Nandan Nilekani is back at Infosys, as the Non-Executive Chairman of the company's board of directors. His appointment was shortly followed by the resignations of former board Chairman R Seshasayee, Director Jeffrey Lehman and Vice Chairman and former CEO Vishal Sikka.
Co-chairman Ravi Venkatesan resigned too, along with two other directors, but he will stay on the board as Independent Director.
Nilekani's appointment as the Chairman of Infosys's board of directors comes at a time when the second biggest IT company in India is going through a rough phase. Former CEO Vishal Sikka stepped down following continuous jibes from Infosys founder NR Narayana Murthy. Infosys shares tanked, wiping off Rs 34,000 crores from company's market capitalisation.
Investors have been calling for Nilekani's return since Sikka resigned, claiming it will be seen as a positive sign in dire times. A group of 12 organised investors in the company wrote to Murthy and others, asking Nilekani to be brought back to Infosys in order to bring things under control.
Certain reports even went on to say that a group of co-founders led by Murthy was marshalling investor support to stage a coup against the Infosys board. This was aimed at making Seshasayee leave the post of Chairman and install Nilekani back in the company, the reports claimed.
Who has replaced whom at Infosys?
Vishal Sikka: Vishal Sikka's replacement is Pravin Rao, but he is an interim CEO. Infosys will appoint a new CEO who will be in control of Infosys in future. Sikka and Narayana Murthy had a bitter fallout after Murthy made public allegations of mismanagement against Sikka. The fight went on for longer than eight months between the founders and the management.
Infosys Chairman R Seshasayee: According to reports, Seshasayee was exploring options after the exit of Sikka. After a scathing letter by former Infosys members, Seshasayee today resigned. He has been replaced by former CEO and vastly experienced Nandan Nilekani. The fact that he has not comeback as the CEO could mean that he may not be in the company for a long haul. He may help the company appoint the new CEO. According to TV reports, he has been appointed as the Non-Executive Chairman.
Co-chairman Ravi Venkatesan: Ravi Venkatesan has followed Sikka and Seshasayee. He will stay on as an Independent Director.
Ex-Infoscions letter to the board supporting Murthy
The developments come hours after the former employees of Infosys slammed the board for its allegations against Narayana Murthy. "As a person with not very insignificant shareholding and with a significant emotional investment, he has every right to seek answers and ask for higher levels of disclosure to ensure Infosys continues to have the highest standards of corporate governance, just as it had been for nearly 25 years since Infosys went public in 1993. In this context, we believe the tone and tenor of the Board's letter is totally contemptuous to Mr. Murthy," the letter by ex-Infoscions read.
The ex-Infoscions letter added that the board was not right to single out Murthy for all the trouble at Infosys. "For the Board to accuse Mr. Murthy as the primary or even the only reason for the distraction and noise is highly unfair and unacceptable. The Board needs to explain in depth, backed by facts and data, the issues raised by Mr Murthy, and come clean to all stakeholders," the letter read.
Markets, experts welcome Nilekani's re-entry
Most analysts are welcoming the decision of Nilekani's re-entry in Infosys. However, the fact that Nilekani has not come back as the CEO means Infosys will have the challenge to find the right candidate to lead the organisation in the long term. From the markets perspective too, Nilekani's entry is considered to be a good news. The whiff of Nilekani's re-entry on Wednesday had helped the Infosys stock regain lost ground after Vishal Sikka's exit.
"It is the best thing that has happened to Infosys. It will bring stability to Infosys. It should have happened long ago," V Balakrishnan, Former CFO Infosys told CNBC.
"His (Nandan Nilekani) first task would be to make an investors call and talk to the investors. It think it will be a little easier to get the new CEO," M Damodaran, Former Chairman Sebi told CNBC-TV 18.
"It should make customers feel comfortable. I think it is a good development. But again, this is a short term path, people will be looking forward to a long term solution," Moshe Katri, MD Webbush Securities told CNBC TV18.