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Infosys’ Rs13,000 crore payout to shareholders too little: ex-CFO V. Balakrishnan

LiveMint logoLiveMint 13-04-2017 PTI

Hyderabad: Infosys Ltd’s decision to return Rs13,000 crore to shareholders is “too little”, said former chief financial officer V. Balakrishnan on Thursday, and added that appointing a co-chairman would make the structure much more complex at board level.

“I think it’s a good step forward, but the quantum could have been bigger because they have Rs40,000 crore on their balancesheet. Returning Rs13,000 crore is too little,” Balakrishnan told PTI over the phone.

“On go-forward basis, returning 70% of free cash flow is almost similar to what they (Infosys) have today—that is 50% of net profit,” Balakrishnan said.

Infosys on Thursday said will pay out up to Rs13,000 crore in FY18 either in dividends or via a buyback or a mix of both, after it reported an almost flat net profit in the March quarter and sales outlook that fell short of estimates.

The Bengaluru-headquartered, NASDAQ-listed company said it would begin to pay 70% of annual free cash flow as dividend compared to a previous policy of sharing up to half its post-tax profit.

“... I think the benchmark for IT services companies should be Accenture,” Balakrishnan added. “Accenture returned substantial part of existing cash, and also, if I am right, they returned around 90% of free cash flow to shareholders every year. So, progressively Infosys should move towards this. That is a good benchmark.”

On the appointment of Ravi Venkatesan as co-chairman of Infosys, Balakrishnan said there is no substance in that because the company today has a chairman, chief executive, chief operating officer, co-COO, chief financial offer, and a deputy CFO.

“And I think it’s too top heavy. And they have not articulated why this change is required now and what value it is going to add. So, I don’t want to read too much into it. I think it’s making the structure much more complex at the board level, and that has got its own repercussions,” he said

Balakrishnan also labelled Infosys results for the March quarter as disappointing. “Whole year (2016-17), they have not met numbers in any of the quarters. And guidance also looks muted. I think the performance is very challenging.”

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