The end of an era at Infosys

Bangalore: Thirty three years after launching Infosys, its founders N R Narayana Murthy and S Gopalakrishnan on Wednesday bade farewell to the over $8 billion IT firm with the former saying he has no regrets and the latter emphasising that politics is not his cup of tea.

Seven co-founders, led by Murthy, set up the Bangalore-based firm in 1981. Murthy had the longest run of about 21 years as CEO before passing the baton to Nandan Nilekani and then Gopalakrishnan and S D Shibulal.

Murthy returned to the over $8 billion firm for a second stint as Chairman in June last year after Infosys hit rough waters, falling behind peers like TCS and HCL Technologies. But he left midway following a spate of senior executives leaving the company.

Murthy and Gopalakrishnan stepped down as Executive Chairman and Executive Vice-Chairman, respectively, on June 14. They, however, continue on the board till October 10 as non-executive chairman and non-executive vice-chairman, respectively.

Murthy, who will be designated as Chairman Emeritus from October 11, said listing of Infosys on NASDAQ, the first by an Indian company, was high point of his career.

Addressing media persons, Murthy said, “This is a unique event in the 150-plus years of corporate India. Never in the past has this country seen, and probably never in the future will this country see, a set of founders who nurtured their creation with care, sacrifice and passion for 33 years and passed it on with equanimity to a set of outsiders. We leave with the satisfaction of taking this company from a market value of Rs 28.5 crore on the day of listing in India in 1993 to Rs 2,00,000 crore today. We leave with the distinction of creating several firsts in good corporate governance in India and the world.”

Murthy also said he had no regrets. “I have no regrets at all. Life is about doing certain things and not doing certain things. At the end of the day, it is the sum total of all this….so I have no regrets,” Murthy said.

Gopalakrishnan, or Kris as he is fondly known, said he is not set out for politics.

“In my case, at least at this point, no political ambitions at all. I don’t think I am set out for politics,” he said when asked if he too will join politics like his former colleagues Nilekani and V Balakrishnan.

In August this year, Infosys appointed former SAP board member Vishal Sikka as its CEO and Managing Director. Sikka is the first outsider (and not part of the co-founder’s club) to lead the Bangalore-based firm. He took over from Shibulal.

Talking about the transition, Shibulal said it is like any other transition at any other firm. “This is an organisation with very strong values and beliefs. It believes in speed and innovation and I hope they will continue to be preserved.”

At the farewell function held at the company’s headquarters, the founding team with Murthy, K Dinesh, Nandan Nilekani, Shibulal, Kris and N S Raghavan were present.

Reminiscing his stint at Infosys, Kris said computers have become ubiquitous and created a large industry, both in products and services.

“The Internet has connected the world. I have been fortunate to be part of this industry for the last 35 years of its 70 years. I was fortunate that my passion for computing became my profession, and that I was able to make an impact in this industry through Infosys, through the innovations we pioneered and the jobs we created,” he said.

A technophile with a fondness for mobile phones and laptops, Gopalakrishnan, who has received the Padma Bhushan, has also been involved in philanthropy and recently gave $35 million to Indian Institute of Science for brain research. He also recently became the first Infosys co-founder to join the Indian Angel Network.

Active on Twitter but keeping his own views to a minimum, Gopalakrishnan hasn’t hinted at anything that he plans to do after spending multiple decades at Infosys but given the silence he has maintained over all his projects so far, it hardly comes as a surprise.

Asked about his post-retirement plans, Gopalakrishnan said he would focus on education & research, and on entrepreneurship development. He has already made substantial grants to scientific institutions, including IISc Bangalore, for brain research, and has invested money and time in establishing the Startup Village in Cochin, and a similar new venture in Visakhapatnam.

 

Listings

Infosys made an initial public offer (IPO) in February 1993 with an offer price of Rs 98 per share against book value of Rs 10 per share. The Infosys IPO was under subscribed but it was “bailed out” by the US investment bank Morgan Stanley which picked up 13% of equity at the offer price. Its shares were listed in stock exchanges in June 1993 with trading opening at Rs 145 per share.

In October 1994, it made a private placement of 5,50,000 shares at Rs 450 each against book value of Rs 10 per share to Foreign Institutional Investors (FIIs), Financial Institutions (FIs) and Corporates.

In March 1999, it issued 2,070,000 ADSs (equivalent to 1,035,000 equity shares of par value of Rs 10 each) at $34 per ADS under the American Depositary Shares Program and the same were listed on the NASDAQ National Market in the US. The total issue amount was $70.38 million.

The share price surged to Rs 8,100 by 1999 making it the costliest share on the market. At that time, Infosys was among the 20 biggest companies by market capitalization on the NASDAQ.

During July 2003, June 2005 and November 2006, it made secondary ADS issues of $294 million, $1.07 billion and $ 1.605 billion respectively.

In December 2012, Infosys transferred the listing of its American Depositary Shares (ADS) from the NASDAQ to the NYSE.

 

Acquisitions

In December 2003, Infosys had acquired Australia-based IT service provider Expert Information Services for $23 million.

In December 2009, Infosys BPO acquired Atlanta-based McCamish Systems for about $38 million.

In January 2012, Infosys BPO acquired Australia-based Portland Group, provider of strategic sourcing and category management services, for about AUD 37 million.

In September 2012, Infosys acquired Switzerland-based Lodestone Management Consultants for about $345 million.

 

Snapshot of revenues

2001- $200 million

2002- $400 million

2003- $500 million (Progeon BPO started)

2004- $1 billion

2006- $2 billion

2007- Quarterly revenue went past $1 billion

2008- $4 billion, (net profit crossed $1 billion)

2010- $5 billion

2014- $8.2 billion

 

Founders

N R Naraynamurthy

N S Raghavan

Nandan Nilekani

S Gopalakrishnan

K Dinesh

S D Shibulal

Ashok Aurora

 

List of CEOs

N R Narayana Murthy – 1981 to March 2002

Nandan Nilekani – March 2002 to April 2007

S Gopalakrishnan – April 2007 to August 2011

S D Shibulal – August 2011 to July 2014

Vishal Sikka – August 2014 to date

With PTI inputs