Infosys noted that some of its clients or suppliers have invoked 'Force Majeure' clauses in contracts, negatively impacting its business with limited recourse.
IT services major Infosys has said its profitability may be “marginally impacted” and its cash flows negatively affected amid COVID-19 pandemic. Also, Infosys CEO Salil Parekh drew a pay package of about USD 6.15 million in fiscal 2020, Infosys said in a regulatory filing. Outlining risks related to the occurrence of COVID-19, Infosys said its profitability may be marginally impacted as some clients have sought price reductions or discounts.
“Lower profitability and prolonged payment terms requests from clients can impact our cash flows negatively and may impact our ability to provide dividend to shareholders,” Infosys said in its 20-F submission to the US SEC.
The Bengaluru-based company also noted that some of its clients or suppliers have invoked ‘Force Majeure’ clauses in contracts, negatively impacting its business with limited recourse. The coronavirus outbreak has disrupted businesses across the world. Like many of its peers, Infosys has also refrained from providing a revenue outlook for FY21 and had cited uncertainty on account of COVID-19 outbreak as the reason for the move.
Infosys said before COVID-19 health crisis, there had been an increase in the number of visa and visa renewal application rejections, predominantly in the US. As a result, it encountered delays and/or additional costs in managing such projects stemming from the uncertainty of whether key personnel could join in-country as needed both in terms of timing and the productivity/ competency.
The company added that it has seen similar actions in Australia with respect to revisions in their temporary visa programme and in the UK with the government’s current policy focus on “net migration”. “Due to a vigorous focus on domestic (local) employment across many markets during the COVID-19 crisis, these restrictions are expected to increase substantially, resulting in increased expenses. The governments of many countries are expected to heighten adjudication standards for visa applications as well labour market tests as the economic impact of the crisis progresses,” it highlighted.
These anticipated restrictions would incur additional cost in maintaining and renewing existing visas, thus resulting in additional expenses for client delivery, Infosys said.
The company said its CEO Salil Parekh had received a pay package of about USD 6.15 million in the fiscal 2020. This included USD 801,264 in salary, USD 1,540,305 in bonus and incentives, USD 53,425 in amount accrued for long-term benefits, and USD 3,758,675 in value of RSUs (restricted share units) granted. Infosys COO UB Pravin Rao drew a package of about USD 2.3 million (Rs 17.25 crore), and CFO Nilanjan Roy received about USD 1.5 million.