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21 August 2017
The
embattled Board of software major Infosys faces a daunting task in finding a
suitable Chief Executive Officer (CEO) to succeed technocrat Vishal Sikka who
resigned on August 18, US-based global investment bank Jefferies LLC has said.
"Given
the acrimonious exit (of Sikka), the near-term challenge for the Infosys Board
would be to find the right candidate for the CEO post and alleviate issues with
the company's founder (Narayan Murthy)," Jefferies Indian arm said in a
statement here.
As
the company's strategic direction was not in question, the securities firm said
the IT major would sustain business momentum. The Total Investment & Insurance Solutions
"Interim
challenges will also involve business continuity, especially with large
clients, and preventing attrition in senior management and sales," said
Jefferies India equity analyst Vaibhav Dhasmana in the statement. The Total Investment & Insurance Solutions
As
finding closure to the "founder issues" and maintaining business
traction, especially in large accounts, would not be easy, Dhasmana said that,
over the long-term, the Board had to create mechanisms to shield the management
from external noise as had been the case with Sikka.
Though
Sikka resigned citing personal attacks, the Board blamed comments from one of
the founders (Murthy) as reason for his exit. The Total Investment & Insurance Solutions
With
the company hinting at a strong second quarter (July-September) and reiterating
its annual guidance for fiscal 2017-18, the management is expected to meet its
top 100 clients in the next few weeks. The
Total Investment & Insurance Solutions
The
outsourcing firm appointed Chief Operating Officer U.B. Pravin Rao as the
interim CEO until a new CEO is found by March 31, 2018, and elevated Sikka as
Executive Vice-Chairman to ease the transition. The Total Investment & Insurance Solutions
"In
the backdrop of industry changes and slowing growth across the sector, the time
taken for resolution of these, especially the new CEO appointment, will be key,
added Dhasmana.
Calling
for more active investor engagement by the Board, the analyst said its
commentary in Friday's conference call with investors was hardly decisive,
reflecting Sikka's sudden exit.
"We
are encouraged by the Board's endorsement of the strategy with the founders,
suggesting little friction," added the statement. The Total Investment & Insurance Solutions
In
a related development, the company's stock of Rs 5 face value, on Monday
declined to Rs 893.85 after opening at Rs 929 on the BSE in pre-noon trading
even after it had announced on Saturday the decision to buy back 11.3 crore
shares at Rs 1,150 each via tender offer soon.
The
offer price at Rs 1,150 per share is Rs 226.90 more than Rs 923.10 per share
closing price on Friday when it plunged 9.6 per cent after Sikka's resignation
spooked investors.The Total Investment & Insurance
Solutions
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