Mahindra Satyam to declare audited nos by June 2010

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Mahindra Satyam to declare audited nos by June 2010

Vineet Nayyar, Executive Vice Chairman, Mahindra Satyam outlines the reasons for the company not being able to report audited numbers earlier.

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Excerpts from Midcap Radar on CNBC-TV18 Watch the full show » RELATED NEWS Satyam says no out-of-court settlement with creditors Mahindra Satyam has good support at Rs 88: Mohindar Sell Mahindra Satyam: Sandeep Wagle Mahindra Satyam: No more attrition from existing customers CBI pegs Satyam scam losses at Rs 14000 cr ALSO READ See latest News about Mahindra Satyam See previous management interviews See what other Experts & Brokerages are saying about Mahindra Satyam Mahindra Satyam BSE | NSE 31/05/12 Are Mutual Funds betting on Mahindra Satyam?

The Mahindra Satyam stock has fallen about 10% on the stock exchanges on a CLSA report exhorting investors to exit the company. CLSA said Mahindra Satyam did not have fundamental value trading at current levels as normal financials of the company would be known only by June 2010.

In an interview with CNBC-TV18, Vineet Nayyar, Executive Vice Chairman, Mahindra Satyam outlined the reasons for the company not being able to report audited numbers and also ruled out the fact that it is looking at an out-of-court settlement with its creditors.

Here is a verbatim transcript of the exclusive interview with Vineet Nayyar on CNBC-TV18. Also watch the accompanying video.

Q: Is there any particular reason why a pro forma statement cannot be put out which gives some indication of what the revenues look like at the moment and could you do it before the 2010 date?

A: We have certain obligations both to the Securities Exchange Commission (SEC) and to Securities & Exchange Board of India (SEBI) to put out audited numbers. We don't want to create confusion in the markets by then changing the pro forma statement.

So that is the precise reason why we are not putting it out. As soon as audited numbers are available, and I suspect it will be over the next six months, all the numbers will be available to everyone.

Q: The SEC also knows that companies can say these are the numbers that we are looking at, they are unaudited, this happens all the time. Is there some chance that you can come out and give us some idea of what are your revenues at the moment? You are accounting for what you are doing on a day-to-day basis. So you have a handle on what your revenues look like or are you holding this information because of the class action suit and you don't want to show the revenues because perhaps the class action law suit guys may say 'pay us more'?

A: No, I don't think there is a linkage between the two because these numbers will be out way before the class action suit comes to anywhere near conclusion.

So these are two independent things, they are two independent commitments which have been made. These are the decisions which have been taken in consultation with the CLB. We are obligated to have all the forensic audit done which is by and large getting completed and thereafter the numbers will become available.

Q: I agree with you that perhaps the balance sheet may not be that easy to figure out but revenues is something that you calculate every day or every month. Could you give us your run rate at the moment, what does it look like, what does your order book look like, have you received any order, something that most public companies would do at this stage?

A: Yes, I am afraid, for that you will have to be patient because this is something which the board has to decide and the board decision has consistently been that, let us come out with the composite data. That is what market needs and the market will get.

Q: The last time we had spoken to you about Mahindra Satyam's run rate itself, you had said that yes, we could look at it in the ballpark of USD 1.2 billion and this was after the management had gone on the road shows, met existing clients and said that we are left with residual USD 1.2 billion kind of revenues. Is that number still intact in the last few months itself?

A: No. I don't think we ever came out with a specific number. We gave a range and if we gave a range, it would be a correct range we would have given.

Q: One key question that CLSA has raised right now is that buoyancy we are seeing with the IT services, is going to be very hard for Mahindra Satyam to hold the kind of employees that you have been able to hold and existing clients may find it more lucrative to go and give it to other vendors rather than to Mahindra Satyam. They seem to raise this red flag. So what are you doing on employee retention itself? You rolled back the variable pay, are you looking at any salary hikes right now? Could you throw light on how many employees are on the books of Satyam right now?

A: We are taking a series of steps to continue to make Satyam attractive for the employees which means quality of work, the variable pay has been restored, we have given out stock options to the employees and other schemes are on the anvil, which will make Satyam an attractive place to work.

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