How 53 thousand crores sunk in a single day of Infosys - AB TAK NEWS

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Tuesday, 22 October 2019

How 53 thousand crores sunk in a single day of Infosys

How 53 thousand crores sunk in a single day of Infosys



Infosys shares of the IT sector fell nearly 17 percent on Tuesday. This was the biggest drop in one day in the last six years, due to which the investors suffered a huge loss of about 53 thousand crores.

Till the market closed on Tuesday, Infosys had a market capitalization of Rs 2.74 lakh crore, compared to Rs 3.27 lakh crore in the previous session. Market capitalization refers to the value of a company's business in the stock market.

The fall comes a day after the company's management was severely accused.

India's second largest IT services company said that they have received complaints from anonymous whistleblowers that wrong practices are being adopted in the company.

The whistleblowers have directly accused Infosys CEO Salil Parekh and CFO Nilanjan Roy of trying to manipulate the books of accounts to exaggerate the company's earnings and profits.

In these letters addressed to the board, the complainants demanded an inquiry and appealed to take immediate action.

The whistleblowers wrote that they can also provide email and voice recordings to prove their allegations.

At the same time, Nandan Nilekani, the chairman of Infosys, has said to get the matter investigated.

Infosys has said that the complaint will be looked into under the company's whistleblower policy.

Nandan Nilekani said that the company's audit committee will conduct an independent investigation into the allegations. Nilekani said that a board member had received two complaints on September 30, on which the date of September 20 was written. The title of the complaint was - 'Disturbing unethical practices' and an un-dated note bearing the title - 'Whistleblower Complan'.

According to the Infosys chairman, "One of the complaints is the allegations of most CEOs related to international travel to America and Mumbai."

In a statement to the stock exchange, Nilekani said that both the complaints were forwarded to the audit committee on 10 October and a day later to the non-executive members of the board.

According to Nilekani, "After the board meeting on October 11, the Audit Committee began negotiations with the independent internal auditor for preliminary investigation. The audit committee has now entrusted the investigation to a law firm, Shardul Amarchand Mangaldas & Co."

According to him, the board will take necessary steps based on the results of the investigation.

Infosys Chairperson Nandan Nilekani also said that the CEO and CFO have been separated from these cases to ensure freedom of investigation.

In the last two years, Infosys was engulfed in controversies due to many complaints from whistleblowers. Because of this, Vishal Sikka had to quit as CEO.

It is being said that the complainants are anonymous employees of the company itself.

Who claimed in the letter that "important information was hidden from the auditors and the board of the company. Employees were instructed not to disclose big deals to the auditors. There are two big deals like Verizon, Intel and JV in Japan." The revenue issue was not according to the accounting standard. CEOs are ignoring reviews and approvals and instructing the sales team to approve Do not match for LA.

In this letter, he also wrote that "In the last quarter, we were told not to add the visa cost completely so that the company's profit is better. We have also made a voice recording of this. During the quarterly results in FY 2019-20 We were pressurized not to mention refund of upfront payment of $ 500 million. Due to this, the company's profit will be less visible and this will affect the share prices. "

According to the news, earlier this month Infosys also had a conference call with analysts. In this, an analyst had questioned the unusual surge in unbuilt revenue and asked whether there was any change in the accounting policy.

Unbuilt revenue is the revenue that is added before the customer is billed.

Such revenue was 10–11% in 2018–19, which increased to about 24–25% in the first six months of this financial year.

But in response to this question, the company said that no change has been made in the accounting policy.

But analyst Anurag Rana told NDTV that "If these allegations are proved to be true then it will cause a lot of damage to the old brand of the company. Especially in the IT services industry. It can also hurt short-term sales, because the customers are new Look at other providers for projects. "

These allegations come at a time when Infosys and Tata Consultancy Services Ltd, which manufactures software and services the world's largest banks and retailers, are going through a difficult phase in the business. The industry is grappling with the trend of automation and rapidly changing technology.

Traditional service contracts are stalled and nervous customers are avoiding putting money in them. In the same month, Infosys had reported that its quarterly profit had decreased by two percent.

These are the challenges that Infosys CEO Salil Parekh is trying to tackle. For this, he emphasized on increasing the work in the digital service, revitalizing the core offering, increasing the skills of the employees and recruiting local people in the US market.

Due to the strictness of H-1B visa in America, labor has become difficult to get from outside.


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