Tech Mahindra to firm up Satyam transition plan

18 Apr 2009, ET Bureau

HYDERABAD: Tech Mahindra, the new owner of Satyam Computer Services, is set to firm up transition plans, including employee retention, on Monday at a crucial board meeting of the beleaguered IT firm.

Four nominees of Tech Mahindra will be inducted into Satyam’s board, which now has six government nominees.

The government-appointed board selected Tech Mahindra as the new owner of Satyam, after the firm bid the highest at Rs 58 per share to acquire management control. The top priority for the new owner would be the formulation of a transition plan to ensure smooth takeover of Satyam’s operations. Anand Mahindra, chairman of Tech Mahindra, will address employees amid rising concern that the Pune-based IT services will axe jobs.

A board member at Satyam is reported to have said Tech Mahindra will have the right to retain or sack employees by virtue of being its new owner. Satyam has 48,000 employees on its rolls now.

The Pune-based IT services provider is also understood to be working on a 100-day plan to complete the integration process for Satyam. Tech Mahindra has proposed four nominees on the board including Vineet Nayyar, vice-chairman, managing director and chief executive officer; CP Gurnani, president (international operations); Sanjay Kalra, president (strategic initiatives) and Ulhas N Yargop, non-executive director on Tech Mahindra board.

The Company Law Board (CLB) on Wednesday approved the takeover of Satyam Computer Services by Tech Mahindra for the deal at Rs 58 / share that the company bid through auction.

Tech Mahindra would have to pay Rs 1,756 crore for acquiring 31% stake in Satyam Computer and deposit the requisite escrow amount of Rs 1,133 crore for the 20% open offer in a separate account on or before April 21. The aggregate amount for 51% stake in Satyam is Rs 2,889 crore.

The Pune-based company is a JV between Mahindra & Mahindra (M&M) and British Telecommunications. Tech Mahindra is the sixth-largest software exporter and second-largest Telecom Software Provider in India.