MUMBAI: India’s second-largest IT outsourcing firm Infosys on Friday announced a 23.5 per cent jump in its quarterly net profits, beating estimates as it declared that an internal probe had found no evidence of misconduct by its top executives.
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This was the company’s first financial announcement after whistle-blower allegations sparked an internal investigation as well as an ongoing probe by the US Securities and Exchange Commission in October last year.
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Anonymous whistle-blowers had accused senior Infosys executives including CEO Salil Parekh of acting unethically to inflate revenues, causing the Bengaluru-headquartered firm to lose over $7 billion from its market value in a 24-hour period in New York.
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But the IT giant appeared to have turned a corner Friday, as net profit for the quarter ending December came in at Rs44.57 billion ($628.2 million), up from Rs36.09 billion a year earlier, due to increased spending by clients in Western markets.
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Infosys said its internal investigation had found no proof of misconduct or financial fraud.
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“The audit committee determined that there was no evidence of any financial impropriety or executive misconduct,” Infosys Audit Committee Chairperson D. Sundaram said in a statement.
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The firm raised its forecast for earnings growth from 9-10 per cent to 10-10.5 per cent in dollar terms for the current fiscal year.
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Analysts said the allegations had not affected the company’s standing because it had acted quickly to defuse the crisis.
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“It also reflects revival of IT spending and clients’ confidence in Infosys’s reputation,” Baburajan K, editor of TelecomLead.com, told AFP.
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Its success comes as Asia’s third-largest economy battles a prolonged slowdown — manufacturing activity has stalled while unemployment has hit a four-decade high.
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In November, government data showed that quarterly growth had fallen to 4.5 per cent, its slowest pace in more than six years.
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Infosys earns over 60 per cent of its total revenue from the United States.
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The December-ended quarter is generally considered a weak period for India’s $150-billion IT sector — one of the country’s flagship industries — due to annual holidays in Western markets.
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In an indication of positive sentiment, shares in Infosys were up by almost two per cent in Mumbai — where it is also listed — as markets closed Friday ahead of the release of its quarterly results.
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Its rival Tata Consultancy Services postponed its earnings announcement originally set for Thursday due to a high-profile legal battle over corporate governance issues.
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