Infosys looks to erase Sikka's imprints by announcing sale of Panaya, Skava

The acquisitions had triggered a crisis when Narayana Murthy raised a storm over supposed lack of transparency in deals

As Infosys closed the financial year 2017-18 with its numbers meeting the Street’s expectations, it also made an effort to erase part of its recent past, in which differences emerged between the company and its founders, and then Chief Executive Officer (CEO) Vishal Sikka quit the firm.

The new regime made clear its intention to grow the digital business by announcing an acquisition in the space. The company also said it would sell two key acquisitions, Panaya and Skava, which were bought under the leadership of Sikka. 

It also wrote down Rs 5.89 billion ($90 million) of the investment value of Panaya.

CEO and Managing Director Salil Parekh evaded the question if the decision was more to lay to rest the controversy, though he said it was part of the strategic review of the investments the company had made. 

“I am looking at the future,” Parekh said when he was asked whether this was done to erase the Sikka legacy. 

The strategy the company announced on Friday was mostly around digitisation, something which it had spelt out to a certain extent during the Sikka regime and even before that. 

“Our strategy is built on where our clients’ digital journey is taking them and for us to have relevance in the future with our clients,” Parekh said. 

As part of the strategy, Parekh said, the company would concentrate more on putting its current employees in key roles rather than hiring.

“We are nominating internal leaders to drive the company, which demonstrates we have a huge leadership pipeline,” he said. 

Sikka’s focus was on hiring candidates, many from SAP, in which he had worked earlier.

Infosys said after the strategic review it had initiated the process of identifying buyers of Skava and Panaya, which, the company believed, did not fit into its changing business requirements. 

It would strengthen its focus on digital and the core IT business, including corebanking platform Finacle and platforms such as Edge and Nia. 

“As part of the strategic review, we have decided to initiate an active interest in Panaya and Skava from buyers,” said M D Ranganth, chief financial officer.  The company reclassified an impairment loss of Rs 1.18 billion ($18 million) with respect to Panaya in the consolidated profit and loss statement for the quarter and the year ended March 2018.  In February 2015, Infosys acquired Panaya, an Israeli firm, in an all cash deal of $200 million. 

In the same year in April, the company announced its decision to acquire Kallidus Inc. (operates under the brand name Skava), a San Francisco-based digital experience solutions company, for $120 million.

The acquisitions had triggered a crisis in India’s second-largest IT firm, when its co-founder N R Narayana Murthy raised a storm over a supposed lack of transparency in the deals. 

Infosys also said it had entered into an agreement to acquire WongDoody Holding Company Inc., a US-based digital and creative customer insight agency, for $75 million. This includes a contingent consideration and retention payouts.