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From the gut and in to the profit books.

A HIGH TECH GAMBLE THAT HAS HIT THE JACKPOT

When Anand Mahidra decided to buy out a down-in-the-dumps Satyam Computer, he knew he could turn it around

IT WAS no easy decision to take over Satyam Computer Services Ltd, a sinking boat tainted by one of the largest corporate scams in India. Founder chairman B. Ramalinga Raju had shocked the world with his revelation of a `7,800-crore accounting scam at the IT company. But Anand Mahindra, vice-chairman and managing director of diversified group Mahindra & Mahindra (M&M) took up the challenge to pull Satyam out of the depths.

In April 2009, Satyam Computer was virtually an 'untouchable' corporate entity with a mass exodus of clients and staff hitting the information technology (IT) giant. Beginning January 2009, Satyam lost a total of 194 clients and 44 per cent of its headcount.

"We went into this situation facing a cleanup of what was India's largest corporate scam. We got a very short period of time to bring it up-to-date," Anand Mahindra recalls about those tumultuous days of the posttakeover period.

"And it started with Tech Mahindra rebranding the company as Mahindra Satyam", says Anand Mahindra, a Harvard MBA, who started his career with the Mahindra Ugine Steel Company.

In September 2010, Mahindra Satyam was able to disclose its audited financials results after skipping it for the past two fiscals. The company posted revenues of $1.1bn for financial year 2010. Its revenue had slumped by 38 per cent.

Currently, Mahindra Satyam has cash reserves of `2,000 crore. The company claims to have retained most of its clients, acquired 50 new ones post-takeover and has begun bagging new contracts from the financial sector. "The attrition of both staff and clients stopped very shortly after we took over. We have been making very steady progress in getting new clients," Anand Mahindra says. "It will take some time before we can count ourselves in the pink of health and compete with the best in terms of gross margins, but we fully intend to get there," Mahindra says.

The company plans to declare results for the first and second quarters of this fiscal on November 15. Subsequently, it will begin the process of merging the company with Tech Mahindra. Mahindra's efforts have received applause from expert.

"The efforts of the Mahindra Satyam leadership team need to be commended. The turnaround exercise at Mahindra Satyam is in no way complete but this is a critical and an absolutely essential milestone to take it to the next stage," Ananth added.

Praising the manner in which the issue was resolved, Som Mittal, President, Nasscom, said, "The takeover is successful despite the huge challenges that the company faced. Tech Mahindra has a large base in Europe. Satyam will give it a very good opportunity to gain a foothold in other geographies and many new verticals".

THE SWEET SOUND OF REVVING UP

Ratan Tata has steered Tata Motors into a respected global auto major

TATA Group chairman Ratan Tata came through with flying colours this year as Tata Motors bounced back both at home and in the overseas markets.

India's leading industrialist has emerged as the saviour of iconic British brand Jaguar Land Rover (JLR), which is now surging ahead with a Au238 million (Rs 1,715 crore) net profit for the July-September quarter compared with a Au51.7million loss in the same period last year.

With Tata Motors' product portfolio spanning the entire spectrum from the world's cheapest car Nano to the luxury brands Jaguar Land Rover, Tata has shown his entrepreneurial mettle in succeeding against stiff global competition.

The consolidated profit of Tata Motors for the first half of the current financial year (April- September) works out Rs 4,212 crore compared with a loss of Rs 307 crore in the first half of last year. This clearly shows that the company is back on the high growth trajectory.

"Ratan Tata is a man of great vision. His success in the world market is a reflection of Indian entrepreneurial talent," said Apollo Tyre chairman and managing director Onkar S. Kanwar Tata has turned around JLR, a company that had been driven to the ground by the management of US auto giant Ford Motor Company.

There were few takers for JLR when Ratan Tata acquired the company in June 2008 for $2.3 billion in a distress sale from Ford and skeptics thought for once the head of the mighty saltto- steel conglomerate had got it wrong.

The economic meltdown that hit the world markets in October that year drove the company to the brink of bankruptcy and closure appeared imminent.

Ratan Tata, however, did not panic even as heavy losses from JLR pulled parent company Tata Motors into the red. There was fierce competition in the Indian market with the Japanese and US companies launching new models and the once popular Indica and Indigo brands starting to lose market share.

The Tata group has pumped more than Au1.2 billion into JLR to cover the losses since it bought the business. Intelligent financial management and costcutting along with the launch of new models has helped to revive the company.

JLR sales soared as the company stormed into China, to tap the potential of the world's fastest growing economy. Sales of the luxury brands also went up in the US with the economic revival and the fact that Japanese rival Toyota suffered a setback with technical flaws leading to recalls of its popular models.

