Mahindra Satyam is now getting back on track. But the biggest issue facing them is the upcoming June declaration of true results. Can they handle that? by Amir Moin
By the time this magazine goes for print, Mahindra Satyam (formerly Satyam Computers) would be hosting an analyst meet with the theme – New World. New Possibilities: How a re-energized Mahindra Satyam looks at the New World, post the recession; and innovates to create value for its stakeholders. If you look at it in one way, a lot of the alarm bells have stopped ringing at Satyam since the company went through the scam, the confession (by B. Ramalinga Raju, that he had cooked up a fictitious Rs.50.43 billion in the account books), the rescue & recuperation and the acquisition by Mahindra for Rs.28.9 billion on April 15 last year. Customer churn, which was at its zenith in that period, has been all but frozen, and the company is now winning accounts like BASF and GlaxoSmithkline. Mahindra Satyam has secured four big deals & added 25 new clients in the past few months and the FIFA contract too.
A great success was achieved with an out-of-court settlement for the U-paid case last year. It was a long standing case, where U-paid had accused Satyam, its former software vendor, for forgery and fraud. The case ended in an out-of-court settlement of $70 million. But the restatement of results for the company, which would happen somewhere in June this year, could throw up a huge spanner in the shareholders’ expectations. Key shareholder L&T has sold off its stake, saying that the company’s performance is being concealed from shareholders. And the issue of SEC fine is yet to be sorted out.
Initially, there were many challenges starting right from reinstating confidence in the brand in front of customers and sorting out corporate governance issues. The uncertainty pertaining to the future of Satyam was so huge that almost every job portal had the CV of every Satyamite! The company still faces a high degree of employee churn in the realm of 20%. As per reports, around 75% of top management has already left the company. CP Gurnani, CEO, Mahindra Satyam has commented that the situation is now under control and a hiring plan of about 8,000 people is in the pipeline. And there are experts –like Mayur Sahni, Senior Market Analyst, IDC – who support his view (“When you have a workforce of around 53000, then an attrition of 15-20% does not really matter. In fact, the people who matter the most at Mahindra Satyam have still not left the company,” says IDC’s Sahni).
But attrition was not the only issue. Mahindra Satyam lost a lot of customers in the initial four to five months. Still, if one looks at recent events, then things seem to be on track as far as recovery is concerned; yet, numbers on the stock market speak a different language. That’s understandable, since the markets are still embroiled in countless speculations on the true state of affairs in the company till the restated results are announced.
By the time this magazine goes for print, Mahindra Satyam (formerly Satyam Computers) would be hosting an analyst meet with the theme – New World. New Possibilities: How a re-energized Mahindra Satyam looks at the New World, post the recession; and innovates to create value for its stakeholders. If you look at it in one way, a lot of the alarm bells have stopped ringing at Satyam since the company went through the scam, the confession (by B. Ramalinga Raju, that he had cooked up a fictitious Rs.50.43 billion in the account books), the rescue & recuperation and the acquisition by Mahindra for Rs.28.9 billion on April 15 last year. Customer churn, which was at its zenith in that period, has been all but frozen, and the company is now winning accounts like BASF and GlaxoSmithkline. Mahindra Satyam has secured four big deals & added 25 new clients in the past few months and the FIFA contract too.
A great success was achieved with an out-of-court settlement for the U-paid case last year. It was a long standing case, where U-paid had accused Satyam, its former software vendor, for forgery and fraud. The case ended in an out-of-court settlement of $70 million. But the restatement of results for the company, which would happen somewhere in June this year, could throw up a huge spanner in the shareholders’ expectations. Key shareholder L&T has sold off its stake, saying that the company’s performance is being concealed from shareholders. And the issue of SEC fine is yet to be sorted out.
Initially, there were many challenges starting right from reinstating confidence in the brand in front of customers and sorting out corporate governance issues. The uncertainty pertaining to the future of Satyam was so huge that almost every job portal had the CV of every Satyamite! The company still faces a high degree of employee churn in the realm of 20%. As per reports, around 75% of top management has already left the company. CP Gurnani, CEO, Mahindra Satyam has commented that the situation is now under control and a hiring plan of about 8,000 people is in the pipeline. And there are experts –like Mayur Sahni, Senior Market Analyst, IDC – who support his view (“When you have a workforce of around 53000, then an attrition of 15-20% does not really matter. In fact, the people who matter the most at Mahindra Satyam have still not left the company,” says IDC’s Sahni).
But attrition was not the only issue. Mahindra Satyam lost a lot of customers in the initial four to five months. Still, if one looks at recent events, then things seem to be on track as far as recovery is concerned; yet, numbers on the stock market speak a different language. That’s understandable, since the markets are still embroiled in countless speculations on the true state of affairs in the company till the restated results are announced.
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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