Trade Nivesh Shares of giant IT company Infosys fell by 14 per cent on Tuesday. The stock plummeted after a whistleblower reported a mess in the company's functioning. After the case came to light, there is a possibility of a big flaw in terms of corporate governance in Infosys.
Indian stock markets were closed on Monday due to the assembly elections in Maharashtra. Hence the impact of the whistleblower revelations on Infosys shares showed on Tuesday. The company's shares fell 14 per cent to Rs 645. Due to this, the market capitalization of the company wiped out Rs 44,000 crore.
Infosys said in its clarification, "As per rules, these complaints have been placed before the company's audit committee. These will be dealt with under the company's whistleblower policy." A copy of the complainants' letter has also been sent to the American Securities and Exchange Board (SEC). Trade Nivesh
This letter states, "He (Salil Parekh-CEO) gives instructions to make miscalculations, so that margins are better shown. CFOs also follow the directive. By showing us the issues related to big deals during board presentation Stops. There was no margin of deal of crores in last few quarter. "
An unknown group of company employees wrote a letter to the board of Infosys on 20 September. He made serious allegations against the company's CEO Salil Parekh and CFO Niranjan Roy for unethical conduct in order to get a big deal. Some of the allegations are as follows:
1. The margin of many big deals is negligible. The company approved these, ignoring the appropriate review and acceptance process.
2. Important information related to these deals were hidden from auditors and company board.
3. In the estimation of revenue and cost of many big deals, the standards of ledger and auditing were not followed, so that profits can be shown to be exaggerated.
4. The CEO and CFO pressurized the fund-linked entity to take more risks and show increased profits in the near future.
What does the company say?
The company has admitted that it has received a complaint. According to the company, the matter has been placed before the audit committee and board chairman D Sundaram. The panel also includes Rupa Kudwa and Punita Kumar Sinha as independent directors.
Jefferies: The impact of the case will remain until the next explanation. A fall of 100 basis points in EBIDIT margins could impact EPS by up to 4.3 per cent. Reducing PE can be a big risk. We are awaiting clarification in this matter.
The brokerage said, "There will be a need for strong evidence from the whistleblowers. This puts the company's credibility at bay and may raise questions on the current management. This will affect the company's performance."
Reliance Securities: This is very serious news. This matter is related to corporate governance. The deputy CFO has also resigned. It indicates that something is wrong. It is quite disappointing that the company whose corporate governance was cited, is being accused of this.
The efficiency of the company's board also arises. This is even more disappointing after the return of a legend like Nandan Nilekani. After his huge coin scandal, the company came back to solve the issue of corporate governance.
The company board is investigating the matter and investors of the company will definitely sell the shares. Markets are not spared on the fronts of corporate governance. We will not jump directly to the Nazis, but on the ground this problem is not a good thing.
Morgan Stanley: The news has put pressure on the stock. Until there is no firm explanation, this pressure will remain. The stock has been volatile for the past six years. We are giving a target price of Rs 805 to the stock.
IIFL: Sanjeev Bhasin of this brokerage firm said, "Only after investigation, the picture will be clear. If there is any truth in the complaint, then the entire IT sector will be affected. Now the situation is half glass full and half glass empty. We have This situation is seen in the cases of DHFL and Indiabulls as well. "
Rumors dominate the market. However, these are hard to believe. But this has definitely stained the company's image. We will now wait for the next information on the investigation. The current phase is good for rival companies like TCS and Wipro.
Infosys said in its clarification, "As per rules, these complaints have been placed before the company's audit committee. These will be dealt with under the company's whistleblower policy." A copy of the complainants' letter has also been sent to the American Securities and Exchange Board (SEC). Trade Nivesh
This letter states, "He (Salil Parekh-CEO) gives instructions to make miscalculations, so that margins are better shown. CFOs also follow the directive. By showing us the issues related to big deals during board presentation Stops. There was no margin of deal of crores in last few quarter. "
An unknown group of company employees wrote a letter to the board of Infosys on 20 September. He made serious allegations against the company's CEO Salil Parekh and CFO Niranjan Roy for unethical conduct in order to get a big deal. Some of the allegations are as follows:
1. The margin of many big deals is negligible. The company approved these, ignoring the appropriate review and acceptance process.
2. Important information related to these deals were hidden from auditors and company board.
3. In the estimation of revenue and cost of many big deals, the standards of ledger and auditing were not followed, so that profits can be shown to be exaggerated.
4. The CEO and CFO pressurized the fund-linked entity to take more risks and show increased profits in the near future.
What does the company say?
The company has admitted that it has received a complaint. According to the company, the matter has been placed before the audit committee and board chairman D Sundaram. The panel also includes Rupa Kudwa and Punita Kumar Sinha as independent directors.
Jefferies: The impact of the case will remain until the next explanation. A fall of 100 basis points in EBIDIT margins could impact EPS by up to 4.3 per cent. Reducing PE can be a big risk. We are awaiting clarification in this matter.
The brokerage said, "There will be a need for strong evidence from the whistleblowers. This puts the company's credibility at bay and may raise questions on the current management. This will affect the company's performance."
Reliance Securities: This is very serious news. This matter is related to corporate governance. The deputy CFO has also resigned. It indicates that something is wrong. It is quite disappointing that the company whose corporate governance was cited, is being accused of this.
The efficiency of the company's board also arises. This is even more disappointing after the return of a legend like Nandan Nilekani. After his huge coin scandal, the company came back to solve the issue of corporate governance.
The company board is investigating the matter and investors of the company will definitely sell the shares. Markets are not spared on the fronts of corporate governance. We will not jump directly to the Nazis, but on the ground this problem is not a good thing.
Morgan Stanley: The news has put pressure on the stock. Until there is no firm explanation, this pressure will remain. The stock has been volatile for the past six years. We are giving a target price of Rs 805 to the stock.
IIFL: Sanjeev Bhasin of this brokerage firm said, "Only after investigation, the picture will be clear. If there is any truth in the complaint, then the entire IT sector will be affected. Now the situation is half glass full and half glass empty. We have This situation is seen in the cases of DHFL and Indiabulls as well. "
Rumors dominate the market. However, these are hard to believe. But this has definitely stained the company's image. We will now wait for the next information on the investigation. The current phase is good for rival companies like TCS and Wipro.
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