Description
It explains talks about Industry Trends in IT industry, PEST Analysis of IT Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Mahindra Satyam, it's Finance performance, SWOT analysis of Mahindra Satyam and Various Strategies employed.
Mahindra Satyam Computer Services. Industry Analysis: 1. Industry trends: Indian and Global perspectives, recent happenings. Ans. According to the NASSCOM Strategic Review 2011, the Indian IT / ITES industry is estimated to aggregate revenues of USD 88.2 billion in FY2011. The export revenues generated by the Indian IT / ITES industry grew by 18.7 percent in FY2011 to USD 59.4 billion. The domestic IT / ITES revenues are also estimated to grow at 21 percent to USD 28.8 billion in FY2011. The growth in domestic market is attributed to the increasing technology adoption by both organizations and the government. NASSCOM predicts that Indian IT / ITES industry may grow to USD 225 billion by 2020. The industry presently employees 1.6 million people and is constantly expanding. Global technology products and services spend increased about 4 percent in 2010 to touch USD 1.6 trillion as per NASSCOM estimates. IT and BPO services continue to lead, accounting for 63% of the total spend. While the developed nations are the biggest spenders on IT, emerging markets have led the return in spending. The developed nations are yet to return to pre-recession spending levels. Mahindra Satyam believes that the revival in IT services spending is driven by factors such as: • IT being a driver for meeting business goals • New Business Models coming into vogue where IT plays a prominent role. • Emergence of solutions around new technology platforms • Efficiency improvement initiatives and cost focus. 2. PEST Analysis: Political, economic, social and technical aspects related to the industry. Ans. Political. Legal aspects and policy IT Act 2000, emails are officially a valid and legitimate form of communication in India and can be duly produced and approved in the court of law. . The Act now allows Government to issue notification on the web thus heralding e-governance. The right of a copyright holder. Position on rentals of software. The right of the user to make backup copies. Most importantly the amendments imposed heavy punishment and fines for infringement of copyright of software. Economic. In 2009, domestic IT spending grew by 20% and reached $ 20 billion. Currency fluctuations cased by the devaluation of the dollar has affected the industry during the last recession. Recession cause low attribute rate due to job layouts and job cuts. India’s global IT spending yet to decline due to entry of new IS companies and the cause of the recession. With the decline of banking and financial sectors, the revenue from there is expected to decline, hurting the bottom line of IT majors. Economic survey revealed that IT sector created almost 3 million additional jobs this year and number will go on in the immediate future IT services will contribute over 7.5 % of the overall GDP. IT Exports will account for 35% of the total exports with potential for 5 million jobs in IT by 2012. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion. Social. Rising work pay in a tough economic situation, entrepreneurs, competition, employee right, language barriers, race nationality have all shown positive symptoms due to the boom in the IT sector. People find a reliable and stable job in this sector and also the scope to grow. This industry requires continuous feeding of skilled human resource and this job is done by the education institutes in the nation. IT sector has also been very much active in their CSR activities be it local, national or global. Mahindra Satyam focuses its CSR activities in the field of education, health, livelihood, empowering persons with disability and food rehabilitation. Infosys, has introducedmeasures in reduction of carbon emission by
trying to reduce its water consumption, electricity utilization and also partnering global companies in troubleshooting this global dilemma. Technology. India today stands 3rd behind China and the US in the number of internet users. 100 million. More and more people spend time online for social or professional reasons. Web 2.0 represents the next transition in the evolution of web applications. Cellular mobile tariffs are the lowest in the world. India has the second largest telephone network in the world after China. In the past 3 years, airtime tariffs have plunged 75%. Indian IT sector exports most of the products thereby giving the world the best solution for their problems.
