Satyam race: Experts' take on the endgame
11 April 2009
On December 16, 2008, Ramalinga Raju, founder and erstwhile chairman of Satyam Computer Services, opened a pandora's box by announcing his intention to invest in group companies, Maytas Infra and Maytas Properties. Since that day it has been a downward spiral for Raju, personally and for Satyam. On January 7, Raju confessed to a fraud of a kind that corporate India has never seen before and was arrested. Four days later the government stepped into to put in place a new board that has been working to find a suitor for Satyam.
Who then will acquire Satyam, and what will be the course ahead for the crisis-mauled company that once threatened to collapse in the wake of the scam but has since managed to stay afloat? Will the new Satyam acquirer resuscitate the erstwhile tech giant - it was regarded as one of India's best till its fall - and restore it to its former glory. Answering the questions in a discussion are Ganesh Natrajan, CEO, Zensar Technologies and former chairman of NASSCOM; Siddharth Pai , Partner and Managing Director, TPI; Raman Roy, CMD, Quattro; Arun Maira, Senior Advisor, Boston Consulting Group; and Josey Puliyenthuruthel, National Corporate Editor, Mint.
CNBC-TV18 shares with domain-b, its interview transcripts
The bids will be open on Monday, what do you think will be the endgame for Satyam?
Raman Roy: I think it is exciting that there are bidders who are willing to bid for the company as it exists today because there are liabilities, there is the unknown. While I do believe that there is a robust business around it - there are good things and bad things - I think the endgame is: Satyam going with somebody who can take it to bigger aspirations, bigger ambitions. That can be very exciting for Satyam, its customers, its employees, everything put together.
Last week, the board actually clarified some procedures as far as the game process was concerned: it said that if there is a 10% differential between top two bidders, then an open auction will take place. What do you think is likely to happen? Do you actually envisage the scenario where we are going to go through that open auction round?
Roy: I do not think it will be a prolonged bidding game because the amount of unknowns and the fact that some punt has to be taken by the bidders is pretty evident. In my opinion, what the board is doing is trying to find out is: what would be the right suitor for the strategic objectives that the board has set out - (with respect to clauses like) that for three years, nobody can break up [the company] and sell pieces and so on. They are trying to avoid somebody coming in and doing the equivalent of asset stripping with Satyam, so that it takes Satyam to the next level and next heights because that is the kind of thing that its customers are looking for, that is the kind of thing that its employees are looking for. The way I look at it is that the government moved in this board to protect the interest of the employees, to protect the interest of the customers.
A report by Forrester recently says that it's in the interest of Satyam's clients that a pure-play technology company wins the race rather than a private-equity fund. Do you subscribe to that view?
Roy: The fact that it is a private equity player or a pure play company is from my perspective not that relevant and what is relevant is that what they intend to do. Even if it is a private equity guy, if they intend to grow the business, put the right management team in place, have a strategic objective of growing the business, it would look and behave the same way as a technology company investing in it because I guess what Forrester said was where the objective of the buyer link in with the objective of what Satyam is trying to achieve. That would be what would be the right thing to happen. So I don't think where they come from, maybe the thinking is that it shouldn't be an asset stripper.
