Following the merger of Tech Mahindra with Mahindra Satyam, the new company will have a cash surplus of Rs. 1,800 crore, which it will use for expansion purposes. The merger, to become effective retrospectively from April 2011, would create a single IT entity with an estimated market value of over
$3.5 billion and revenues of about $2.4 billion. In an interview with Hindustan Times Sonjoy Anand, CFO, Tech Mahindra, talks about the new company's growth plans. Excerpts.
Which company gains more from this merger?
You have to look at the advantages of the combined company because both Tech Mahindra and Mahindra Satyam will benefit. With greater scale, we will be able to compete for larger deals and it will bring combined capabilities to offer to customers. Also, the ability to optimise operating metrics is greater with this merged entity.
What will be the biggest vertical of the new company and what new verticals are you looking at?
Telecom will remain the biggest vertical, accounting for about 47% of the revenues. The combined entity will have a presence across all large verticals like manufacturing, retail, banking, financial services and insurance, technology, media and entertainment. Aerospace is globally a tremendous opportunity for us, especially in India because of the set of rules. We believe that the associated manufacturing activity around aerospace will grow and we will get tremendous opportunities because of the synergies between the wider Mahindra group and our IT business.
How much cash surplus will the new company have?
The merged entity will have a cash surplus of about Rs. 1,800 crore. That cash surplus is available to us for investment whether organic or inorganic.
What will be the size of the new leadership team?
The shape and contours of the new leadership team will be announced as and when the boards decide on it.