satyam after takeover of mahinra tec

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Intro

Mahindra Satyam (f ormerly known as Satyam Computer Services Ltd) wasf ounded in 1987 by B Ramalinga Raju. The company off ers consulting and

inf ormation technology (IT) services spanning various sectors, and is listed

on the New York Stock Exchange, the National Stock Exchange (India) and

Bombay Stock Exchange (India). In June 2009, the company unveiled its new

brand identity Mahindra Satyam subsequent to its takeover by the

Mahindra Groups IT arm, Tech Mahindra.



BRIEF HISTORYOn 7 January 2009, company Chairman Ramalinga Raju resigned after notifying board members and the Securities and Exchange Board of India (SEBI) that Satyam's accounts had been falsified.

Raju confessed that Satyam's balance sheet of 30 September 2008 contained:

inflated figures for cash and bank balances of Rs 5,040 crore (US$ 1.08 billion) (as against Rs 5,361crore (US$ 1.15 billion) crore reflected in the books)

.an accrued interest of Rs. 376 crore (US$ 80.84 million) which was non-existent.

an understated liability of Rs. 1,230 crore (US$ 264.45 million) on account of funds was arranged by himself.

an overstated debtors' position of Rs. 490 crore (US$ 105.35 million) (as against Rs. 2,651 crore

(US$ 569.96 million) in the books).

Raju claimed in the same letter that neither he nor the managing director had benefited financially from the inflated revenues. He claimed that none of the board members had any knowledge of thesituation in which the company was placed



On 5 February 2009, the six-member board appointed by

the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, anelectrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Sectionbefore being appointed as CEO of the company. Thetwo-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and ParthoDatta, a Chartered Accountant as special advisor



Satyam Computer Services on March10, 2009,commenced the competitive bidding process which would

be overseen by a former Chief Justice of India or aretired Supreme Court Judge.

The bidders will have to register their interest byThursday (March 12) and submit a detailed expression of interest (EoI) together with the proof of availability of at

least Rs. 1,500 crore ($290 million) by March 20.

The three Indian bidders who will compete with oneanother for a controlling stake of 51 per cent in the ITcompany are: L&T, B. K. Modi¶s Spice Group and TechMahindra.



Upon being declared the highest bidder, Tech Mahindra andSatyam executed an agreement whereby Tech Mahindra agreedto subscribe to and acquire 30.28 crore shares of Satyam,

representing 31 per cent of its share capital, at Rs. 58 a share.

This will infuse Satyam with Rs. 1,756 crore. The subsequentopen offer for 20 per cent, amounting to Rs. 1,132 crore, willresult in a total of Rs. 2,889 crore coming into the company forthe 51 per cent stake.



The beleaguered Satyam Computer Services has finally found a new owner,after its founder chairman, B. Ramalinga Raju left it in the lurch with hisconfession of corporate fraud in January this year.

Tech Mahindra pipped Larsen & Toubro and Wilbur Ross to the post and isset to initiate the takeover process pending the approval of the CompanyLaw Board which should happen in a week.

The final act of the Satyam saga played out on Monday with thegovernment-appointed board of directors selecting Venturbay ConsultantsPrivate Ltd., a subsidiary controlled by Tech Mahindra, as the highest bidder

to acquire a controlling stake in the IT services company.

Company will have to shell out Rs. 2,889 crore for 51% stake



Industry Presence

Mahindra Satyam provides services in the f ollowing areas:

Aerospace and Def ense

Banking, Financial Services & Insurance

Energy and Utilities

Lif e Sciences & Healthcare

Manuf acturing, Chemicals & Automotive

Public Services & Education

Retail and Consumer Packaged



Competencies

Mahindra Satyam off ers the f ollowing horizontal services.

Extended Enterprise Solutions

Web Commerce Solutions

Business Intelligence Services

Quality Consulting

Strategic Outsourcing Services

Industry Native Solutions

BPO

Engineering Services



Controversies



Maytas acquisition

In 2008, Satyam attempted to acquire (Maytas Inf rastructure and Maytas

Properties) f ounded by f amily relations of company f ounder Ramalinga Raju

f or $1.6 billion, despite concerns raised by independent board directors.

Both companies are owned by Raju's sons. This eventually led to a review of

the deal by the government, a veiled criticism by the vice president of India

and Satyam's clients re-evaluating their relationship with the company.

Satyam's investors lost about INR 3,400 crore in the related panic selling.The USD $1.6 billion (INR 8,000 crore) acquisition was met with skepticism

as Satyam's shares f ell 55% on the New York Stock Exchange.Three members

of the board of directors resigned on 29 December 2008.



World Bank

The World Bank had banned Satyam f rom doing business with it f or 8 years

due to inappropriate payments to the World Bank's staff . The World Bank

accused Satyam of giving improper benef its to its (the Bank's) staff and of

f ailing to maintain documentation to support f ees charged f or its

subcontractors. However, it clarif ied that Satyam was not involved in

incidences of data thef t or malicious attacks that had been made on the

Bank's inf ormation systems.

satyam after takeover of mahinra tec

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