Bangalore: A day after the momentous decision on NR Narayana Murthy's successor, the 65-year-old chairman of Infosys Technologies met Forbes India's Mitu Jayashankar in his office in the company's Electronic City campus. Shortly after the interview, Murthy set off to London to attend a global board meeting on May 4, after which he left for Los Angeles to see his granddaughter, who was born at 7 pm on April 27. Excerpts:
Jayashankar: S (Kris) Gopalakrishnan has said that the market is very volatile and you don’t have the visibility you had in the past. One of the things you stressed is predictability. Is there any discussion inside Infosys that it must move away from giving guidance?
Murthy: I will say what my philosophy is. The company may move away from it when I leave in August. My belief has been that if I’m the CEO, I must know what the target for the quarter is — top line and bottom line — and for the whole year.
In a company like ours, in the earlier days, there were lots of shareholders who were also employees. If we don’t announce [the target] to the public at large, there could be asymmetry of information. It would lead to insider trading. Therefore, before we listed, in 1993, I said that we should give guidance, both for the quarter and for the year. We are the only company that does it. It is not mandatory that Infosys needs to follow it post August 21. It is as right to change it as it is not.
Jayashankar: Have there been any discussions around it inside the board?
Murthy: No. There is no law that demands it. If somebody feels that this is no longer important, then why not?
Jayashankar: There is so much talk about your bellwether status being under threat...
Murthy: We were voted the best employer last year; we have been voted in the top seven-eight in the world in the most admired knowledge enterprise [category]; we have been voted the best in finance in Asia; we have the best training facility in the world…. So we continue to be the bellwether. But if you define bellwether by the stock market, then we have gone through much bigger reverses. For example, in 2001, when I took a decision to announce that we will grow only 30 percent as opposed to 100 percent the previous year, the stock went down from Rs. 5,500 to Rs. 1,500. We said, so be it.
One of the most important decisions for executive management is not to look at the ticker tape. As long as we satisfy our customers, as long as the employees are happy, we embrace speed, imagination and excellence in execution, as long as we make a difference in society, I believe that revenues will come and therefore market cap will come. We should do nothing keeping the ticker tape in mind. Frankly, I worry nothing about that.
Jayashankar: The perception now is that the competition is far more aggressive. Is that a worry that the board shares?
Murthy: I have tremendous respect for competition at the global level. Thanks to them we have brought a lot of innovation to this company. Having said that, when people make comparisons between one company and another, they have to know the details. You have to look at our quality of earnings, our depreciation policies, our earnings recognition policy, our revenue recognition policy, the taxes that we pay. We have paid taxes of Rs. 2,400 crore in India. I’m very proud of that. I am the only CEO who stood up and said there should be no tax exemptions for export companies.
Many of my colleagues were upset with me. But in a poor company like India, it makes no sense to say I pay taxes in Japan, US and rest of the world, but not in India. When you look at all that and say I have 26 percent margin of net income, there is no other company like that. So when you look at all this and normalise it, then you can compare. You look at one or two figures and write something that is not true.