The settlement of a long-pending fraud and forgery case with UK-based online and mobile payments solutions firm Upaid is a positive indicator of how smartly Tech Mahindra is managing legal issues concerning Satyam Computers. Upaid was a legal liability that the market expected would settle at $200 million, but TechM settled at $70 million in two installments. The immediate impact on the stock price was evident?Tech Mahindra shares surging 2.20% and Mahindra Satyam, 5.26%, on Thursday on the BSE.
However, Tech Mahindra?s efforts to pull Mahindra Satyam out of the woods don?t end here. It may be recalled that Satyam needs to work out other legal issues, the larger concern being 12 US class action lawsuits. Besides these, Satyam also needs to fight three more legal issues coming from past acquisitions, concerning companies like the Chicago-based Bridge Strategy Group, Belgium?s S&V Management Consultant and Venture Global.
The firm, in the past, did settle its issues with Caterpillar and termed the demand of about Rs 1,230 crore from as many as 37 ?unacknowledged? creditors as ?legally untenable?. When the picture came to light, the overall liability, according to industry viewers, was set to be around Rs 10,000 crore. Backed by the efforts of its team coming from Tech Mahindra, Satyam has been trying to settle some of these claims amicably, while it intends to ?vigorously defend? the class action lawsuits filed against the IT firm in the US.
At the same time, Mahindra Satyam continues to face challenges in terms of retaining clients and employees. Though industry viewers say that Satyam has been able to cling on to some clients, bagging a large contract is still a difficult task for the company. Retaining the top leaders, who brought a lot of business to Satyam, was a key concern and Satyam did take steps to retain them. In a recent media event, one of the veterans from Satyam mentioned how the firm had to dig its pockets to retain these senior employees. And it continues, he added. But it?s a long journey before Tech Mahindra can say that it brought Satyam back on its tracks.
?rachana.khanzode@expressindia.com
