With TechM and Satyam now in ‘honeymoon phase’, the spry former civil servant talks about Raju and life after IT.
Vineet Nayyar says Tech Mahindra’s acquisition of Satyam Computers exactly two years ago was a marriage made in heaven. But unlike other marriages, this one has worked in the reverse direction: “the honeymoon is about to begin as the tough period of the relationship is just over”, write Shyamal Majumdar and Shivani Shinde.
The man, who started his career in information technology with HCL Corporation when he was 56 – an age most techies consider suitable only for writing memoirs or mentoring – clearly hasn’t lost his keen sense of humour. When we ask him about succession in view of the widely reported clash of egos between the CEOs of Mahindra Satyam and TechM (the latter has since quit), Nayyar jokes that it was easier to manage than the egos of his grandchildren aged five and three.
For him, Ramalinga Raju (Satyam’s disgraced former chairman) is a “tragic hero” who plotted his downfall step by step and while people commit crime out of greed, Raju did it “out of pride”. He was referring, of course, to the systematic mis-statement of accounts to the tune of over Rs 7,000 crore over several years, to which Raju confessed in January 2009. This time, Nayyar is dead serious. “Raju had vision; he built a world-class company and did incredible work in CSR. I am curious to know why he did what he did.” Seeing our puzzled expressions, Nayyar says he has reached a stage in life when he can resist the temptation of painting everything in black and white — though he is quick to add that Raju has committed the worst fraud in corporate India and deserves harsh punishment.
His anger, however, is directed at Pricewaterhouse, the PricewaterhouseCoopers accountancy responsible for auditing Satyam’s accounts. “Raju could have never done what he did unless he was sure that the auditors would willingly look the other way.”
At age 73, Nayyar wears a very large hat: He is the vice-chairman, MD & CEO of TechM, and chairman of Mahindra Satyam. Over coffee (he prefers coffee from freshly ground beans) on the sixth floor of the Mahindra Towers in Mumbai, he provides a long explanation for the “belated honeymoon” of the two companies he heads.
Nayyar says the last two years were devoted to “considerable repair jobs” — the gigantic fraud under the previous management, huge overheads, employee exodus (the company lost over 10,000 employees), customer desertion, and rock-bottom credibility. There were also other issues like a considerable real estate portfolio that was not needed but had been hired to provide the impression of opulence. He is glad that over 95 per cent of those problems are now over, finally giving the company a platform for growth.
His immediate challenge, of course, is to get Mahindra Satyam’s accounts to US GAAP (generally accepted accounting principles) so that the company can be relisted on the US stock exchanges, following which a formal merger between the two companies can begin. This process could take about a year, he adds.
What gives him hope is the tremendous synergy between TechM and Mahindra Satyam. Apart from the fact that TechM can focus exclusively on telecom and Satyam in the enterprise space, 80 per cent of the former’s revenues come in European currencies, while 80 per cent of Satyam’s revenue is in dollars.
Nayyar says he had a fair sense of the problems when TechM bid for Satyam, and he took a calculated risk because the company had no other option if it wanted to enter the big league. When Anand Mahindra (Mahindra Group MD & Vice-Chairman) met him with the offer to head TechM (known as Mahindra British Telecom) in 2005, the company’s turnover was just $120 million. He is now confident that it will touch at least $2.5 billion in the next five years.
While most of the problems have been sorted out, Nayyar says he was surprised by the income-tax department’s decision to slap a Rs 616 crore tax claim on Mahindra Satyam when the government and its two important agencies are prosecuting Raju for showing large fictitious income. That means the basis of the Rs 616 crore tax is Raju’s fictitious income. “This is bizarre,”says Nayyar, adding that he wonders how fraud can be taken as a basis for tax claims.
(We met Nayyar for this interview just before the Supreme Court’s subsequent verdict that Mahindra Satyam will be re-evaluated for its tax liability for the years 2003-04 to 2008-09 by the Central Board of Direct Taxes within four weeks. The court also directed Satyam to furnish a bank guarantee by next week, after which the attachment of the company’s properties by the authorities, including the freezing of its bank account that contains Rs 1,300 crore, will be withdrawn).
Nayyar, who did his Master’s degree in Development Economics from Williams College, Massachusetts, says the Satyam acquisition wasn’t the highest point of his life. That is reserved for his long career as a public servant. “Public policy is the biggest turn-on. IT in contrast has only a limited scope,” he adds.
Consider his assignments: An IAS officer of the 1961 batch (his wife was from the same service), he has worked as a district magistrate, as Haryana’s rural development secretary and director at the department of economic affairs before heading off to the World Bank where he worked for over 10 years in its energy and infrastructure divisions.
He was responsible for the Bank’s decision not to finance Enron’s ill-fated Dabhol project in Maharashtra — and braved quite a lot of trouble for doing so because Enron was influential in Washington.
He remembers how Enron Vice-Chairman Rebecca Mark stormed into his office in Washington after the World Bank went along with his views, and said “It’s silly bureaucrats like you who are big obstacles to any growth. Do you realise you are going against the interests of the US?”
Nayyar’s reply to her was a one-liner: “Ms Mark, I work for the interests of my client, and the US is not my client.” It’s memories such as these that prompts Nayyar to say he would not trade his years in the IAS and the World Bank with anything else.
Would he return to his “public policy” days if there is an offer from the government, we ask. There’s a long pause before Nayyar says he is probably too old for all that. For once, his voice lacks conviction.
Nayyar’s corporate career started with the Gas Authority of India where he was the founding chairman & managing director and was responsible for setting up the Hazira-Bijaipur-Jagdishpur (HBJ) gas pipeline, which carries most of India’s liquid natural gas.
IT was a late-life encounter, that too an almost accidental one. Shiv Nadar roped him in because he wanted to set up a power plant in 1994 and wanted Nayyar to oversee it. The power plant didn’t come up and he ended up at HCL Corporation, responsible for transforming the company from its hardware focus to a software and services firm.
How did he manage it having spent a better part of his 50-year career in a world that had nothing to – even remotely – with IT? “Well, management principles are the same everywhere – whether it’s a gas pipeline company, public service or an IT firm. You are basically managing the aspirations of people – something I think I have been quite good at,” he says.
Nayyar is, however, getting ready for a “bigger” chapter in his life. He has decided not to take another extension in his current job beyond the three-year term, and would love to do something that is the closest to his heart: charity work.
One of India’s highest-paid executives (no surprise that he is an avid collector of M F Husain and Sanjay Bhattacharya paintings), Nayyar says he will donate almost everything to charity (“my children don’t need my money”). He has been closely connected with the TechM Foundation, which is involved in providing education for poor children, and is using his own money for public purposes.
His wife already runs an orphanage in Delhi called Bal Sahyog and has set up a school — Cathedral Vidya School, Lonavala. “My wife is already full-time into this work. I hope she allows me to work with her,” Nayyar says. Life, for him, will indeed begin again at 76.
