World Library  
Flag as Inappropriate
Email this Article

Satyam Computer Services

 

Satyam Computer Services

This article is about Mahindra Satyam prior to its 2013 merger within Tech Mahindra. For the resulting company, see Tech Mahindra.

Mahindra Satyam (Tech Mahindra)
public company
Industry IT services, IT consulting
Fate Merged within Tech Mahindra
Successor(s) Tech Mahindra
Founded 1987
Founder(s) B Ramalinga Raju
Defunct 2013
Headquarters Hyderabad, India
Services IT, business consulting and outsourcing services

Mahindra Satyam (formerly Satyam Computer Services Limited) was an Indian IT services company based in Hyderabad, India (renamed Tech Mahindra effective from 24 June 2013 with merger approval by Andhra Pradesh and Maharashtra high courts).[1] It was founded in 1987 by B Ramalinga Raju. The company was listed on the Pink Sheets, the National Stock Exchange and Bombay Stock Exchange. In June 2009, the company unveiled its new brand identity Mahindra Satyam subsequent to its takeover by the $14 billion Mahindra Group's IT arm on 13 April 2009. It subsequently merged within Tech Mahindra on June 24, 2013. The company offers a comprehensive range of services, including software development, system maintenance, packaged software integration and engineering design services.

Milestones before merger

In a 2000 SEC filing, Satyam Computer Services claimed to be the fourth largest provider of information technology services in India, based on the amount of export revenues generated. There were 7,560 technical associates servicing over 300 customers. The five largest customers, on the basis of revenue, were General Electric Company and its affiliates, State Farm Mutual Automotive Insurance Company, Megasoft Inc., Caterpillar Inc. and NCR Corporation. They together accounted for 42.4% of its IT services revenues. About 26.1% of its total IT services revenues were generated from fixed-price contracts. Satyam also claimed topline growth of 68% to $164 million at 45% gross profit margin. All of its personnel in the USA were working pursuant to extended H-1B visas (570 persons) or temporary L-1 visas (574 persons).[2]

In a 2005 SEC filing, Satyam claimed topline growth of 40% to $794 million at 36% gross profit margin. There were 20,690 technical associates. The five largest customers accounted for 29.5% of IT services revenues. About 34.2% of its total IT services revenues were generated from fixed-price contracts.[3]

Merger with Tech Mahindra

Mahindra Satyam's proposed merger with Tech Mahindra may be delayed all because of legal issues, and ambiguity over jurisdiction between investigating agencies and the government.[4] The merger has been delayed due to two tax cases pending with the Income Tax claiming over INR 27 billion for both.[5] Tech Mahindra announced its merger with Mahindra Satyam on 21 March 2012,after the board of two companies gave the approval.[6] The two firms have received the go-ahead for merger from the Bombay Stock Exchange and the National Stock Exchange.[7] Competition Commission of India(CCI)approved the proposed merger of Mahindra Satyam and other companies with Tech Mahindra.[8] Mahindra Satyam will hold its annual general meeting (AGM) on 8 June 2012 to consider the proposal to merge the company with Tech Mahindra. It is mandatory for the firm to get the AGM nod to go ahead with the merger.[9] The shareholders of both Tech Mahindra and Mahindra Satyam have unanimously approved the scheme of amalgamation and merger of Satyam Computer Services Ltd, Venturbay Consultants, C&S System Technologies, CanvasM Technologies and Mahindra Logisoft Business Solutions with Tech Mahindra.[10][11] Mahindra Satyam chairman, Vineet Nayyar said on 2 August 2012, that the merger with Tech Mahindra was at the final stage of getting approval from the Andhra Pradesh and Maharashtra High Courts.[12] The two firms had received the go-ahead for merger from the Bombay Stock Exchange and the National Stock Exchange.[7] On June 11, 2013,Andhra Pradesh High Court gave its approval for the merger of Mahindra Satyam with Tech Mahindra,after Bombay high court already gave its approval.[13][14][15][16] Vineet Nayyar said that technical approvals from the Registrar of Companies(RoC) in Andhra Pradesh and Maharashtra are required which will be done in two to four weeks,and within 8 weeks,new mwerged entity will be in place,a new organisation chart would also come into force led by Anand Mahindra as Chairman, Vineet Nayyar as Vice Chairman and C. P. Gurnani as the CEO and Managing Director.[17][18][19] Tech Mahindra on June 25, 2013 announced completion of Mahindra Satyam's merger with itself to create nation's fifth largest software services company with a turnover of USD 2.7 billion.[20][21] Tech Mahindra got the approval from the registrar of companies for the merger late in the night at 11:45 (pm) on June 24, 2013. July 5, 2013 has been determined date on which the Satyam shares will be swapped for Tech Mahindra shares which was approved by both the boards.[22] Mahindra Satyam (Satyam Computer Services), was suspended from trading with effect from July 4, 2013, following its merger with Tech Mahindra .[23] Tech Mahindra completed share swap and allocated its shares to the shareholders of Satyam Computer Services on July 12, 2013.[24] The stock exchanges have accorded their approval for trading the new shares effective July 12, 2013.[25][26] On July 24, 2013,a division bench of Andhra Pradesh High Court admitted a petition filed by Ekadanta Greenfields and Saptaswara Agro Farms private limited challenging the Mahindra Satyam-Tech Mahindra merger order.The order was given by a single judge of the court in June, allowing the merger and dismissing the objections raised by a few parties.After admitting the petition, the bench comprising N.V. Ramana and Vilas V. Afzulpurkar posted the matter to August 26, 2013.[27]

