Sept. 29: “The patient is out of the ICU, but it will be another one to two years before he is healthy again.” That comment, coming Mr Vineet Nayyar, chairman of Mahindra Satyam — as the company is now called — perhaps addresses the queries of employees, investors and clients better than the 25 pages of financial statements and clarifications that the company came out with on Wednesday.
Satyam on Wednesday declared a loss of Rs 125 crore for FY10 on a total turnover of Rs 5,481 crore. For the previous year —FY09, Satyam had a turnover of Rs 8,813 crore — but took a whopping loss of Rs 8,177 crore. The loss was the result of years of overstated revenues, over-invoicings and other mal-practices. One positive inference that can be drawn from the numbers is the operating margin of 8.3 per cent for FY10 — which means that Satyam is making money at an operational level now. However, for large IT companies, operating profit is usually at a much higher 20-22 per cent.
The future course for Satyam also seems charted out. That Satyam and Tech Mahindra will eventually merge is a foregone conclusion to most observers. “After that, we shall approach AP and Bombay High Courts for approval, which would officially kickstart the merger process,” Mr Nayyar explained.
The merger process would also involve determining swap ratio and ratification of the proposal at both companies’ AGMs. “The entire exercise could take nine to twelve months,” he said.