Mphasis shares saw a major setback today with a downfall of nearly 27%. This was the response of the stock market to the company's decline in the profit for the quarter ending January 31,2011. Company discouraged market for its stock prices with its results. HP owned Mphasis posted net profit of Rs 226.67 crore for the November-January quarter. This net profit is a sharp 15.5% down from the Rs 268.27 crore profit posted by company during the same period last year. In the Bombay Stock Exchange, company's share prices were down nearly 28%. In the BSE, stock touched lowest mark in 52 weeks (one year). In BSE Mphasis closed at Rs 448.40. Same was the scene in the National Stock Exchange, where share price of company fell by same percentage touching 449.30.

Parent company HP is being widely criticized for not following corporate governance. Indian software company was needed to the drop rates it charges for software development, as HP demanded it for HP's clients. HP acquired Mphasis back in 2008, to fetch established clients of competitor IBM, by providing clients with low-cost IT services from India. HP's Clare Gayner told Bloomberg about this “HP and Mphasis have rigorous policies in place to define the rules of commercial engagement and avoid conflicts of interest.” HP has 61% stake in Mphasis.

Mphasis CEO Balu Ganesh Ayyar said in a press conference that there is no harm to the corporate governance. Mphasis has two types of relationships with HP, shareholder and client. Balu claimed that they treat HP just like any other customer.