“Panaya and Skava are giving investors sleepless nights,” quipped a shareholder at Infosys’ Annual General Meeting on June 22 in Bengaluru. Clearly the company continues to be under fire from shareholders even four years after the acquisition of Israeli firm Panaya and e-commerce service provider Skava.
Infosys acquired Panaya, which offers a range of services, including cloud and automation, in an all cash deal for $200 million when Vishal Sikka was the CEO of Infosys in 2015. Panaya. Skava was acquired for $120 million in the same year.
Overvaluation of the two firms and not being a right fit for the company then had created a controversy. It wouldn’t be too much of a stretch to say these two firms were Sikka’s undoing. Sikka quit Infosys in 2017 and the promoters jumped in to stabilise the company.
One of the measures included sale of two the firms, which did not go as planned, as the company could not find any potential buyers. Till March, the company had seen its fair value reduce by close to Rs 854 crore on impairment, owing to fall in holding value of these two entities.
Infosys recently reclassified Panaya and Skava from ‘Held for Sale’. In its FY19 annual report, the company said the assets were reclassified because it was no longer highly probable that the sale would be consummated by March 31.
This was one of the primary concerns raised by shareholders during the AGM on June 22. This stems from the fact that Panaya and Skava, which was considered a misfit then, now aligns with the current CEO Salil Parekh’s digital vision. One of the investors -- PK Naik – said why not try to make Panaya and Skava work instead of selling the firm when they are in line with the company’s current strategy.
Responding to shareholder concerns, Parekh said, “Panaya and Skava are a closed chapter for us internally. They are not assets for sale anymore. We are currently refocusing on strategies and have two senior leaders from Infosys who are working on this. They are looking at various segments of growth such as consumer products, retail and manufacturing segment.” Infosys, he added, is aiming to improve its performance in the short to medium term.
The shareholders also wanted the company to disclose the audit report on the acquisition of these two firms. Commenting on making the report public, Nandan Nilekani, Chairman, Infosys, said the board is satisfied with the findings of the report, which has confidential and hence cannot be made public.
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