UPDATE 1-India Tech Mahindra to run Satyam as standalone unit

* Priorities are to retain and win clients: Tech Mahindra

* Layoffs at Satyam "last option": Tech Mahindra CEO

* Tech Mahindra deposits funds to take control of Satyam (Add details)

By Devidutta Tripathy

HYDERABAD, India, April 20 (Reuters) - India's Tech Mahindra Ltd (TEML.BO), which is taking over Satyam Computer Services Ltd (SATY.BO) in a deal worth about $580 million, said on Monday it would run the fraud-hit outsourcing firm as a standalone unit.

The buyers of the company at the centre of India's biggest corporate fraud said their priority was keeping customers and winning back lost business, but said it was too early to talk about possible job cuts.

"On reaction of customers so far, I don't believe this is a sinking ship, no longer. This may not be a racing car yet. That is our task to make it one," Tech Mahindra chairman Anand Mahindra told a news conference at Satyam's headquarters in the southern Indian city of Hyderabad.

Tech Mahindra, 31 percent owned by Britain's BT Group (BT.L), was the highest bidder for a controlling stake in Satyam at an auction last week, a deal that will see it step up to the top tier of Indian IT firms.

On Monday, it said it had deposited $351 million for a 31 percent allotment of new shares and for an open offer up to 20 percent of the company at a cost of up to $231 million.

"Under Tech Mahindra's plans, Satyam will continue to operate as a standalone unit and its leadership will continue to drive operations," it said on a statement issued after a meeting of the two companies to discuss transition plans.

In early January, Satyam's founder and chairman shocked investors by saying profits had been overstated for years, putting in doubt the survival of a company once ranked as India's fourth-largest software services exporter. [ID:nBOM394323]

The government quickly stepped in and sacked the board to limit damage to India's once-shining IT sector.

RETAIN CLIENTS

Tech Mahindra said its immediate priority was to retain and win back lost clients of Satyam and the company intended to meet key customers across the world.

"This is highest on our priority, retaining our existing clients. That should not be taken as a given because there was certain uncertainty about the future of Satyam and its financial viability," said Vineet Nayyar, chief executive of Tech Mahindra.

Satyam, which counts Citigroup Inc (C.N), Cisco Systems Inc (CSCO.O) and General Electric (GE.N) among its clients, has not reported results since releasing its July-September figures in October. Its accounts are in the process of being restated.

On possible layoffs at Satyam, which had about 48,000 staff at the end of the March quarter, Nayyar said Tech Mahindra would look at all the options and laying off people would be the last.

The combined entity will have about 73,000 staff and Tech Mahindra - a unit of tractor and utility vehicle maker Mahindra & Mahindra (MAHM.BO) - will become India's fourth-largest outsourcing firm from a current ranking of sixth. (Writing by Sumeet Chatterjee; Editing by John Mair)