Companies & Sectors
Behind the scenes at Infosys

TV Mohandas Pai quit because of internal squabbles and not, as he said, because he wants to serve the country. Moneylife pieced together the picture from circles close to the company

Given that the wealth of all its promoters remains substantially locked in the company, team Infosys puts on a strong united front, so as not to rattle investors or destabilise the stock price. This was evident in TV Mohandas Pai's larger than life presence at all the media interactions that followed the announcement of his exit plans and the company's worse-than-expected financial performance.

The media savvy Mr Pai asserted that he was only quitting to serve the nation and "to give youngsters a chance", but it wasn't quite convincing. Mr Pai claimed, according to a report in a national daily, that NR Narayana Murthy had offered him the CEO's job nine months ago, but he didn't take it. Soon after, embarrassingly, Mr Murthy, while heaping praise on Mr Pai, clarified that he had "not offered him any position" because he had "no locus standi to offer anybody a position in Infosys".

But is it merely "pique" at not getting the top job? Well, a day after the results, Mr Pai seems to have admitted as much. The Indian Express (19th April) quoted him as saying that he "does not agree with founder NR Narayana Murthy's principle of rewarding seniority instead of picking the best person to lead the company". Mr Pai, who apparently, believes he is best placed to head the company said, "What goes against me? Seniority. You are discriminated against because the founders have spent longer years," he told the newspaper, converting the battle as one between "founders" and "professionals".

Sources close to the company's top team, however, have a different view. They say that contrary to the public perception of strong unity, or the claim of "no discord" at the top, there were two clear camps at Infosys-one had Krish (S Gopalakrishnan) and S D Shibulal, while the other had the brash Mohandas Pai with Narayana Murthy and Nandan Nilekani as his backers. They say "with Murthy set to leave and Nandan already out, the writing on the wall was pretty clear because Krish strongly backed Shibulal as his successor. So Mohan would either have to go or be rather uncomfortable under the new dispensation. All he has done is to quit a little before (Mr Pai's resignation is effective 11 June 2011) Murthy's term ends in August".

In effect, the perception that Mohandas Pai quit out of "pique" and is "devastated" at parting from Infosys seems fairly accurate. On the other hand, K Dinesh, another founder-director also announced his exit, to coincide with the March-end results, but since he played no role of any substance, his departure will go largely unnoticed.

Significantly, there are no reports of S Gopalakrishnan lamenting Mr Pai's departure; instead, his matter-of-fact comment was that it "would not impact the firm as it has experience in transitioning leaders". Given how the capital market has reacted, Mr Gopalakrishnan and Mr Shibulal will have to work hard and prove themselves, or it will affect the founders' wealth as much as those of the public shareholders who swear by the company.

The internal assessment about the media savvy Mr Pai is also rather different from the public image he has cultivated. His 17-year association with Infosys, without direct responsibility for sales and performance, has also allowed him to occupy several public positions that hardly come the way of corporate directors. For instance, he must be the only professional director who was on the board of the Securities & Exchange Board of India (SEBI) and his role in helping former chairman CB Bhave in a sticky situation has been fairly controversial. Internally too, as the blog  (by Bala Shah) notes, he was seen as abrasive or "cold and ruthless", in contrast to his genial and benign external image. Way back in January 2010, the blog had written about how Mr Pai was positioning himself to becoming CEO after Mr Nilekani.



p k

6 years ago

infosys is a cunning , mean machine with mr murthy at the helm.he is fantastic at the free tele-opportinities e g visit of bill gates to campus has to adire the cunning ness of murthy ..same person who has not given any commnet on the investment in the hyderabad MICRO FINANCE spite of the problems in thet company. so murthy talks about middle class , culture , hardwork etc etc, his approach to money is like any american,doesn't matter the means as long as the end result - returns are there!!!

one thing is for sure, due to murthy, a lot of company employees became true millionaires beyond imagination. this has never happended in any other indian managed company.

with the politics, infosys seems to be set for decay over next 2 to 3 years .

Avinash Murkute

6 years ago

Quite interesting to note this.

scheel shenoy

6 years ago

It is a good move on the part of Mr T V M Pai to find something better to do ... ;
education requires highly talented people and I would like to get in touch with him to share some path-breaking ideas in education with him. Can anyone help me get his contact ID?

Kingshuk Mukherjee

6 years ago

Mr. Pai leaving Infosys is not suprising given the legacy left behind by an extremely CUNNING, SHREWD and MEDIA MANIPULATIVE Mr. NRN Narayan Murthy. The problem is not new even before people like Mr. Basab Pradhan who were looking forward to becoming the "CEO" were not given the opportunity as they hit the so-called "Glass Ceiling". Many others like him Mr. Phaneesh Murthy followed. Mr. Murthy had made a very clear game plan all the original Team Members who cofounded Infosys were to become CEO once he and Nandan Nilikeni had left that post. So it's not surpising that people like Mr. Pai and Pradhan left in disgust. WIPRO is much better than Infosys in that respect. In my view it's just a matter of time before "Cognizant" overtakes Infosys as well as WIPRO to become the No.2 player in INDIA'S IT Industry. TCS will still dominate the industry for some time eventually the CHINESE IT GUYS are going to have out Indian IT Giants for breakfast, lunch and dinner. I hope that they are preparing for that scenario.



