New Delhi (PTI): The Company Law Board on Friday said it would appoint four independent directors on the board of Maytas Infra including its Chairman.
"I would appoint four persons on the board of the company (Maytas Infra) that I have in mind. Out of that four, one would be appointed as Chairman. Let the appointed board take its course," said CLB Chairman S. Balasubramanian while reserving his order over government's plea to supersede the board of the company.
This was also accepted by the counsels representing the Maytas Infra. The company has proposed strength of nine directors on its board, including four independent directors.
During the proceeding, the Maytas counsel suggested some names for the post of independent directors which included names of some former CLB chairmen and members, and former MRTPC members.
The board, however, immediately rejected it and returned the list of the names to Maytas counsels.
Meanwhile, creditors IDBI and ICICI Banks and IL&FS, which have 37.01 per cent shares of Maytas, today submitted that they do not want any representation on the company's board. They further requested CLB to appoint persons expert in their field on the Maytas board.
However, the banks pleaded that the present directors of the company should refrain from participating in the board meeting "in greater public interest".
"...For four weeks, their representatives should not vote on any proposal. No one would take a penny from the company. This is in the greater public interest of the company having 34 big projects.
"We would not even seek representation in the company. Future is to be seen. Let there be an immediate appointment of independent directors of the company...before everything would go in dust," pleaded counsel for the creditors Dushyant Dave.
However, this was opposed by the counsels of the Maytas Properties saying that it would amount to indirectly superseding the board.
The government on Friday once again opposed the proposal of appointment of independent directors and requested the board to allow its prayer to supersede Maytas Infra board.
"The central government has no faith in the present management of the company. They themselves are denying any fraud in the company and now deciding who should be appointed on the board of the company," submitted a deputy director appearing on behalf of the company.
He further submitted that the company has projects worth Rs 6,800 crore and debt around Rs 1,270 crore.
"It has big projects like Hyderabad Metro Project. If the company fails, then it would have impact...project would be delayed by 10 years and company would be flooded with litigations," he submitted.
However, the CLB Chairman on Friday again said that he was against superseding Maytas Board at this stage and asked the government to furnish evidence supporting their allegation.
"You want to supersede at this stage, I disagree... Show me the material evidence. I want to see it before taking any decision. I have to follow principles of law and cannot go merely on allegations.
"Tell me incidences, how company is suffering? How they are not discharging their duties? How it has affected the public interest...," said the CLB Chairman after the government repeatedly failed to present material evidences supporting allegations against Maytas Infra.
"You are at an interim stage...investigations are going on. Bring more material evidence based on that," he said. The CLB also declined request by IDBI and ICICI Banks to pass a status quo order on the contracts and projects of the company.
"No...the new board would take care of it. I am not concerned," said CLB Chairman.
The CLB order is expected to be delivered early next week.
Saturday, February 28, 2009
CLB wants four directors on Maytas Infra
28 Feb 2009
NEW DELHI: The Company Law Board on Friday suggested appointment of four independent directors on the board of Maytas Infra, including a chairperson, which was accepted by the Raju-family controlled company but opposed by the government. “I would appoint four persons on the board of Maytas Infra. Out of the four, one would be appointed as chairman. Let the appointed board take its course,” CLB chairman S Balasubramanian suggested during the hearing on the government’s plea to supersede the company’s existing board.
While this was accepted by the counsels representing Maytas Infra, the government counsel opposed the suggestion, pleading for sacking of the existing board. “The central government has no faith in the present management of the company. They themselves are denying any fraud in the company and now deciding who should be appointed on the board of the company,” the government counsel argued. Maytas Infra, listed on the stock exchanges, has seen resignations by its directors, following the confession by Satyam’s disgraced founder B Ramalinga Raju of cooking up the company’s books.
While RC Sinha, the non-executive director and chairman, resigned on January 9, the company’s CEO and director PK Madhav resigned on January 19. Of the three independent directors — CS Bansal has resigned, while CS Mohan passed away in November last year.
RP Raju is now the only independent director on the company’s board. And while Teja Raju continues as vice-chairman, the company had on January 30 appointed B Narasimha Rao (v-p contracts and claims division and head, corporate affairs) as a director.
Balasubramian refused to take any immediate decision on sacking the existing board and asked the government to furnish evidence supporting their demand. “You want to supersede at this stage, I disagree... Show me the material evidence. I want to see it before taking any decision. I have to follow principles of law and cannot go merely on allegations... Tell me incidences, how company is suffering? How they are not discharging their duties? How it has affected the public interest...,” the CLB chairman said.
IL&FS — that also holds a stake in Maytas Infra as Satyam promoter family pledged shares to them — suggested while the existing directors of Maytas should be allowed to continue, they should not be allowed to vote. “Let them contribute with their experience, but not vote,” said Ashok Desai, former Attorney General and senior advocate who appeared for IL&FS. However, this was opposed by the counsels of the Maytas Properties saying it would amount to indirectly superseding the board.