3. Competitor Analysis: Analyze pricing, quality, distribution and partnerships of the nearest competitor of the company. Ans. As per industry leaders it is essential to stay innovative and educate the country’s seemingly limitless talent pool to ensure they sustain double-digit growth rates in the face of rising costs and competition globally. Over the last 5 years, the industry has shown a growth of almost 30%. With global brands like IBM, Cisco and Accenture just around the corner it is essential to offer competitive services to offer. In India, Mahindra Satyam faces competition from TCS, Infosys, Wipro, HCL Tech, Oracle. They have a much better Market capital share as they have been in the industry for a long time. Globally, the competitors are Accenture, Cap Gemini, Deloitte etc. 4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the industry. Strengths High skilled human resource, low wage structure, English speaking professionals, quality of work, cost competitiveness, quality infrastructure, suitable outsourcing option for most countries, quality standard such as ISO 9000 and SEI CMM are followed and many global players have set up their operations in India like Microsoft, Oracle, Adobe. etc. Many employees lack practical knowledge, dearth of suitable candidates, employee salaries are growing continuously and low wage benefits might soon come to an end. High economic growth in developing markets. For sustaining growth IT will play an important role in increasing competitiveness, Increased adoption of off-shoring, environment sustainability issues and emergence of new markets. Lack of data security systems, countries like China and Philippines with qualified workforce gearing up to overcome the language barrier, instability of political environment, horizontal competition.
Weaknesses Opportunities
Threats
Company Analysis: 1. Company description (a brief introduction regarding what businesses the company is into) Satyam computer services a leading global service information, communications and technology (ICT) company based in Hyderabad founded in 1987 by Ramalingam Raju. In the midst of its growth of 20
years Ramalingam Raju was accused for an accounting fraud of the company's financial statement. He was arrested and with other 2 accused for the same. Just when the scandal broke out Merrill lynch now part of BofA and State Farm Insurance terminated their engagement with the company. Even Satyam's auditing firm PWC came under the lens of the investigation. The NYSE, S&P CNX Nifty 50 had announce that they will remove Satyam from their index in January 2009. The shares were the lowest since 1998. On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors. 2. General information about the company: location of the headquarters, year of founding, shareholding pattern, number of employees, top management, etc. On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy under the leadership of its current Chairman Vineet Nayar. Effective July 2009, Satyam rebranded its services under the new Mahindra management as "Mahindra Satyam" with a new corporate website www.MahindraSatyam.com.
Board of Directors Vineet Nayyar, Chairman C. P. Gurnani, Whole-time Director & CEO C. Achuthan, Government Nominee T. N. Manoharan, Government Nominee S. Krishnan, Chief Financial Officer G. Jayaraman, Company Secretary Auditors Deloitte Haskins & Sells
Mahindra Satyam offers consulting and Information technology spanning across various sectors and is now listed on BSE, NSE, Pink Sheets. Mahindra Satyam Now offers services in an array of sectors which are mentioned below:
? ? ? ? ? ? ? ? ? ?
Consumer Packaged Goods Travel, Transport, Logistics Telecom, Infrastructure, Media and Entertainment & Semiconductors Aerospace and Defence Banking, Financial Services & Insurance Energy and Utilities Life Sciences & Healthcare Manufacturing, Chemicals & Automotive Public Services & Education Retail Mahindra Satyam headquarters is still in Hyderabad, India and has centers and regional offices in USA, UK, Brazil, Egypt, Canada, Hungary, UAE, Malaysia, Australia and Singapore. Mahindra Satyam is the largest IT employer in Hyderabad with currently eight campuses in the metropolitan city. The company added 36 new customers during the quarter in 2011 and total headcount stood at 33,353 as of March 31, 2012, a net addition of 1,073 QoQ and 4,087 YoY.
Satyam offers following horizontal services.
? ? ? ? ? ? ? ? ?
Extended Enterprise Solutions Web Commerce Solutions Business Intelligence Services Quality Consulting Strategic Outsourcing Services Industry Native Solutions Business Services Group - BSG (BPO) Engineering Services Product management.
