Revived Satyam merged into parent Tech Mahindra
- 25 June, 2013 10:28
Satyam Computer Services, the Indian outsourcing company hit by an accounting fraud in 2009, has been merged with parent Tech Mahindra.
The combined entity has total IT services revenue of US$2.7 billion, and about 84,000 staff serving 540 customers, Tech Mahindra said in a statement to the Bombay Stock Exchange on Tuesday.
Tech Mahindra, also an outsourcer, acquired a dominant stake of about 43 percent in Satyam through subsidiary Venturbay Consultants in 2009, after the government invited bids from strategic investors to revive the ailing Hyderabad company.
The government had earlier installed its own board at Satyam, after founder B. Ramalinga Raju said in January that year that company's profit had been inflated for several years. Satyam lost a number of clients as a result of the financial scandal, and had to settle litigation and fraud charges, including with the U.S. Securities and Exchange Commission.
Tech Mahindra soon after considered a merger to benefit from economies of scale, operational efficiency and a joint go-to-market strategy. The aim of the two companies was to create an IT powerhouse that would be better able to compete with larger Indian outsourcers like Tata Consultancy Services, Infosys and Wipro.
In the interim it adopted the "Mahindra Satyam" brand for the company's services.
The announcement of the completed merger follows approvals by courts in Mumbai and Andhra Pradesh state in India. The boards of the two companies approved the merger in March.
Satyam had seen a revival in its business. In its fiscal year ended March 31, revenue grew 20 percent year-on-year to 77 billion Indian rupees (US$1.4 billion), while profit after tax rose 11 percent.