On a day when Sensex and Nifty touched an all-time high in the morning trade, Infosys stock price slipped by around 3 per cent. The fall was apparently, a reaction to the news that the company's board had accepted the resignation of M. D. Ranganath, chief financial officer and key managerial personnel of Infosys.
Many within the company were surprised by the news and questions are being raised about the real reason of Ranganath's exit. Some media reports even suggest that he was slotted for a board seat in the next meeting. However, now this seems out of question, as the company has a philosophy of an independent board, and therefore there is limited scope to expand presence of executive members.
Meanwhile, there is still no clarity on the reason for his exit, except for a statement by Ranganath, which says, "After a successful career spanning 18 years in Infosys including as its CFO for the last 3 crucial years, I now plan to pursue professional opportunities in new areas." In a note to the stock exchanges, Infosys says, "The board will immediately commence the search for the next chief financial officer." However, this raises the question -- whether they will get the right fit to replace him?
It may be worth pointing out that co-founder N R Narayana Murthy, has described Ranganath's departure, as an irreplaceable loss for Infosys at this critical juncture.
Analysts, however, feel that there may not be any immediate impact on the business, since Ranganath is not in a client-facing role. Additionally, in the case of Infosys some of the policies on financial matters, such as return to shareholders, have all been institutionalised and are not led by one person.
But the larger concern, many feel, is dealing with the top level attrition that seems to have become a problem in the company, and has been underlined by Ranganath's exit. Especially since Narayana Murthy describes him as the one who "has been instrumental in raising investor confidence in the company in the last five years, by managing costs and margins."
According to Murthy, Ranganath is a rare individual, who understands all important stakeholders -- clients, delivery teams, employee aspirations, finance, investors, governance, the law, and the role of an ethical business in building a better society. "He is everything the idea of Infosys has always stood for," Murthy says.
Analysts differ a bit and feel that the credit also goes to the CEOs of the company, both past and present.
The pain point, at a larger level for the company, could be efforts at retaining key employees. Is the company doing enough on this? That seems to be the question most people are asking, as the company has seen some major exits in the past year, including a CEO and now a CFO.
Analysts feel much depends on how the board of Infosys looks at it and if it wants to take any action, as this alone would have future ramifications for the company.