Even as Mahindra Satyam (the rebranded Satyam Computer Services) is in the process of preparing to announce its Q1 and Q2 results for the current financial year on November 15, the company is looking aggressively at inorganic growth. Chief Financial Officer S Durgashankar shares his plans with Bibhu Ranjan Mishra and K Rajani Kanth. Edited excerpts:
You must be a relaxed man now, after the months of pressure on your team to restate the accounts?
Given the magnitude and complexity of the problem, our team has done a commendable job. But it's not just my team but many other agencies involved, including the external auditors and various agencies of the government. It was complex because we had to continuously ride a faulty machine and correct as we go along. To that extent, we have not fixed all the problems, but fixed only some things.
How supportive was the government during the investigation process?
The biggest credit goes to the Government of India, which really swung into action. Because you don't see a government reacting in two days time and taking over the entire thing. The fate of some 50,000 employees were at stake, India's image was also at stake.
The previous management had made many ‘string of pearls’ mergers and acquisitions. Have you traced any fraud in those deals in terms of valuations?
There have been no fraud acquisitions. Valuation is another matter. Somebody will have to go back to that particular time and imagine what it was. Predicting such things is sometimes hard. It is difficult to exactly know if something extra was paid or not. Investigators have given their reports. We have mentioned in our reports that there was nothing wrong on the part of the subsidiaries.
What actions have you taken to improve corporate governance?
Several, like improving the auditors’ mandate, new internal and external auditors, having a corporate ombudsman, modifying the whistle-blower policy. Today, of our seven directors, four are independent ones and two of them are government nominees. So, it brings in people of repute and independence into the picture.
After announcing the Q1 and Q2 results, what will be the next priority?
Basically, the company in 2009, after excluding exceptional items, had an Ebitda of 8.3 per cent. Despite a year of falling revenues, the management has managed to bring about 8.3 per cent Ebitda, which is extremely creditable. If you look at the entire year, of dust and toil, despite revenues falling, to bring up the profitability from 3.4 per cent to 8.3 per cent is really creditable.
Tech Mahindra infused Rs 2,900 crore, of which about Rs 700 cr was spent on extraordinary items, etc. Now you have close to Rs 2,100 crore cash on your books.
Operations also threw up some cash. But a substantial part of the cash was out of Tech Mahindra's investments.
How do you propose to utilise that?
The cash is something of great mental comfort. It takes care of many other issues that we may have. The company is also looking at inorganic growth opportunities. The cash can be also utilised for that.
Any target companies? Is it expected after merger with Tech Mahindra or even before?
The company is examining opportunities. Certainly, one of the growth areas identified is the inorganic route. After merger... not necessarily. It will be parallel and independent. If we find a right fit and the area that we need to get into in order to get additional revenue, we won't step back. The deal should have to click.
Given your past experience, what are you bringing in to keep track of money flows?
Bank reconciliations are being done on a daily basis. Bank confirmations are being sought on a regular basis, to be sure that we provide it to the auditors. Also, other procedures like authorised signatories (multiple persons) who can operate the accounts. All these things have been streamlined in line with our group policy.
Your ADRs will be traded over-the-counter. How will the pending class-action suits impinge this?
The class-action lawsuits will take some time to settle. There has been a history of lawsuits which get settled out of the court. If you see the commitments and contingencies section in our report, we have already said that except for class-action, where the right amount is difficult to quantify, we have provided funds adequately.