NEW DELHI: The Company Law Board on Friday suggested appointment of four independent directors on the board of Maytas Infra, including a chairperson, which was accepted by the Raju-family controlled company but opposed by the government. “I would appoint four persons on the board of Maytas Infra. Out of the four, one would be appointed as chairman. Let the appointed board take its course,” CLB chairman S Balasubramanian suggested during the hearing on the government’s plea to supersede the company’s existing board.
While this was accepted by the counsels representing Maytas Infra, the government counsel opposed the suggestion, pleading for sacking of the existing board. “The central government has no faith in the present management of the company. They themselves are denying any fraud in the company and now deciding who should be appointed on the board of the company,” the government counsel argued. Maytas Infra, listed on the stock exchanges, has seen resignations by its directors, following the confession by Satyam’s disgraced founder B Ramalinga Raju of cooking up the company’s books.
While RC Sinha, the non-executive director and chairman, resigned on January 9, the company’s CEO and director PK Madhav resigned on January 19. Of the three independent directors — CS Bansal has resigned, while CS Mohan passed away in November last year.
RP Raju is now the only independent director on the company’s board. And while Teja Raju continues as vice-chairman, the company had on January 30 appointed B Narasimha Rao (v-p contracts and claims division and head, corporate affairs) as a director.
Balasubramian refused to take any immediate decision on sacking the existing board and asked the government to furnish evidence supporting their demand. “You want to supersede at this stage, I disagree... Show me the material evidence. I want to see it before taking any decision. I have to follow principles of law and cannot go merely on allegations... Tell me incidences, how company is suffering? How they are not discharging their duties? How it has affected the public interest...,” the CLB chairman said.
IL&FS — that also holds a stake in Maytas Infra as Satyam promoter family pledged shares to them — suggested while the existing directors of Maytas should be allowed to continue, they should not be allowed to vote. “Let them contribute with their experience, but not vote,” said Ashok Desai, former Attorney General and senior advocate who appeared for IL&FS. However, this was opposed by the counsels of the Maytas Properties saying it would amount to indirectly superseding the board.
Govt ill-equipped to plead own case for Maytas boards takeover
27 Feb 2009, PTI
NEW DELHI: The Government, which is seeking to supersede the board of Maytas Properties and Maytas Infra, till now seems to have virtually failed to convince the CLB that they are involved in financial irregularities.
"You are at an interim stage...investigations are on. Bring more material evidence based on that," said CLB Chairman S Balasubramanian to the government on Friday during the hearing.
"Tell me incidences, how company is suffering? How they (directors) are not discharging their duties? How it has affected the public interest...?" he said after the government failed to substantiate its allegation by placing concrete evidence before the Board.
However, deputy directors of the Ministry of Corporate Affairs representing the government, kept saying they were seeking only interim relief and at this stage, "mere intention (of committing irregularities) needs to be established".
On this, the CLB chief said, "Show me material evidence. I want to see it before taking any decision. I have to follow principles of law and can't go merely on allegations."
The Government pleading was based on company's balance sheet, some prints taken from website of Maytas Infra and confession of fraud by Satyam's former Chairman B Ramalinga Raju. They tried to establish charges of fraud and diversion of company's money to group firms, associates' concerns, etc.
NEW DELHI: The Government, which is seeking to supersede the board of Maytas Properties and Maytas Infra, till now seems to have virtually failed to convince the CLB that they are involved in financial irregularities.
"You are at an interim stage...investigations are on. Bring more material evidence based on that," said CLB Chairman S Balasubramanian to the government on Friday during the hearing.
"Tell me incidences, how company is suffering? How they (directors) are not discharging their duties? How it has affected the public interest...?" he said after the government failed to substantiate its allegation by placing concrete evidence before the Board.
However, deputy directors of the Ministry of Corporate Affairs representing the government, kept saying they were seeking only interim relief and at this stage, "mere intention (of committing irregularities) needs to be established".
On this, the CLB chief said, "Show me material evidence. I want to see it before taking any decision. I have to follow principles of law and can't go merely on allegations."
The Government pleading was based on company's balance sheet, some prints taken from website of Maytas Infra and confession of fraud by Satyam's former Chairman B Ramalinga Raju. They tried to establish charges of fraud and diversion of company's money to group firms, associates' concerns, etc.
Non-tech firms can now bid for Satyam
27 Feb 2009 ET Bureau
HYDERABAD: The government-appointed board of Satyam Computer Services on Thursday decided to allow non-IT firms to join the race to buy the software firm. PE firms with a partner will also qualify as bidders, said a person privy to the development.
The move comes as something of a surprise as the Satyam board had earlier contemplated making prior experience in the IT sector as a qualification criterion, as reported in this paper. But it was reckoned that the norm would have been restrictive, given that only a clutch of IT firms have shown interest in acquiring Satyam. It would have also disqualified PE firms from bidding.
“We have decided to open the window further, by allowing firms with managerial experience in the non-IT sector to bid for Satyam as long as they meet certain financial parameters such as net worth. Stand-alone PE firms will not be allowed to bid, but a PE player can make a joint-bid with a partner,” said the source. Some consortiums are in the process being formed.
