Were the Mahindras sold a lemon?
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Were the Mahindras sold a lemon?

Anand Mahindra begs to disagree. "Nobody realises that we bought the company very cheap. So it does not matter to us what the restatement of accounts of Satyam would throw up. All this was discounted by us when we bought into Satyam." The Mahindras paid Rs 1,750 crore to buy 31 per cent of Satyam shares.

Much before Raju fell from grace, Tech Mahindra had proposed a strategic alliance with Satyam. The offer was rebuffed. But in the first week of January 2009 - days before Raju's confession - not too discreet overture was made again. But Ramalinga again said no.

A year later, a proper restatement of accounts of Satyam is turning out to be tougher than anticipated. The job has been given to KPMG with a deadline of June 2010. An indication of why restating accounts is proving so difficult becomes clear from the CBI chargesheet which says that on January 7, 2009, Raju "dishonestly and fraudulently reloaded the operating system on his laptop, causing destruction of incriminating electronic records pertaining to commission of the fraud." Though the chargesheet does not say so, the same was done with the main operating system of Satyam.

"When Raju confessed, Satyam was a $ 2 billion company on paper," says an internal source. In a sense, Raju's initiative in destroying Satyam records also helps the Mahindras: the claims of over Rs 1,230 crore being pumped into Satyam by privately-held Raju companies and Maytas can never be found in the records of Satyam. Demands to return this money have been raised, but there is no pressure on the Mahindras as this cannot be proved.

Despite all this, Satyam is expected to finish with revenues of $800- $900 million in the current financial year, ending March 31. It might also have a small operating profit. The company which had close to 53,000 employees on its rolls when it went bust, now has a headcount of 30,000. This is expected to go down by another 3,000, but some of that will be made up by fresh recruitments of around 2,000. The fresh appointments are to take care of the growing attrition rate in the company.

Since Satyam sank in the middle of a slowdown, there were not many jobs on offer and its employees stayed back. But now with the market looking up, many have started leaving. Some of them are also leaving because the old laid-back style of management has given way to a professional approach. "Mahindra Satyam is not Raju's Satyam. A lot of flab has been cut. Many divisions have been closed and others consolidated. Divisions like Satyam School of Leadership and Learning, a Raju favourite, have been shut and many top guns have left the company," says an old timer.

In their place the company has made new inductions, not only from Tech Mahindra, but also from Infosys and Wipro. Another old hand says: "The new guys, led by the new CEO, are hands-on; they are to the point and mean business. There is none of the permissiveness of the Raju days. It's a new culture." Meanwhile, the Mahindras have successfully settled a $ 1-billion suit filed by a British company, Upaid, out of court for just $ 70 million.

As a first step, the company's brand name has been changed from Satyam to Mahindra Satyam. Once the legal process is over, Mahindra Satyam, in all probability, will be merged with Tech Mahindra to create a large IT conglomerate. Analysts say this could happen sooner than later - possibly before 2010 rings out.
Posted On : 11 Jan 10
Were the Mahindras sold a lemon?
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