Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Infosys: Beyond numbers - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • May 21, 2001

    Infosys: Beyond numbers

    Infosys has held the stocks markets in awe. Of course, the brilliant growth rates and a superb operating margins did have a significant contribution, however, its quality of corporate governance and the high disclosure standards have also contributed to its success. A good measure of the disclosure standards would be the fact that Infosys, for the sixth consecutive year, has received the Silver Shield from the Institute of Chartered Accountants of India for the best presented accounts among the entries received from non-financial, private sector companies.

    Infosys’ zealous commitment to corporate governance can be an example for others in the corporate sector. For Infosys has benchmarked itself against global practices. Infosys’ philosophy is “the company respects the inalienable rights of its shareholders to information on the performance of the company and considers itself a trustee of its shareholders “.

    To implement this philosophy the company has constituted a board that is relatively large compared to other corporates in the country. What is interesting to note is the fact that 50% of the board members are independent i.e. they do not have any interest in the company. The independent members include Prof. Marti G. Subrahmanyam, Senator Larry L. Pressler, Dr. Omkar Goswami to name a few.

    Board of Directors composition
    Category No. of
    Founder directors 5 31.2
    Executive directors 3 18.8
    Non-executive, independent directors 8 50.0
    Total 16 100

    To oversee financial reporting Infosys has an audit committee that as per Blue Ribbon committee report has only independent and non-executive directors. Deepak M. Satwalekar, MD, HDFC Standard Life Assurance Company Ltd., heads the committee.

    The primary objective of the committee is to ensure that the financial reporting that takes place is accurate, timely and transparent. Its very interesting to note that Infosys has decided that the committee shall consist solely of independent directors and minimum of three directors in the committee shall be ‘financially literate’. At lease one of the members of the committee should have a financial management expertise.

    Infosys has not only managed comply with the Kumar Managlam Birla committee on corporate governance but also with other standards that are used globally like the Cadbury Committee recommendations in the (UK), Euroshareholders corporate governance guidelines and the Blue Ribbon committee (US).

    As a result of complying with these recommendations Infosys has managed reporting standards that are one of the best in the Indian corporate sector. The depth of reporting in every quarter is quite significant. Infosys is one of the very few Indian corporates that publish a balance sheet every quarter.

    In a recent study by CLSA (Credit Lyonnais Securities Asia) on emerging markets, Infosys was ranked No 2 in corporate governance. It scored 93.3 out of a possible 100. The company that did better than Infy was HSBC, which scored 95.5.

    The study found that good corporate governance begets good stock performance. According to the study, the stock prices of the largest 100 companies covered fell an average 8.7% last year, while the stocks of the 25 companies rated best for corporate governance rose by an average 3.3%. The bottom 25 companies (ranked by their quality of corporate governance) saw their stocks fall by an average 24%. A very important conclusion that was drawn from the study was that the correlation between good corporate governance and share performance for the largest companies is "a near perfect fit."

    Those pessimistic about Infosys performance should take a clue from here. The concern is about growth. One statement in the directors report reads “ As of 31st March, 2001 the company had 1.6 m square feet of space capable of accommodating 10,100 professionals and 1.9 m square feet under construction”. This should allay fears about growth.



    Equitymaster requests your view! Post a comment on "Infosys: Beyond numbers". Click here!


    More Views on News

    Infosys: A Decent Start to FY18 (Quarterly Results Update - Detailed)

    Jul 14, 2017

    Infosys starts FY18 on an encouraging note with a stable performance.

    Infosys: A Flat End to FY17 (Quarterly Results Update - Detailed)

    Apr 13, 2017

    Infosys ends FY17 with a 7% QoQ fall in net profit for the March quarter.

    Infosys: A Decent Quarter (Quarterly Results Update - Detailed)

    Jan 13, 2017

    Infosys has reported a 0.2% QoQ decrease in the topline and an increase of 4.6% QoQ in the bottomline for the quarter ended December 2016.

    Tech Mahindra: Our Revised View (Quarterly Results Update - Detailed)

    Aug 2, 2017

    A better than expected turnaround in performance results in a change in view.

    Wipro: A Decent Start to the Year (Quarterly Results Update - Detailed)

    Jul 27, 2017

    Digital services drive growth for Wipro in 1QFY18.

    More Views on News

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 16, 2017 (Close)


    • Track your investment in INFOSYS LTD with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts