The Hindu Business Line : Amid the success, the truth was elsewhere

In better times: Mr B. Ramalinga Raju, Chairman, Satyam Computers Services Ltd, with the plaque of Indian School of Business Icon Award on December 12, 2003.

V. Rishi Kumar

Hyderabad, Jan. 7 After a steady journey of 20 years, from an early start-up in Hyderabad to a global $2.5 billion corporation, Satyam Computer has, in a dramatic turn of events, landed itself at the crossroads, with uncertainty staring in its face.

Rated as the country’s fourth largest IT services provider employing 53,000 people with operations in 66 locations across the globe and 185 Fortune-500 companies as clients, the company commanded respect from all quarters and all stakeholders till the middle of December 2008.

In many ways, Satyam – promoted by first generation entrepreneur, Mr B. Ramalinga Raju – has played a critical role in the country’s and Hyderabad IT history, building a global brand. Mr Raju was the Indian IT face during former US President Mr Bill Clinton’s visit to Hitec City, even while other luminaries like Mr Narayana Murthy of Infosys were at the venue.

With barely Rs 100 crore revenue in 1995, the company’s business built mainly on the Y2K opportunity and systems integration work, gradually transformed itself into a full services provider building on various verticals.

During the late 1990s, the company created scores of subsidiaries then considered the right business approach to handle different subjects. It only led to consolidate them after the 9/11 events dramatically impacted the IT sector.

As it grew, building on scale, Satyam was amongst the first Indian companies to be listed on the New York Stock Exchange (NYSE). In 2008, it was also listed at The Euronext, giving a measure of its size confidence and strengths.

The company was amongst the first to leverage potential in Europe, also part of de-risking its business and now has close to 21 per cent revenue. It is next only to the US exposure (59 per cent), where all major Indian IT companies thrive. Satyam was quick to make its presence felt in Australia, China and the Asia-Pacific region as well.

In its growth story, the major contracts it bagged included work for FIFA World Cup and World Bank jobs. But it also suffered several set-backs.

These include the recent ban by World Bank – a long time client, and case of fraud filed by Upaid in a Texas court.

During the journey, Satyam had several highs and lows that included carving out the country’s first Internet Service Provider (ISP) Satyam Infoway (Sify), only to exit it later citing focus on core competency, buyout of Indiaworld (Rs 499 crore), a decision which evoked sharp criticism.

Paradoxically, the company’s auditors PricewaterhouseCoopers, which is in the dock for various accounting flaws now surfacing with Mr Raju’s disclosures, also helped Satyam to become the first Indian company to comply with International Financial Reporting System (IFRS).

For a company which always took pride in corporate governance building up a distinguished board, all its corporate actions are now under scanner.

Given the current mess the company is in with a valuation of about $600 million, it may find suitors hard to come by. Earlier, names of the likes of IBM made rounds.

While Satyam was on the rise in the corporate and IT firmament of the country, its promoters spread their presence in society. They ventured into corporate social responsibility floating Byrraju Foundation, Satyam Foundation, the ‘108’ EMRI (Emergency Management and Research Initiative), 104 HMRI, etc., which are all making an impact.

Ironically, today’s revelations of fraud and overstatement in the company’s books have seriously dented the image of the Promoter Chairman of Satyam Computer, Mr B. Ramalinga Raju, the only public face for the company all these years, and threaten to expose him to face legal scrutiny.

In barely three weeks since the botched bid to acquire Maytas Twins, promoted by Mr Raju’s sons, the brand image of Satyam built over the years has taken a severe beating and the scrip price has plummeted.

Will it come out of this mess with new leadership, is anybody’s guess.