There were always two views within the board, according to another person familiar with the matter. While one view was that the bidders should be restricted to firms with IT experience the other opinion was that it would narrow the field. The latter appears to have prevailed. “In the Indian software space a firm like Flextronics is being run by PE firm KKR,” said this person. The board, which met on Thursday, has asked the investment bankers Goldman Sachs and Avendus to formulate the guidelines for qualification. Sebi and the Company Law Board will have to approve these norms, the person quoted first said.
The board also inched closer to finalising the pricing guidelines for preferential allotment to a strategic investor. “The board is expected to give its recommendations on pricing to Sebi in a day or two,” this source said. Operational issues including cost-cutting were also discussed in Thursday’s meet.
The company is expected to adopt a two stage process while selecting a strategic investor. It will invite expression of interest (EOI) from prospective bidders. The board will short-list bidders based on the qualification criteria. After this the strategic investor will be selected from the short-listed bidders through a fair and transparent auction process that would be overseen by a retired Supreme Court judge or the former Chief Justice of India.
The Company Law Board (CLB) has already authorised the Satyam Board to make a minimum 26% preferential allotment of equity shares to a strategic investor and raising the company’s capital base to Rs 280 crore from Rs 160 crore, or to 140 crore shares from 80 crore shares.
The board could allow the strategic investor to buy up to 31% equity through a preferential allotment and an additional 20% through a mandatory open offer. A second round of preferential allotment of shares may be on the cards if the response from the open offer of shares is poor.
HYDERABAD: The government-appointed board of Satyam Computer Services on Thursday decided to allow non-IT firms to join the race to buy the software firm. PE firms with a partner will also qualify as bidders, said a person privy to the development.
The move comes as something of a surprise as the Satyam board had earlier contemplated making prior experience in the IT sector as a qualification criterion, as reported in this paper. But it was reckoned that the norm would have been restrictive, given that only a clutch of IT firms have shown interest in acquiring Satyam. It would have also disqualified PE firms from bidding.
“We have decided to open the window further, by allowing firms with managerial experience in the non-IT sector to bid for Satyam as long as they meet certain financial parameters such as net worth. Stand-alone PE firms will not be allowed to bid, but a PE player can make a joint-bid with a partner,” said the source. Some consortiums are in the process being formed.
There were always two views within the board, according to another person familiar with the matter. While one view was that the bidders should be restricted to firms with IT experience the other opinion was that it would narrow the field. The latter appears to have prevailed. “In the Indian software space a firm like Flextronics is being run by PE firm KKR,” said this person. The board, which met on Thursday, has asked the investment bankers Goldman Sachs and Avendus to formulate the guidelines for qualification. Sebi and the Company Law Board will have to approve these norms, the person quoted first said.
The board also inched closer to finalising the pricing guidelines for preferential allotment to a strategic investor. “The board is expected to give its recommendations on pricing to Sebi in a day or two,” this source said. Operational issues including cost-cutting were also discussed in Thursday’s meet.
The company is expected to adopt a two stage process while selecting a strategic investor. It will invite expression of interest (EOI) from prospective bidders. The board will short-list bidders based on the qualification criteria. After this the strategic investor will be selected from the short-listed bidders through a fair and transparent auction process that would be overseen by a retired Supreme Court judge or the former Chief Justice of India.
The Company Law Board (CLB) has already authorised the Satyam Board to make a minimum 26% preferential allotment of equity shares to a strategic investor and raising the company’s capital base to Rs 280 crore from Rs 160 crore, or to 140 crore shares from 80 crore shares.
The board could allow the strategic investor to buy up to 31% equity through a preferential allotment and an additional 20% through a mandatory open offer. A second round of preferential allotment of shares may be on the cards if the response from the open offer of shares is poor.
Satyam yet to finalise strategic investor norms
February 27, 2009,
The government-appointed board of Satyam Computer Services met here today, but the discussions remained inconclusive and its outcome was not disclosed.
The board, which was exploring all options for inviting a strategic investor, was expected to finalise the guidelines and procedures for preferential allotment of shares and shortlist the potential bidders. However, at the end of its meeting today the board members did not say anything in this regard.
Earlier, Satyam had informed that the guidelines and procedures were discussed by the board and were in the process of applying for the market regulator’s nod. But, as the company’s financial accounts were in question, complexities have cropped up in arranging the induction of a new investor.
Though the intent was to progress in a swift manner, the board was stated to be of the view that the intricacies of diligence and need for confidentiality of the bidders would need due consideration. Thus, it was likely to take another six to eight weeks to know about who would be the strategic investor in the company.
The government-appointed board of Satyam Computer Services met here today, but the discussions remained inconclusive and its outcome was not disclosed.
The board, which was exploring all options for inviting a strategic investor, was expected to finalise the guidelines and procedures for preferential allotment of shares and shortlist the potential bidders. However, at the end of its meeting today the board members did not say anything in this regard.
Earlier, Satyam had informed that the guidelines and procedures were discussed by the board and were in the process of applying for the market regulator’s nod. But, as the company’s financial accounts were in question, complexities have cropped up in arranging the induction of a new investor.
Though the intent was to progress in a swift manner, the board was stated to be of the view that the intricacies of diligence and need for confidentiality of the bidders would need due consideration. Thus, it was likely to take another six to eight weeks to know about who would be the strategic investor in the company.
