The merger of Satyam Computer Services with Tech Mahindra is on despite a formal go-ahead from the Andhra Pradesh High Court yet to be received, the companies confirmed on Thursday.
“A formal legal ascent (for the merger) is awaited. Otherwise, we are already in an integration mode. But for a formal approval, we are doing system consolidation, process and policy integration and joint go-to-market. In a way, we are almost ready for the integration,” said Satyam chairman Vineet Nayyar.
“We are hopeful that the matter will be closed soon,” he said.
The company is also currently working on creating a new brand identity for the merged entity and seeking feedback from its clients, employees and analysts on this.
To be sure, Satyam has nearly frozen recruitments in order to fully utilise the headcount available in Tech Mahindra. For the quarter ended December, the recruitment was as low as 200.
“We have combined the skill utilisation. Tech Mahindra has been a leader in telecom vertical and the resources are being used for Satyam’s clients as well. Similarly, Satyam’s resources are being used in Tech Mahindra,” said C P Gurnani, CEO of Satyam.
“The merged entity will have telecom as the leading vertical and manufacturing would be the second-largest vertical,” said Gurnani.
According to him, there is no overlap between Tech Mahindra and Satyam in operations.
“Tech Mahindra has been only in telecom and Satyam is in various other verticals. But, we find overlap only in administrative issues.”
However, Satyam’s profits for the quarter ended December nosedived following the settlement with Aberdeen. The company had a profit of about Rs374 crore before exceptional items. After providing for the Aberdeen UK claim settlement, the profit stood at about Rs80 crore, down from Rs308 crore in the corresponding period of the previous year.
“With the Aberdeen settlement, we have concluded all the litigations external to India,” said Nayyar. Despite the turning around of the business, Satyam is still facing cases in the courts including a claim from the income tax department.
The company is also facing questions for maintaining about Rs1,230 crore in a suspense account while the founder Ramalinga Raju’s family has been claiming the monies. “We have challenged the income tax claim. The earlier management has fudged the account and there can’t be any taxation on fictitious income. On the suspense account, the earlier management had shown the inflow of funds through receipts, FDs and other forms. We found out that the inflow of money was to bridge a huge gap and we have reflected that in the suspense account,” said Nayyar.