SATYAM TECH MAHINDRA IN A GIST

BACKGROUND OF TECH MAHINDRA Founded in 1986, (Tech Mahindra Ltd.) Mahindra British Telecom (MBT) is an Information Technology service provider company headquartered in Pune, India. It is a joint venture between the Mahindra Group and BT Group plc, UK with M&M (Mahindra and Mahindra) holding 44% and BT holding 39% of the equity. Tech Mahindra clocks revenues over USD 1 billion, offering end-to-end IT solutions across the value chain to worlds leading telecommunications companies. Its capabilities spread across a broad spectrum, including Business Support Systems (BSS), Operations Support Systems (OSS), Network Design & Engineering, Next Generation Networks, Mobility Solutions, Security consulting and Testing. The solutions portfolio includes Consulting, Application Development & Management, Network Services, Solution Integration, Product Engineering, Infrastructure Managed Services, Remote Infrastructure Management and BSG (comprises BPO, Services and Consulting). BACKGROUND OF SATYAM COMPUTER SERVICES LTD. Ramalinga Raju is the Founder and Chairman of Satyam Computer Services Ltd. Satyam Computer Services was incorporated in 1987. It went public in 1992 and has since grown to become one of India's preeminent IT companies with a global presence, serving over 144 Fortune 500 and over 390 multinational corporations. Satyam Computer Services Limited offers consulting and information technology (IT) services worldwide. The company operates in three segments: IT services, Business Process Outsourcing (BPO), and Software Products. The IT Services segment provides a range of services, including software development, packaged software integration, system maintenance, and engineering design services. Its BPO segment provides services covering human resource, finance and accounting, customer contact, and transaction processing. Its Software Products segment engages in the product development and creation of propriety software. The company offers services to customers in a range of industries, including insurance, banking and financial services, manufacturing, telecommunications, transportation, and engineering services. The company markets its services primarily to companies in the United States, Europe, the Middle East, and the Asia-Pacific region. The company has a strategic alliance with MindFlow Technologies Inc. Satyam was organized in 1987 and is headquartered in Hyderabad, India.

COMPETITORS Its competitors are Tata Consultancy Services, Cognizant Technology Solutions, Aricent, Infosys, Wipro, Computer Sciences Corporation, HCL Technologies, Alcatel Lucent.

DEAL MERGER OF SATYAM COMPUTER SERVICES LTD. AND TECH MAHINDRA Tech Mahindra will fund more than three-fourth of Rs 2,890 crore from debt to acquire Satyam Computer for which it outbid Larsen and Toubro with an offer of Rs 58 a share. Tech Mahindra had cash available through internal generation of more than Rs 700 crore. They were having the ability to raise debt at the SPV level and at the Tech Mahindra level. They had to pay Rs 2,890 crore at Rs 58 a share to acquire 51 per cent stake. Tech Mahindra did not join hands with any private equity player to fund the deal. Anand Mahindra, Chairman of Mahindra Group, personally reached out to top brass of Satyam clients Citigroup, General Motors and Cisco to restore customer confidence. Tech Mahindra closed at Rs 359.45, up by 12.31 per cent on the Bombay Stock Exchange today. Based on the bid price, market capitalisation of the expanded equity base of Satyam would be around Rs 5,600 crore. Besides, the current valuation of Satyam at the sale price of around Rs 5,600 crore is just about one-sixth of its last year's market capitalisation. The executive also said that the top three companies are not very serious about looking at Satyam as it's a large, complicated deal that comes with the baggage of the World Bank ban. A merger would make more sense for large IT companies like HCL, Cognizant and Tech Mahindra any of which can use this as an opportunity to enter the big league, said an industry analyst, who did not wish to be named. In fact a merger with Satyam would change the pecking order for these companies. A Tech Mahindra official, who wanted to remain unidentified, said that the company would be interested in merging with Satyam, though it has not been approached yet. Such a merger would mean lower dependence on British Telecom (BT) for Tech Mahindra, while Satyam could gain from the smaller company's having a board of directors following the same international standards as BT.

MAHINDRA SATYAM:
Mahindra Satyam is a part of the Mahindra Group which is one of the top 10 industrial firms based in India. The company offers consulting and information technology (IT) services spanning various sectors, and is listed on the New York Stock Exchange, the National Stock Exchange (India) and Bombay Stock Exchange (India). In June 2009, the company unveiled its new brand identity Mahindra Satyam subsequent to its takeover by the Mahindra Group s IT arm, Tech Mahindra. Mahindra Satyam has offices in 32 countries.Mahindra Satyam is in list of top 10 IT services providers in India.[4]

Turnaround
The company had reported a consolidated net loss of Rs 233.3 crore for the JulySeptember quarter of 2010. Speaking at a press conference, Vineet Nayyar, chairman of the company said the consolidate cash and cash equivalents at Rs 30 crore compared to Rs 26 crore. We will take three [years] for a turnaround, he informed.[9] Even though the company got 245 crores profit in Q4 for 2010-2011, but due to outside payments nearly 570 crores for SEK,UNIPAID and Class Action Suit in Q4 (Total 641 crores for the year 2010-2011 ),the company had reported a consolidated net loss of Rs 327 crore for the Jan-Mar quarter of 2010-2011.

SYNERGY From a synergy point of view, Tech Mahindra is the most likely candidate. The services of the two companies do not overlap each other, so integration would not be too much of a problem. Satyam had a poor presence in telecom and without doubt Tech Mahindra is very strong in this sector. A strategic merger or acquisition of Satyam would place Tech Mahindra in a very favourable position. It was always their plan to branch out from telecom and this buy will give them that boost as well as a ready-made presence that they crave for," said an IT analyst who did not want to be named.

Tech Mahindra Quarterly Income Statement Income Statement (In Crore) Sales Turnover Operating Profit Net Profit Earnings Per Share Reserves Face Value Net Profit Margin Average Margin Dec 09 1,149.90 261.97 165.79 13.56 10 14.42% 15.10% Mar 10 1,163.87 277.53 231.83 18.95 2,550.02 10 19.92% Jun 10 1,093.57 191.45 128.32 10.34 10 11.73% Sep 10 1,491.77 271.89 183.95 14.63 10 12.33% Dec 10 1,181.23 245.56 202.02 16.05 10 17.10%

Mahindra Satyam Quarterly Income Statement Income Statement (in Crore) Sep 08 Jun 10 Sep 10 Dec 10

Sales Turnover Operating Profit Net Profit Earnings Per Share Reserves Face Value Net Profit Margin

2,700.52 649.27 597.43 8.87 8,392.23 2 22.12%

1,154.10 108.9 104 0.88 2 9.01%

1,150.80 71.2 28.5 0.24 2 2.48%

1,193.50 82.1 65.8 0.56 2 5.51%