Satyam keen to sell 31 pct new stock to bidder
Fraud-hit Satyam Computer Services wants to offer no more than 31 percent in new shares to a strategic investor, the Mint newspaper reported on Friday, citing a company source familiar with the matter.
Satyam's board met on Thursday to finalise a plan to invite bids for the struggling company -- at the centre of India's biggest corporate scandal -- but the firm ended the meeting without issuing any statement.
The Mint said Satyam's board wanted the winning bidder to buy a further 20 percent through a mandatory offer. The company would consider another preferential allotment of new shares only if the bidder failed to get the 20 percent, it said.
"The intention is to provide an exit route to the company's minority shareholders through the open offer," the newspaper quoted a company executive as saying.
The Mint said Satyam Chairman Kiran Karnik refused to comment on the report. A Satyam spokeswoman reached by Reuters declined to comment on the report on Friday.
Satyam's suitors include India's top engineering and construction firm Larsen & Toubro, which already owns 12 percent, the Hinduja Group and Spice Group.
The Economic Times said Satyam's board decided to allow private equity firms to also bid, moving away from an earlier plan that insisted on bidders having experience in information technology. The paper cited a source with knowledge of the development.
"We have decided to open the window further by allowing firms with managerial experience in the non-IT sector," the newspaper quoted the source as saying. "Standalone PE firms will not be allowed to bid, but a PE player can make a joint bid with a partner."
Satyam's chairman had said on Tuesday the company hoped to invite expressions of interest from potential bidders by the end of the week.
Satyam's board met on Thursday to finalise a plan to invite bids for the struggling company -- at the centre of India's biggest corporate scandal -- but the firm ended the meeting without issuing any statement.
The Mint said Satyam's board wanted the winning bidder to buy a further 20 percent through a mandatory offer. The company would consider another preferential allotment of new shares only if the bidder failed to get the 20 percent, it said.
"The intention is to provide an exit route to the company's minority shareholders through the open offer," the newspaper quoted a company executive as saying.
The Mint said Satyam Chairman Kiran Karnik refused to comment on the report. A Satyam spokeswoman reached by Reuters declined to comment on the report on Friday.
Satyam's suitors include India's top engineering and construction firm Larsen & Toubro, which already owns 12 percent, the Hinduja Group and Spice Group.
The Economic Times said Satyam's board decided to allow private equity firms to also bid, moving away from an earlier plan that insisted on bidders having experience in information technology. The paper cited a source with knowledge of the development.
"We have decided to open the window further by allowing firms with managerial experience in the non-IT sector," the newspaper quoted the source as saying. "Standalone PE firms will not be allowed to bid, but a PE player can make a joint bid with a partner."
Satyam's chairman had said on Tuesday the company hoped to invite expressions of interest from potential bidders by the end of the week.
Thursday, February 26, 2009
India's Satyam board meeting ends without statement
Feb 26, 2009
BANGALORE (Reuters) - India's Satyam Computer Services (SATY.BO) said on Thursday it would not issue a statement after a board meeting that was expected to firm up a plan to bring a strategic investor into the fraud-hit outsourcing firm.
Satyam, hit by India's biggest corporate scandal, had been expected to outline terms and conditions for a preferential share issue, with the chairman saying on Tuesday the company hoped to invite expressions of interest from potential bidders by the end of the week.
A Satyam spokesman said the company had decided not to issue a statement after the meeting, breaking with recent practice, and declined to comment on what the government-appointed board had discussed or decided.
"Once we have something to report, we will revert," the spokesman said.
After the previous board meeting on Saturday, Satyam had said it would seek regulatory approval this week for its plan to bring in an investor, and would announce the details once it was approved.
Statements had been issued after the previous seven meetings of the board, which was installed last month to rescue Satyam after its founder chairman Ramalinga Raju had quit on January 7 saying profits had been overstated for years and assets falsified.
New chairman Kiran Karnik could not be contacted for comment.
Analysts say potential bidders for Satyam are attracted by its marquee clients, business model and a trained workforce, but putting a price for the company could be difficult in the absence of audited accounts and clarity about its liabilities.
"They could take a potential leap of faith here," said Sachin Jain, Jefferies & Co's equity research analyst. "Apart from their inability to do a due diligence regarding the financials, there are couple of other issues like lawsuits from investors."
The Economic Times newspaper said on Thursday the board was likely to insist on experience in the information technology sector and minimum net worth for potential bidders, quoting a person familiar with the situation.
Potential suitors for Satyam include India's top engineering and construction firm Larsen & Toubro (LART.BO), Hinduja Group and Spice Group.
The board is being advised by Goldman Sachs (GS.N) and Indian investment bank Avendus Advisors in its search for a strategic investor.
In a statement to the stock exchange, Satyam said fund manager Fidelity had raised its stake in the firm by 0.45 percent to 8.89 percent. FMR LLC and FIL Ltd, the parent companies of Fidelity, purchased 3 million shares on February 9.