Particular Promoter Holding Indian Promoters Foreign Promoters
No. Of Shares
Percent Shares(%)
501843740 0
42.66 0.00
Non-Promoter holdings (Other than Public) Financial Institutions/Banks FII/Foreign Fin Inst/Foreign Banks Corporate Bodies Government Holdings OCB NRI Mutual Funds Other Foreign Holdings General Public Individual Holding Upto Rs. 1 lakh Individual Holding Excess of Rs. 1 lakh Others Total 226075915 21854577 25395908 1176424871 19.22 1.86 2.16 100.00 33673697 116100950 98375435 0 0 26600 5032907 148045142 0.00 0.00 0.43 12.58 9.87 8.36
Source: moneysulekha.com 3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year Ans. Financial Highlights for the year ended March 31, 2012:
? ? ? ?
Revenues at Rs 6,396 crore, up 24% YOY. EBITDA at Rs 1,024 crore, margin at 16%, up 729 bps YoY PAT at Rs 1,306 crore, as compared to loss of Rs 147 crore in the previous year EPS was Rs 11.1 per share for FY12
in Rs Million Consolidated P&L Summary Revenues C&B cost - Personnel and Sub Con Operating Expenses EBITDA EBITDA Margins Other Income Depreciation / Amortisation Interest and Financing Charges Exceptional Items Profit Before Tax Provision for Tax Profit After Tax (after Minority Interest) EPS - Rs/Share for the Quarter / Year Quarter Ended 31-Mar-12 31-Dec-11 16,659 17,181 11,136 2,607 2,916 17.5% 727 415 25 (1,094) 4,296 (943) 11,449 2,951 2,781 16.2% 1,513 385 27 3,881 790 4.9% Growt Year Ended Growt h QoQ 31-Mar-12 31-Mar-11 h YoY -3.0% 63,956 51,451 24.3% 43,124 10,592 10,240 16.0% 4,189 1,577 118 (1,094) 10.7% 13,828 852 38,050 8,912 4,489 8.7% 2,879 1,721 97 6,411 (861) 579 128.2 %
5,342 4.54
3,084 2.62
73.2% 13,061 11.10
(1,472) (1.25)
Source: MahindraSatyam.com
4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the company. Ans. Strengths Global presence, new Management and leadership, broad range of research and development services, broad service portfolio, strategic alliances, strong financial position, revenue of $ 1.8 billion and employee strength of 33353. Low operating margin of other group of companies, ongoing law suits of tax and other issues in India and foreign soil, few financial burn marks left by the accounts of scandal. Increase in Global IT spending, new brand identity and synergy with the parent company, launching BPO services, huge potential in domestic market. Risks due to increasing IT complexity, fluctuations in currency value, process non compliance, increasing cost of human capital.
Weaknesses Opportunities
Threats
5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. Ans. On July 9, 2012, Mahindra Satyam announced a strategic partnership with Aspire zone foundation, a leading sports firm in the middle east. This partnership will create end-to-end and innovative venues and event management systems (VEMS) which includes sport and non sport events. Won a GTM implementation deal from one of the largest Global aircraft manufacturers. Won a multimillion multiyear deal from a leading precious metals and financial services group of companies for oracle implementation and support. Mahindra Satyam was chosen by a semiconductor global leader for its share point development and IMS support. Chosen by one of world’s oldest publishing houses in UK for implementation of its SAP Global Finance and Fulfillment (GFF) and Procurement Rollout over next 3 years. : IT firm Mahindra Satyam said it has set up a delivery centre in Toulouse, France, dedicated to aerospace and defense sector. This is part of the company's larger strategy of expanding footprint in Europe with focus on strengthening relationships with regional aerospace and defense businesses References: MahindraSatyam, business standard, economic times, wikipedia, Moneysulekha, mbaskool, google images.
doc_314032880.docx
It explains talks about Industry Trends in IT industry, PEST Analysis of IT Industry, Competitor Analysis, SWOT analysis, Company Description, General Information about Mahindra Satyam, it's Finance performance, SWOT analysis of Mahindra Satyam and Various Strategies employed.
