From scandal to success: Turning around India's Enron

CP Gurnani

In January 2009, a corporate scandal emerged that became known as the Enron of India.

The chairman of Indian IT firm Satyam Computer Services admitted that its accounts had been falsified, in a case that echoed the collapse of US energy group Enron.

India's government stepped in and appointed a new board to try to sell the company.

It was bought by Indian conglomerate Mahindra Group, which renamed it Mahindra Satyam, and put Chander Prakash Gurnani in charge.

Start Quote

We decided no, this is not their [the workers'] fault. They need to go back home and say they're still employed”

End Quote Chander Prakash Gurnani

"Some of us had a firm belief that while the company's accounting books were toxic, the people were not," he says.

Faced with the challenge of rehabilitating the company, Mr Gurnani set about trying to convince everybody that it was still viable.

"I was on the road for 250 days in that year, being in front of every client and explaining," he says. "Frankly, all I did that year was talk, talk, talk, talk to the people and customers, day in, day out."

But at the same time he had to engage with regulators and prosecutors.

"There was a fraud committed, and there was a fraud investigation going on," says Mr Gurnani.

"We had to be able to answer everybody, and still maintain delivery excellence, still maintain investment into the future of the company."

Bruised morale

One of the urgent priorities when Mr Gurnani starting running Mahindra Satyam was to reduce the headcount from 53,000 people to about 35,000, to help return the company to profitability.

He and vice-chairman Vineet Nayyar agonised over how to go about doing this without damaging the already bruised morale in the company.

Mahindra Satyam building in Hyderabad Mr Gurnani decided that departing staff would still get paid for six months

Mr Gurnani says he didn't want to hurt the affected staff, who would struggle to find new jobs in an Indian IT sector battered by the global recession.

Academic institutions and HR professionals all advised him the company should just pay off staff and get rid of them as quickly as possible. Mr Gurnani chose to ignore this advice.

Start Quote

If I have to salute one thing, it is the grit and the determination of the people, of my associates, who wanted to succeed, who wanted to prove the sceptics wrong”

End Quote Chander Prakash Gurnani

He says: "We decided no, this is not their [the workers'] fault.

"They need to go back home and say they're still employed. The family does not want to bear the additional trauma of working in a company that has now been declared Enron, while the neighbour is asking, 'Was this the guy who was a fraud?'"

So instead of getting rid of staff overnight, Mr Gurnani decided that those affected would receive a small salary for six months and help in finding new employment.

"In those six months we had psychiatrists, we had a training department, we had job fairs, and we were doing all that to make sure that those people found a home," he says.

"Is this something that has been done before [in India]? No."

Mr Gurnani's next decision was that instead of trying to deal with all the company's problems in one go, he would break it up into 11 streams, which would be more manageable.

Proving sceptics wrong

Of his remaining staff, Mr Gurnani says: "Crises like this bring out the best in the people.

"If I have to salute one thing, it is the grit and the determination of the people, of my associates, who wanted to succeed, who wanted to prove the sceptics wrong.

Employee of Tech Mahindra Mahindra Satyam has since merged with Tech Mahindra

"I don't know whether I convinced them or they convinced themselves. I don't want to take any credit on this."

But he says that he had a simple formula for getting his message across to his still large number of staff.

"I believe in an equation, which says one guy can convince 10; 10 can convince 100; 100 can convince 1,000; 1,000 can convince 10,000. And trust me, I used that communication method to the hilt."

Mr Gurnani says he also valued working alongside vice-chairman Vineet Nayyar, a colleague for the past 20 years.

"He and I were joined at the hip to make things happen, and in many ways I think a pairing worked to our advantage.

"I was on-the-job training, and it's not that we don't make mistakes - we made mistakes - but having two people talk to each other 24/7 was a huge advantage."

The rehabilitation of Mahindra Satyam was completed in June last year, when the company merged with its sister company Tech Mahindra.

Mr Gurnani was put in charge of the combined group, which took the Tech Mahindra name.

He is now aiming to double the company's revenue by the end of 2015, through a combination of acquisitions and organic growth.

Five years on from a scandal that would have destroyed many companies, Mr Gurnani is now aiming for stellar growth.

