Tech Mahindra
Industry Year of Incorporation Listed in Ownership Revenue Net income Computer Software 1986 NSE,BSE M&M Group US$ 1.12 billion (2011) US$ 163 million (2011)
Company Details
Tech Mahindra is part of the US $12.5 billion Mahindra Group, in partnership with British Telecommunications plc (BT), one of the world¶s leading communications service providers'. M&M (Mahindra and Mahindra) holding 44% and BT holding 39% of the equity. Focused primarily on the telecommunications industry, Tech Mahindra is a leading global systems integrator and business transformation consulting organization. Tech Mahindra¶s capabilities spread across a broad spectrum, including Business Support Systems (BSS), Operations Support Systems (OSS), Network Design & Engineering, Next Generation Networks, Mobility Solutions, Security consulting and Testing.
Vision ? To be the most respected solution provider in the communications ecosystem ? Admired for technology, agility, innovation, business models and the quality of its talent
Values ? Customer first ? Good corporate citizenship ? Professionalism ? Commitment to quality ? Dignity of the individual
Mile Stone
y 1995 y 2006 y 2007 y 2009 y 2010
Established the UK branch office Name changed to Tech Mahindra Acquired iPolicy Networks Private Limited Tech Mahindra has won the bid for Satyam Computer Services AT&T 2010 Supplier Award for outstanding performance & service to AT& T and its affiliates
Objective of Tech Mahindra behind Satyam Acquisition
y Tech Mahindra was relatively a weak player in the IT segment as compared to
Infosys, TCS etc.
y Tech Mahindra is strong in Europe, while Satyam Computer has strength in the
US
y Satyam was very good at ERP & SAP. y It also had its Proficiency at Data
ware housing & Data mining.
SATYAM COMPUTERS!!!!!
FOURTH LARGEST IT
OUTSOURCING COMPANY OF INDIA EMPLOYEES MORE THAN 50,000 PEOPLE IN INDIA HIGH GLOBAL REPUTATION OFFERS SERVICES TO MORE THAN 550 MNC¶S
Do you know him???
y B RAMALINGA RAJU y FOUNDER AND FORMER
CHAIRMAN OF ONE OF THE BIGGEST IT GIANT OF OUR NATION ³SATYAM COMPUTERS´ AND y ««««««««««GUESS WHAT THE PRIME CONVICT IN THE BIGGEST SCAM OF COUNTRY
Satyam Clients
A total of 650 Clients (185 of the top fortune 500 Companies)
Satyam ± Share holding Pattern
Shareholding Pattern as on 31st March 2008
19.46% 10.58% 8.74% Promoters 61.22% Institutional Shareholders Non-Institutional Shareholders Custodians
Institutional & NonInstitutional Shareholders LIC L&T Lazard Aberdeen Fidelity ICICI Prudential Citigroup JP Morgan 4.34% 4% 13.16%
Total Market capitalization of Rs. 15,262 Cr Total Market capitalization of Rs. (As on Dec 16, 2008 )
15,262 Cr (As on Dec 16, 2008 )
So, How did it all began?
21 April 2008 22 Sep 2008
2006
Satyam revenues cross $1 Billion
Satyam becomes first Indian company to publish IFRS audited financials
Satyam receives the Golden Peacock Award for excellence in Corporate Governance from World council
16 Dec 2008
17 Dec 2008
Satyam gets board approval for controlling stake in Maytas Infrastructure and Maytas properties as fully owned subsidiary for $1.6B (Rs. 8000 Cr.)
Satyam backs out of Maytas deal citing investors protest
Satyam shares plunge 55 percent in NYSE. BSE share plunges over 30%
30 02 03 Dec Jan Jan
Post cancellation of deal, Maytas looks for raising $500 million through sale of equities and properties
IL&FS sells further 44.27 Lakh pledged shares taking the tally to 1.5 crore pledged shares
Satyam board confirms promoters stake to be around 5%. Further 3.2% still pledged.
Satyam-Upaid case hearing over the Maytas deal in Texas court on January 8.
05 06 Jan Jan
07 Jan
Promoters stake in the company downs to 4.5% SEBI considers proposal to make it mandatory for promoters and majority share holders to disclosed pledged shares to stock exchange
Total pledged shares sold by IL&FS reaches 2.5 Cr. in last 13 days. Promoters stake down to 3.6%. Still a further 1.7% are pledged The Night Before 7th Jan Merill Lynch discovers serious irregularities in books of accounts and approaches regulator SEBI for further course of action and its inability to investigate further. DSP submits report to SEBI and Satyam management late night.
