Once the fourth largest IT services provider in the country, Mahindra Satyam (MSat, formerly Satyam Computer Services) is reworking its strategy. The company is now aligning its strategy with group firm Tech Mahindra with which it is expecting to merge. It is also working on a strategy to focus on five key areas: network, mobility, analytics, cloud and security (NMACS). Satyam’s CEO Chander Prakash Gurnani interacted with mediapeople in Hyderabad to give an update on what’s going on. Excerpts:
What is the strategy now for growth?
Both the companies (Tech Mahindra and Mahindra Satyam) have adopted a common strategy and investment patterns. Our investments have been centred around around NMACS growth strategy. NMACS is network, mobility, analytics, cloud and security. In addition to the NMACS strategy, we had also demonstrated some of our investments in R&D. We had an enthusiastic response from the analysts and also our customer community on the overall NMACS strategy. While we assure a committed and definitive growth, we continue to focus on running this ship as efficiently as possible. We are conscious that the business environment continues to be challenging. The reality is that overall spending patterns are cautious.
How is the market in general and how is it for Satyam?
The turmoil in global markets has marginally settled down while there are still issues around slower growth. However, last few months have been relatively stable. Our customers are still cautious in their outlook and decision-making cycles are long. Customers are taking too much time to decide. Despite these, we have delivered reasonable profits in Q2 (second quarter, July-September). The reality is that this is a connected world. If there is a breakdown in Europe it will impact all of us. The impact of slowdown is also being felt by consumption led economies like China and India. Various parameters show that the economic growth is going to be challenging or slow. So, we believe that it will be a similar trend for the next few years.
How has that been for Satyam?
Our growth trajectory has continued even during Q2. Our strategy of building our practices around existing customers has shown positive results. We are proud of our growth. The revenue growth has been at about 3.5% quarter-on-quarter (q-o-q). Our volume growth has been at about 2.8% q-o-q.
How are you investing to meet the growth plans?
We continue to invest into the business. Our R&D expenditure, whether it is in security services or cloud enablement of legacy applications or IT platforms, continues. We are also investing about `30-40 crore on infrastructure. The board has cleared our investments in Nagpur, Bhubaneshwar, Vizag (Visakhapatnam), Chennai and Hyderabad. Overall, the board has authorised an expenditure of about `500 crore on infrastructure and this too would translate into about `30-40 crore per month. We expect to add an additional 3,500 seats using this investment.
Are you seeing large deals coming your way?
We have started signing some large deals. We had great success in signing one such deal in Singapore. We have been selected by a large oil and gas major. We have also been selected by a large regulator in Singapore. Overall, the deal flow has improved significantly. However, if you want me to give you an outlook, I would still say I am cautious.
Internally, we continue with some of the productised platforms. We have launched the motor vehicle enterprise solution in the US market. This solution effectively means a solution covering entire process from registration to all the taxes, has been automated on a platform and this is ready for the global markets also. Similarly, we have done a major deal in Europe. We have standardised the retail enterprise information management system. Thanks to one of the acquisitions by Tech Mahindra, we also now have a platform for mobile money taking us into mobile financial payment systems.
How is the merger process with Tech Mahindra progressing? Is there a delay in the process?
Initially, when we had disclosed our roadmap, we had indicated the merger to be complete between December 2012 and March 2013. Now, we strongly believe we are ahead of the schedule. The first court hearing is still due. The Bombay high court has already given its judgement. We are right at the edge. In fact, we are at a penultimate stage.
The Enforcement Directorate had attached over `820 crore in Satyam accounts. You said you are going to challenge it. Is it not Satyam’s founder Ramalinga Raju’s money?
When the board members appointed by the government took over this company, it had almost zero cash balance. They had to borrow about `500 crore to meet the working capital requirements. That means, there is no money to be sought from Ramalinga Raju since all the monies were already spent.