More Business stories

RSS

Business Live

  1.  
    09:45: Greece stops privatisations

    The Greek government will freeze plans to privatise the country's dominant energy firm PPC, Energy Minister Panagiotis Lafazanis has told Greek television today. The previous government had passed legislation last year to spin off a chunk of PPC and privatise it as part of its efforts to liberalise its energy market under the terms of its IMF-EU bailout A planned sale of a 67% stake in the State owned Piraeus Port Authority has also been shelved.

     
  2.  
    09:28: Russian plan
    People walk in the Red Square

    The Russian government unveiled a 2.34 trillion-rouble ($34.8bn, £22.9bn) plan to tackle its economic and financial troubles prompted by a collapse in oil prices and Western sanctions over the Ukraine crisis. In the plan, the government said it would collect proposals for creating a 'bad bank' for problematic banking assets. It would also provide state development bank VEB with 300 billion roubles from the National Wealth Fund.

     
  3.  
    09:13: Greece euro exit? BBC Radio 4

    Greece leaving the euro wouldn't do irreparable damage to the eurozone, Carl Bildt tells Today. It is up to Greece whether it wants to stay in the eurozone or not, but the currency bloc itself is here to stay, he adds. "Leaving the eurozone is not going to sort out Greece's problems," he says.

     
  4.  
    08:58: Greece euro exit? BBC Radio 4

    "Greece evidently wants to stay in the euro," Carl Bildt, tells Today. There will be discussion and there will be division between the Greek government and the rest of Europe, he adds. "The rest of Europe already feels it has helped Greece massively and Greece has turned things around slightly, it's not a hopeless case but now, suddenly, they want to spend and go back to irresponsible policies," he says.

     
  5.  
    08:46: Newspaper review
    papers

    The Times reports doctors can now approve Eculizumab, a treatment for a rare kidney condition. It will cost the NHS £82m a year for the 200 people with Atypical hemolytic-uremic syndrome. The FT leads on Apple's performance. The Wall St Journal dissects the new Greek cabinet and the Daily Telegraph reports that the drop in petrol price is as good as a 1p tax cut.

     
  6.  
    08:32: Alibaba report
    alibaba

    Chinese regulators have accused online shop Alibaba of allowing sales of fake and poor-quality goods in a report that was withheld until now to avoid disrupting its US stock market debut. China's industrial regulator said Alibaba allowed unlicensed dealers to use its services and failed in consumer protection.

     
  7.  
    08:22: Market update

    Tokyo stocks reversed early losses to close 0.15% higher as a weak yen pushed the market into gains. The Nikkei 225 index at the Tokyo Stock Exchange, which fell 0.86% at the open, added 27.43 to end at 17,795.73. The benchmark Hang Seng Index in Hong Kong gained 54.53 or 0.22% to 24,861.81.

     
  8.  
    08:13: Nintendo
    mario

    Japanese videogame maker Nintendo said its April-December profit rose six-fold to $504m as a weaker yen boosted its bottom line and make up for slowing sales. It won't make as many sales for the full year as previously hoped, though.

     
  9.  
    08:05: Greece euro exit? BBC Radio 4

    Former Swedish prime minister Carl Bildt tells Today it is not just the Germans that oppose a renegotiation of Greece's debt repayments. He points to Finland which holds elections later this year and has some problems in its economy. He says it is very hard for Finnish MPs to tell the public they have to accept some cutbacks in public spending but Greece doesn't. "That doesn't really fly," he says.

     
  10.  
    07:48: EDF disconnects nuclear power plant
    A view of Heysham Nuclear Power Station

    EDF Energy has said it disconnected Heysham's 1-2 nuclear power plant at the Lancashire site from the electricity grid on Tuesday. "Unit 2 at Heysham 1 power station was taken offline on 27 January 2015," an EDF spokesman said in an emailed statement to the Reuters newswire. EDF tells the BBC it's an issue with a turbine. So it's a non-nuclear part of the plant. Should take "a few" days to sort.

     
  11.  
    07:34: AG Barr results
    bru

    Fizzy drink maker and manufacturer of Irn Bru said it delivered a "robust performance" and should hit analysts' targets for the year. It had 5% growth in the fourth quarter, "well ahead of the total soft drinks market."

