We believe that the shareholders of Satyam need to be compensated: CP Gurnani, MD, Mahindra group
"We are now earning approximately Rs 2,000 crore a quarter and if we take away the fictitious revenues, we have reached almost the pre-crisis level."
Chief executive and managing director CP Gurnani feels the Indian government, through its various agencies like Income Tax Department and the Enforcement Directorate, is being unfair. After the successful turnaround, the Mahindra group now hopes to complete Satyam’s merger with Tech Mahindra by March to emerge as the fifth-largest Indian IT firm, Gurnani told CR Sukumar and Raji Reddy Kesireddy. Excerpts:
Is the turnaround of Satyam complete?
We are now earning approximately Rs 2,000 crore a quarter and if we take away the fictitious revenues, we have reached almost the pre-crisis level. Last year revenue growth was 16% in dollar terms which was in line with industry growth. Our profit margin is around 21.6%, which again is comparable with peers. There is still scope for better revenue per client compared to peers and this is an opportunity for Satyam. The turnaround is complete but we do have some challenges with the government agencies such as Income Tax and Enforcement Directorate because of the interpretation of the law and those are a few things that we consider as overhang from the past. Otherwise, the company is running at full throttle and is seriously back in business.
Do you regret the acquisition now?
We have no regrets except about those overhangs . We have agreed with the aggrieved overseas shareholders of Satyam and have settle other law suits. My only challenge is that the same Indian government which brought in the rescue team to save the fraudhit company is now trying to dig into the pre-Mahindra era and bring in claims which we think are not fair. One arm of the government says there was no income and the other arm of the government says ‘Pay income tax.’ The fraud happened only because there was no income, right? The government should be fair and differentiate between pre and post-Mahindra eras. Otherwise, Mahindras are very happy that we participated in this resurrection and look forward to build up on the strong foundation that we have already built in the last three-and-a-half years.
The AP High Court is yet to clear the merger. Will it delay the merger?
The next hearing in this case is on February 6 and we think there are no reasons for the merger to be delayed. The external auditor was asked to submit its report and hopefully it will be conclusive. We are still hopeful of merger completing by March.
What is the outlook for Europe, which accounts for over a fifth of your sales?
We continue to be hopeful not only about recovery of Europe but also opportunities in Europe. We consider the crisis as an opportunity because it is an opportunity for European companies to reengineer and relook at cost metrics that offer fair amount of transformation possibilities. We mainly focus on Germany, France, Nordic countries and UK and will continue to focus.
Analysts worry that Satyam is still not in a position to win big-ticket customers?
We have signed two Fortune-500 clients and two Fortune-2000 clients this quarter. These are reasonably big clients. We are poised for big leap on this front in the near future.
Any plans to sue auditors, Ramalinga Raju and previous board members responsible for the fraud?
We believe that the shareholders of Satyam need to be compensated for irresponsible management and irrespective audit of the company. I cannot say anything beyond this as the matter is sub judice.