Bengaluru: Infosys audit committee has issued a clean chit to the top leadership following a detailed probe into whistleblower allegations, company executives said.
Also, the IT services firm said it would grow faster than anticipated in the current financial year.
The double dose of good news for Indias second-largest software exporter comes after a prolonged spell of turbulence over allegations of misgovernance.Infosys said it will continue to cooperate in investigations by the US Securities and Exchange Commission (SEC) and Sebi into charges of financial malfeasance against CEO Salil Parekh and CFO Nilanjan Roy by anonymous complainants.
Speaking to reporters at the company headquarters Friday, non-executive chairman Nandan Nilekani said Parekh had come out of the internal probe (led by law firm Shardul Amarchand Mangaldas) with flying colours.Nilekani Refuses to Give Time Frame for SEC ProbeNilekani said he would not speculate on how long the SEC might take to conclude its investigation.
We are in constant touch with all the regulators and other agencies.
We are giving them full cooperation and we are keeping them fully up-to-date.
And we will take those discussions to the logical conclusion.
So I would not like to give any conjecture, he said.Once the industry bellwether, Infosys raised its FY20 guidance for the third time in as many quarters to 10-10.5%, up from 9-10% at the end of the second quarter.It reported revenue of $3.24 billion, up 9.5% year-over-year in constant currency, and a net profit of $627 million for the third quarter, underscoring the strong outlook at the company that said it is winning large deals from customers and market share from peers with its digital offerings.The Infosys ADR was up 5% on the New York Stock Exchange in early trade on Friday.Back home, the stock closed up 1.7% at 738.25 on the BSE.The audit committee has given a clean chit to both the CEO and CFO on the whistleblower issue and also finds no proof of financial impropriety and misconduct.
(This) is a positive for the stock, said Sanjeev Hota, head of research at brokerage Sharekhan by BNP Paribas.Nilekani, who took over as non-executive chairman of Infosys in August 2017 in the aftermath of a governance battle between former CEO Vishal Sikka and Infosys founder NR Narayana Murthy, pointed to the possibility that the whistleblowers may not have been employees.A combative Nilekani also addressed media queries about the slew of whistleblower letters Infosys has faced over the past three years.
This is Season 3 of this Netflix series.
I cannot say whether there will be another season of this, Nilekani said.
I am not the producer of this show.SERIOUS APPROACHCorporate governance experts approved Infosys serious approach towards investigating the whistleblower claims.The conclusion of these investigations will calm investors, Shriram Subramanian, MD of shareholder advisory firm InGovern Research Services, told ET.However, investors also await the conclusion of the investigation by the SEC and Sebi, where the whistleblowers claim to have submitted evidence, he said.Last September, a whistleblower had mailed the companys board with a slew of allegations against Parekh and Roy, claiming they were using sharp practices to boost the companys revenue and profit.
Mails were also sent to the US markets regulator, ostensibly with evidence to back up the claims.There is no evidence that this was done by employees.
Just because someone says they are employees, does not mean that is the case.
It is equally likely that they were outsiders.
Our view tends to the belief that this is from outside, Nilekani told analysts during a postearnings conference call.He said he trusted the companys finance team and asserted that they had nothing to do with the whistleblower letter.Nilekani pointed out that Infosys had not been provided any evidence that the whistleblowers have ostensibly given to the SEC.
He said there was no way to determine what evidence, if any, the SEC had received.
They neither confirm nor deny anything.
So we dont know whether they have it or not, Nilekani said.NO EVIDENCE OF IMPROPRIETYInfosys said during investigations, its audit committee helped by Shardul Amarchand Mangaldas - Co and PricewaterhouseCoopers interviewed 77 people and reviewed 210,000 documents.The audit committee took the anonymous whistleblower complaints very seriously and commissioned a thorough investigation with the assistance of independent legal counsel.
The audit committee determined that there was no evidence of any financial impropriety or executive misconduct, D Sundaram, chairperson of the audit committee, said in a statement.Analysts said the companys increased revenue growth guidance was ahead of expectations.Infosys delivered in-line revenue performance, while margins slightly missed our expectations, said Hota of Sharekhan by BNP Paribas.In rupee terms, the company reported revenue of 23,092 crore, up 7.9% year-on-year, and a net profit of 4,466 crore.
The company reported an operating margin of 21.9% at the end of the quarter, within its operating margin band of 21-23%.