     
  12.  
    07:26: Greece euro exit? BBC Radio 4

    Greece should tell Europe it will not pay its debt and will exit the eurozone, Lord Desai tells Today. He says the country has to decide whether it wants "misery now or misery forever". He suggests that has to be the starting point of any negotiations with the Troika - the IMF, ECB and EU. He adds no country has ever paid debts like this in the past. Germany did not pay all its reparations, he says. "The international community has to recognise you can't put such a incredible burden on a people regardless of whose fault it was," he adds.

     
  13.  
    Via Twitter Rory Cellan-Jones Technology correspondent
    apple

    tweets: Amazing Apple quarter: record $18bn profit, 74m iPhones - most profitable product in history? But iPads disappoint

     
  14.  
    06:57: Greek euro exit? BBC Radio 4

    Lord Desai says most of the debt Greece owes is to public bodies such as the European Union and IMF. Greece cannot continue to pay off its debts for the next 20 years, he adds, and Greece and Germany have to decide whether they can afford for Greece to leave the eurozone. Anne Richardson of Aberdeen Asset Management points out £8bn of bank deposits have left Greek banks since November because investors see a so-called Grexit as having come "one step closer".

     
  15.  
    Via Twitter Stephanie McGovern Breakfast business reporter
    port

    tweets: Morning from the Port of Tyne - where today I'm talking about exports. #economy

     
  16.  
    06:44: Greek euro exit? BBC Radio 4
    Greece"s Prime Minister Alexis Tsipras is accompanied by associates

    Now that the Greek election has been won by Syriza, thoughts have begun to turn to negotiations over the country's debts. Greece could request to pay no interest on those debts for about five years, Lord Desai, economist and chairman of the Official Monetary and Financial Institutions Forum, tells Today. "That would save them about 4% of GDP," he says. But, he adds, there "really is no human way that Greece can pay the debt without ruining at least one generation's future."

     
  17.  
    06:31: GDP growth Radio 5 live

    Anne Richards, chief investment officer of Aberdeen Asset Management is the markets guest on Wake Up to Money. "You have to be a wee bit careful with quarterly numbers as they are subject to a lot of revision," she says. "The overall picture for the year was reasonably positive." Low construction growth was "a bit worrying." Strong sterling is a drag on GDP growth. Reliance on services rather than making things is also a challenge, she says. More engineers are needed.

     
  18.  
    06:20: Apple profit Radio 5 live
    The Apple logo

    The biggest quarterly profit ever for a company: $18bn, has been posted by phone pedlars Apple. Daniel Eran Dilger who writes for AppleInsider tells Wake Up to Money. Apple makes a load of margin from its high-end phones. They also make a lot when you break your power cable and have to splurge £65 on a new one, as presenter Adam Parsons learned earlier this week.

     
  19.  
    06:12: Services growth Radio 5 live

    More from Greg Madigan, the boss Subway UK and Ireland on Wake Up to Money. Hospitals, service stations and forecourts, or "non-traditional locations" are a big area of growth for the firm, he says. He used to be an air traffic controller, he adds.

     
  20.  
    06:01: Services growth Radio 5 live

    Services is what's propping up GDP growth, we learned yesterday. Greg Madigan, the boss Subway UK and Ireland is on Wake Up to Money. "The price of oil has come down putting more money in peoples pocket... one of the things that benefit from more discretionary spending is food retail," he says. They have 2,000 stores in the UK and Ireland now.

     
  21.  
    06:00: Howard Mustoe Business reporter

    Good morning. Keep your thoughts on today's news rolling in via email bizlivepage@bbc.co.uk and on twitter @BBCBusiness

     
  22.  
    06:00: Matthew West Business Reporter

    Morning everyone. In case you missed it EDF became the last of the "Big Six" energy suppliers to cut its gas prices last night. And US tech giant Apple reported the largest quarterly profit in corporate history. Today sees trading updates come from Brewin Dolphin, Johnson Matthey, Sage and Anglo American. We'll bring you those numbers and more as we get them.

     

Features

From BBC Capital

Programmes

  • Virtual courtroomClick Watch

    The 'forensic holodeck’ system that recreates crime scenes as 3D virtual worlds

Copyright © 2015 BBC. The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.