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CASE OVERVIEW
Silverline Technologies, an IT company, incorporated in 1992, during its initial years of existence created some historical landmarks. The company then went on an acquisition spree to grow. Within a span of a year, the company acquired four companies, all in cash deals. Within the next two years the company became a classic example of havoc that can be unleashed if a company blunders in mergers and acquisitions. The company even defaulted on paying salaries to its employees. Surprisingly, the company managed a turnaround. The company released the movie "Hanuman" which became the first animation blockbuster movie in India. The company restructured itself. However, post revival the company once again went on an acquisition spree. The company is again concentrating on "buying capability" instead of "building capability". This case traces issues related to strategic management (mergers and acquisitions), competitiveness and corporate survival at STL.
Keywords: Strategic Management, Competitiveness, Corporate Survival, Buying Capability, Building Capability, Mergers and Acquisitions
PROLOGUE
"We are fortunate to be back. It is just our relationships that helped us" opines Ravi Subramanian, Chairman Silverline Technologies Ltd.4, while discussing the turn around of Silverline from the rock bottom status it reached in 2003 on account of acquisition blunders it made. Silverline Technologies was formerly, one of the top software companies in India. It was ranked sixth by the National Association of Software Service Companies, India (NASSCOM) in 2000.
HISTORY
Silverline Technologies Limited (STL) was started on April 13, 1992 as a public limited company. Mr. Ravi Subramanian, Mr. Pat Sarma, Mr. Paramjeet Bhalla, Mr. Ram Mahtani, and Mr. Arjan Daswani were the main promoters of the company. The company was providing end-to-end support solutions for the IT department and system integration, technical support, customer care, back office shared services, and was also extending its expertise in animation and media services.
The growth that the company exhibited in the first decade of its existence was tremendous. Silverline Technologies recorded a compounded annual growth rate of 22 percent and 29 percent in revenues and post tax earnings between the years 1995-1999. Within a short period of time since its existence, the company had 1350 employees, 920 in India and 430 in the USA. As mentioned in an article by Quinn William...