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We will put in investment, aim to be a significant player: C P Gurnani

Interview with CEO, Mahindra Satyam & chief financial officer, Tech Mahindra

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For , chief executive officer of , and , chief financial officer of , the merger announcement of the two companies is another step in creating an entity preparing to be counted among the big boys. In a chat with Shivani Shinde, they talk about the road ahead. Edited excerpts:

Why the need to create a trust and what are the opt-ions available if the Com-panies Bill receives a nod before the process is over?
Anand: The intent is clear. It provides flexibility and speed if there is an M&A (merger and acquisition) opportunity. From the Companies Bill point, for me the situation is a bit hypothetical. The Bill has taken time and it seems it will take some more. If it is approved before we close our transaction, then we will have to modify. If at a later stage we still have our treasury stock and the Bill comes in, we need to see if it’s retrospective or prospective. If the former, we will have to do whatever other firms might do. We are not the only firm to have a trust. The option then is that those shares will get transferred to somebody else. If the scheme is not complete, the shares will be cancelled and there will be automatic adjustment in shareholding pattern.

What is the next step?
Gurnani (this and remaining answers): At the executive level, our board will communicate who will be the CEO, CFO, etc. At the operational level, we have all the clarity. We will have three divisions — business operations group, enterprise business and telecom. They will run as separate operations, which means they have their own profit & loss account, R&D, management structure and functions. After this, we will have a layer that will bring certain services together. Areas in corporate functions like knowledge management & information technology, human resources, resource management, marketing, M&A, legal and finance will be shared businesses. As the structure gets defined, there will be more simplification. But the focus is to create virtualised teams to drive benefits to the customer.

Where have the companies already created synergies?
Marketing, business operations-BPO group, remote infrastructure management have been virtualised. In the next six to nine months, the others will get virtualised, too.

You said the management will hold road shows. What will be the focus?
Our story to clients and investors is that we will be a dominant and significant player in spaces of networking, mobility, analytics, cloud and security services. In certain vertical segments like life sciences, manufacturing, telecom, media and entertainment, we will be the big boys.

Some analysts feel the company needs to focus on sales and hire more laterals that can speed non-linear initiatives.
We do not like to talk on non-linear initiatives, as it’s just two-three per cent of the revenue. Rather, I don’t see any of my peers or competition to have double-digit revenue contribution from non-linear initiatives in the next two-three years. But it’s a focus for us. At any given point, I have 18-20 initiatives running that would lead us towards non-linear initiatives. For instance, in end-to-end solutions and services for the healthcare sector, we have two initiatives; in the platform space, we have six. These are new babies and require nurturing. So, you need to put in investment and attention. As for hiring laterals, we believe we have a strong leadership. If we find a person who will be able to bring new ideas and new growth opportunities, we will take them on board. Otherwise, I prefer growing people from within.

BT continues to be the largest client even in the merged entity. Do you think it will continue to be a pain for the merged entity due to its insistence on price negotiations?
To me, Mahindra & BT started as equal partners. BT provided us the technology, opportunity, access to markets. We will always be indebted to BT. They will contribute 17 per cent of revenue for the company and their share will also come down. BT’s exit is something they need to answer. We are very proud of our relationship with BT and the our work with them. We will continue to have persons dedicated on that account.

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