BANGALORE (Reuters) - India's Satyam Computer Services (SATY.BO) said on Thursday it would not issue a statement after a board meeting that was expected to firm up a plan to bring a strategic investor into the fraud-hit outsourcing firm.
Satyam, hit by India's biggest corporate scandal, had been expected to outline terms and conditions for a preferential share issue, with the chairman saying on Tuesday the company hoped to invite expressions of interest from potential bidders by the end of the week.
A Satyam spokesman said the company had decided not to issue a statement after the meeting, breaking with recent practice, and declined to comment on what the government-appointed board had discussed or decided.
"Once we have something to report, we will revert," the spokesman said.
After the previous board meeting on Saturday, Satyam had said it would seek regulatory approval this week for its plan to bring in an investor, and would announce the details once it was approved.
Statements had been issued after the previous seven meetings of the board, which was installed last month to rescue Satyam after its founder chairman Ramalinga Raju had quit on January 7 saying profits had been overstated for years and assets falsified.
New chairman Kiran Karnik could not be contacted for comment.
Analysts say potential bidders for Satyam are attracted by its marquee clients, business model and a trained workforce, but putting a price for the company could be difficult in the absence of audited accounts and clarity about its liabilities.
"They could take a potential leap of faith here," said Sachin Jain, Jefferies & Co's equity research analyst. "Apart from their inability to do a due diligence regarding the financials, there are couple of other issues like lawsuits from investors."
The Economic Times newspaper said on Thursday the board was likely to insist on experience in the information technology sector and minimum net worth for potential bidders, quoting a person familiar with the situation.
Potential suitors for Satyam include India's top engineering and construction firm Larsen & Toubro (LART.BO), Hinduja Group and Spice Group.
The board is being advised by Goldman Sachs (GS.N) and Indian investment bank Avendus Advisors in its search for a strategic investor.
In a statement to the stock exchange, Satyam said fund manager Fidelity had raised its stake in the firm by 0.45 percent to 8.89 percent. FMR LLC and FIL Ltd, the parent companies of Fidelity, purchased 3 million shares on February 9.
CLB refuses to supersede Maytas Infra board
The government had approached the Company Law Board seeking to supersede the board of Maytas Infra, a concern promoted by the family of Satyam founder Ramalinga Raju
New Delhi: The Company Law Board on Thursday refused to supersede the board of Maytas Infra at this point in time, but favoured giving board representation to lenders IDBI Bank and ICICI Bank.
However, it was against allowing a board seat to IL&FS citing conflict of interest.
The CLB has sought reply from Maytas Infra by Friday afternoon.
The government had approached the Company Law Board seeking to supersede the board of Maytas Infra, a concern promoted by the family of Satyam founder Ramalinga Raju.
The government is probing over 300 companies affiliated to the family in connection with the accounting fraud at Satyam.
New Delhi: The Company Law Board on Thursday refused to supersede the board of Maytas Infra at this point in time, but favoured giving board representation to lenders IDBI Bank and ICICI Bank.
However, it was against allowing a board seat to IL&FS citing conflict of interest.
The CLB has sought reply from Maytas Infra by Friday afternoon.
The government had approached the Company Law Board seeking to supersede the board of Maytas Infra, a concern promoted by the family of Satyam founder Ramalinga Raju.
The government is probing over 300 companies affiliated to the family in connection with the accounting fraud at Satyam.
Maytas evaluation: E&Y refutes Govt's allegations
25 Feb 2009,
NEW DELHI: Audit firm Ernst and Young (E&Y) has refuted the government's allegation that it over-valued Maytas Properties and the entire valuation work was done in a day. We refute the allegation ... that E&Y spent one day to conduct the valuation of Maytas Properties Ltd and the same was overvalued. Our association with the engagement was much longer, which can be demonstrated by sufficient documentation on the matter, a spokesperson of the audit firm said.
The firm also said that it was not appointed by Satyam Computer Ltd or any of its subsidiaries to conduct the valuation of Maytas Properties. In an unrelated context, E&Y was engaged to undertake a valuation of Maytas Properties, as required under the guidelines of the Reserve Bank of India, for a proposed share transaction involving existing shareholders of Maytas Properties Ltd, it said.
On Tuesday, the government told the Company Law Board (CLB) that E&Y had undertaken the valuation of Maytas Properties, prior to Satyam s aborted attempt to buy-out the company.
How hollow this valuation is... As per our knowledge, the company does not have any land bank and this company, having a turnover of mere Rs 22 crore, was valued at Rs 6,523 crore, an official in the ministry of corporate affairs told CLB while arguing its case to supersede the board of Maytas Properties.
ET Bureau
NEW DELHI: Audit firm Ernst and Young (E&Y) has refuted the government's allegation that it over-valued Maytas Properties and the entire valuation work was done in a day. We refute the allegation ... that E&Y spent one day to conduct the valuation of Maytas Properties Ltd and the same was overvalued. Our association with the engagement was much longer, which can be demonstrated by sufficient documentation on the matter, a spokesperson of the audit firm said.
The firm also said that it was not appointed by Satyam Computer Ltd or any of its subsidiaries to conduct the valuation of Maytas Properties. In an unrelated context, E&Y was engaged to undertake a valuation of Maytas Properties, as required under the guidelines of the Reserve Bank of India, for a proposed share transaction involving existing shareholders of Maytas Properties Ltd, it said.