Tech Mahindra (Revenues 3766 Cr.) offers to merge with Satyam (Revenues 8473 Cr.)
Satyam Decade at a Glance
Satyam Revenues in Rs Cr.
8394 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 1247 0 2623 1803 2052 3547 10 5 5012 15 6410 30 25 20
Promoters Share holdings % 25.6
22.26 20.74 17.35 15.67 14.02 8.79 5.13
Fabricated Income Statements µCreative Account Practice¶
5,040 + 376 + 470 (Rs. Cr)
Rs. 1,230 Cr
Rs. 7,136 Cr
Fraud Amount
Understated Liabilities Overstated cash balances, Income receivables
STOCK CHARTING
Reasons for acquisition
y Failure to acquire Maytas y Intervention by the government y Recommendations by the new Board of Directors
appointed by the government.
Tech Mahindra, Satyam's new owner
y In a race that saw only a handful of bidders, Tech
Mahindra (offered Rs58/share) beat rivals such as L&T (Rs46/Share) & Cognizant Technologies (Rs20/Share). y Tech Mahindra agreed to buy a 31 percent stake (Rs1,757 crore) in Satyam at 58 rupees, a 23% premium to Stock¶s last closing price (Rs 45). y Whereas for the total 51% stake the company will have to pay Rs 2,890 crore y Tech Mahindra is a joint venture between M&M and BT, faced the difficult task of reshaping Satyam.
How did Tech Mahindra fund Rs1,757 crore deal?
y Raised Optionally Convertible Debentures (OCDs) of
nearly Rs550 crore (150cr from Tata Capital & 400cr from IDFC)
o o
at 15% per annum as interest convertible or redeemable at the end of three years
y Tech Mahindra also borrowed Rs 1,450 crore at 10%
per annum from various banks and financial institutions
What was L&T¶s interest «..??
y It bought 4% share initially when the Maytas deal y y y
y
happened, for ~160 rupees a share. It bought 8% more when the Raju¶s confession came out and later stock plunged to 6 rupees. Average Value of Holding (12%) = Rs57 But, when it came to actually buying a total of 30% it offered 46 rupees per share, If they would have won the bid, their avg Price would have been Rs49 for 42% controlling stake. At this point Satyam was trading at Rs 50«!!
Is this a merger?
?No it is not a Merger, it is an Acquisition. ?But both the companies will function with different names. ?In future Tech Mahindra can think of merging with Satyam , but because of Satyam's liabilities, it is a distant thing.
What Tech Mahindra cannot do?
1. Tech Mahindra can bring in any kind of investor. However, the agreement says that they cannot strip the company and cannot sell it . 2. ³They can take another partner if they want to, in the SPV,´
Benefit from the Acquisition«?
y Tech Mahindra¶s 57% revenues telecom sector . y Where as Satyam has clients from insurance,
healthcare and automotive sector. y Thus Tech Mahindra reduces its dependence from British Telecom revenues. y Tech M receives 70% of its revenues in currencies like the Euro, where as Satyam has its bulk of revenues in Dollar. This gives it more balance in terms of currencies.
Benefit from the Acquisition, cont...
y Broader & deeper skill set with the increased pool of y y y y y
Human Resource, from different work specialization Increased global footprint Direct access to Domain Specific-Partners Therefore increased Geographical & Domain coverage Industry Specific Solutions Diversification for Tech M
Customer¶s worry
y Telecom customers of Satyam may not be very thrilled that
Tech Mahindra will take over Satyam, as British Telecom holds a substantial stake in Tech Mahindra.
y Similarly, some Satyam auto customers may not be thrilled
that an Indian automotive group may have access to their sensitive data.
What Did L&T do with the stock?
?L&T categorized the investment as strategic. ? As per bidding rules, L&T could not sell the shares for six months. ? Later it sold its holding in the market when Satyam was trading at Rs 115. ?Thus making a profit of Rs 300 crore before tax.
Timeline & the Satyam Stock
POEM Raju raju sat on the wall, Raju Raju had a great Fall, Balance sheet died Sharehlders cried Raju Raju made a Fraud. Raju Raju Yes Baba, Cheating us No Baba, Telling lies No Baba Open the Balance sheet HA HA HA«!!
