Rs 2900 crore - that's approximately how much a 51 per cent stake in Satyam Computer Services has cost Tech Mahindra (a joint venture between Mahindra & Mahindra and British Telecom). The morning after holds several promises, as also worry lines on the faces of TechMa officials. While the company will benefit immensely from Satyam's large client database, particularly manufacturing companies and financial companies, Satyam is not exactly the smoothest deal to crack, considering what happened less than four months ago.
The B Ramalinga Raju scandal in the tail end of 2008 brought Satyam into the eye of the storm (and under the scanner for all the wrong reasons), and little needs to be said on how the trust its stakeholders had in the company was badly shaken up. It reached a stage where one said, "It can't get worse."
With Tech Mahindra now in the picture, things seem to be looking up. But the real question now is - does Satyam as a brand name still carry weight? Or is it now simply a bad aftertaste of its recent fraudulent past?
afaqs! quizzed four agency CEOs on whether Satyam should be retained as a brand name, or whether Tech Mahindra should stamp its own branding all over the place. Interesting musings followed:
Nakul Chopra, chief executive officer, Publicis South Asia
I think Satyam as a brand is a strong one. Although its accounts are being restated, rough estimations peg its annual revenues to be around US $ 1.3 billion. I don't think that's the picture of a tarnished brand.
There are four perspectives involved: the customer's perspective, the shareholder's perspective, the layman (public) and what he thinks, and the vendor's perspective. Out of these, the value that Satyam offers its customers hasn't changed. The shareholder's perspective, however, has been tainted, and there is a need for a fresh start here. But this will be taken care of, now that Tech Mahindra is aboard. Mahindra brings with it the repute of a sound quality of management and financial stability. Further, Tech Mahindra will have a majority shareholding, while L&T, too, has its own bit in Satyam. Among the two of them, they'll pull it up. So, things will be taken care of.
Personally, I think the brand name Satyam should be retained as it is a formidable one and stands for quality and performance.
One has to understand - Brand Raju was the scam/ poison in the system, and not Brand Satyam.
Suman Srivastava, CEO, EURO RSCG India
Let's forget about what Satyam was before the scam for a moment. I won't go into the details of its delivery and performance.
Because of the scandal, there is more awareness of Satyam globally, whether one wants to admit it or not. Clients and companies in the US suddenly know about Satyam. It is a conversational point worth retaining. The awareness may be in bad light, but it is awareness nevertheless! At the cost of many, Mr. Raju did something for Satyam by default: he made it popular, even if it wasn't in the best of light. Like they say, any publicity is good publicity.
Tech Mahindra won't have to invest in the awareness bit at all. Once you have awareness, you can take it, mould it, and turn things around. You can twist it, shape it, and 'positivise' it. That is a far less investment than starting from scratch.
Another reason to retain the Satyam brand name would be that it is far stronger than Tech Mahindra. For this reason alone, people will now know Tech Mahindra as the "chaps who bought Satyam." While Mahindra & Mahindra is a strong brand, Tech Mahindra is a rather small one with a limited clientele. It isn't in the heart of the market and hasn't expanded the way it intended to.
Furthermore, it will be an expensive proposition to rename Satyam as Tech Mahindra and invest in its branding. Perhaps Tech Mahindra can add its own brand name to the whole affair. It will be far wiser and easier to call it 'Satyam, a Tech Mahindra company'.
Who knows? Conversely, Tech Mahindra may build itself as a brand on the back of the more known Satyam.
Colvyn Harris, CEO, JWT India
Tech Mahindra has a fabulous positive equity because it belongs to the Mahindra family, even more so because of Anand Mahindra's personal credibility.
Satyam is obviously a back-end solutions company, whose audience is its clients. Its current clientele has stuck on simply because of its service and not because of its brand name in any case. So dropping Satyam won't make a dent there. But the name Satyam will be a deterrent while acquiring new clients because its credibility and reputation has been eroded away - completely washed out with the fiasco. They'd much rather go with a brand that is untainted and of sound repute: qualities that Tech Mahindra brings with itself.
Globally, when takeovers happen, generally rebranding takes place to bring about a freshness/rejuvenation in the brand. As long as Satyam still figures in the equation, one will constantly have a niggling negativity in the branding equation. Why even debate this, I ask?
As far as Brand Satyam is concerned, I think it's time for moving on.
Arvind Sharma, chairperson and CEO, Leo Burnett, India
Plenty of brands have gotten into trouble, but have bounced back right into the game simply by correcting their behaviour. One fine example of such a brand is Amitabh Bachchan. We all know of the financial mess he was in, and how his career had plummeted. But with some right moves, he was back with a bang and once again earned the respect of everyone.
Brands are like human beings; sometimes, they mess up! But they have to pick themselves up and move on. Trust is fragile, but can be rebuilt. People are forgiving. Besides, it will be too much of an investment to start something afresh.
Furthermore, I like the way Satyam has handled itself post the scandal. The government appointed directors are doing a splendid job at the speed and transparency with which they have handled things.
While I'd like Satyam to stick around as a brand, I'm not so sure that will happen. M&M may have ambitions of targeting international markets in a big way and as a long term strategy, it may sacrifice 'Satyam' in favour of 'Tech Mahindra' to build the latter globally.
That's my hunch.