Revenues of JLR have now shot up by 57.7 per cent to Au2.25billion, and the company now accounts for 10 per cent of Britain's total exports to China. In the Indian car market, Tata knew his strength lay in the diesel segment where new entrants Ford and Maruti Suzuki were eroding his market share. He deftly entered into an alliance with Fiat and roped in the leading Italian car maker for supply of its hi-tech quadrajet diesel engine to successfully relaunch the Indica and Indigo models.

"He also succeeded in putting Nano into commercial production despite the heavy odds following the debacle at Singur.

The car rolled out first in small numbers from the makeshift facility in Pantnagar and then the main plant from Gujarat to add to the market share of Tata Motors and boost the morale of its workforce,'' said a company insider who did not want to be named.

In the commercial vehicles segment, Tata Motors has launched the new Prima brand of globally benchmarked heavy trucks and introduced a number of variants from the mini-truck Ace enabling it to cover the entire product range and capture 64.2 per cent of the Indian market.

FOR PREMJI PHILANTHROPY A WAY OF LIFE

The Wipro chairman is giving back to society after leading his firm to worldwide fame

ONE OF the reasons, Azim Premji, IT major Wipro Ltd's billionaire founder, is considered India's largest philanthropist is that unlike others he uses his personal funds to finance all his charity activities, whereas most others use their companies as a front.

Unlike in the West, very few Indian industrialists involve themselves in charity work, says Vijay Mukhi, former member of IT industry body NASSCOM. "Azim Premji is one of the rare industrialists who spends millions of dollars in charity every year, does it discreetly and does not like to make a mention about it in the media," he says.

Mukhi has closely seen the work done by Premji when he was in Mumbai. "Education is a sector that needs urgent attention in India due to the shortage of trained staff and it is a sector which Premji foundation has been closely associated with. If philanthropists like him come in, the teaching sector would certainly get a boost in India."

While studying for electrical engineering at Stanford University Premji was called upon to take over the family business due to the sudden demise of his father, M.H. Premji. He inherited his father's $2-million hydrogenated cooking fat company in 1966. He repositioned the company and went on to create Wipro Ltd, the Bangalore, India-based IT services behemoth.

Under Azim Premji's leadership Wipro (Western India Vegetable Products Ltd) metamorphosed from a company dealing in hydrogenated cooking fats to a pioneer in providing integrated business, technology and process solutions on a global delivery platform. Today, Wipro Technologies is the world's largest independent R&D service provider.

The Azim Premji Foundation, formed in the year 2001 is 100 per cent funded by the founder of Wipro. Its primary focus is on education.

The foundation has around 300 full-time employees and 1,100 volunteers and is working towards making fundamental changes in the way schooling takes place, from Uttaranchal to Karnataka.

It plans to set up the first private university in Karnataka. It is expected to be operational by mid-2011. The university will not only train teachers but also administrators and non-teaching staff belonging to the education sector. Towards funding of the project, the Azim Premji Foundation has agreed to deposit Rs 25 crore with the government and induct ministers and senior government officials on its board.

According to media reports, Premji is in talks to sell about 4.47 per cent stake in Wipro Ltd. Post-sale, his total stake in the company will fall to 75.14 per cent from the current level of 79.61 per cent. This move is in line with the government norms for listed companies to have at least 25 per cent equity in the form of public holdings.

The sale, which would take place over the next six months, would likely fetch Premji around `4,000 crore at current market valuation. News reports also suggest that he will create an endowment trust with the funds. This corpus would fund all the charity activities of Premji Foundation.

QUICK FACTS

AZIM PREMJI

His grandfather was the rice king of Burma.

His company's net worth is estimated to be around $18.42 billion as on year ended March 2010.

According to Forbes, he is currently the second richest Indian with a personal wealth of $17 billion.

Premji was forced to leave his studies in electrical engineering at Stanford University, USA at the age of 21 to take over the family business when his father, M.H. Premji, suddenly died in 1966.

RATAN TATA

Cornell and Harvard-educated Ratan N Tata has been the chairman of Tata Sons since 1991.

He is also the chairman of Tata Motors, Tata Steel, Tata Consultancy Services, Tata Power, Tata Tea, Tata Chemicals, Indian Hotels and Tata Teleservices.

During his tenure, the group's revenues have grown nearly 12-fold.

He also serves on the UK Prime Minister's Business Council for Britain and the International Advisory Council of Singapore's Economic Development Board.

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Publication:Mail Today (New Delhi, India)
Geographic Code:9INDI
Date:Nov 16, 2010
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