Mahindra Satyam posts flat Q1, Q2 revenues

HYDERABAD - Mahindra Satyam, formerly Satyam Computers, has posted flat revenues during the first two quarters of the current fiscal year but claimed that it is now “stable and current”.

The company posted consolidated profit of Rs.98 crore and Rs.23 crore for Q1 and Q2. The revenues for the Q1 were Rs.1,248 crore and it came down to Rs.1,242 crore in the second quarter, ending September.

The company, however, claimed that it had reached stability point and that the recovery in the next two quarters would be slow.

The profit margin was 9.1 percent and 5.2 percent for Q1 and Q2 respectively. Vineet Nayyar, chairman, Mahindra Satyam, told reporters that the profit margin came down in Q2 due to the salary hike to retain the talent pool.

The company, which had a headcount of 28,068 in Q2, hiked the salaries by 15 percent. The company had an attrition rate of 25 percent, which it claims to be similar to that of the IT industry.

“This is another important milestone in transformation journey of Mahindra Satyam. With these accounts we can now say with an element of pride that we are current,” Nayyar said while commenting on the results of the two quarters.

He claimed that the company had reached stability point. “We believe we are stable now. We believe now that we are current. Most business will be opened up to us which were not available to us earlier because of this great financial barrier, he said.

The company will now go back to customers, who wanted the company to first come out with results. CEO C.P. Gurnani said it added nine customers during last six months but declined to give the total number of customers.

Stating that transformation is a three-year journey, Nayyar advised media and investors to be patient. Terming the journey so far as challenging, he said the challenges had not yet gone away. He identified class section suits in the US and stigma hangover as the challenges.

Mahindra Satyam, which announced financial results for 2008-09 and 2009-10 in September, plans to recruit 3,000 to 4,000 people in six months. It also has set a recruitment target of 5,000 for next fiscal.

The process of Mahindra Satyam’s merger with parent firm Tech Mahindra is now likely to get delayed. Nayyar said the process may go down to the end of next year.

The company has started the consultations with the board members and law firms for the merger.

On US Securities and Exchange Commission (SEC) considering a legal suit against the firm seeking damages for fraud in the aftermath of the company’s near collapse, Nayyar said he presumed that it was in ultimate or penaultimate stage of finalization. “I don’t know which way it goes but we have made all our submissions. Now it is under consideration of the commissioners”.

Nayyar said restating accounts as per US GAAP norms would take another five to six months. “We will then decide whether to re-list on New York Stock Exchange or not,” he said.

The company had delisted from the NYSE in September.

Mahindra Satyam had suffered a net loss of Rs.8,177 crore in fiscal 2008-09 on net sales of Rs.8,813 crore. It had also reported a net loss of Rs.1,250 crore in 2009-10.

The results were announced in September, more than one and half years after Satyam’s founder B. Ramalinga Raju resigned as chairman admitting a massive accounting fraud.

Tech Mahindra bought Satyam in April 2009.