Wednesday, 10 June 2009

Satyam profit surprise – and acqusition angst

(By Anthony Miller – Wednesday 10th June 2009 7:45am). The Indian media is full of reports that Satyam turned a Rs1.8b profit ($37m) in the quarter to Dec. ’08 on Rs20b revenues ($411m), a 9% margin, and higher than market expectations. Both Satyam’s and new parent Tech Mahindra’s stock have jumped on the news. Putting this into perspective, Satyam’s last published results prior to the ‘Raju bombshell’ for the quarter to Sept. ’08 reported revenues of $652m and a $132m net profit, a 20% net margin. I guess it’s all relative!

But the Indian media also reports that Satyam is in legal dispute over no fewer than four of its recent overseas acquisitions, including Belgium-based supply chain management consultancy firm S&V Management Consultants. Satyam paid over $35m cash to buy S&V back in April ’08. S&V had revenues around $15m.

I’m assuming that the forensic review of Satyam’s accounts must be at or near completion, then, but I can’t find any statements from either Satyam or Tech Mahindra to substantiate this (or the M&A story) as yet.

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