Mahindra Satyam Turnaround- The

Phoenix That Rose From The Ashes

Story
Satyam Computer Services has probably been the buzzword of the year gone by, albeit
for unfortunate reasons. Satyam was one of the top most IT services company and
shouldered the industry veterans like Infosys and Wipro. Who would have known what
was cooking behind the glamorous walls and the highly profitable balance sheets.

Evidently Satyam was to become a part of one of the biggest Corporate Frauds in
India.The man in charge, Mr.Ramalinga Raju evidently was cooking the books beyond
recovery. We have had so much coverage here on the Satyam fiasco that there is no point
going over it again. It all started with the Satyam-Matyas fiasco and then things got really
ugly when Mr.Ramalinga Raju confessed his crime in open

It opened the flood gates for the company and the in direct consequences had the
Government stepping in. Eventually, Tech Mahindra ended up buying Satyam Computer
Services and rechristened it to Mahindra Satyam.

There were speculations that Tech Mahindra might have made a mistake given that the
clear financial details were very much under the wraps even then. Moreover, Satyam was
no small fish, and Tech Mahindra would have had to really pull the plugs to make it
work. The timing couldn’t have been worse as the global markets plummeted and IT
budgets just vanished out of the blue.

The turnaround is even more spectacular given the industry Satyam operated in. IT
services is a data sensitive industry, where confidentially and trust form the backbone of
its sustainability. With the image that Satyam got itself, there were serious doubts that it
will be possible to even restore the existing clients leave aside acquiring new ones.

But, Mahindra Satyam has risen from the ashes. Aided by an improving economy and
some real brand building , Mahindra Satyam is finally getting into shape. The evidence
stems from the fact that Mahindra Satyam is back in hiring mode.

It has called back 2000 of its employees which were relegated to the virtual pool.

Mahindra Satyam is clearly expecting increasing workload on account of acquiring new

clients. More so, it is honouring the commitment made to its employees and looking to
utilize the existing employee base before looking outside for hiring.

The new management board has indeed assed and executed the damage control
meticulously and it is now aiming for growth. Infact, Mr.Mukesh Ambani cited Satyam’s
turnaround as a great example of improving Corporate governance in India , during the
show ‘The Politics of Economics’.

It is only the beginning and probably a lot needs to be done but the revival has been
speedy and efficient so to speak. With improving IT spend forecasts, Mahindra Satyam
would be gunning to regain its lost glory.

I remember there were news doing the rounds that Satyam Corporate Governance
fiasco became a case study at one of the premier MBA schools.Wonder if Mahindra
Satyam turnaround accounts for another case study on How To Revive A Maligned
Brand

Who do you think should be credited for the quick turnaround of Satyam ?

An improving marketplace? – the strong technical fundamentals of the company? or the

new management who steered the company? My vote goes for the management because
it can be seriously daunting to chart growth plans and work towards improving the image
of a company at the same time.

Satyam Rises to 8-Month High as It

Prepares Earnings
September 22, 2010, 7:05 AM EDT

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By Ketaki Gokhale

(Updates with closing share prices in second and seventh paragraphs.)

Sept. 22 (Bloomberg) -- Satyam Computer Services Ltd. rose to an eight-month high in

Mumbai after saying it will report annual earnings this month, its first since the software
exporter was embroiled in India’s biggest corporate fraud probe.

The shares rose as much as 15 percent to 109.45 rupees, the highest intraday level since
Jan. 21. The stock changed hands at 107.70 rupees at the 3:30 p.m. close of trading in
Mumbai.

Satyam, which delayed reporting its accounts after former Chairman Ramalinga Raju
disclosed in January 2009 that he overstated the company’s assets by $1 billion, will
announce audited earnings for the fiscal years ended March 2009 and 2010, on Sept. 29,
spokesman Sridhar Maturi said. Tech Mahindra Ltd., which acquired Satyam, may
absorb the company following the earnings announcement, said Naushil Shah, an analyst
at Anand Rathi Financial Services Ltd.

“Once the numbers are out, and things are stabilized at Satyam, they will want to merge it
with Tech Mahindra,” said Shah, based in Mumbai. He has a “hold” rating on shares of
Tech Mahindra.

Satyam may report a profit of 6.27 billion rupees for the year ended March 31, 2009, and
4 billion rupees for the following year, according to the average of two analyst estimates
compiled by Bloomberg.

Government Takeover

Tech Mahindra’s corporate communications department didn’t immediately respond to

an e-mail seeking comment.

Shares of Tech Mahindra rose 8.3 percent to close at 787.95 rupees in Mumbai trading.
Tech Mahindra is partly owned by BT Group Plc and India’s largest sport-utility vehicle
maker Mahindra & Mahindra Ltd.

Raju’s admission and resignation on Jan. 7, 2009, triggered a stock slump and a
government takeover that led to the sale of the company to Tech Mahindra. Satyam in
June had sought time until Sept. 30 from the government to file its financial results.

Raju won bail from a court in Hyderabad last month, his lawyer S. Bharat Kumar said by
telephone on Aug. 18.

Shares of Satyam have fallen 40 percent since Jan. 6, 2009, compared with a 93 percent
gain in the Bombay Stock Exchange’s benchmark Sensitive Index in the period.
Tech Mahindra, the software company based in Pune, India, owns 42.6 percent of Satyam
Computer. It gained control of Satyam in May last year after winning an auction held by
a government-nominated board.

--Editors: Anand Krishnamoorthy, Abhay Singh

To contact the reporter on this story: Ketaki Gokhale in Mumbai at

kgokhale@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy in Singapore at
anandk@bloomberg.net