 out of 23,000 persons offered jobs last fiscal year not turning up.

A shareholder from Mumbai welcomed Mr Murthy by saying, "We are elated and happy to see Murthy back at the helm of affairs."

"We will not mind even welcoming his daughter as his son thirty-year-old Rohan Murthy, who was appointed as his executive assistant," she said.

Replying to shareholders, Mr Murthy said the company would strive hard to rectify its mistake of losing focus on its outsourcing business, a bread and butter business for Infosys.

He said the predictability of company's earnings forecast has weakened during the last couple of years and it has resulted in its inability to provide earnings guidance to the market.

"We will refocus on building a more predictable earning model in the medium term," he added.

Mr Murthy assured the shareholders that he would dedicate himself for company's growth.

S D Shibulal, CEO and managing director of Infosys, said the attrition rose from 14.7 last year to 16.3 now and one or two per cent rise was not substantial.

"We have to see that there is below normal utilisation of a section of staff. The underperformers cannot be retained for ever, especially in these difficult conditions," he said.

He said the company was spending substantial sums for R&D which stood at 2.6 per cent of its annual budget.

Mr Shibulal said Infosys would make acquisition as per its needs and Swiss-based Lodestone Holding AG acquisition was one such move.

"We may have Rs 20,400 crore liquid assets, but we need to keep the cash. We make acquisition depending on our strategic needs," he reaffirmed.

Infosys director V Balakrishnan said the new US visa policy was yet to take a final shape and the current one had hit the IT industry hard.

"We need to see how it will take shape to know the actual impact," he said.

Shareholders of Infosys met to ratify the board's decision to appoint Mr Murthy as executive chairman of the board and additional director with effect from today.