Mahindra Satyam Computer Services. Industry Analysis: 1. Industry trends: Indian and Global perspectives, recent happenings. Ans. According to the NASSCOM Strategic Review 2011, the Indian IT / ITES industry is estimated to aggregate revenues of USD 88.2 billion in FY2011. The export revenues generated by the Indian IT / ITES industry grew by 18.7 percent in FY2011 to USD 59.4 billion. The domestic IT / ITES revenues are also estimated to grow at 21 percent to USD 28.8 billion in FY2011. The growth in domestic market is attributed to the increasing technology adoption by both organizations and the government. NASSCOM predicts that Indian IT / ITES industry may grow to USD 225 billion by 2020. The industry presently employees 1.6 million people and is constantly expanding. Global technology products and services spend increased about 4 percent in 2010 to touch USD 1.6 trillion as per NASSCOM estimates. IT and BPO services continue to lead, accounting for 63% of the total spend. While the developed nations are the biggest spenders on IT, emerging markets have led the return in spending. The developed nations are yet to return to pre-recession spending levels. Mahindra Satyam believes that the revival in IT services spending is driven by factors such as: • IT being a driver for meeting business goals • New Business Models coming into vogue where IT plays a prominent role. • Emergence of solutions around new technology platforms • Efficiency improvement initiatives and cost focus. 2. PEST Analysis: Political, economic, social and technical aspects related to the industry. Ans. Political. Legal aspects and policy IT Act 2000, emails are officially a valid and legitimate form of communication in India and can be duly produced and approved in the court of law. . The Act now allows Government to issue notification on the web thus heralding e-governance. The right of a copyright holder. Position on rentals of software. The right of the user to make backup copies. Most importantly the amendments imposed heavy punishment and fines for infringement of copyright of software. Economic. In 2009, domestic IT spending grew by 20% and reached $ 20 billion. Currency fluctuations cased by the devaluation of the dollar has affected the industry during the last recession. Recession cause low attribute rate due to job layouts and job cuts. India’s global IT spending yet to decline due to entry of new IS companies and the cause of the recession. With the decline of banking and financial sectors, the revenue from there is expected to decline, hurting the bottom line of IT majors. Economic survey revealed that IT sector created almost 3 million additional jobs this year and number will go on in the immediate future IT services will contribute over 7.5 % of the overall GDP. IT Exports will account for 35% of the total exports with potential for 5 million jobs in IT by 2012. IT industry will attract Foreign Direct Investment (FDI) of U.S. $ 4-5 billion. Social. Rising work pay in a tough economic situation, entrepreneurs, competition, employee right, language barriers, race nationality have all shown positive symptoms due to the boom in the IT sector. People find a reliable and stable job in this sector and also the scope to grow. This industry requires continuous feeding of skilled human resource and this job is done by the education institutes in the nation. IT sector has also been very much active in their CSR activities be it local, national or global. Mahindra Satyam focuses its CSR activities in the field of education, health, livelihood, empowering persons with disability and food rehabilitation. Infosys, has introducedmeasures in reduction of carbon emission by
trying to reduce its water consumption, electricity utilization and also partnering global companies in troubleshooting this global dilemma. Technology. India today stands 3rd behind China and the US in the number of internet users. 100 million. More and more people spend time online for social or professional reasons. Web 2.0 represents the next transition in the evolution of web applications. Cellular mobile tariffs are the lowest in the world. India has the second largest telephone network in the world after China. In the past 3 years, airtime tariffs have plunged 75%. Indian IT sector exports most of the products thereby giving the world the best solution for their problems.
3. Competitor Analysis: Analyze pricing, quality, distribution and partnerships of the nearest competitor of the company. Ans. As per industry leaders it is essential to stay innovative and educate the country’s seemingly limitless talent pool to ensure they sustain double-digit growth rates in the face of rising costs and competition globally. Over the last 5 years, the industry has shown a growth of almost 30%. With global brands like IBM, Cisco and Accenture just around the corner it is essential to offer competitive services to offer. In India, Mahindra Satyam faces competition from TCS, Infosys, Wipro, HCL Tech, Oracle. They have a much better Market capital share as they have been in the industry for a long time. Globally, the competitors are Accenture, Cap Gemini, Deloitte etc. 4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the industry. Strengths High skilled human resource, low wage structure, English speaking professionals, quality of work, cost competitiveness, quality infrastructure, suitable outsourcing option for most countries, quality standard such as ISO 9000 and SEI CMM are followed and many global players have set up their operations in India like Microsoft, Oracle, Adobe. etc. Many employees lack practical knowledge, dearth of suitable candidates, employee salaries are growing continuously and low wage benefits might soon come to an end. High economic growth in developing markets. For sustaining growth IT will play an important role in increasing competitiveness, Increased adoption of off-shoring, environment sustainability issues and emergence of new markets. Lack of data security systems, countries like China and Philippines with qualified workforce gearing up to overcome the language barrier, instability of political environment, horizontal competition.
