This month Infosys Ltd celebrates its silver jubilee of becoming a public company in India. It was a seminal event for the capital markets in India. Infosys redefined governance standards in the country and created a new form of capitalism based on a good value system, sharing of wealth with all constituents, with clear separation of private interest and public wealth.
The Infosys IPO was a tough act and eventually was bailed out by its investment banker, Enam. Infosys raised ₹ 16.58 crore at a time when its revenue in the previous year was just ₹ 8.66 crore. In the roadshow, the company claimed that it would reach $100 million revenue by 2000. This was a bold statement while entering the capital markets when they were just recovering from one of the biggest scams of our generation, the Harshad Mehta scam. The stock was issued at ₹ 95 per share and ended the day at ₹ 160 per share. It was a tepid listing but the first step towards history in the making. The first taste of success came with Morgan Stanley taking a large stake. The rest is history. Infosys ended up being one of the largest wealth creators for its investors.
What set Infosys apart from the rest was its insistence on doing business in a fair and ethical manner; its insistence on creating wealth legally and ethically and sharing it with all stakeholders; its mindset to treat shareholders as owners and the management as trustees of shareholders’ money; its practice of using disclosures and financial reporting as a competitive advantage without worrying too much about losing competitiveness; its trendsetting adoption of global practices like quarterly reporting, voluntary adoption of global governance standards; its innovative way of recognizing employees through human resource valuation reporting; its outreach to global investors by providing financial statements in GAAPs of seven countries in their own languages; its innovative ESOP scheme, which made many millionaires including some of the drivers and peons in the company; and finally its insistence on values before profits.
All these did not happen by chance. It happened due to the vision of one great leader—N.R. Narayana Murthy. If you check the history of Infosys, you will find his footprint in every aspect of its success. He created the idea of Infosys that attracted some of the best minds from the corporate world to build a much greater institution of our times. His ability to spot talent, his ability to challenge them to achieve the unachievable, his clear communication of value systems, his ability to walk the talk as a leader and more than anything his ability to provide space for everyone to grow and shine and take a step back when needed. He had simple business rules and a clear focus on business.
Infosys was a dream company for many generations. It was the middle-class dream. Many investors bought their first house selling Infosys shares, many investors got their sons or daughters married with the proceeds of Infosys shares, many middle-class people became millionaires because of their holdings in Infosys and more than all that, Infosys enhanced the aspirations of many Indians and made them think global. One analyst from a global firm wrote a famous report with the title “Infosys, god’s own company" and for many of us that was not an exaggerated statement. Investors loved the stock and benchmarked other companies to the same standards that resulted in overall governance improvements across the board in India.
Recently, Murthy was very vocal when he saw Infosys compromising on some of its core values and governance principles. For an outsider, he was power-hungry, not willing to let go of his hold on Infosys. But for many of us, who worked closely with him, we knew that it was due to his genuine feeling to make Infosys stick to its core principles and value system. There are not many leaders in corporate history who left the company they built lock, stock and barrel like him. I, for one, strongly believe that the truth has a profound way of establishing itself, irrespective of circumstances, and will always prevail.
I am proud to have been part of this journey, which transformed India’s corporate world forever, and also to have worked closely with a legend, the one and only, Narayana Murthy.
V. Balakrishnan, former chief financial officer at Infosys, joined the company in September 1991 and resigned in December 2013. He is founder and chairman of Exfinity Ventures.