Satyam ship on course again
The handover, expected to be as swift as the sale, will see an infusion of managerial talent from the House of Mahindra, which should steady the hand at Satyam’s wheel. All told, a happy ending. But beware of the moral hazard. The oversight failure that preceded the clean-up at Satyam must not be compounded by delay in handing out justice.india Updated: Apr 13, 2009 20:44 IST
The ‘Good’ Satyam story has had a happy ending. Tech Mahindra’s takeover of what till a few months ago was India’s fourth largest software company brings to closure the government’s efforts to protect the stakeholders of Satyam Computer Services from the Rs 7,000 crore fraud committed by its promoter B. Ramalinga Raju. It also contains the knock-on effects in the rest of the information technology industry. The regulatory response to the biggest con in India’s corporate history was quick and clean — the board appointed by the government consisted of business leaders universally regarded for their integrity and acumen, and the process of sale they drew up was by and far the most transparent that could be devised under the circumstances. New auditors have restated Satyam’s numbers for five of the seven years during which Raju confessed to having siphoned off funds.
The gains accruing to Tech Mahindra are immediately obvious to investors, who pushed up its stock price within minutes of the acquisition. The niche telecom software player is now straddling a wide spectrum of the infotech industry, from financial services to business process outsourcing. The Satyam auction didn’t draw the likes of Infosys or Accenture because they are in a position to scale up organically. IBM wanted to see more of Satyam’s books than were ready. The vulture funds were kept off by the three-year moratorium on equity sales. Tech Mahindra emerged as the bidder with the right combination of appetite — for scale and risk — and pedigree. It walked away with Satyam for a shade under Rs 3,000 crore. Satyam’s revenue in January-March, the deepest hour of its crisis, was Rs 2,000 crore.
The 48,0000 people working at Satyam have an extra reason to cheer. At least for some time their jobs are protected during a global recession that has seen even Infosys laying off staff. The handover, expected to be as swift as the sale, will see an infusion of managerial talent from the House of Mahindra, which should steady the hand at Satyam’s wheel. All told, a happy ending. But beware of the moral hazard. The oversight failure that preceded the clean-up at Satyam must not be compounded by delay in handing out justice.