Weaknesses Opportunities
Threats
Company Analysis: 1. Company description (a brief introduction regarding what businesses the company is into) Satyam computer services a leading global service information, communications and technology (ICT) company based in Hyderabad founded in 1987 by Ramalingam Raju. In the midst of its growth of 20
years Ramalingam Raju was accused for an accounting fraud of the company's financial statement. He was arrested and with other 2 accused for the same. Just when the scandal broke out Merrill lynch now part of BofA and State Farm Insurance terminated their engagement with the company. Even Satyam's auditing firm PWC came under the lens of the investigation. The NYSE, S&P CNX Nifty 50 had announce that they will remove Satyam from their index in January 2009. The shares were the lowest since 1998. On 5 February 2009, the six-member board appointed by the Government of India named A. S. Murthy as the new CEO of the firm with immediate effect. Murthy, an electrical engineer, has been with Satyam since January 1994 and was heading the Global Delivery Section before being appointed as CEO of the company. The two-day-long board meeting also appointed Homi Khusrokhan (formerly with Tata Chemicals) and Partho Datta, a Chartered Accountant as special advisors. 2. General information about the company: location of the headquarters, year of founding, shareholding pattern, number of employees, top management, etc. On 13 April 2009, via a formal public auction process, a 46% stake in Satyam was purchased by Mahindra & Mahindra owned company Tech Mahindra, as part of its diversification strategy under the leadership of its current Chairman Vineet Nayar. Effective July 2009, Satyam rebranded its services under the new Mahindra management as "Mahindra Satyam" with a new corporate website www.MahindraSatyam.com.
Board of Directors Vineet Nayyar, Chairman C. P. Gurnani, Whole-time Director & CEO C. Achuthan, Government Nominee T. N. Manoharan, Government Nominee S. Krishnan, Chief Financial Officer G. Jayaraman, Company Secretary Auditors Deloitte Haskins & Sells
Mahindra Satyam offers consulting and Information technology spanning across various sectors and is now listed on BSE, NSE, Pink Sheets. Mahindra Satyam Now offers services in an array of sectors which are mentioned below:
? ? ? ? ? ? ? ? ? ?
Consumer Packaged Goods Travel, Transport, Logistics Telecom, Infrastructure, Media and Entertainment & Semiconductors Aerospace and Defence Banking, Financial Services & Insurance Energy and Utilities Life Sciences & Healthcare Manufacturing, Chemicals & Automotive Public Services & Education Retail Mahindra Satyam headquarters is still in Hyderabad, India and has centers and regional offices in USA, UK, Brazil, Egypt, Canada, Hungary, UAE, Malaysia, Australia and Singapore. Mahindra Satyam is the largest IT employer in Hyderabad with currently eight campuses in the metropolitan city. The company added 36 new customers during the quarter in 2011 and total headcount stood at 33,353 as of March 31, 2012, a net addition of 1,073 QoQ and 4,087 YoY.
Satyam offers following horizontal services.
? ? ? ? ? ? ? ? ?
Extended Enterprise Solutions Web Commerce Solutions Business Intelligence Services Quality Consulting Strategic Outsourcing Services Industry Native Solutions Business Services Group - BSG (BPO) Engineering Services Product management.
