The ability to create value for shareholders is the spirit of Infosys, said Vallabh Bhanshali, Chairman, Enam Securities.

Speaking to CNBC-TV18, Bhanshali said he is happy that after 25 years, it's good occasion to revisit those soft factors that shaped not only Infosys but the country also.

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Don't lose focus on the customer, says Enam Securities

Bhanshali said, if we have a good monsoon, then maybe we could have just one more hike from RBI, because the supply side is doing well and if oil prices go down, we could have robust economic performance for one more year.

Edited Excerpts:

Your thoughts as Infosys turns 25 on the exchanges today?

My thoughts are two fold. One, I feel happy for the company’s shareholders, founders, management, employees and customers. But more importantly, I feel happy that the company listed at a time when India emerged from darkness created by itself of the controls. The company played a torch bearer of values, vision, execution and scalability.

These were the factors that were important for the country as a whole. So, I feel happy that after 25 years, it's good occasion to revisit those soft factors that shaped not only this company, but to quite an extent shaped what has happened in the last 25 years.

We have spoken a lot about the journey of Infosys in the past 25 years. If you have a roadmap on what Infosys should focus on to chart, its growth trajectory for the next 25 years, what do you think it should be?

For every business, customer is king and if you lose focus on the customer, you lose it all. Of course, next comes execution and that has not only the technology and resources and people, but also processes and culture. Narayana Murthy was a much sort after technology professional, when he was caught by the enterprise bug because he was so free thinking, ambitious and idealist, he had to be an entrepreneur.

That is the spirit that Infosys has to continue, to be confident about its ability to create value for shareholders and work backward to create that culture within the firm. So, it's being talked about but may not be talked about enough that, how all the values and idealism overlapped and synchronised with what was necessary for the customer and that is how the company was able to get a higher margin and higher growth than the industry.

I think the same has to be looked at in the current context by the company. So, customer, employee and an enabling culture in which the employee can create a huge value for the customer and eventually it boils down and falls down to the shareholders lap.

Just to take away one of the things in a way they standardised - Indian Inc is giving out detailed disclosures, putting out a guidance. American companies used to do it and after Infosys started the practice, here we got Indian companies giving out guidance. But we recently had Warren Buffett and Jamie Dimon in the US blaming the practice of guidance for short term. What are your thoughts on this in the Indian context?

We must look at the history of guidance, particularly in the context of Infosys. It did not begin with quarterly guidance but began with annual guidance and what Warren Buffett and Jamie Dimon have taken up is quarterly guidance.

Today’s stock market has very skewed playing field and there are individual shareholders with limited ability and then there are institutional players with armies of research analysts, and therefore how does a company try and create a level playing field. It's from that point of view that good companies feel persuaded to give some kind of guidance.

So as long as that, guidance is in the context of the way business is done. If the business can think of itself only in a quarterly manner, then so be it. But if not, most businesses would have an annual plan or mid-term plan, which is beyond one year also. If they are giving guidance, which is in-line with how the business is actually thinking, I think it’s a good service to shareholders.

Where instead the company starts feeling that my share price will get affected then, I think it's clearly a bad thing. As long as the company speaks its mind, speaks about its goals, that is really setting for itself, I think it's a good practice. It puts pressure on the company to stand honest to the guidance, you don’t have to meet the guidance.

Guidance is primarily telling the shareholders and world at large as to what they are attempting to do. So, I think it's a good practice if it is practiced in that manner.

The one other thing linked to Infosys is corporate governance. They really brought about the standards of corporate governance, when you talk about India Inc. However, recently there have been examples of board issues and audit issues for certain companies. In your opinion, do you think that maybe we have longer walk ahead of us to reach the standards of corporate governance as a whole compared to what Infosys set?

I think, your question does not beg an answer really. Yes, it's an unfortunate phase through which we are going, but I do believe that it's only a phase. Sometimes such transactions and such events bunch up and we start feeling that as if we have lost the plot. I don’t think we have lost the plot, I think on the, whole the corporate governance in the country is improving.

I must also mention that there are two things that go hand in hand, the regulatory overreach and the under performance by those who are the custodians, whether it be the directors or be it auditors. We need to create a climate in which the regulator is not seen as a victimizer looking for victims.

Sometimes, if you do not let fiercely capable to come on board, because they do not want to get into this overreach, then you are weakening the whole institution of independent directors.

So, dividing the lines as to what is the responsibility of independent director and what is the responsibility of an auditor. So, if I was to say that as a regulator, I want the auditor to perform my role, the director to perform my role and if something goes wrong, I will victimize everybody. At the same time, the auditor and independent director not walking away from their responsibility as custodians.

I think, we have not had enough debate. I think even the way our laws and rules are structured, probably have grey lines, so we need to look at some of that stuff also. At the end of the day, some of this reflects the society at large we really are. Society as large does not have great value system. Some of it will reflect from time to time.

Having said that, I must say, I am an optimist. I believe that we have moved a long way since Infosys showed the path. There are ‘n’ number of companies today trying to walk the path, we will have aberrations and they a have come in a bunch at this point in time. We will learn from it as a system and move to a better place from here, I have no doubt.

This market recovery from the low has been accompanied by rising bond yields – the difference between where the RBI rate is at and what market rates are indicating is also pretty large. We have got one rate hike and many believe we will get one more and that is it. Do you believe that is the likely case and what is your outlook for the market broadly from here?

We are in turmoil period globally, with US raising rates and dollar strengthening, oil seems to have become quiet now after boiling, plus there are elections in India and the impact of rising dollar and oil on our economy. So, we have lot of macro variables at this point of time.

As far as interest rates are concerned, we have become data driven – after a long time, we saw some hardening of inflation but the picture on wholesale or consumer index is quite moving. So, if we have good monsoon, then maybe we could have just one more hike because the supply side is doing well and if oil quietens then, we could have robust economic performance for one more year and the market will follow. The market will continue to be sheepish given various macro factors at national and international levels.