Ratings major Crisil has put the long-term ratings on Infosys on 'rating watch with developing implications'. Currently, the rating is at AAA, which is the highest rating assigned to any company. The move comes as the saga of the whistleblowers continues to unfold.
"Crisil has taken note of the developments and the steps taken by Infosys' board and audit committee with respect to the whistleblower complaints. Crisil will continue to monitor the situation and any additional developments," stated a release by the firm. It added that the rating will be removed from watch once there is "adequate clarity on the outcome of the investigation, along with updates provided by Infosys' management." "Any significant observations or findings, including from regulators and government agencies, will remain rating monitorables," it stated.
A day after the contents of the letter were disclosed, Infosys' stock price fell 17 per cent, with shareholders losing up to Rs 55,000 crore through a fall in the company's market capitalisation. A group of whistleblowers wrote letters to the company's board and the SEC alleging that Infosys' top management including its CEO Salil Parekh indulged in unethical practices. The company said that it has asked a law firm to investigate the allegations.
Market regulator SEBI, its US counterpart SEC and financial auditing regulator NFRA have started independent investigations into the allegations. Three law firms in the US have also filed class-action lawsuits against the IT giant.
According to a report in Times of India, at least two brokerages have warned their clients that if the allegations are proven then CEO Salil Parekh and CFO Nilanjan Roy might have to leave the company.