Satyam fraud: Investor actions and reactions
becomes the fourth-largest Indian IT services firm by Satyam revenues. Analysts say HCL’s recent acquisition of Axon Group had bridged Satyam’s lead over it to some extent and the latest development clearly takes HCL up the rankings.
As per Satyam chairman B Ramalinga Raju’s letter to the company’s board on Wednesday, the company’s actual standalone revenues for the July- September quarter in 2008 were Rs 2,112 crore, while it had reported revenue figures of Rs 2,700 crore. Adding revenues from subsidiaries of Rs 120 crore, its actual consolidated revenues would be about Rs 2,232 crore. HCL Technologies had reported revenues of Rs 2,369.3 crore for the same quarter.
“On an annualised basis, HCL Technologies will be fourth-largest among Indian IT firms. Axon is expected to add about $200-225 million and it should push HCL revenues about $2.2- 2.3 billion for the full financial year ending June 2009,” said an analyst at a Mumbai-based brokerage, asking not to be identified. HCL Technologies recently acquired SAP consultancy Axon Group for $658 million, marking the largest acquisition by an Indian IT firm.
The Axon acquisition added significantly to HCL’s enterprise applications services (EAS) business, an area where Satyam is strong too. About 45% of Satyam’s revenues came from this business, while the Axon buyout increased EAS contribution to HCL’s revenues to 30%, from 11% earlier.
Outsourcing analysts, however, say HCL Technologies may not gain as much as its bigger rivals TCS, Infosys and Wipro Technologies after Satyam’s disclosure. “HCL Technologies will take about a year to integrate Axon. So, clients are going to look at the top three to move work from Satyam. Tier-II firms such as L&T Infotech, which is strong in enterprise applications, could also come on their radar,” sourcing advisory firm Tholons CEO Avinash Vashistha said.
Meanwhile, HCL Technologies CEO Vineet Nayar has written to clients after revelations of Satyam’s financial fraud, pointing out that the company has a strong business focus as demonstrated by its signing contracts worth over $1 billion in the last quarter. He also highlighted that six of the eight board members are independent and non-executive members.
Source:
http://economictimes.indiatimes.com/Infotech/Satyam_out_HCL_takes_4th_spot/artic
