Indian IT major Infosys drops plan to sell Panaya, Skava

Infosys
Photo: Mint

Remember Panaya? It was among Infosys Ltd’s most ambitious buys that eventually became a bone of contention between founder Narayana Murthy and the then chief executive officer and managing director Vishal Sikka. Infosys then tried to exit the Israeli enterprise software management company after Vishal Sikka was forced out of the company. It has now shelved that exercise.

The company on Friday said it had declassified the provider of automation technology as well as other sell-off candidates as “held for sale”. This includes Kallidus and Skava. It had bought e-commerce services provider Kallidus for $120 million. This gave it access to the holding group behind San Francisco-based Skava, a cloud-based platform provider of online services for retailers. All the acquisitions happened in 2015.

“During the quarter ended December 31, 2018, based on evaluation of proposals received and progress of negotiations with potential buyers, the company concluded it was no longer highly probable that the sale would be consummated by 31 March 2019,” the company said in a statement.

Infosys has been an acquisition-shy company, choosing instead to sit on cash — it conducted its first-ever share buyback in 2017 and announced another one on Friday. Sikka, bubbling with ideas as the company’s first non-founder CEO and a desire to move the traditional bread-and-butter software exporter to a company riding on automation and artificial intelligence, tried to change that. Panaya was a step in that direction — Infosys bought it at an enterprise value of $200 million.

Murthy accused Sikka of not being transparent in the deal, while also charging him of other misdemeanours. An April 13 story by Mint mentioned how the company’s then chief financial officer Rajiv Bansal walked out of a board meeting, protesting against the acquisition.

Later, a generous severance package to Bansal was questioned by shareholders and Murthy. A whistleblower claimed that the acquisition was overvalued and this became the foundation for allegations that the company, under Sikka, had bought out Bansal’s silence. Once Sikka was ousted, the company held back further payments to Bansal. The case went into arbitration and Bansal won.

In the December quarter, the company took a one-off depreciation charge and amortisation expenses of $12 million on its books, which hit its margins. Infosys will now continue to hold companies at a reduced fair value with plans to repurpose Skava’s micro services-based business and refocus Panaya’s suite of products.

This article was first published on livemint.com.