Exclusive Roopa Kudva Interview: ‘Infosys‘ capital allocation in line with transformation plan‘

Malini BhuptaMoneycontrol Infosys’ independent director Roopa Kudva on Sunday defended the company’s capital allocation plans in an exclusive interview with Moneycontrol, saying these were geared to transforming the software services major.“The board reviews capital allocation policy and the principles behind the same. There is a strategic direction that has been set and acquisitions would be part of the transformation agenda. The move is to acquire strategic companies that are value-accretive that can help new and existing businesses,” she said.Infosys founders are on the warpath with the management and board, clearly preferring a buyback of shares rather than an expensive acquisition, but Kudva maintained that the company had strong internal controls.Also read: Board member Kudva says Infosys reworked contracts post CFO exitShe said that there were teams in place that thoroughly evaluated the process and that the cash allocation policy was also reviewed from time to time. “The financial and internal controls are very strong. Everything is system driven and there is little left to individual discretion. There is a wide and holistic audit agenda,” she said.Capital allocation has emerged as the big bone of contention between the founders and management of Infosys, which has a cash stash of USD 5.25 billion. The discord may have started with 24 months compensation being paid to Rajiv Bansal, the company's former CFO, but at the heart of the dispute is capital allocation.

Over the last few days, co-founder of Infosys NR Narayana Murthy and Mohandas Pai have have questioned several financial decisions of the company and raised the flag on corporate governance. Pai has conveyed to analysts that the company should consider a buyback and reward shareholders.Also read: Mohandas Pai urges investors to question Infy's cap allocation policyEver since Vishal Sikka took over as CEO of Infosys he has been attempting to transition the company from a pure-play services company to a software and services company. He has been talking of opportunities in the SMAC (social, mobile, analytics & cloud). The company has laid out a capital allocation plan for the same, which will include acquisitions. The founders are of the view that there are enough opportunities in the services business as IT giants like Accenture and IBM are showing signs of fatigue.