Mahindra to consider IT acquisitions, but not to bulk up: Vineet Nayyar
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Nayyar, Executive Vice Chairman of Tech Mahindra and Chairman of Mahindra Satyam, also said that the merger of the two companies would have negligible impact on their staff, but a fair amount of positive impact was likely on the business as the combined entity would be seen as a much bigger player in the Indian IT sector.
"I don't think anything quantitatively will change after the merger as we have been working like a sort of single entity for some time now. What will change is that what was de facto, will become de jure," Nayyar told PTI in an interview here.
Nayyar, who was here for the World Economic Forum Annual Meeting which had Mahindra Satyam as one of the strategic partners, said that there would be some rationalisation in terms of functions, "but by and large it will have very little impact on staff".
"But we are hoping a fair amount of positive impact on business, because we will be seen as a much larger entity," he added.
Asked whether the group would consider any acquisitions as the merger process was close to be completed, Nayyar said: "Our position regarding this is that our growth strategy is based both on organic growth and non-organic growth.
"As far as non-organic growth is concerned, we believe that we will not do it for the purpose of bulking up, but only if it is of strategic interest.
"We will consider an acquisition if it gives us a strategic interest that we do not have. It will be on that basis. We will be definitely looking at acquisitions, both inside and outside India. But it has to be strategic," he added.
The headcount of the combined entity is estimated at around 85,000-90,000 people and the total revenue would be close to USD 2.7 billion, Nayyar said.
Asked what was the target to make the combined entity a USD five billion entity or over one lakh workforce, he said that the headcount would have to be much more than one lakh if the revenue reaches USD five billion.
"We are working, we are striving. Remember that we started with a figure of USD 120 million six-seven years ago and we have come a long way now. We don't make forward looking statements, but you can look at the pace of our growth.
"It may not be possible to maintain the same momentum because economic conditions have changed, but nonetheless we will put a fair amount of efforts," Nayyar said.
When asked about his outlook for the IT sector vis-a-vis the global scenario and domestic macroeconomic trends, Nayyar said: "It is difficult to forecast the business. However, the economic stability is now much better. The US has started to grow and the sense of crisis in Europe has disappeared, thanks to actions taken by various governments and central banks.
"The impact of these developments may not be so much in 2013, but we should see better times in 2014, as we are hoping to see a greater amount of stability in both these continents, unless some other crisis comes up.
"Except for unseen circumstances, we are hoping that the things would be better."
On domestic front, he said, some problems are still continuing.
"There have been some amelioration, but will there be a follow through to it, that is a question mark. Still, we are hoping that the things would be better," Nayyar said.
His colleague and Mahindra Satyam CEO C P Gurnani, who was part of the Mahindra group's leadership team present at Davos, said that the mood is hesitant today and the IT companies need to be realistic in their response to the market.
"We have to plan a strategy that is not 'one size fits all' and, therefore, Mahindra Satyam strategy is different for different regions - be it Australia-New Zealand, China, India, Mid-East, Africa or Europe," Gurnani said.
"The main point is that it is better to be realistic. There may be a hesitant mood, but there are also reasons to believe that there are opportunities everywhere and there should be a strategy fit for each of these opportunities," he said.