AgenciesHYDERABAD: Mahindra Satyam on Wednesday announced its first earnings results in nearly two years after a massive false accounting scandal that threatened its future. FY-10 total sales stood at Rs 5481 crore. The company suffered a loss of Rs 124.6 cr. FY-10 standalone loss stood at Rs 71.2 cr. The company said that the total impact on P&L on account of fictitious profit was Rs 6800 crore. FY-09 loss was at Rs 8177 cr. The company said it will release Q1, Q2 FY 11 accounts as well. Accounts under US GAAP will be declared in the next 6-8 months.
Mahindra Satyam called the publication of the earnings "a new beginning" for the troubled company. Chairman Vineet Nayyar refuted allegations that Mahindra Satyam had been less transparent in the entire process, he cited the sheer volume of audit & reconciliation work that had to be done.
"We have done a lot of work but have we completely recovered, no. It will take another year or two before it is healthy. We are getting new clients. This year EBITDA has gone up. This also includes lots of clients who left the company but their work was nearing end," he added.
Helped by a sharp reduction in employee cost at Rs 3,981.10 crore in 2009-10 from Rs 6,073.7 crore in the previous year, the company reduced the net consolidated loss from Rs 8,176.8 crore in 2008-09. Cash and bank balances were to the tune of Rs 2,176.8 crore as on March 31, 2010. The loan balance as of March 31, 2010 was Rs 422 crore.
The company reported that 7500 inflated invoices were found. "Over $41mn of ADS proceeds may have been diverted and there was Rs 1139 cr of unexplained difference in suspense account," Nayyar added. Amongst the other disclosures, the company said that it had detected fictitious sales of Rs 4800 crore. FY10 exceptional items stood at Rs 410 crore.
Answering questions, the company management said that all bank borrowings had been extinguished. Mahindra Satyam now has 350 active clients and it added 44 new clients in 2010. Clients have been added in BFSI, manufacturing & healthcare. It also said that it was moving in the right direction in right sizing. However, it also said that it proposes to hire 3000 more people this year.
Company officials said that the intention to merge with Tech Mahindra remains and that the process could take up to one year. The process is expected to begin by November of this year.
On the class action suit, the company said the case was in preliminary stages and that it could take up to 2-3 years. The company will consider relisting on the NYSE in six months. It ruled out any out-of-court settlement.
Over past two years, as Satyam struggled to retain customers, and key employees, the company saw its larger rivals widen the gap-both in terms of new technology investments and new business. The company’s flagship SAP practice, which was serving top customers including GE, GM and Nestle has been among the most hit. From around 4,500 staff in January 2009, the business now has around 800 professionals, with most top executives including the unit head Manish Mehta quitting to join rival Patni.
Investors have been waiting for signs of recovery, particularly after the firm said last week it would delist from the New York Stock Exchange over fears it may not meet US reporting deadlines for its restated accounts.
In January 2009, B Ramalinga Raju, the then founder-promoter of Satyam, confessed to an accounting fraud to inflate its profits. Since then the company had not declared its results. In its last available full-year report, the company had reported a net profit of Rs 1,689 crore on revenue of Rs 8,473 crore for FY08.
In April 2009, Tech Mahindra, a unit of the tractors-to-holidays conglomerate Mahindra and Mahindra, paid nearly 600 million dollars for a majority share of struggling Satyam.
Satyam, ranked as India's fourth-largest outsourcer by revenue when the scandal broke, acts as a back office for some of the world's biggest companies including Nestle, General Electric and General Motors.
Mahindra Satyam called the publication of the earnings "a new beginning" for the troubled company. Chairman Vineet Nayyar refuted allegations that Mahindra Satyam had been less transparent in the entire process, he cited the sheer volume of audit & reconciliation work that had to be done.
"We have done a lot of work but have we completely recovered, no. It will take another year or two before it is healthy. We are getting new clients. This year EBITDA has gone up. This also includes lots of clients who left the company but their work was nearing end," he added.
Helped by a sharp reduction in employee cost at Rs 3,981.10 crore in 2009-10 from Rs 6,073.7 crore in the previous year, the company reduced the net consolidated loss from Rs 8,176.8 crore in 2008-09. Cash and bank balances were to the tune of Rs 2,176.8 crore as on March 31, 2010. The loan balance as of March 31, 2010 was Rs 422 crore.
The company reported that 7500 inflated invoices were found. "Over $41mn of ADS proceeds may have been diverted and there was Rs 1139 cr of unexplained difference in suspense account," Nayyar added. Amongst the other disclosures, the company said that it had detected fictitious sales of Rs 4800 crore. FY10 exceptional items stood at Rs 410 crore.
Answering questions, the company management said that all bank borrowings had been extinguished. Mahindra Satyam now has 350 active clients and it added 44 new clients in 2010. Clients have been added in BFSI, manufacturing & healthcare. It also said that it was moving in the right direction in right sizing. However, it also said that it proposes to hire 3000 more people this year.
Company officials said that the intention to merge with Tech Mahindra remains and that the process could take up to one year. The process is expected to begin by November of this year.
On the class action suit, the company said the case was in preliminary stages and that it could take up to 2-3 years. The company will consider relisting on the NYSE in six months. It ruled out any out-of-court settlement.
Over past two years, as Satyam struggled to retain customers, and key employees, the company saw its larger rivals widen the gap-both in terms of new technology investments and new business. The company’s flagship SAP practice, which was serving top customers including GE, GM and Nestle has been among the most hit. From around 4,500 staff in January 2009, the business now has around 800 professionals, with most top executives including the unit head Manish Mehta quitting to join rival Patni.
Investors have been waiting for signs of recovery, particularly after the firm said last week it would delist from the New York Stock Exchange over fears it may not meet US reporting deadlines for its restated accounts.
In January 2009, B Ramalinga Raju, the then founder-promoter of Satyam, confessed to an accounting fraud to inflate its profits. Since then the company had not declared its results. In its last available full-year report, the company had reported a net profit of Rs 1,689 crore on revenue of Rs 8,473 crore for FY08.
In April 2009, Tech Mahindra, a unit of the tractors-to-holidays conglomerate Mahindra and Mahindra, paid nearly 600 million dollars for a majority share of struggling Satyam.
Satyam, ranked as India's fourth-largest outsourcer by revenue when the scandal broke, acts as a back office for some of the world's biggest companies including Nestle, General Electric and General Motors.
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