All Mah Satyam claims cleared post Aberdeen deal: Nayyar

Our success in the last few quarters is partly based on the fact that we are not only providing technical services but are also going into managed services.

Vineet Nayyar

Chairman

Mahindra Satyam

British telecom giant BT offloaded 9.1 percent stake in Tech Mahindra   for Rs 1,011.4 crore on Wednesday, exiting from the Indian IT services firm.

Vineet Nayyar, vice chairman, Tech Mahindra told CNBC-TV18 that though BT's IT budget is coming down, but Tech Mahindra still remains their preferred partner.

"A share of BT's wallet on technology spend is growing as a percentage. Their reliance on our services is increasing as the percentage grows, but in absolute terms the inflow of money has come down marginally and could go down further a little bit," he elaborated.

BT had set up the technology outsourcing firm in joint venture with Mahindra & Mahindra in 1986. The British company had around 30 percent stake in Tech Mahindra initially.

Meanwhile, Mahindra Satyam   has settled claims from Aberdeen Global and 22 funds that had claimed damages, which were to the extent of USD 298.3 million.

Vineet Nayyar who is also the chairman of Mahindra Satyam said, "All claims with respect to Mahindra Satyam are cleared post Aberdeen Global deal and all external litigations are behind the company now."

Below is an edited transcript of Vineet Nayyar's interview on CNBC-TV18.

Q: What is happening to the BT business of Tech Mahindra, not much for the stake sale but whether there is more pain for Tech Mahindra in terms of seeing the contribution of BT slipping over the next year or so?

A: If the client has pain so does their suppliers. Yes, BT's budget on IT is coming down, but the good news is that a share of BT's wallet on technology spend is growing, as a percentage. So net-net we are still their preferred and chosen partner, their reliance on our services is increasing as the percentage grows, but in absolute terms the inflow of money has come down marginally and could go down further a little bit.

Q: Mahindra Satyam has paid USD 68 million to settle claims in 22 cases. Does that mean that most of the claims or all the claims are settled now and behind you?

A: We are praying that this is it. This was the last external claim to the best of our knowledge which has now being settled and external litigation is behind us.

Also Read: Tech Mahindra has resistance around Rs 925-950: Sukhani 

Q: Can you update us on your merger between the two companies, after the Andhra Pradesh court asked for an independent auditor? Will it take many more months for this merger process to be completed because your investors would have been hoping that by now you would have made significant progress with that?

A: This is the last step in the long process of merging the two entities. The requirement of the official liquidator came in a bit late but nonetheless the court has given them four weeks to get the audit completed and once that is done, we will go ahead with the merger.

Q: What kind of rough timeline are both managements working with at this point?

A: We are hoping that in about six weeks, this too would be behind us like the litigation.

Q: A couple of weeks back Hexaware Technologies  went ahead and cut its guidance, a slightly more difficult growth environment going into 2013. Tech Mahindra itself had a pretty strong performance. Is the landscape getting tougher for the next few quarters?

A: Yes, Europe is suffering and that's no news, the telecom sector is also under pressure and again that is no news but we have always seen opportunities rising on the heels of adversity because the telecom sector is suffering, they are looking for more cost effective solutions. Our perceived success in the last few quarters is partly based on the fact that we are not only providing technical services but are also going into managed services. That is a qualitative shift and we are no longer designing a railroad. We are actually running a railroad which has opened new opportunities for us in Australia, Belgium, UK, Qatar. So, we are progressively moving into those areas.

Q: The contribution of BT to your overall revenue as of last quarter has come down to 33 percent. That's the lowest it has been for a long while if not ever. Where do you see it stabilizing by the end of FY14, given the pace at which the non-BT business is growing and the way BT is declining?

A: Our objective has always been to reduce the share of BT in our business and we have achieved it by doing two things; by growing the other business much faster and also by growing BT's business. However, in the last five quarters the absolute value has come down and it could come down marginally, but increase in other business will push their percentage even to a lower level and we took that objective five years ago.

Q: Until merger happens between the two companies, will you still go ahead with your track of acquisitions in order to expand growth opportunities?

A: Of course if there is right opportunity, we will take it.