Shares of Infosys Ltd shares plunged nearly 15 per cent on Tuesday in their worst single-day drop in over six years. Company's shares nosedived as another whistleblower complaint rocked the company's top management and spooked investors.
Infosys stocks were trading over 13 per cent lower at Rs 667.40 a share after falling as much as Rs 645.35 apiece. Infosys shares on the BSE closed at Rs 767.75 a share on Friday. An anonymous letter by Infosys employees has alleged that in the quarter under review of fiscal 2019-20, the management put immense pressure on them to not recognise reversals of $50 million (Rs 353 crore) of upfront payment in FDR contract, as it will slash profits for the quarter and negatively affect the company's stock price.
According to Bloomberg, Infosys Ltd.'s shares plunged a 10-month low in New York after whistleblowers accused Chief Executive Officer Salil Parekh of leading an effort to shore up profits through irregular accounting, turning up the heat on an IT services giant that endured internal turmoil just two years ago.
As per a report by NDTV, the letter, addressed to the board and published by the Deccan Herald, charged Parekh with "unethical practices" to boost revenues and profit in recent quarters, anonymous whistleblowers wrote in a memo titled "Disturbing unethical practices." They asked the board to investigate and take immediate action, offering to provide emails and voice recordings to support their allegations. Infosys said in a statement its Audit Committee will look into the accusations and handle the matter in accordance with policy. Its American Depositary Receipts slid more than 12 per cent, their biggest single-day fall since 2013.
The complaints "have been placed before the Audit Committee as per the Company's practice and will be dealt with in accordance with the Company's whistleblower policy", Infosys said in a regulatory filing on Monday. Chairman and co-founder Nandan Nilekani had only just proclaimed last year that Infosys had become "boring again." The allegations "could severely damage the company's pristine brand if true, especially in the IT services industry," Bloomberg Intelligence analyst Anurag Rana wrote. "It could also hurt short-term sales, as clients may look for other providers for newer projects."
The whistleblower complaint is the second such complaint to rock the top management of the company in the past five years. Parekh's predecessor lost his job after whistleblowers alleged wrongdoing in the company's acquisition of Panaya and Skava for $340 mln. Earlier this year, the company settled a case with the Securities and Exchange Board of India after a probe by the regulator found that severance pay for former chief financial officer Rajiv Bansal was not in accordance with remuneration policy.
(Inputs from Agencies)