On Tuesday, the government told the Company Law Board (CLB) that E&Y had undertaken the valuation of Maytas Properties, prior to Satyam s aborted attempt to buy-out the company.
How hollow this valuation is... As per our knowledge, the company does not have any land bank and this company, having a turnover of mere Rs 22 crore, was valued at Rs 6,523 crore, an official in the ministry of corporate affairs told CLB while arguing its case to supersede the board of Maytas Properties.
ET Bureau
Satyam board meets; to discuss stake sale
Hyderabad (PTI): The board of Satyam started its meeting here on Thursday to discuss various issues including the criteria for shortlisting strategic partners.
The board is likely to take into account the process for stake sale and finalise the norms for inviting expression of interests from interested parties.
It is also likely to discuss as to what extent information with regard to clients and receivables from them could be shared with prospective bidders.
Kiran Karnik, Chairman of the board, had earlier said "the board is likely to announce the details of the process of inviting strategic partners into the company by the end of this week."
He had further added that "as per the CLB order we will approach SEBI and by the end of this week we expect to make the process public and after that we will invite proposals from the interested parties."
However, it is not clear whether the board has decided in favour of inducting a strategic minority partner or selling 51 per cent of the company's equity.
The board is likely to take into account the process for stake sale and finalise the norms for inviting expression of interests from interested parties.
It is also likely to discuss as to what extent information with regard to clients and receivables from them could be shared with prospective bidders.
Kiran Karnik, Chairman of the board, had earlier said "the board is likely to announce the details of the process of inviting strategic partners into the company by the end of this week."
He had further added that "as per the CLB order we will approach SEBI and by the end of this week we expect to make the process public and after that we will invite proposals from the interested parties."
However, it is not clear whether the board has decided in favour of inducting a strategic minority partner or selling 51 per cent of the company's equity.
What is Satyam’s value?
February 25, 2009
Ramalinga Raju’s big mess is making it harder for bidders and the Satyam board to value the company.
Apurva Shah, Head of Research at Prabhudas Lilladher said that it was quite difficult to valuate Satyam in absence of the profit and loss accounts.
The board meets on Thursday and sources say it is keen on a technology firm to buy Satyam, but how do the numbers stack up?
Satyam gets Rs 1700 crore as receivables per quarter. By that mathematics, the full year’s total receivables are Rs 6800 crore.
According to sources, Satyam could manage Rs 1300 crore with a 26 per cent stake sale.
This means that if any bidder picks up at least 51 per cent, then the price tag could be around Rs 2500 crore.
Satyam's bidders will be given information on client relationship and potential business from various geographies, but in the day's ahead, any acquirer will have to watch for long term risks of securing and saving some of these big contracts.
So, the Satyam board is depends on big corporates to buy into Satyam and save it.
The valuations for Satyam will now depend on the stringent conditions put out by the Satyam board. But no matter what, in a market like this, even the Satyam board will have to be forgiving to a company willing to take the plunge by picking up Satyam.
Ramalinga Raju’s big mess is making it harder for bidders and the Satyam board to value the company.
Apurva Shah, Head of Research at Prabhudas Lilladher said that it was quite difficult to valuate Satyam in absence of the profit and loss accounts.
The board meets on Thursday and sources say it is keen on a technology firm to buy Satyam, but how do the numbers stack up?
Satyam gets Rs 1700 crore as receivables per quarter. By that mathematics, the full year’s total receivables are Rs 6800 crore.
According to sources, Satyam could manage Rs 1300 crore with a 26 per cent stake sale.
This means that if any bidder picks up at least 51 per cent, then the price tag could be around Rs 2500 crore.
Satyam's bidders will be given information on client relationship and potential business from various geographies, but in the day's ahead, any acquirer will have to watch for long term risks of securing and saving some of these big contracts.
So, the Satyam board is depends on big corporates to buy into Satyam and save it.
The valuations for Satyam will now depend on the stringent conditions put out by the Satyam board. But no matter what, in a market like this, even the Satyam board will have to be forgiving to a company willing to take the plunge by picking up Satyam.
Satyam to decide on qualification criteria for bidders
26 Feb 2009, ET Bureau
HYDERABAD: The Satyam board is likely to finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders at a crucial meeting on Thursday.
The board is expected to set experience in the IT sector and financial parameters like net worth as qualification criteria as it seeks to keep out ‘undesirable’ and ‘frivolous’ parties from the bidding, a person familiar with the situation told ET. Once the bidding criteria is decided, it will have to be approved by the Company Law Board, said the person. Similarly, the pricing norms will have to be approved by Sebi.
“Goldman Sachs and Avendus, the two board-appointed investment bankers, can formally begin the process of marketing the process to bidders once these approvals are secured,” added the source.
