Friday, April 17, 2009

Do a Satyam-Rescue on the Economy


Amidst election madness and recession blues, a good thing went unnoticed. That is, for its goodness.

Satyam found a suitor. And a good suitor at that. Willing to pay more than the fair price.

Dr. Manmohan Singh, Kamal Nath, and Prem Chand Gupta can be proud.

The 6 guys that they entrusted ‘Truth Computer Services’ with, did a splendid job. From Chairman Kiran Karnik to Directors Deepak Parekh, TN Manoharan, Tarun Das, C Achutan, & SB Manik, all worked overtime to save India’s fourth largest IT services company and its 40,000 employees, and more importantly, thwart India Inc from feeling Satyam’s ripple effects.

Most of these guys already had their hands full. Still they found time for Satyam. They systematically divided the tough task between them, according to their core strengths. Karnik looked after panicked clients, Parekh negotiated with the banks, Das selected consultants, Achutan took on legal compliance, and Manoharan & Mainak managed the forensic audit to clean up India’s largest corporate fraud to date.

It was not an easy task. On one side were the Big-3 hawks who found high ethics in not absorbing Satyam employees, but no ethical problem in poaching Satyam clients. On the other side were hard bargainers like BK Modi and Wilbur Ross who wanted Satyam for a song. And to complicate things, AM Naik who wanted to correct L&T’s earlier investment blunder in Satyam.

That is why the Satyam Board deserves kudos. It was a near miracle that they pulled off, that Anand Mahindra agreed to buy 51% in Satyam for Rs. 2890 crore, at Rs. 58 per share.

What a far cry from how the Tatas were allowed to take over a clean, booming operation like VSNL in 2000. That was for a song.

TechMahindra was the better fit for Satyam, in more ways than one, because the combined entity is something that is nearer in size and capability to compete with the Big-3.

Even Ramalinga Raju would have smiled in his cell. All through the years, his distant-fourth operation was left breathing hard, unsuccessfully trying to compete with the shrewdly sophisticated Big-3. In fact, there are analysts who feel that this unfair competition and the subsequent margin-cuts contributed much to Satyam’s problems.

The lesson from the Satyam rescue episode is simple. There is no limit to what we can achieve if there is honest political will to appoint people with integrity, and if those people work hard to live up to the trust.

Indian fiscal 2009-10 calls for such a team. India has produced many capable brains. But many of them are in US universities, consulting for America Inc and American politicians. Seasonal Magazine presents five such gurus who share their views on how to tackle this downturn.

Let us hope for a decisive government and a decisive economic team.

John Antony

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