Infosys To Sell Subsidiary Panaya
Infosys Ltd. is looking for buyers for its subsidiaries including Israeli Panaya that was at the heart of the boardroom coup resulting in exits of former Chief Executive Officer Vishal Sikka and former chairman R Seshasayee.
India’s second largest software services provider decided to look for potential buyers for subsidiaries Kallidus and Skava (together called ‘Skava’) and Panaya, the company said in its filing. The transactions are expected to be completed by March next year.
Infosys' strategic direction comprises of digital and core information technology services and strong suite of products like Finacle, Chief Executive Officer Salil Parekh told reporters at the earnings press conference.
Skava and Panaya did not fit all of the criteria we have today for scaling our businesses.Salil Parekh, CEO, Infosys
Infosys had acquired Skava and Panaya for $120 million and $200 million respectively in 2015. These assets amounting to Rs 2,060 crore (or $316 million) and liabilities of Rs 324 crore ($50 million) are now held for sale. The company has recognised an impairment loss of Rs 118 crore in respect of Panaya for the quarter. The corresponding write-down in the investment value of the subsidiary in the standalone financial statements of Infosys is Rs 589 crore, the filing said.
Among the governance issues raised by Infosys co-Founder NR Narayana Murthy was the severance package for former Chief Financial Officer Rajiv Bansal. Murthy, according to an Economic Times report, had said there was a need to probe if there was “hush money” related to the acquisition of Panaya. He had cited allegations by an anonymous whistle-blower.
Based on Murthy’s demand, the board appointed agencies to investigate the acquisition and the circumstances surrounding it. But despite Murthy’s insistence, the board refused to make the reports public saying the investigations had found no wrongdoing.
The bickering between Murthy and the board eventually led to the return of his fellow co-founder Nandan Nilekani as chairman, and Sikka, Seshasayee and two other directors quit. Infosys eventually named Salil Parekh as its chief executive officer.