Though the IT factor will rule out standalone private equity firms, these entities can still make a joint bid with an IT firm. Another person familiar with the situation said such consortiums were already in the process of being formed. “We prefer the buyer to have some experience in the IT sector. Satyam is an intrinsically good firm with some reputed clients and competent employees. So we want the suitor to be interested in running the company in the long term and not cash out after short-term gains,” said a person privy to the move. He said if a private equity firm has to qualify in the bidding, it should prove it has a strong management team in place to run a big IT company like Satyam.
MARRIAGE PORTAL ON AGENDA
To finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders.
RIGHT FIT
Board is expected to insist on experience in IT sector and specify certain financial parameters such as minimum net worth. This is to weed out 'undesirable' and 'frivolous' parties from the bidding process. PE players can make only joint bids with software firms due to the IT experience factor.
HYDERABAD: The Satyam board is likely to finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders at a crucial meeting on Thursday.
The board is expected to set experience in the IT sector and financial parameters like net worth as qualification criteria as it seeks to keep out ‘undesirable’ and ‘frivolous’ parties from the bidding, a person familiar with the situation told ET. Once the bidding criteria is decided, it will have to be approved by the Company Law Board, said the person. Similarly, the pricing norms will have to be approved by Sebi.
“Goldman Sachs and Avendus, the two board-appointed investment bankers, can formally begin the process of marketing the process to bidders once these approvals are secured,” added the source.
Though the IT factor will rule out standalone private equity firms, these entities can still make a joint bid with an IT firm. Another person familiar with the situation said such consortiums were already in the process of being formed. “We prefer the buyer to have some experience in the IT sector. Satyam is an intrinsically good firm with some reputed clients and competent employees. So we want the suitor to be interested in running the company in the long term and not cash out after short-term gains,” said a person privy to the move. He said if a private equity firm has to qualify in the bidding, it should prove it has a strong management team in place to run a big IT company like Satyam.
MARRIAGE PORTAL ON AGENDA
To finalise the pricing guidelines for preferential allotment to a strategic investor and the criteria for shortlisting potential bidders.
RIGHT FIT
Board is expected to insist on experience in IT sector and specify certain financial parameters such as minimum net worth. This is to weed out 'undesirable' and 'frivolous' parties from the bidding process. PE players can make only joint bids with software firms due to the IT experience factor.
Tuesday, February 24, 2009
India Regulator Eases Takeover Rules Paving Way for Satyam Sale
India amended takeover rules for companies where the government replaces the board to save them from collapse, paving the way for Satyam Computer Services Ltd.’s state-appointed board to sell a stake to a strategic investor.
The guidelines will apply in cases where the new board has devised a plan that provides for continued operation in the interests of stakeholders, the Securities & Exchange Board of India said Feb. 13, when it announced the decision to ease norms.
The relaxation may make it easier for suitors including Larsen & Toubro Ltd., India’s biggest engineering company, to bid for Hyderabad-based Satyam, the software company at the center of India’s biggest fraud inquiry. The computer-services provider plans to start the search for a strategic investor this week, Chairman Kiran Karnik said yesterday.
The move comes after Satyam’s government-appointed board sought a waiver of the rules, which required buyers to offer to pay the higher of the average share price for the past 26 weeks or two weeks. The regulator would consider easing the takeover norms in “special cases,” Chairman C.B. Bhave said on Feb. 2.
India sacked Satyam’s interim board on Jan. 9, two days after the company’s founder and former chairman Ramalinga Raju said he had falsified accounts and inflated assets by more than $1 billion. Raju is currently in judicial custody and the company’s state-appointed board plans to expedite the sale to help restore investor confidence and stem client defections.
Satyam has lost 75 percent of its market value since Raju’s disclosure on Jan. 7 and was 0.7 percent higher at 44.15 rupees as of 10:11 a.m. in Mumbai trading. The benchmark Sensitive Index gained 1.4 percent.
The regulator also tightened rules for warrant subscriptions, raising the upfront payment for buying warrants to 25 percent from 10 percent. It also eased rules for pricing equity offerings by allowing companies to set the price two days before the opening date of a public offer.
Rules for free share offers were modified, with companies getting 15 days to complete transactions that don’t require shareholder approval. Offers that require approval are to be completed within 60 days. Earlier, companies could take six months to complete a bonus issue.
The guidelines will apply in cases where the new board has devised a plan that provides for continued operation in the interests of stakeholders, the Securities & Exchange Board of India said Feb. 13, when it announced the decision to ease norms.
The relaxation may make it easier for suitors including Larsen & Toubro Ltd., India’s biggest engineering company, to bid for Hyderabad-based Satyam, the software company at the center of India’s biggest fraud inquiry. The computer-services provider plans to start the search for a strategic investor this week, Chairman Kiran Karnik said yesterday.
The move comes after Satyam’s government-appointed board sought a waiver of the rules, which required buyers to offer to pay the higher of the average share price for the past 26 weeks or two weeks. The regulator would consider easing the takeover norms in “special cases,” Chairman C.B. Bhave said on Feb. 2.
India sacked Satyam’s interim board on Jan. 9, two days after the company’s founder and former chairman Ramalinga Raju said he had falsified accounts and inflated assets by more than $1 billion. Raju is currently in judicial custody and the company’s state-appointed board plans to expedite the sale to help restore investor confidence and stem client defections.
