New CEOs for Satyam, Tech Mahindra

Tech Mahindra (TECHM.NS : 916.55 +7.3) on Tuesday announced new leadership roles for itself and Mahindra Satyam (SATYAM.BO : 90.55 -2.2), erstwhile Satyam Computer Services, which it acquired in April. Tech Mahindra also said it will raise funds through private placement or the qualified institutional placement (QIP) route to partly repay loans it had taken to acquire a majority stake in Satyam for Rs 2,889 crore.

The company named CP Gurnani, earlier president, international operations at Tech Mahindra, as chief executive officer (CEO) of Mahindra Satyam. Gurnani succeeds AS Murthy, who was appointed by the government board after the multi-crore scam broke out at Satyam. A decision on Murthy' role in Mahindra Satyam is expected shortly, the company said.

Tech Mahindra's strategic initiatives president Sanjay Kalra has been promoted as its new CEO. Its current CEO, vice-chairman and MD, Vineet Nayyar, has been promoted as executive vice-chairman of both Tech Mahindra and Mahindra Satyam.

Kiran Karnik, appointed by the government as chairman of the board, will continue in that position.

The new CFO of Mahindra Satyam is S Durgashankar, who was earlier senior vice-president (MandA) for the Mahindra group. The CFO's post has been lying vacant after former Satyam CFO Vadlamani Srinivas was arrested for his alleged role in the financial fraud in Satyam.

Ram Mynampati, the former Satyam executive director and an interim spokesperson of the company after Ramalinga Raju's exit, is learnt to have put in his papers. Asked about this, Gurnani said, "He wants to move on. We are looking to retain him."

Tech Mahindra said that it will raise funds by selling 1.36 crore shares in private placement or QIP. Going by the closing price of the Tech Mahindra shares on BSE (^BSESN : 16632.01 -222.92), the company will garner about Rs 1,016 crore by selling these shares. The company is said to have borrowed around Rs 2,000 crore from various banks, mutual funds, institutions and NBFCs for the Satyam acquisition. Tech Mahindra already had a cash balance of Rs 700 crore in its books. Tech Mahindra shares closed at Rs 747.45, up 0.99% on the BSE on Tuesday. Satyam lost 5% to close at Rs 75.30.

Announcing the new appointments here, Nayyar said, "The way ahead is to put efforts for congruence and ultimately convergence of the two companies." He added that the two companies will be merged in the foreseeable future. He didn't elaborate. Nayyar added, "The biggest challenge before Mahindra Satyam is in terms of governance, especially in matters of finance. We will look at retaining clients and growing the company."

Gurnani said, "There has been no client retrenchment post April 13, 2009." The company said there will be no lay-offs at Mahindra Satyam. "There are 8,500 employees on the virtual bench and will be absorbed as per projects." Anand Mahindra, chairman, Tech Mahindra, said, "These executive appointments will help the respective companies leverage their immense global experience across different verticals, in their quest to take an unassailable lead."