Mahindra Satyam

» see mahindrasatyam.com as it lived, on the wayback machine

~ the obituary ~

Satyam Computer Services was founded in Hyderabad in 1987 and grew into one of the handful of Indian firms that the phrase "offshore IT" got attached to. By 2008 it was reporting revenue above two billion dollars and employing 52,000 people. Its founder and chairman, B. Ramalinga Raju, was the public face of all of it.

On 7 January 2009 Raju sent his board a letter admitting he had manipulated the accounts, and resigned the same day. Two figures get quoted for what he had done and they are not the same measurement: the English Wikipedia article on the company puts the invented cash and cash-equivalent assets at roughly a billion dollars, while the article on the scandal gives the manipulated accounts as 7,000 crore rupees. The New York Stock Exchange halted trading in the stock that day.

Two days later the shares touched 6.30 rupees, their lowest since March 1998, against a high of 544 rupees the previous year. Raju was arrested on the same day the price bottomed out.

The government dissolved the board and installed its own, then kept the company trading while it looked for a buyer. Tech Mahindra won the formal public auction on 13 April 2009 with 31 percent, outbidding Larsen & Toubro. In June the company was renamed Mahindra Satyam.

~ he wrote it down himself ~

What makes the confession unusual is that it was a confession. No regulator uncovered this and no auditor qualified the accounts. The chairman wrote it down himself and sent it to his own board, which is why the letter rather than an investigation report is the primary document in the case.

Satyam did not run out of customers or lose a price war. It ran out of a balance sheet anyone could stand behind, and that kind of ending takes about a week.

~ forty thousand ~

On 22 January 2009 the CID told the court that the real headcount was about 40,000, not the 53,000 the company had been reporting. Thirteen thousand positions existed on a payroll and nowhere else, and those salaries left the building every month.

Nothing about Satyam was reachable from a desk in Turkey, and nothing about it was reachable from a desk anywhere. It sold multi-year contracts to the IT departments of large Western companies, so there was nothing to download and no account to open. The people who dealt with it signed paperwork instead. Outside its customer list the company was visible for about a week in January 2009 and then went back to being a line in somebody's vendor table.

~ what tech mahindra bought ~

The boards approved a full merger on 21 March 2012. The Bombay High Court cleared the scheme first and the Andhra Pradesh High Court followed on 11 June 2013, with the Registrar of Companies signing it off late on 24 June. Tech Mahindra announced completion the next day and said the combined business would trade under its own brand.

Mahindra Satyam shareholders got two Tech Mahindra shares for every seventeen they held. Trading in the old stock was suspended on 4 July 2013 and the new shares started trading on the twelfth. Tech Mahindra had been incorporated in 1986 as a Mahindra and British Telecom joint venture, so this was not a renaming: the receiving company already existed, with its own registration, and the one that had been Satyam stopped.

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