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Mahindra Satyam's restated results: Baby step in a long journey

Mahindra Satyam's much awaited restated audited financial results for FY 2009 and FY 2010 have hardly enthused analysts, many of whom feel while the top line numbers are on expected lines. They say it still has a long way to go.

twitter-logoE Kumar Sharma | September 30, 2010 | Updated 13:26 IST

Mahindra Satyam's much awaited restated audited financial results for FY 2009 and FY 2010 have hardly enthused analysts, many of whom feel while the top line numbers are on expected lines. They say it still has a long way to go.
 
Here are the broad numbers: The total income of the company stood at Rs 5,481 crore for the last financial year (FY10). In 2008-09, its total income was Rs 8,812.6 crore. Loss after tax was Rs 8177 crore and Rs 124.6 crore in FY 09 and FY 10 respectively. Exceptional items stood at Rs 7,992 crore and Rs 416.9 crore for the fiscals 2008-09 and 2009-10, respectively. Total employee numbers are down from 44,000 to 27,000 and the total number of active clients is down from 500 to around 350.
 
So, what is the key take away? "They don't have the money to be a mini-TCS or a mini Infosys anymore and they need to pick their verticals, service lines and geographies very carefully otherwise they are never going to get the momentum," says John McCarthy, VP and principal analyst, Forrester Research.

Much of how they score on this will be evident in the next six weeks or so when they announce the numbers in November for the first two quarters of this fiscal year.

The next step thereafter will be some 5 to 6 months from now when they promise to be out with US GAAP numbers. This may be of great interest for their global clients. Then, the final step in this journey would be when the merger with Tech Mahindra becomes a done deal.
 
Is there anything in today's results which could have given some indication of the route they are taking given the financial compulsions they have on account of low top line (with $1.2 billion) which makes it today the 6th or 7th largest in the pecking order of the top Indian IT companies with companies like TCS, Infosys, Wipro, Cognizant, HCL ahead of them and perhaps even Tech Mahindra a notch higher? Not really.

McCarthy of Forrester for instance says, "I wonder why they are still holding on to the BPO. I would have been happier if they had said we are just going to focus on the areas of business applications (SAP), Business Intelligence and on Product engineering."

As Mahindra Satyam CEO C P Gurnani put it: "This is a three-year transformational journey and we have another one and a half years to go." How they spend this time now and what they see, all will be watching with keen interest.


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