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Business News/ Companies / Infosys and TCS’ responses

Infosys’s first response

Post our earning release on January 10, 2014, our Chief Executive Officer and Managing Director, Mr. S. D. Shibulal travelled extensively and met approximately 35 clients globally. The disclosures made by Mr. Shibulal in the investor’s meeting on March 12, 2014 were based on the feedback that he received during such client meetings. His statements are primarily relating to macro environment relating to business verticals that we operate in.

The disclosures made on March 12, 2014 were neither selective nor price sensitive. Infosys had already given the revenue guidance for FY2014, which is 11.5% to 12.0%. This is a very narrow range of guidance and the statements made on March 12, 2014 were in line with the guidance given at the beginning of the quarter. We have stayed within this guidance range during the investor meeting. Further, we did not issue any formal revenue guidance for FY 2015 either earlier or during the event. Therefore, none of the information shared on March 12 can be considered to be material non-public information. The information disclosed on March 12, 2014 are merely business updates and not distinct from the previously shared financial projections.

The Company is fully committed to following the Fair Disclosure Standards (consistent with the stringent practices that comply with the US SEC’s regulations). Infosys was being prudent and upholding the highest standards of transparency by explaining the challenges it was facing in the marketplace in an open investor forum with over 200 participants so that investors have a wider appreciation of the marketplace.

Infosys’s second response to Ref FD definitions

1) We do not believe that the disclosures we made during the investor event held on March 12, 2014 constituted material non-public information. We had given guidance earlier for 11.5-12% growth for FY’14 and all we indicated during the event on March 12, 2014 was that we would be closer to the lower end of the guidance. 11.5-12.0% is a narrow band and we stuck to the same during the event. We didn’t disown the guidance nor did we say that we would be outside the guidance range on this event. Hence, we believe that our expectation of being at the lower end of the guidance is merely a business update consistent with the earlier guidance. Since we didn’t stray from the guidance band, we believe that this information would not be viewed by a reasonable investor as having significantly altered the ‘total mix’ of information made available.

As regards the reaction of the stock market, as a responsible listed company, from time-to-time we provide the public with relevant and timely business updates. We have always believed in doing so, irrespective of the likely movement of the stock price in either direction. Further, we believe no reasonable assessment would have indicated that a disclosure which said that we would be at the lower end of a narrow guidance range of 11.5 to 12 percent would move the market and in any way, nor do we speculate on market movements.

Hence we do not believe that it is material non-public information.

2)The disclosures on March 12, 2014 were not selective in any manner. This was an event accessible to all by means of a live audio webcast. As mentioned in my earlier mail, multiple people accessed the event in spite of not being a part of the delegation that visited us. This demonstrates that everyone had access the event and hence the disclosures could not have been selective. If at any time it is implied that this was a selective disclosure, it is completely incorrect and against the facts.

3)There was adequate public notice of this event. This event was publicized as the lead story on our website on the Investor Relations (IR) home page on March 6, 2014, six days ahead of the actual event on March 12, 2014. The fact that multiple people accessed the event as explained above demonstrates that they had advance notice of the event and hence accessed it through the live audio webcast. Posting the notice of the impending event on the IR section of our website in this case was sufficient disclosure, according to us, since the website is a public forum accessible to all.

The March 12, 2014 meeting was handled no differently from others in which we notify investors on our IR home page and they can access the live audio webcast. In fact, we organized two such events earlier in the quarter (February 18 and February 26, 2014). We have followed the same process for each of these events in the form of sufficient advance notice ahead of the event, live audio webcast during the event and deferred audio file and transcript post the event.

As regards your observation of not providing a stock exchange announcement, as mentioned in point one above, we do not think it was material non-public information and did not warrant being sent to the stock exchange. We instead believe it was both non-material (as we were within our narrow band of guidance) and public (since we had given six days advance notice on the IR section of our website of the audio webcast that was accessible to all).

TCS response

TCS firmly believes in the principle of fair disclosure which is framed around the dissemination of material non-public information. At the sellside briefing on March 18th, we merely reaffirmed (i) our extant business outlook on FY15, (ii) the weakness in our India business and (iii) the historic seasonal weakness in the March quarter vis-a-vis the December quarter. The first two points are a matter of public record, stated in our earnings call of January 18th, a transcript of which is available on our website. The seasonality is readily observable by anybody from our historic data which is also in the public domain. None of this represents any new non-public information.

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Updated: 06 Apr 2014, 10:35 PM IST
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