Wiping the memory

zoom

Satyam Computer Services gained a reputation as the Enron of India when details of a $1bn fraud emerged in January. Now part of Tech Mahindra, can the firm ever restore its credibility? Chief development officer Atun Kunwar sits down with Arabian Business to talk reputations, rebranding and revenue.

India’s it industry heaved a collective sigh of relief when Tech Mahindra snapped up the scandal-tainted Satyam Computer Services in April this year. The sale, conducted by auction and rushed through by the Indian government, gave the firm a 31 percent stake and the job of sweeping the country’s largest corporate fraud under the carpet. It was, industry insiders told each other, the close of a bad chapter, one that had sent shockwaves through India’s $70bn-a-year outsourcing market.

For Tech Mahindra, a firm that has had its eye on Satyam for months, it was a chance to buy the backroom giant at the fire-sale price of $353m. Scandal or no scandal, says Atul Kunwar, chief business development officer of the newly-named Mahindra Satyam, his firm knew a deal when it saw one.

“Satyam happened by accident, but we were one of the first off the block to establish contact when the news broke,” he says, spreading his arms wide.

The firm bid Rs58 ($1.16) a share, more than double that offered by other buyers circling the troubled company.

“The company was a victim as much as the customers were. Our angle was we believed Satyam still had a particular worth and we put that across. We said: ‘This is value we can work with,’” Kunwar adds.

By any measure, the outsourcing giant has suffered a spectacular fall from grace. Satyam, which once counted a third of the Fortune 500 firms among its client list, morphed into India’s Enron in January when its chairman and cofounder confessed he had fabricated $1bn worth of cash and assets.

In a four-and-a-half page letter to directors, B Ramalinga Raju revealed he had spun the company’s books for seven years, a scam he described as “like riding a tiger, not knowing when to get off without being eaten”.

The size and scope of the fraud was particularly shocking, as Satyam had been audited by PricewaterhouseCoopers since its listing on the New York Stock exchange in 2001.

For Tech Mahindra, the deal has changed the game. Overnight it has turned into an outsourcing giant with more than 65,000 staff, a roster of blue chip clients and the means to answer analysts who have called on the firm, in which British Telecom holds a 31 percent stake, to diversify beyond telecoms (BT currently accounts for more than 60 percent of its business).

The acquisition also put an end to months of speculation for Satyam clients, which included Nestle, Citibank and Telstra.

Print | Email | Discuss this article

| Share |

READERS' COMMENTS

Employee retention
Posted by Kamal, Hyderabad, India on Saturday 18 July 2009 at 19:25 UAE time


There are so many talented employees - not only technical but also non-techies, who have been very wrongly put in the virtual pool by a bunch of biased senior old satyam hands, people like Mr. Kunwar and other new management should take this seriously to ensure fair practise and create a culture of professionalism. They save good skills then. Mr. Kunwar, CEO and other gentlemen, are you all listening ??

Will employees on reserve be considered ?
Posted by Employee, Hyderabad, India on Monday 13 July 2009 at 17:59 UAE time


Great article, futuristic views...fantastic, will the same ethics be taken to see the talented employees in virtual pool being retained back. Will Mr. Kunwar, increase business to make this happen ?

Click here to post a comment

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic. Arabian Business would like to point out that only comments relevant to the story will be published. Any containing personal insults or inappropriate language will not be approved.
Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country
Subject *
Comment *
Notify me of further comments
Enter the words above *
Please click post only once - your comment will not be published immediately.

MORE FROM ARABIANBUSINESS.COM