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    Mahindra Satyam Temp

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    Roshan Rathi
    Satyam Computer Services was a leading IT services company that engaged in fraudulent accounting practices in 2008. It was acquired by Tech Mahindra in 2009. Tech Mahindra paid $3.2 billion to acquire a 51% stake in Satyam, with the goal of diversifying its business and joining the ranks of major Indian IT companies. However, integrating Satyam posed challenges for Tech Mahindra, such as rebuilding Satyam's brand, reducing debt from acquisition financing, and retaining customers amid ongoing litigation issues.

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    Mahindra Satyam Temp

    Uploaded by

    Roshan Rathi
    19 views17 pages
    Satyam Computer Services was a leading IT services company that engaged in fraudulent accounting practices in 2008. It was acquired by Tech Mahindra in 2009. Tech Mahindra paid $3.2 billion to acquire a 51% stake in Satyam, with the goal of diversifying its business and joining the ranks of major Indian IT companies. However, integrating Satyam posed challenges for Tech Mahindra, such as rebuilding Satyam's brand, reducing debt from acquisition financing, and retaining customers amid ongoing litigation issues.

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    Satyam Computer Services was a leading IT services company that engaged in fraudulent accounting practices in 2008. It was acquired by Tech Mahindra in 2009. Tech Mahindra paid $3.2 billion to acquire a 51% stake in Satyam, with the goal of diversifying its business and joining the ranks of major Indian IT companies. However, integrating Satyam posed challenges for Tech Mahindra, such as rebuilding Satyam's brand, reducing debt from acquisition financing, and retaining customers amid ongoing litigation issues.

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    19 views17 pages

    Mahindra Satyam Temp

    Uploaded by

    Roshan Rathi
    Satyam Computer Services was a leading IT services company that engaged in fraudulent accounting practices in 2008. It was acquired by Tech Mahindra in 2009. Tech Mahindra paid $3.2 billion to acquire a 51% stake in Satyam, with the goal of diversifying its business and joining the ranks of major Indian IT companies. However, integrating Satyam posed challenges for Tech Mahindra, such as rebuilding Satyam's brand, reducing debt from acquisition financing, and retaining customers amid ongoing litigation issues.

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    of 17

    From Satyam to Mahindra

    Satyam
    Satyam Computer Services Ltd
    • Founded in June 1987 as a private limited company
    by Ramalinga Raju along with R Rama Raju
    • In June 1991, Satyam Computers got its first Fortune
    500 Client and was recognized as a Public Limited
    Company
    • One of the leading global consulting and IT services
    company that offered end-to-end IT solutions
    • The company employed over 50,000 IT professionals
    across development centers in 6 continents
    Satyam Clients

    A total of 650+ Clients


    185 of the top fortune 500
    Companies
    Turbulence
    The White Knight - techMahindra
    Genesis

    • Incorporated in 1986 as a joint venture of Mahindra Group & BT

    • IPO in 2006, rechristened to “Tech Mahindra”

    Business

    • Comprehensive service offerings for TSPs, TEMs & ISVs

    • Consulting, Application Development & Management, Network

    • Services, Solution Integration, Product Engineering, Managed Services,

    • Remote Infrastructure Management and BPO.


    The White Knight - techMahindra
    Leader in Telecom offshoring
    • Ranks 5th among the Top 20 IT Software and Service exporters in India (excluding BPO revenues)
    • Stands 11th in the IT-BPO Employers category.
    Global presence
    • Operations in more than 25 countries
    • Global presence with 16 sales offices & 13 delivery centers
    Customer profile
    • Clients include 11 Fortune Global 500 companies (5 US)
    • Customers include 12 of Top 20 wireless TSPs & Top 5 TEMs
    Major clients
    • BT, Cisco, Alcatel Lucent, Microsoft, Motorola, O2, Qwest, StarHub,
    • TNZ, Hutchison, Unisys, Vodafone, BSNL, Airtel, MTN, Etisalat, Zain, TMobile,
    • NSN, Cox, Telus, Huawei.
    Employees
    • Around 33,000+ professionals across the globe.
    Strategic intent
    • Engineer the group’s entry into the big league
    of India’s IT sector joining the ranks of Tata
    Consultancy Services, Infosys and Wipro

    • Diversification and derisking of business

    • No overlap in businesses
    The Big Confession
    • Confession of fraudulent accounts
    • Balance sheet (as on the 30th of September,
    2008) reflected:
    – Inflated figures for cash and bank balances – by
    361 crores
    – Accrued interest of Rs 376 crore which was non-
    existent
    – Understated liability and overstated debtors
    position.
    Turbulence
    The Aftermaths
    • Satyam stock price falls to 39.95 from 178.95
    • The New York Stock Exchange halted trading in
    Satyam stock from January 7, 2009.
    • India’s National Stock Exchange announced that it
    will remove Satyam from its Nifty 50-share index
    from January 12, 2009.
    • More than 12 law suits filed in US court
    • Auditing firm PriceWaterHouseCoopers came
    under scrutiny
    Corporate Governance??
    • September 2008 - Golden Peacock award for
    Excellence in Corporate Governance
    Bidding process

    • 6th Mar, 09 – Approval From SEBI .

    • 9th -12th Mar, 09 – Registration for Bidding.

    • Criteria - min Rs. 1500 crores

    • No minimum Floor price required.

    • Lock-in period – 3 yrs.


    Bidding Process(cont.)

    • Investor to get 31% fresh Equity shares from


    Satyam .

    • Additional 20% from Public Offer.

    • Open Offer Price = Bid Price.


    Bidders involved

    • L & T Infotech@ Rs.45.90 per share

    • Wilbur L Ross & Co @ Rs. 20 per share

    • Tech Mahindra @ Rs. 58.90 per share

    • Cognizant & Spice Corp.


    Tech Mahindra wins Satyam Bid.
    • Paid Rs. 1756 crores for 31% stake .
    • Additional 20% for Rs.1129 crores.

    FUNDING
    -- Raised Rs. 550 crores by issuing Convertible
    Debuntures.
    -- Borrowed Rs. 1450 crores @ 10% rate.
    Post-acquisition scenario & valuations

    CHALLENGES
    • To rebuild the brand image
    • Issues related to governance( litigation),
    • Retaining customers,
    • Reduce insecurity among employees,
    • Downsizing .
    Effect On Tech Mahindra
    • Net borrowings of Rs 2,380 crores
    • paid Rs 57.1 crores as interest for just over two months on its
    borrowings that have a tenure of one to five years.
    • Revenues increased to Rs 1,113 crores by 5.8% from Rs 1,051
    crores in the last quarter of 2009 .
    • Tech Mahindra reported a net profit of Rs 131.6 crores in the
    first quarter ending June 30, 2009 as against Rs 230.4 crores ,
    down by 42.8% in the last quarter.
    • The drop in net profit was largely due to interest paid and
    forex loss of Rs 26.1 crores due to currency fluctuations.

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