Thank you
doc_856032860.pptx
Industry Year of Incorporation Listed in Ownership Revenue Net income Computer Software 1986 NSE,BSE M&M Group US$ 1.12 billion (2011) US$ 163 million (2011)
Company Details
Tech Mahindra is part of the US $12.5 billion Mahindra Group, in partnership with British Telecommunications plc (BT), one of the world¶s leading communications service providers'. M&M (Mahindra and Mahindra) holding 44% and BT holding 39% of the equity. Focused primarily on the telecommunications industry, Tech Mahindra is a leading global systems integrator and business transformation consulting organization. Tech Mahindra¶s capabilities spread across a broad spectrum, including Business Support Systems (BSS), Operations Support Systems (OSS), Network Design & Engineering, Next Generation Networks, Mobility Solutions, Security consulting and Testing.
Vision ? To be the most respected solution provider in the communications ecosystem ? Admired for technology, agility, innovation, business models and the quality of its talent
Values ? Customer first ? Good corporate citizenship ? Professionalism ? Commitment to quality ? Dignity of the individual
Mile Stone
y 1995 y 2006 y 2007 y 2009 y 2010
Established the UK branch office Name changed to Tech Mahindra Acquired iPolicy Networks Private Limited Tech Mahindra has won the bid for Satyam Computer Services AT&T 2010 Supplier Award for outstanding performance & service to AT& T and its affiliates
Objective of Tech Mahindra behind Satyam Acquisition
y Tech Mahindra was relatively a weak player in the IT segment as compared to
Infosys, TCS etc.
y Tech Mahindra is strong in Europe, while Satyam Computer has strength in the
US
y Satyam was very good at ERP & SAP. y It also had its Proficiency at Data
ware housing & Data mining.
SATYAM COMPUTERS!!!!!
FOURTH LARGEST IT
OUTSOURCING COMPANY OF INDIA EMPLOYEES MORE THAN 50,000 PEOPLE IN INDIA HIGH GLOBAL REPUTATION OFFERS SERVICES TO MORE THAN 550 MNC¶S
Do you know him???
y B RAMALINGA RAJU y FOUNDER AND FORMER
CHAIRMAN OF ONE OF THE BIGGEST IT GIANT OF OUR NATION ³SATYAM COMPUTERS´ AND y ««««««««««GUESS WHAT THE PRIME CONVICT IN THE BIGGEST SCAM OF COUNTRY
Satyam Clients
A total of 650 Clients (185 of the top fortune 500 Companies)
Satyam ± Share holding Pattern
Shareholding Pattern as on 31st March 2008
19.46% 10.58% 8.74% Promoters 61.22% Institutional Shareholders Non-Institutional Shareholders Custodians
Institutional & NonInstitutional Shareholders LIC L&T Lazard Aberdeen Fidelity ICICI Prudential Citigroup JP Morgan 4.34% 4% 13.16%
Total Market capitalization of Rs. 15,262 Cr Total Market capitalization of Rs. (As on Dec 16, 2008 )
15,262 Cr (As on Dec 16, 2008 )
So, How did it all began?
21 April 2008 22 Sep 2008
2006
Satyam revenues cross $1 Billion
Satyam becomes first Indian company to publish IFRS audited financials
Satyam receives the Golden Peacock Award for excellence in Corporate Governance from World council
16 Dec 2008
17 Dec 2008
Satyam gets board approval for controlling stake in Maytas Infrastructure and Maytas properties as fully owned subsidiary for $1.6B (Rs. 8000 Cr.)
Satyam backs out of Maytas deal citing investors protest
Satyam shares plunge 55 percent in NYSE. BSE share plunges over 30%
30 02 03 Dec Jan Jan
Post cancellation of deal, Maytas looks for raising $500 million through sale of equities and properties
IL&FS sells further 44.27 Lakh pledged shares taking the tally to 1.5 crore pledged shares
Satyam board confirms promoters stake to be around 5%. Further 3.2% still pledged.
Satyam-Upaid case hearing over the Maytas deal in Texas court on January 8.
05 06 Jan Jan
07 Jan
Promoters stake in the company downs to 4.5% SEBI considers proposal to make it mandatory for promoters and majority share holders to disclosed pledged shares to stock exchange
Total pledged shares sold by IL&FS reaches 2.5 Cr. in last 13 days. Promoters stake down to 3.6%. Still a further 1.7% are pledged The Night Before 7th Jan Merill Lynch discovers serious irregularities in books of accounts and approaches regulator SEBI for further course of action and its inability to investigate further. DSP submits report to SEBI and Satyam management late night.
