Mah Satyam to press pedal by June 2012; integration key

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Mah Satyam to press pedal by June 2012; integration key

CP Gurnani, the man who led his team to turnaround the erstwhile Satyam Computers and now Mahindra Satyam, said that the company has enough resources to wade through the legal battle over claims with the IT department.

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Nearly two-and-a-half years after acquiring IT and outsourcing firm Mahindra Satyam , its parent, Tech Mahindra , is still struggling to resolve issues in the US and back home.

Speaking to CNBC-TV18, CP Gurnani, the man who led his team to turnaround the erstwhile Satyam Computers and now Mahindra Satyam, said that the company has enough resources to wade through the legal battle over claims with the IT department.

Explaining his sales pitch to the board for the merger of the two entities, Gurnani said that Tech Mahindra has core strength in the telecom space and Mahindra Satyam has a core enterprise application. "It is like a marriage made in heaven because Tech Mahindra provides mobility, we provide enterprise and the world is asking for enterprise mobility. This differentiator is the one reason why the two companies should work under one roof and create better value for its employees, its customers and the shareholders."

Below is an edited transcript. Watch the accompanying videos for more.

Q: Your colleague Vineet Nayyar had said, "Past is gone, the ship is now back on course and gathering momentum." Are you satisfied with the three year transformational plan that you had put in place to turn things around at Satyam Computers and now Mahindra Satyam?

A: It has been quite a journey I must admit. Eventually, working with various parts of not only our internal organization but with the external world has been quite a challenge.

Q: What was the most challenging because you had three fronts that you had set out as part of that transformational plan that you had put in place. The client challenge, the people challenge and the governance challenge, what was the hardest part of getting through?

A: The bigger challenge obviously was not only the regulators in India, but regulators overseas. There are a number of times when suddenly you start feeling that you are an ambulance driver, you picked up a wounded patient and now you are being penalized for having done so. We had to go through a lot of questions because they were all related to the past.

Q: So, is your bigger challenge with the Indian regulatory system or with the US regulatory system?

A: Both. The US is more decisive because once you start having a dialogue with them; there is a finite element to it. In the Indian system, the questions are the same, they just challenge the driver. They don't discriminate between what has happened in the past or what has happened now, whether it was right or wrong, they just don't.

Q: Where do things currently stand with the IT department, you are contesting the claims that the IT department have put forward as far as Mahindra Satyam is concerned. Where do things currently stand on that front?

A: I think the media has done a phenomenal job of reporting where we stand because we believe it is a fictitious income and on fictitious income, we should not be liable to pay any taxes. The department disagrees because as far as they are concerned, within their own purview, once the income is declared, it is an income. So, it is subjudice, and as you know, these kinds of cases will take their own due course of time. So, we are also waiting.

Q: The regulators in the US have been asking for a restatement of accounts all the way back to 2002 which you haven't been able to provide so far. Where do things stand on that front?

A: I think again we have come to a resolution that we will delist. So, we have given a definite date on which will delist. We have informed all the investors and they know what the investors need to do. We are very clear with the government that this is where we stand, and as far as I am concerned, effective April 1, 2012 we will be delisted from the US.
 
Q: Do you think you have been able to make that journey from being Satyam to being Mahindra Satyam at the core?

A: I do believe so, as a matter of fact - what is the difference? The first part is that the kernel of whole of Satyam which was its competency, it was technology and people were not impacted.

Q: So, Raju built a good company?

A: Raju built a great company. I strongly believe that Raju was a visionary. Raju clearly put his bets on the right technology and that he built a great organization.

Q: Is it that he just became too greedy?

A: Frankly, I wish he had a financial discipline, I wish he had focused a lot more on operating matrix and he wouldn't have had to be in a situation what he is in. But then we wouldn't have been here, discussing the same thing. Ultimately in this particular case, what we are proud of is that media had written us off as Enron of India. Now when we say we are the comeback kids, we are really proud of what we have been able to achieve. 

Q: You were talking about the larger challenges that face not just Mahindra Satyam, but the world at this point in time and specifically the IT business. What is 2012 looking like - there is cautious optimism among IT companies that it's not going to be as bad as one expects it to be; that the deal pipeline is still looking somewhat robust?

A: On a macro environment, there is nothing which is positive, let me be very clear. I strongly believe that there is a lag in our industry.  So, if retail in Europe is bad today, the impact on us will actually come in 6 months because more often than not, we are already into some contract or the other. So as a lag industry, if anybody is trying to predict, he is actually telling you what will happen two quarters later.

Now, the opportunities that I see are clearly in two parts. Number one, being a part of a larger Mahindra Group, I am giving a market opportunity. Ultimately, every CEO in the world wants to grow his business, and being part of a larger family, which we call an M-Cube initiative, we provide an opportunity for that company to do business not only with us, but for the larger Mahindra family. The second part is that we have a track record of delivering operating metrics around variety of projects, from being a telecom player to offering consulting to BPO, IT and Enterprise Business Solutions. So ultimately, we are clearly the people who can influence operating metrics of every client that we work with.

Q: What does that then mean to hiring and salary hikes that you are planning as far as your company is concerned because the mood across the Indian IT industry seems to be muted at this point?

A: There would be a wage correction, let's be very clear. Meritorious people will always get higher wage hikes and in our business, which is a people intensive business, we need to recognize people who make a huge difference. So, there will be a wage increase, the question is how much? I think we will do our surveys and we will align ourselves to the market.

Q: I want to now talk to you about something that the market has been watching for a long time now and we have got an indication from you that things have been deferred yet again, what is the situation as far as the merger is concerned?

A: The management is keen to bring it forward and there has been a separate sub-committee by both the boards to look at various new answers. As soon as we get a green light from our boards, we will start the process.

Q:  You had earlier mentioned there would be a serious forward move on this front between January and March. Are we still talking about January to March or has there been a further pushback?

A: I can only tell you this time we are talking January to March 2012, so yes, there will be some movement and I do believe that.