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A marriage made in heaven

Zafar Anjum | March 23, 2012
Post-merger, we will be more aggressive in AP, says Rohit Gandhi, Mahindra Satyam’s managing director for the Asia Pacific.

Legal issues

Satyam was plunged into a crisis in January 2009 after its founder, B. Ramalinga Raju, admitted to perpetrating fraud for several years. Consequently, the company lost many clients and had to settle litigation and fraud charges including from the U.S. Securities and Exchange Commission.

According to Rohit, now no major legal issues remain to be settled from the past. "We had told our customers that we will not merge till each and every issue is settled," he said.

This is largely true but some thorns still remain in Satyam's path to glory. For example, there is still a pending class action suit from the Aberdeen group, one of the largest institutional investors, prior to the fraud. It also faces tax claims of millions of rupees from the income-tax authorities. Satyam is contesting these claims.

"I mean most of it is all sorted out," Rohit said. "So, the only legal issue is you have to take formal approvals. It is time consuming but we don't see frankly any significant challenges of any kind."

The confusion is gone

"Till the legal formalities are cleared, we still have to run as two different operating companies but I think with this announcement now what can happen is that at least from the customers' point of view, the confusion is gone," he said. "Earlier what used to happen was when you go with the mobile solution of Tech Mahindra to a Satyam customer, he would more or less in his mind treat Tech Mahindra as a sub-contractor. Now the customer looks at it as a seamless solution."

So, with the merger, Mahindra Satyam's most pain points are gone.

"Also, once we have officially announced it, we can now go and do a lot of informal synergies, which earlier was extremely difficult," he said. "We can now start selling some of the Satyam offerings like business intelligence, analytics, that are very relevant for the telecom sector."

"Earlier, it was very complicated," Rohit said. Now the opportunities for both the companies have expanded. "If you look at Asia Pacific, there can be a lot of synergy in that location. For example, Tech Mahindra is very strong in Indonesia and New Zealand. Satyam does not have a significant presence there. Now we can start formally leveraging that."

"So, go-to-market becomes much easier because in services business people don't get confidence till they feel that you are one entity. In outsourced services, they look at long-term players."

"Also, look at Satyam's locations, We are strong in China and Japan where Tech Mahindra is not strong. So, it is very complementary in this region. That can start right away. We don't have to wait (for legal approvals)."

 

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