Tech Mahindra (Revenues 3766 Cr.) offers to merge with Satyam (Revenues 8473 Cr.)
Satyam Decade at a Glance
Satyam Revenues in Rs Cr.
8394 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 2001 2002 2003 2004 2005 2006 2007 2008 1247 0 2623 1803 2052 3547 10 5 5012 15 6410 30 25 20
Promoters Share holdings % 25.6
22.26 20.74 17.35 15.67 14.02 8.79 5.13
Fabricated Income Statements µCreative Account Practice¶
5,040 + 376 + 470 (Rs. Cr)
Rs. 1,230 Cr
Rs. 7,136 Cr
Fraud Amount
Understated Liabilities Overstated cash balances, Income receivables
STOCK CHARTING
Reasons for acquisition
y Failure to acquire Maytas y Intervention by the government y Recommendations by the new Board of Directors
appointed by the government.
Tech Mahindra, Satyam's new owner
y In a race that saw only a handful of bidders, Tech
Mahindra (offered Rs58/share) beat rivals such as L&T (Rs46/Share) & Cognizant Technologies (Rs20/Share). y Tech Mahindra agreed to buy a 31 percent stake (Rs1,757 crore) in Satyam at 58 rupees, a 23% premium to Stock¶s last closing price (Rs 45). y Whereas for the total 51% stake the company will have to pay Rs 2,890 crore y Tech Mahindra is a joint venture between M&M and BT, faced the difficult task of reshaping Satyam.
How did Tech Mahindra fund Rs1,757 crore deal?
y Raised Optionally Convertible Debentures (OCDs) of
nearly Rs550 crore (150cr from Tata Capital & 400cr from IDFC)
o o
at 15% per annum as interest convertible or redeemable at the end of three years
y Tech Mahindra also borrowed Rs 1,450 crore at 10%
per annum from various banks and financial institutions
What was L&T¶s interest «..??
y It bought 4% share initially when the Maytas deal y y y
y
happened, for ~160 rupees a share. It bought 8% more when the Raju¶s confession came out and later stock plunged to 6 rupees. Average Value of Holding (12%) = Rs57 But, when it came to actually buying a total of 30% it offered 46 rupees per share, If they would have won the bid, their avg Price would have been Rs49 for 42% controlling stake. At this point Satyam was trading at Rs 50«!!
Is this a merger?
?No it is not a Merger, it is an Acquisition. ?But both the companies will function with different names. ?In future Tech Mahindra can think of merging with Satyam , but because of Satyam's liabilities, it is a distant thing.
What Tech Mahindra cannot do?
1. Tech Mahindra can bring in any kind of investor. However, the agreement says that they cannot strip the company and cannot sell it . 2. ³They can take another partner if they want to, in the SPV,´
Benefit from the Acquisition«?
y Tech Mahindra¶s 57% revenues telecom sector . y Where as Satyam has clients from insurance,
healthcare and automotive sector. y Thus Tech Mahindra reduces its dependence from British Telecom revenues. y Tech M receives 70% of its revenues in currencies like the Euro, where as Satyam has its bulk of revenues in Dollar. This gives it more balance in terms of currencies.
Benefit from the Acquisition, cont...
y Broader & deeper skill set with the increased pool of y y y y y
Human Resource, from different work specialization Increased global footprint Direct access to Domain Specific-Partners Therefore increased Geographical & Domain coverage Industry Specific Solutions Diversification for Tech M
Customer¶s worry
y Telecom customers of Satyam may not be very thrilled that
Tech Mahindra will take over Satyam, as British Telecom holds a substantial stake in Tech Mahindra.
y Similarly, some Satyam auto customers may not be thrilled
that an Indian automotive group may have access to their sensitive data.
What Did L&T do with the stock?
?L&T categorized the investment as strategic. ? As per bidding rules, L&T could not sell the shares for six months. ? Later it sold its holding in the market when Satyam was trading at Rs 115. ?Thus making a profit of Rs 300 crore before tax.
Timeline & the Satyam Stock
POEM Raju raju sat on the wall, Raju Raju had a great Fall, Balance sheet died Sharehlders cried Raju Raju made a Fraud. Raju Raju Yes Baba, Cheating us No Baba, Telling lies No Baba Open the Balance sheet HA HA HA«!!
Thank you
doc_856032860.pptx