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| Transition may be discussed today |
| BS Reporters / Mumbai/New Delhi Apr 20, 2009, 00:48 IST |
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Tech Mahindra, the new buyer of Satyam Computer Services, is expected to discuss the transition plan when it meets the government-appointed board tomorrow in Hyderabad, the company headquarters.
To complete the acquisition process, the company has to pay Rs 1,756 crore before Tuesday to acquire a 31 per cent stake in Satyam. It also has to deposit the remaining cash (around Rs 1,144 crore) for an open offer of another 20 per cent, in a separate bank account. It can have formal talks only after it deposits the entire amount of Rs 2,990 crore for a majority (51 per cent) stake, which it is expected to do on Monday.
Tech Mahindra has already raised around Rs 875 crore through the issue of non-convertible debentures (NCDs) and one-year commercial papers (CPs). It was also in talks with banks to mobilise Rs 1,000 crore worth of bridge loans. Another Rs 1,000 crore to fund the entire deal will be through internal accruals.
“Other than the induction of the new board members, Tech Mahindra will have discussions with the management to articulate the growth of the company, strengthen the governance part and also focus on cash-flow issues. The current management members, including CEO A S Murty, will continue for some time,” said a source close to the development.
Tech Mahindra members are also expected to take stock of operations at Satyam. Some of them will look into the client list, as well as the receivables with the company.
Anand Mahindra, chairman of Tech Mahindra and vice-chairman & CEO of Mahindra and Mahindra Group, will be present in Hyderabad on Monday, when four members from Tech Mahindra — Vineet Nayyar, C P Gurnani, Sanjay Kalra and Ulhas Yargop — will join the Satyam board. The current six government-appointed board members will continue till the Company Law Board (CLB) deems fit.
Monday’s meeting is the culmination of the process that started four months earlier, with the appointment of new board members by the government. In a letter dated January 7, Ramalinga Raju — founder of Satyam — confessed he had cooked the company’s books of accounts for years.
The journey for Tech Mahindra will start now, say analysts. It will have to face 13 class-action suits in the US against Satyam and a $1 billion case filed by Upaid (which comes up for hearing this June). It also has the task of integrating close to 48,000 employees with its 25,000 staffers.
Tech Mahindra will also have to come up with a plan that will not only convince clients to stay on, but also make key employees stay.
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