In Reply to Kingshuk Mukherjee 6 years ago

"CHINESE IT GUYS are going to have out Indian IT Giants for breakfast, lunch and dinner" - name one

Narendra Doshi

6 years ago

Only the in near term when Mohandas declares his activities & role, one may get an idea of the predictions that are in the open. Will this Mohandas be as true "Gandhian" in action, words & deed, time will tell. But it does sadden to learn that this great Global company with such great founder leaders indeed remain the IDEALS for the young enterpreneaurs & the professionals.


6 years ago

The coporate world is full suprises as should be expected in the world of business. The fact that professionals still govern and occupy chairs and positions because of reputations is getting worrisome. The results INFY has to show is there for the world to see the past performance is also not going to help this giant after a couple of Qtrs .The fact is the best man for a job irrespective of whose "camp " he belongs should have no bearing on survival. The world is shrinking and so will business and margins .To stay where you are an organisation would have to not compromise on personnel . The coming days as in the "RAJAT GUPTA" case the tide does catch a person unawares .The great companies of the past have fallen , so many examples in india ( ALEMBIC) being one amongst so many.The coming qtrs will seal the fate of a company which can hide behind its past glory for possibly another qtr till the analyst re-rate this organisation once and for all.

Crisil looks at 10-fold increase in SME portfolios

Crisil expects to increase its rated portfolio in the small and medium enterprises (SME) segment by 10 folds in the next 3-4 years

Credit ratings agency Crisil today said it expects to increase its rated portfolio in the small and medium enterprises (SME) segment by 10 folds in the next three to four years.

The firm, which currently has 20,000 SME firms under its ratings portofolio, also said it expects more and more small scale industries to go for renewal of ratings.

"We see no reason why not two lakh. We don't know by what time...maybe 3-4 years. That's our medium-term goal," Crisil chief executive officer and managing director Roopa Kudva said here when asked about her company's plan to expand business.
She was speaking during an event on Crisil SME Ratings.

Ms Kuvda said that in a span of 12 months, since April 2010 till now, the firm has doubled its clientele base in the SME segment from 10,000 to 20,000.
"Henceforth, we also plan to launch specialised research on SMEs on a regular basis," she said.

Besides, 20,000 SMEs, Crisil also has rated potrfolios of over 6,200 large companies. Ms Kudva said around 40% of the SMEs come back for rating renewal. The Ministry of Small and Medium Enterprises subsides rating projects to the tune of 75% for the first year.

However, for renewals, SMEs have to bear the full cost which may go up to around Rs30,000. "Over time, our expectation is that it will go up to 50 per cent. Then we will be satisfied," Ms Kudva said.

When pointed out that the current renewal numbers seem too moderate, she said: "The 40% figure of renewal may look small but one has to understand that many firms have undergone ratings only during the past year and so are not eligible for renewal. Besides, others may not get the expected financial benefits and so do not go for renewal."

Commenting on the benefit of a ratings structure, Ms Kudva said it is very important for transparency and independent analysis in the Indian market.
SMEs employ 66 million workers and almost 1 million new jobs are created in the segment every year.

They account for 45% of the country's manufacturing output and 40% of Indian exports.

"Ratings are integral to development of a credit culture in India and development of a bond market. And a major part is that ratings help SMEs get better access to credit and banking facilities. Over 10% of the banking sector advances are to SMEs and scope is there to increase it," Ms Kudva said.

Crisil's client base covers SMEs with turnover between Rs10 lakh to Rs300 crore.


Paramount Printpackaging IPO opens 20th April

Paramount Printpackaging issue closes on 25th April

Paramount Printpackaging Ltd, a company operating fully automated manufacturing plant at Navi Mumbai, proposes to enter capital markets on 20th April with a public issue of 1,30,94,175 equity shares of Rs10 each through a book building process.

The issue closes on 25th April and the price band has been fixed at Rs32 to Rs35 per equity share of Rs10 each. The issue will constitute 49.04% of the fully diluted post issue paid-up capital of the company. The equity shares will be listed on the NSE and the BSE. Onelife Capital Advisors Limited is the Book Running Lead Manager to the Issue and Sharepro Services (India) Pvt Ltd is the registrar to the issue. ICRA Ltd has graded the Issue at 2/5.

The Paramount Printpackaging plans to use the net proceeds of the issue for setting up new facilities for manufacturing of high end duplex board cartons, shippers and printed corrugated boxes at Gujarat as well as augment its long term working capital requirements.


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