Row with Income Tax Department

The Income Tax Department had issued notices to the company seeking INR 6.17 billion tax for the assessment years from 2003–04 to 2008–09, when the company was run by the founder B Ramalinga Raju and his team. The Central Board of Direct Taxes has attached the properties of Mahindra Satyam on 3 February 2012,stating the attachment of properties was according to Section 281 B of the Income Tax Act. Section 281 B refers to recovery of tax and allows the tax department to issue provisional orders to the assessee to safeguard revenues accrued to it.The Income Tax department had slapped notice on the company after disallowing exemptions claimed by the software firm. The company has received notices of demand for INR 1,037 crore and INR 10.75 billion for assessment years 2002–03 and 2007–08, respectively. [28] However, the Andhra Pradesh High Court granted a breather to Mahindra Satyam, by staying the Income Tax Department's provisional order to attach properties of the IT firm.[29]

Turnaround

The company had reported a consolidated net loss of INR 2.33 billion for the July–September quarter of 2010. Speaking at a press conference, Vineet Nayyar, chairman of the company said the consolidate cash and cash equivalents at INR 300 million compared to INR260 million. “We will take three years for a turnaround,” he informed.[30] Even though the company got INR 2.45 billion profit in Q4 for 2010–2011, but due to outside payments nearly INR 5.70 billion for SEK,UPAID and Class Action Suit in Q4 (Total 6.41 billion for the year 2010–2011 ),the company had reported a consolidated net loss of INR 3.27 billion for the January–March quarter of 2010–2011.IT firm Mahindra Satyam posted a consolidated net profit of INR 2252 million for the quarter ended 30 June 2011. During the quarter, the company added 2,172 people (net), taking total headcount to 31,438 as of 30 June 2011.[31] The company added 36 new customers during the quarter. The total headcount of the company stood at 32,092 as of the quarter ended 30 September 2011 during which net addition of 654 personnel took place.[32] The company added 188 employees in quarter three ending 31 December 2011 and recorded 29.4% quarter-on-quarter in its consolidated net profit of INR 3.08 billion .[33] Mahindra Satyam reported a net profit of INR 5.34 billion for the fourth quarter ended 31 March 2012.[34] Mahindra Satyam declared 30 per cent dividend, signalling a complete turnaround,after declaring Q4 results of 2012-2013 in May 2013.[35][36]

Controversies

Maytas acquisition

In 2008, Satyam attempted to acquire Maytas Infrastructure and Maytas Properties, founded by family relations of company founder Ramalinga Raju (Maytas is "Satyam" reversed) for $1.6 billion, despite concerns raised by independent board directors.[37] Both companies are owned by Raju's sons. This eventually led to a review of the deal by the government,[38] a veiled criticism by the vice president of India[39] and Satyam's clients re-evaluating their relationship with the company.[40] Satyam's investors lost about INR 34 billion in the related panic selling. The USD $1.6 billion (INR 80 billion) acquisition was met with scepticism as Satyam's shares fell 55% on the New York Stock Exchange.[41] Three members of the board of directors resigned on 29 December 2008.[42]

Accounting scandal of 2009

Main article: Satyam scandal

In addition to other controversies involving Satyam, on 7 January 2009, Chairman Raju resigned after publicly announcing his involvement in a massive accounting fraud.

See also

Companies portal

References

External links

  • Official website
  • The Official Corporate Website for Satyam Computer Services
  • Mahindra Satyam repositioned as an ICT firm
  • Are there more Satyam's in making?
  • BusinessWeek profile
  • The rise and fall of Satyam
  • Raju's Statement – Scanned Copy – "Satyam CEO's Letter to its board of directors" – Hyderabad, India, 7 January 2009

This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and USA.gov, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for USA.gov and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
 
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
 
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.
 


Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.