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What L&T learnt from Satyam

May 29, 2009 15:32 IST
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Former Wipro executive Sudip Banerjee's tenure as CEO of L&T Infotech is proving to be eventful.

Since September 1, 2008, till date, his stint has faced several challenges -- right from the collapse of Lehman Brothers and the start of the global slowdown, to losing the bid to acquire Satyam Computer Services (initiated by the parent firm Larsen & Toubro).

Banerjee, however, seems unfazed. In an interview with Shivani Shinde, he talks about business post-Satyam, expansion plans and bigger acquisition targets. Excerpts:

You will soon be completing a year at L&T Infotech. How has the ride been?

Well, I came in at a time, which I thought was great. There was a lot of excitement with the company's initial public offering on its way. The IT market growth was great.

But then Lehman Brothers collapsed, which was followed by a series of bad news that culminated with the Satyam fraud revelation. So, in a period of three months since I joined, the whole IT industry had undergone a sea change.

Obviously, a lot of things had to be done. Operations had to be tightened; we had to postpone some decisions (IPO was delayed) as well as take some new decisions.

But we continued to focus on several areas. We also decided that we will focus on strong operational parameters and focus on expansion.

Satyam would have given the company the desired growth. Do you think it's a lost opportunity?

Well, if you have tried for something really hard and things didn't work out, then, in that sense, it's a loss. But, on the other hand, we made a bid for it.

We think that everything comes at a price and, at a certain price, it becomes less attractive. And that's our position on Satyam.

We wish Tech Mahindra all the very best and hope they do a good job so that we are able to recover our investment.

Would this stagger the growth momentum?

It was a transactional opportunity that came along for a brief period. It was not a planned acquisition or a target. So the normal plan continues.

If it would have happened, life would have been different. While there would have been advantages, there were risks as well. Only time would tell whether it was, in retrospect, the right thing.

But the risks were there even when the company was trying to acquire Satyam...

That's why I say that everything, at a certain price, is fine. But as the price goes up, things become more and more risky.

That's why we quoted a price that we thought was reasonable. Beyond that, the risk becomes more than your capacity.

Going ahead, what will be the inorganic growth strategy?

We are still upbeat about that. We are looking at several targets in the market.

But even after losing out, we had indirect benefits. We got the desired publicity and exposure, besides getting access to companies and customers who didn't know about L&T Infotech and what it did.

During that time, a lot of people talked to us and continue to do so. I think that has given us a much larger canvas to play on. Besides, this has also made us much more ambitious. Our risk appetite has gone up.

So will this translate into a large acquisition? What is the cash flow of the company?

Well, I cannot predict the size of the acquisition, but we are certainly mulling large acquisitions -- much larger than what we would have done before pitching for Satyam. As for our numbers, they are a part of the group's numbers.

You spoke about new initiatives. Could you elaborate?

We decided on three things in terms of expansion -- geography, new service lines and getting key people in. So we entered areas like the Gulf and increased our push in India.

We are looking at geographies like the Nordic regions and Apac (Asia-Pacific). We introduced new service lines like testing, consulting and infrastructure management services. And made key appointments.

While last year went into getting these things in place, this year will be more about focussing on operations. We made investments in creating offices. Even the 12 per cent stake in Satyam is an investment.

What about the IPO and the growth in the domestic market?

The IPO will happen. But I cannot give a time-frame. The group has been very clear about this as well as the need for an independent management.

A part of my charter was to get the right leadership as well. There used to be a lot of L&T people, who have been replaced.

As for the domestic market, we will be leveraging the parent company's position. Other than targeting the BFSI (banking, financial services and insurance) segment, we are focusing on railways, infrastructure and airports. These are also the areas where L&T has a good presence.

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