Tech Mahindra paid top price for Satyam

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Tech Mahindra paid top price for Satyam

Bill Goodwin

Tech Mahindra paid top price for troubled Indian outsourcer, Satyam, the chairman of Mahindra and Mahindra group revealed today.

Keshub Mahindra, group chairman of M&M, Tech Mahindra's parent company, revealed that the group would have walked away from the deal if the price had risen higher.

"We could have bid lower. But I want to say at once it was a strategic decision not a speculative one. It provided us with a platform to align the business of Tech Mahindra and Satyam," he said.

In an interview with The Economic Times, Keshub Mahindra said he had not expected Tech Mahindra, which is 31% owned by BT, to win the auction for Satyam.

"We though L&T would be the winner. I would have thought they would have been more aggressive," he told the paper.

He acknowledged that the purchase of Satyam was risky. The company is facing class actions in the States, and an uncertain balance sheet, following the discovery of an internal fraud at the beginning of the year.

"There were a whole lot of uncertainties around Satyam. For example, the class-action suits in the US were a big area of uncertainty," he said.

"Another big risk is that you don't know what Sataym's balance sheet looks like. But we felt this was a great company with a good reputation with its clients, coupled with an excellent workforce."

He said Tech Mahindra was in a good position to put Satyam back on track.

Tech Mahindra has shown it has the ability to raise finance. And although, Satyam operates in 4 to 5 vertical sectors new to Tech Mahindra, three of the company's directors have past experience in these verticals from their time with HCL Technologies.

"Of course it's a big challenge. But in life, this kind of deal never comes cheap, and you have to accept the challenge. We also have our strengths," he said.

Keshub Mahindra said that the group's first priority would be to rebuild contacts with Satyam's customers.

"I think Tech Mahindra's first task will be to re-establish contact with Satyam's clients. They have lost some clients since the episode broke. The other important task will be to contact workers."

Satyam loses staff >>

Interview: Satyam CEO speaks to Computer Weekly >>

Related Topics: IT outsourcing, VIEW ALL TOPICS

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