Three former top executives of IT services major Infosys Ltd, including two who have served as its chief financial officers in the past, have raised the issue of the company’s bulging cash pile suggesting the firm should opt for an ongoing share buyback programme from its equity holders.
V Balakrishnan, T V Mohandas Pai and D N Prahlad have written to the firm to use around Rs 11,200 billion ($1.83 billion) out of its estimated $5 billion cash & cash equivalents for the buyback, as per separate media reports.
The firm has largely banked on dividend payouts to its shareholders and has not given any buyback offer since it went public in 1993. Investors have been demanding such a buyback for years.
The new demand comes five days after Vishal Sikka took over as the new chief executive of the company. He is the first non-founder head of Infosys.
Balakrishnan, who resigned from Infosys last December and had joined the Aam Aadmi Party, wrote a letter to the board on July 29: "We are a set of retail shareholders who want to impress upon the board of Infosys to consider our proposal of announcing a large, consistent buyback programme for the company,†he said in the letter. Pai and Prahlad also signed the letter.
"Infosys today is seeing a major transition from a founder-driven company to a non-founder driven company. While the change is inevitable, the abrupt nature of the change raises some serious concerns not only in our minds but also with many stakeholders," the letter added.
The three suggested the company that the buyback should be at the 52-week-high price of Rs 3,850 a share and Infosys should announce an ongoing buyback programme to the extent of 40 per cent of the previous year’s net profits on a consistent basis.
Shares of Infosys were trading at Rs 3,567.70, up 1.8 per cent on BSE in a mid-day market in a weak Mumbai market on Wednesday.
(Edited by Joby Puthuparampil Johnson)
