For Tech Mahindra, the successful bidder for Satyam Computer Services, it was "a game-changing day," according to Anand Mahindra, vice-chairman & MD of Mahindra & Mahindra.
And the start of a process full of challenge.
Anand Mahindra, also chairman of Tech Mahindra, and Vineet Nayyar, vice-chairman and CEO of Tech Mahindra, address some of these concerns at a press conference.
What are the key challenges now?
Nayyar: The first issue remains governance. We need to get a good company back to its position.
The other issue is financial viability of the company. We want to bring it on a par with other players in the industry.
Finally, retention of clients.
Of course, there are many more challenges but we need time to study the company further. Satyam has over 500 clients. I do believe we will have to address each one of them.
Mahindra: We will give our highest priority to restoring confidence in the company. I plan to reach out to some of the key clients of Satyam, including Cisco, Citigroup and GM.
Did you pay a high price for Satyam, considering the other bids?
Mahindra: We looked at this strategically and made a rational bid that we can defend and that will allow us to turn this into a good business. We have put our best foot forward.
What is the entire timeline of the process of management control?
Mahindra: Right now, we have to be very circumspect. Assuming we do get the deal, we have a set procedure and plan for integration. As of now, I cannot elaborate.
What do you make of Satyam's financials?
Nayyar: We have looked at billing rates, utilisations, and we believe the operating margins can and should have been much, much higher.
We had no ambiguity in our minds when it came to bids. That is simply because we are in the same business, have EBIDTA (operating) margins of 27-28 per cent and their billing rates are no more lower.
What about the legal liabilities?
Nayyar: There are clearly some liabilities.
Two of the main concerns are legal liabilities and Upaid. Yes, we did look into it and when we bid, we did take these into consideration and what they would mean to us.
Well, we hope to be right.
What has been your largest shareholder, BT's stand on this issue?
Nayyar: BT has been incredibly supportive of this bid. We would not have been able to make the bid if they would have been either reluctant or not supported us.
Mahindra: At all the levels, we had a very constructive debate, that is, at M&M, Tech Mahindra, as well as BT.
It was rather surprising to see the consensus on going ahead and bidding for this. This is because, as I said earlier, this is a game changer for Tech Mahindra.