If there is one company which exemplifies complete lack of corporate governance, it is 3i Infotech. And the amazing thing is, it is supposedly a professionally managed company.
Its share price has come down to as low as Rs 42 now. Looks at the prices of successive public dilutions it has done since the IPO:
Apr’2005 – Rs 100 (this was the IPO)
2007 – Rs 220 (a series of bond conversions)
Sep’09 – Rs 84
Apr’10 – Rs 78
So the last 2 dilutions have been at a discount to the IPO price. Equity has ballooned about 4 times since the IPO, or in just about 5 years. There is still an outstanding FCCB, which wont convert though.The D/E at the end of FY10 was 2.3x, despite 2 dilutions within FY10.
The company took a Rs 230 crore write off in FY10 as well. And what happens to the management? To the best of my knowledge there’e been no change in the CXOs. Some of these gents have been in saddle since IPO.
- V Srinivasan (MD & CEO, since 1999)
- Amar Chintopanth (CFO, since 2001)
So the board seems be sleeping at its job. It has not asked anyone to quit despite the steady slide of the company.
Here are the names of the gents sleeping on the board (these are the independent directors):
- Hoshang N. Sinor (chairman, since 2003)
- Mahadevan Chandrasekaran
- Dilip Choksi
- Ashok Jhunjhunwala
- Bruce Kogut
- Samir Mitter
I couldnt get the dates of appointment of other directors. But it appears the 2 CXOs and the chairman have been there 7-8 years. Cosy arrangement indeed. The board directors get paid about Rs 12 lakh a year, for sleeping thru the 4-5 meetings they perhaps attend in a year. ICICI Bank is the largest shareholder in 3i (it was a perhaps a promoter of 3i, as it is of the other laggard Firstsource). Vishaka Mulye is in ICICI. Even Sinor and Choksi are on the boardss of several ICICI companies. So in effect, it is ICICI sleeping on the job.
The CFO got paid Rs 3.2 crore in FY10. Thats a fat salary by India standards. Couldnt find the CEO’s sal, must be a good sum too (he’s based in the US)
