Case Study on Corporate

Governance
Infosys Technologies Ltd.
(The best amongst Indian corporates)

CA. SHIVPRASAD S. PARNATTI

 Case study: Infosys Technologies
 As per the Credit Lyonnais Securities Analysis (CLSA), the corporate
governance ratings of the Software firms are higher than those of other
Indian firms
 Software firms are on average, more exposed to global competition than
other Indian firms
 It is an interesting success story with good spirit of entrepreneurship
 Started as a small unit in 1981 by Mr. Narayana Murthy with his six
colleagues in Bombay in a single room
 With a small amount of investment of Rs. 10,000 (US 250) as capital
 More than 100,000 employees in 63 cities across 26 countries
 Net income of US 1,155 million and revenue of US 4,176 million
 At present having US 20.4 billion market capitalization
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Progress Of Infosys Technologies
as on 31st March 2008 Custom
-ers
538*
Market
Capitaliz
at-ion
US $20.2 billion*
Reven-
ue
US $4,176 million**
Net
income
US $1,155 million**
Global
presenc
-e
63 cities across 26 countries
Employ
e-es
91,187*

Compa
n-y Started in 1981,with seven founders, US $250,and a
dream
 Vision & Mission of Infosys
Technologies
The vision of Infosys is “to be a globally respected
corporation that provides best-of-breed business
solutions, leveraging technology, delivered by best-
in-class people”. Its mission is “to achieve our
objectives in an environment of fairness, honesty
and courtesy towards our clients, employee’s
vendors and society at large”.

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Value Systems at Infosys
Technologies

Integrity
&
transper
-ancy

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 Corporate Governance
Philosophy
The philosophy of corporate governance is based on the
following principles :
 Satisfy the spirit of the law
 Transparent and high degree of disclosure levels

 Distinction between personal conveniences and corporate resources

 Truthful external communication

 Comply with laws of all countries in which the company operates

 Simple and transparent corporate structure driven solely by business

needs
 Management is the trustee of the shareholders’ capital and not the

owner

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 Unique practice
 The Infosys Technologies believe that the Board of
Directors is at the core of corporate governance practice
 Oversees how management serves and protects the long
term interest of all stakeholders
 Active and well informed and independent board is
necessary to ensure highest standards of corporate
governance
 The majority of the, 8 out of 15 are independent
members
 Infosys have audit, compensation, investor grievances,
nominations, and risk management committees which
comprises only independent directors

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 Unique practice
 The recommendations of The Conference Board
Commission on public trust and private enterprises in
the US
 The company also adhere to the UN global compact
programme
 furnish in the annual reports about its compliance with
the corporate governance guidelines of six countries in
their national languages
 The company comply with Euroshareholders corporate
governance guidelines, 2000

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 CG Achievements & Ratings
 Infosys is committed to long-term shareholder value
 Its business activities are anchored in three pillars of
corporate behaviour, Viz., Business Ethics, Corporate
Governance and Corporate Social Responsibility
 In 2000, the company was conferred the National Award for
Excellence in Corporate Governance by the Government of
India
 The Business World — IMRB Survey ranked Infosys number one
among the most respected companies in India, in 2001
 In the year 2000, in the survey of Far Eastern Economic
Review, Infosys was selected as one of Asia’s leading
corporations and was ranked first as “The Company that
Others Try to Emulate”

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 CG Achievements & Ratings
 The company was voted “India’s Most Admired Company” in
Economic Times in 2000
 In 2003, Infosys Technologies co-founder and chairman, Mr. N.
R. Narayana Murthy, won the Ernst &t Young World
Entrepreneur of the Year award and his company’s
“outstanding financial performance and global impact in a
dynamic and volatile industry”
 Infosys Technologies has won the prestigious “Global Most-
Admired Knowledge Enterprises (MAKE)” Award, for 2004
 Infosys Technologies made a winning sweep in the Business
World “Most Respected Companies’ Award” 2004
 It was voted as India’s best managed company for 6 years in a
row, between 1996 and 2001 by the Asia Money Poll

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 CG Achievements & Ratings
 The latest Business Today—AT Kearney study conducted in
March 2005 placed Infosys Technologies as “India’s Best
Managed Company”. It was also recognised in a number of
other categories including corporate governance, creation of
shareholder value, corporate social responsibility and
innovation
 CRISIL assigned the company the “CRISIL GVC Level 1” rating,
indicates the capability to create wealth for all stakeholders
while adopting sound corporate governance practices
 ICRA assigned “CGR 1” rating to the company corporate
governance practices
 The asset magazine acclaims Infosys’s corporate governance
and has been named as the best company in India in corporate
governance in 2008

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Effects of Infosys Corporate Governance Initiatives
 Concluding Observations
 Code of CG should be redesigned to reflect international
best practices
 Stringent enforcement of Law
 More effective coordination and cooperation between
SEBI and DCA
 CG mechanism should be flexible and suitable
 Overall ethical values in all segments should be
promoted for effective
 Accounting, auditing, disclosure and transparent system

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Thank you !

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