The shares of one of India’s most successful companies fell 16.2% on the National Stock Exchange on Tuesday after the news of a whistleblower complaint that alleged aggressive accounting practices and attempts to blindside the board.
In a filing with the Infosys board and the U.S. Securities and Exchange Commission, the whistle-blower alleged that the company’s top executives were bending rules with regard to accounting of revenue from large deals to make them look more profitable.
In a conference call with analysts earlier this month questioned the company about an unusual jump in unbilled revenues and whether there was a change in accounting policy.
Unbilled revenue is revenue that is recognized before being billed to the client.
In terms of incremental sales, unbilled revenues jumped to almost 24-25% in the first six months of this fiscal, compared to 10-11% in fiscal 2018-19, he pointed out in the call.
The company answered that there was no change in accounting policy, but that there were a few clients where there was a difference in timing with regards to revenue recognition and actual billing milestones reached for clients.
Shares of Infosys Ltd today crashed 16% to ₹643.30 wiping off ₹53,452 crore from its market capitalisation.
Infosys Chairman Nandan Nilekani said in a statement on Tuesday that the complaints were placed before the audit committee and the non-executive members of the board. CEO Salil Parekh and CFO Nilanjan Roy have been recused from the matter to ensure an independent investigation.
These new allegations comes two years after former CEO Vishal Sikka left after a public battle with founders.