We were right about acquiring Satyam: Anand Mahindra

Editor’s Note: Last week, we carried excerpts from the forthcoming new book ‘The Resurgence of Satyam - The Global IT giant, (Random House India, Random House Publishers India Private Limited) by Zafar Anjum_. That excerpt told the story of the frenzied Sunday when it all began. On 7 January 2009, Satyam ’s founder and chairman admitted to cooking the books of his own company to the tune of $1 billion. The news stuns the corporate sector. After all, at that time,_ Satyam __counted 185 of the Fortune 500 companies as its clients. In April 2009, after a bidding and evaluation process, Venturbay Consultants Private Limited, a 100 percent subsidiary of Tech Mahindra, becomes the new owner of Satyam. In June that year, Satyam is rebranded as Mahindra Satyam. The rest is history.

[caption id=“attachment_495004” align=“alignleft” width=“380”]  Cover of ‘The Resurgence of Satyam - The Global IT giant’ by Zafar Anjum[/caption]

In today’s excerpt, we carry an adaptation of Mahindra Group Chairman Anand Mahindra’s interview with Zafar, in which he looks back at what led to the decision to get involved in Satyam and takes stock of the decision three years after the event.

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When we acquired Satyam, the deal made good business sense because of the obvious complementarities. But we also felt that our processes and reputation for good governance would be an important factor in reviving the company. So we did consider it a privilege to have an opportunity to correct an injustice.

Tech Mahindra won the bid for Satyam because it was able to offer the best price after considering the synergies both companies could derive. Today, three years down the road, we can confidently say that our assessment proved to be right.

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After the acquisition

After Tech Mahindra won the bid for Satyam it was important to manage the integration process so that we were able to leverage the synergies we had identified while managing the litigation and reputational risks we inherited. Integrating two large companies of this scale is never an easy task and we encouraged them to set out and follow some very clear principles.

- Focus on governance, and put in place policies for the future to ensure that the lapses are corrected

- Ensure an environment of inclusivity, fair play and trust

- Create a culture of a courageous, connected and agile organization, where ethical conduct is valued

- Manage reputation risks by meeting customers and demonstrating our commitment to stay invested in critical ‘go to market’ opportunities

- Restore faith within our customers through new found business models of delivery and engagements

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But we had confidence in the inherent strength of the company, its people and capabilities and I think our leap of faithhas paid off.

There wasn’t a single inflexion point. Rather, it was a sequence of events that gave us the confidence that we were on track.

Customer attrition stopped in July, 2009, providing us much needed validation of the inherent strength of the business. When we restated financials as per plan, we knew the exact magnitude of the problem we were dealing with. Soon thereafter, we embarked on the growth trajectory, when it became clear that we had turned the corner completely.

As soon as the litigation issues were resolved we were ready to consider the merger with Tech Mahindra.

Lessons from the turnaround

The Mahindra Satyam story has been a challenging yet exciting three year transformational journey. Not only has it been a successful one, but it has also been an inspirational one.

The entire experience of the Mahindra Satyam turnaround taught me that crisis can always be turned into an opportunity, that when you have the courage to take challenges head on, you are always rewarded with results. It also taught me that engaging hearts and minds and giving people hope, brings out the best in them. Today, Mahindra Satyam is back in the reckoning. It has recovered lost ground and is raring to go as a refreshed, recharged and revitalized organization.

I certainly think the turnaround reflects the resilience of the company, the spirit of corporate governance in India and the deftness with which the Indian system can act when confronted with a challenge. Hopefully, this has created a global impression.

I am very optimistic about the future of the Tech Mahindra and Mahindra Satyam merged entity. We see it as fuelling our ambition of becoming the No. 1 Indian IT company. The merged company will create a new offshore services leader with approximately US$ 2.4 billion in revenues, a 75,000+ workforce and 350 active clients.