MUMBAI (NewsRise) -- The troubles dogging Infosys seem to remain unabated after new reports surfaced that India's stock market regulator opened a deeper probe into whistleblower allegations against the nation's second-largest software exporter.
The Securities and Exchange Board of India is set to order a forensic audit into Infosys' books, after whistleblowers alleged financial irregularities at the Bengaluru-based company, the Mint newspaper reported Friday. The regulator's investigation so far has "in fact warranted a deeper analysis," the report said, quoting an unnamed person.
The report comes barely weeks after Infosys said its audit panel, along with external investigation agencies, found no evidence of "financial impropriety" against its Chief Executive Salil Parekh and Chief Financial Officer Nilanjan Roy. The New York- and Mumbai-listed company had initiated a probe after two whistleblower complaints late last year alleged that the two executives used "unethical business practices" to bulk up its revenue and profit. The complaints alleged CEO Parekh bypassed reviews and approvals for large deals, fearing a backlash on its growth targets, while CFO Roy allegedly abetted hiding matters around such deals.
The allegations on Oct. 21 led to a 16% crash in Infosys shares, its biggest intraday drop in six and a half years, wiping off $6.6 billion in the company's market value. The shares have since recovered most of the losses. They gained about 12% last year, compared with a more than 16% jump at larger rival Tata Consultancy Services. Infosys is up 7% so far this year.
Infosys Friday said the company had received letters from regulatory authorities seeking information on the anonymous whistleblower investigation. "The company continues to cooperate with regulatory authorities," it said in a statement.
However, Infosys has not received any specific request from SEBI to conduct further audits as reported by media, it said.
Infosys is also being investigated by the U.S. Securities Exchange Commission, which it had previously said it will continue to cooperate with. A class action lawsuit has been filed against the software exporter in the U.S., and Infosys said it intends to "vigorously" defend the litigation.
"The work that is being done in this (audit) review has been extremely detailed and thorough, (with) about 200,000 individual elements that we have looked at, 77 different people that we have interviewed," Parekh told CNBC TV18 television channel in an interview at Davos earlier this week. "So, the sense that I have, the way that the board has done, the audit committee, is extremely detailed."
The whistleblower issue struck Infosys just as it managed to shake off the effects of a similar complaint in the past that led to a boardroom tussle rocking it for months. Infosys' performance has been improving in recent quarters thanks to rising investments in new internet technologies such as cloud computing and artificial intelligence.
In the quarter ended in December, Infosys posted a better-than-expected profit and raised its annual dollar revenue growth outlook to 10% to 10.5% from the 9% to 10% it previously forecast.
Infosys shares closed down 0.2% in Mumbai trading on Friday, while the benchmark Sensex gained 0.6%.
--Dhanya Ann Thoppil