Infosys

For years, Infosys has followed an organic growth approach by building its business, brick by brick. The blue-eyed boy of the Indian corporate market, Infosys, is sitting on a cash pile of Rs 10,000 crore and has not really made any serious deployment of it. The presence of KV Kamath at the helm could  now mean  better utilisation of cash at disposal and effectively better returns for shareholders.

There has also  been some speculation that Infosys, which has in recent times lost some of its verve, may go in for a strategic shake-up of its businesses by consolidating some of its verticals.[caption id="attachment_64957" align="alignleft" width="380" caption="Image: Wikipedia"][/caption]But Kamath cannot be the remedy for all of Infosys' problems. The blood bath across equity markets in the US and European markets led to a selling frenzy in domestic markets as the BSE and the NSE index declined  2-3 percent. Fears of a possible double-dip recession led to investors offloading shares. Infosys, the Indian software bellwether, was one of the biggest losers as it fell by almost 7 percent.  While it recovered towards the end and closed at Rs2225.4 per share, it was trading at its 21 month low.

The company, which till recently was headed by Narayan Murthy,    was  in the news regarding a visa scandal that erupted when one of its American employees, Jay Palmer accused Infosys of misusing the B1 business visa programme to bring Indian employees to the US to work at clients sites. However, company officials said that the accuser’s commentary was full of exaggerations and falsehoods and that he was interested in getting a “big payout from the company”.

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For the June 2011 quarter, the company reported a 20.8 percent rise in sales to Rs7,485 crore while net profit grew by 15.7 percent to Rs1,722 crore. During the quarter Infosys had two clients who accounted for $200 million  revenue each. Over the past one year, the company succeeded in adding one such customer. The number of clients that account for $100 million revenue is at 11 up from eight in June 2010. As on 30 June 2011, cash and cash equivalents, including investments in available-for-sale financial assets and certificates of deposits was  Rs 16,969 crore or $3.7 billion.

Infosys Technologies is India’s second largest software exporter and was founded in 1981 by seven people including Narayana Murthy at an investment cost of $250. Since then, it has come a long way and has a market capitalisation of around Rs1,35,624 crore today. It  was also the first Indian company to be listed on the Nasdaq in 1999.

Infosys started its operations in a 10×10 room with a capital investment of just Rs 10,000, which was borrowed from Narayan Murthy’s wife, Sudha Murthy. Now, its revenues have grown to Rs 27,000 crore.

In August 2011 Narayan Murthy stepped down as the Chairman of the company and was replaced by KV Kamath, who has been an independent director on the Infosys board since May 2009.  He served as the  founder CEO of the company for 21 years until he was succeeded by co founder Nandan Nilekani  in March 2002.