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Infosys' new chairman K V Kamath faces stiff challenges ahead

The second-biggest software exporter has selected Kamath as a replacement to its present chief mentor N.R. Narayana Murthy, in a bid to spur its growth.

B. S. Srinivasalu Reddy   Mumbai     Last Updated: May 10, 2011  | 15:05 IST

Kundapur Vaman Kamath, who has been appointed as the non-executive chairman of the second-largest software exporter, Infosys Ltd (earlier Infosys Technologies Ltd), is not new to challenges. The market is expected to receive positively the announcement of his appointment to the company that seems to be losing its growth steam, of late.

The second-biggest software exporter has selected Kamath as a replacement to its present chief mentor N.R. Narayana Murthy, in a bid to spur its growth. Kamath is known for his innovative techniques to boost the growth pace of icici bank during his 13-year tenure as managing director (MD) and chief executive officer (CEO).

Infosys, which has been known for years to produce over 25-40 per cent of growth in topline and bottomline quarter after quarter, has disappointed the market in three of the past four quarters with less than 25 per cent growth.

"Kamath has always identified future trends and opportunities ahead of others. He has always looked beyond the immediate boundaries and identified future horizons of growth. He will bring to this new role the foresight, strategic vision and depth of knowledge for which he has been widely recognised and honoured," said Chanda Kochhar, MD and CEO of ICICI Bank, who also succeeded Kamath to this position in 2009.

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Kamath is known for making ICICI tech-savvy even in the early-1990s, when it was still a developmental financial institution (DFI). Thus, Kamath was a pioneer in harnessing technology for building business in the financial sector.

As MD and CEO, his biggest achievement was pioneering the conversion of DFIs into universal banks in the country, by merging the DFI with ICICI Bank in 2002.

But his initiative to build market share through direct selling agents (DSA), later faced some challenges as it had led to rise in non-performing assets (NPAs).

This, along with mopping up deposits through high-cost bulk deposits cost the bank heavily even before Kamath retired as MD and CEO in April 2009. It took nearly two years for the bank to unwind the bulk deposits and bring down the cost of funds, before it returned to tangible profits in the January-March 2011 quarter.

However, an industry veteran who wished not to be named said that Kamath may not be an exact replacement for Murthy, who is an iconic mentor of Infosys and known as a stickler for corporate governance principles.

The board nomination committee of Infosys, headed by Jeff Lehman, professor of Cornell University, has elevated the current chief operating officer (COO) S. D. Shibulal as CEO and MD, while the current CEO has been promoted as co-chairman.

Shibulal is the last of the six founders of the 30-year old company's hierarchy.

An information technology analyst of a domestic broking house said: "The appointments at the top deck are in line with the market expectations. However, retaining the top executives and Infosys veterans who are losing patience waiting for the jobs like CEO or COO is the challenge."

Chief Financial Officer V. Balakrishnan is among those who eyed the position of CEO in the recent round of changes. Executive Council members including B. G. Srinivas, Ashok Vemuri and Subhash Dhar also fall in this category of senior management personnel looking for promotions to the board.

There are two options for the company to offer top positions to these aspirants. one is to create strategic business units (SBUs) and appoint them as heads and the other is to increase the number of board positions for executives and accommodate them.

Courtesy: Mail Today

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