Shibulal: Exit mode
Mumbai, April 11: Infosys today announced that S.D. Shibulal, managing director and chief executive officer of the Rs 36,765-crore software exporter, would step down in January next year – at least two months before he is due to retire.
The company said it had begun the hunt for a successor and had asked the nominations committee to draw up a shortlist and evaluate internal candidates with the assistance of Development Dimensions International (DDI), a company specialising in corporate executive evaluations.
It has also appointed Egon Zehnder, an executive search firm, to assist the nominations committee in identifying external candidates who would be suitable for the job.
Shibulal will step down sooner if the company finds a successor earlier than the tentative schedule.
The three-member nominations committee is headed by Prof. Jeffrey S. Lehman. The other two members are Ann Fudge and Ravi Venkatesan.
“Shibulal has expressed his desire to retire from the post and as a member of the Board of Directors, either on the date of the last board meeting before his superannuation - January 9, 2015, or when his successor is ready to assume office, whichever date is earlier,” Infosys said in an announcement to the stock exchanges today.
Shibulal’s decision was announced three days before the company was due to announce its full-year results for 2013-14 next Tuesday.
Sources said the process to find the next CEO was likely to take around six months.
The Infosys stock closed at Rs 3,231 on the Bombay Stock Exchange, up 0.76 per cent. It had slipped to a low of Rs 3,165 soon after the news of Shibulal’s early exit hit the Street but the stock recovered towards the end of the day.
Critics will be tempted to say that Shibulal’s will be the ninth high-profile exit from Infosys since N.R. Narayana Murthy took over as the executive chairman last July.
But the company was quick to dismiss such talk as unwarranted and insisted that the company had been working on a succession plan for some time.
On March 12, Narayana Murthy had told analysts at a meeting in Bangalore that there would be more exits this year with Shibulal due to leave next March and Srinath Batni in November this year. Vice-chairman Kris Gopalakrishnan will also hang up his boots in April next year.
Observers who track Infosys believe that Pravin Rao and B.G. Srinivas are the two front-running internal candidates for the CEO’s post.
Pravin Rao, president, drives growth across a slew of portfolios that include retail, consumer packaged goods, logistics and life sciences. He is also responsible for global delivery and services innovation.
Srinivas, who is also a president and a member of the board, heads financial services, insurance, manufacturing, engineering services, energy & communications. Prior to joining Infosys, Srinivas was with ABB.
At a press conference in January, Narayana Murthy had remarked: “All of us would like one of these two people (Rao and Srinivas) to become the next leader after Shibulal.”
He was, however, quick to add that it was for the nominations committee to decide whether it should be an internal or external candidate.
For Infosys, the search for a new CEO comes at a time the company is making news for all the wrong reasons. There has been an exodus of top executives from the company, including V. Balakrishnan who headed Infosys BPO, Ashok Vemuri, global head of manufacturing and the Americas, and T.V. Mohandas Pai, former board member and head of human resources and administration.
At the analysts meeting, Murthy played down the impact of the high-profile exits.
“Barring a few exceptions…most of the people that left us were not adding critical value to the company,” he added.
On Tuesday, Infosys is expected to announce tepid numbers for the January-March quarter as this has traditionally been a lean season for the sector. However, the market’s attention will be on its revenue guidance for 2014-15.
Murthy had told analysts in early March that revenue this year would be around 11.5 per cent, which would be lower than Nasscom’s projection of 13 per cent average growth for the software industry. But the executive chairman’s deeper concern was over the slump in operating margins to 23.5 per cent at the end of the third quarter.
Coming as it did at a time when the rupee had slumped against the dollar, he said: “The operating margin ought to have been 41.5 per cent which means that our margins have fallen by about 45 per cent.”
At that time, Murthy had expressed hope that the action plan he had devised would start yielding results “hopefully by the first quarter of 2015-16”.