Particular Promoter Holding Indian Promoters Foreign Promoters
No. Of Shares
Percent Shares(%)
501843740 0
42.66 0.00
Non-Promoter holdings (Other than Public) Financial Institutions/Banks FII/Foreign Fin Inst/Foreign Banks Corporate Bodies Government Holdings OCB NRI Mutual Funds Other Foreign Holdings General Public Individual Holding Upto Rs. 1 lakh Individual Holding Excess of Rs. 1 lakh Others Total 226075915 21854577 25395908 1176424871 19.22 1.86 2.16 100.00 33673697 116100950 98375435 0 0 26600 5032907 148045142 0.00 0.00 0.43 12.58 9.87 8.36
Source: moneysulekha.com 3. Financial performance of the company: Sales, net profit, segment wise performance of the past 1 year Ans. Financial Highlights for the year ended March 31, 2012:
? ? ? ?
Revenues at Rs 6,396 crore, up 24% YOY. EBITDA at Rs 1,024 crore, margin at 16%, up 729 bps YoY PAT at Rs 1,306 crore, as compared to loss of Rs 147 crore in the previous year EPS was Rs 11.1 per share for FY12
in Rs Million Consolidated P&L Summary Revenues C&B cost - Personnel and Sub Con Operating Expenses EBITDA EBITDA Margins Other Income Depreciation / Amortisation Interest and Financing Charges Exceptional Items Profit Before Tax Provision for Tax Profit After Tax (after Minority Interest) EPS - Rs/Share for the Quarter / Year Quarter Ended 31-Mar-12 31-Dec-11 16,659 17,181 11,136 2,607 2,916 17.5% 727 415 25 (1,094) 4,296 (943) 11,449 2,951 2,781 16.2% 1,513 385 27 3,881 790 4.9% Growt Year Ended Growt h QoQ 31-Mar-12 31-Mar-11 h YoY -3.0% 63,956 51,451 24.3% 43,124 10,592 10,240 16.0% 4,189 1,577 118 (1,094) 10.7% 13,828 852 38,050 8,912 4,489 8.7% 2,879 1,721 97 6,411 (861) 579 128.2 %
5,342 4.54
3,084 2.62
73.2% 13,061 11.10
(1,472) (1.25)
Source: MahindraSatyam.com
4. SWOT Analysis: Strengths, weakness, opportunities and threats faced by the company. Ans. Strengths Global presence, new Management and leadership, broad range of research and development services, broad service portfolio, strategic alliances, strong financial position, revenue of $ 1.8 billion and employee strength of 33353. Low operating margin of other group of companies, ongoing law suits of tax and other issues in India and foreign soil, few financial burn marks left by the accounts of scandal. Increase in Global IT spending, new brand identity and synergy with the parent company, launching BPO services, huge potential in domestic market. Risks due to increasing IT complexity, fluctuations in currency value, process non compliance, increasing cost of human capital.
Weaknesses Opportunities
Threats
5. Various strategies employed by the company in the course of conducting business (in the form of alliances, joint ventures, product innovation/ expansion strategies, acquisitions/ divestitures and any such strategies that you think may affect the business of the company) in past 2 years. Ans. On July 9, 2012, Mahindra Satyam announced a strategic partnership with Aspire zone foundation, a leading sports firm in the middle east. This partnership will create end-to-end and innovative venues and event management systems (VEMS) which includes sport and non sport events. Won a GTM implementation deal from one of the largest Global aircraft manufacturers. Won a multimillion multiyear deal from a leading precious metals and financial services group of companies for oracle implementation and support. Mahindra Satyam was chosen by a semiconductor global leader for its share point development and IMS support. Chosen by one of world’s oldest publishing houses in UK for implementation of its SAP Global Finance and Fulfillment (GFF) and Procurement Rollout over next 3 years. : IT firm Mahindra Satyam said it has set up a delivery centre in Toulouse, France, dedicated to aerospace and defense sector. This is part of the company's larger strategy of expanding footprint in Europe with focus on strengthening relationships with regional aerospace and defense businesses References: MahindraSatyam, business standard, economic times, wikipedia, Moneysulekha, mbaskool, google images.
doc_314032880.docx