Satyam set to ink pact with M&M Group to tap aerospace customers

2 Jun 2009, ET Bureau

HYDERABAD: Satyam Computer Services is firming up a joint-go-to-market strategy with the Mahindra & Mahindra (M&M) group of companies for customers in the aerospace and other engineering segments to boost revenues from its engineering practice.

Tech Mahindra, the new owner of Satyam, is a subsidiary of the M&M group. Satyam will ink a non-disclosure pact with its partner before starting negotiations with customers. EADS, the owner of Airbus, features in the list of Satyam’s clients in the IES space.

The joint go-to market strategy will entail design, sourcing and making components for aerospace customers and other clients in the IES space. This division contributes to around 6-7% of Satyam’s revenues.

“The capability to do end-to-end aerospace components will make our clients leverage on the expertise from the combined entities”, said Karthik, Head, Integrated Engineering Solutions (IES), Satyam Computers.

He reckons that the global economic melt-down notwithstanding, the aerospace sector offers significant business opportunities as clients are looking for a good value proposition coupled with competitive pricing.

The Hyderabad based outsourcer reported revenues of around $ 2 billion before its defamed founder B Ramlainga Raju admitted to perpetrating a Rs 7,000 crore financial fraud. Many clients snapped ties after the fraud, impacting its revenues.

While Satyam’s accounts are now being re-stated, Tech M is reportedly looking at combined annual revenues of around $ 2.2 billion.

Besides aerospace, Satyam also offers IES to clients in the automotive, consumer products, telecom and healthcare sectors, besides aerospace. Engineering firm M&M has an established presence in the Indian market, especially in auto segment.

Satyam’s IES division offers a bouquet of product design and development services, both mechanical and electronic. The Systech group of M&M, in particular, has an eco-system for manufacturing and sourcing components from India.

It is reckoned that Satyam’s aerospace engineering practice will stand to gain from Mahindra Systech’s manufacturing capabilities. And the proposed tie-up will allow Satyam to select different parts of value chain – right from design and engineering of sub-systems upto sourcing and manufacturing.

“Satyam’s IES strengths in design, mechanical and embedded electronics, and China sourcing are complemented by M&M group companies’ strength in manufacturing and India sourcing. This synergy to take designs from art-to-part can help both clients accelerate their new product development (NPD) cycles and thereby increase their profitability across the global markets”, he said.