Satyam has lost 75 percent of its market value since Raju’s disclosure on Jan. 7 and was 0.7 percent higher at 44.15 rupees as of 10:11 a.m. in Mumbai trading. The benchmark Sensitive Index gained 1.4 percent.
The regulator also tightened rules for warrant subscriptions, raising the upfront payment for buying warrants to 25 percent from 10 percent. It also eased rules for pricing equity offerings by allowing companies to set the price two days before the opening date of a public offer.
Rules for free share offers were modified, with companies getting 15 days to complete transactions that don’t require shareholder approval. Offers that require approval are to be completed within 60 days. Earlier, companies could take six months to complete a bonus issue.
Maytas Infra diverted public money to group entities: Government
23 Feb 2009, PTI
NEW DELHI: The government has alleged that Maytas Infra has diverted money raised from public to the group companies owned by kin of disgraced The Great Fall of Satyam founder Chairman of scam-ridden Satyam B Ramalinga Raju.
"Substantial funds (raised through IPO by Maytas Infra) received in company's books of accounts have been diverted to group companies, associate concerns and subsidiaries. Most of the investments made are in the nature of interest-free loans and advances against the share application money," said the government in its petition before the Company Law Board (CLB).
The government's petition seeking dismissal of the existing board of Maytas Infra will come up for hearing on February 26.
The company had earlier raised Rs 327.45 crore through a public issue and charged a premium of Rs 360 on shares of face value of Rs 10 each.
The government also said that B Rama Raju, son of Ramalinga Raju, had admitted before the authorities that he had prior knowledge of the sale of Maytas Infra to Satyam, a deal which was aborted following pressure from Satyam shareholders.
The government further said in its petition that the "corporate veil" of the company should be lifted to see who are the persons in control of the affairs of Maytas Infra. "It will throw light on the present state of mismanagement, gross negligence and persistent financial irregularities into the running affairs of the company."
NEW DELHI: The government has alleged that Maytas Infra has diverted money raised from public to the group companies owned by kin of disgraced The Great Fall of Satyam founder Chairman of scam-ridden Satyam B Ramalinga Raju.
"Substantial funds (raised through IPO by Maytas Infra) received in company's books of accounts have been diverted to group companies, associate concerns and subsidiaries. Most of the investments made are in the nature of interest-free loans and advances against the share application money," said the government in its petition before the Company Law Board (CLB).
The government's petition seeking dismissal of the existing board of Maytas Infra will come up for hearing on February 26.
The company had earlier raised Rs 327.45 crore through a public issue and charged a premium of Rs 360 on shares of face value of Rs 10 each.
The government also said that B Rama Raju, son of Ramalinga Raju, had admitted before the authorities that he had prior knowledge of the sale of Maytas Infra to Satyam, a deal which was aborted following pressure from Satyam shareholders.
The government further said in its petition that the "corporate veil" of the company should be lifted to see who are the persons in control of the affairs of Maytas Infra. "It will throw light on the present state of mismanagement, gross negligence and persistent financial irregularities into the running affairs of the company."
Maytas suggests CLB-appointed director on company's board
24 Feb 2009, PTI
NEW DELHI: Maytas Properties, facing a takeover by the government, on Tuesday suggested that the Company Law Board should appoint a director on its board or put an observer, who would report directly to the quasi-judicial body.
During the proceedings before the CLB, Senior Advocate Mukul Rohatagi appearing for the company submitted, "The CLB should put an observer on the Maytas board, who would report to you, or appoint a director in the company."
But the deputy director appearing for the government opposed it and requested the CLB to direct to take over the board of the company, run by B Rama Raju, son of scam-tainted Ramalinga Raju of the Satyam Computer Services.
Raising suspicion over Satyam Computer's Rs 6,400-crore proposal to acquire Maytas, based on the valuation by audit firm Ernst & Young, the government said there was a clear nexus between father and son.
The accounting and audit firm E&Y had valued Maytas Properties at Rs 6,523 crore.
"How hollow this valuation is... As per our knowledge, the company does not have any land bank and this company, having a turnover of a mere Rs 22 crore, was valued at Rs 6,523 crore," submitted the government.
NEW DELHI: Maytas Properties, facing a takeover by the government, on Tuesday suggested that the Company Law Board should appoint a director on its board or put an observer, who would report directly to the quasi-judicial body.
During the proceedings before the CLB, Senior Advocate Mukul Rohatagi appearing for the company submitted, "The CLB should put an observer on the Maytas board, who would report to you, or appoint a director in the company."
But the deputy director appearing for the government opposed it and requested the CLB to direct to take over the board of the company, run by B Rama Raju, son of scam-tainted Ramalinga Raju of the Satyam Computer Services.
Raising suspicion over Satyam Computer's Rs 6,400-crore proposal to acquire Maytas, based on the valuation by audit firm Ernst & Young, the government said there was a clear nexus between father and son.
The accounting and audit firm E&Y had valued Maytas Properties at Rs 6,523 crore.
"How hollow this valuation is... As per our knowledge, the company does not have any land bank and this company, having a turnover of a mere Rs 22 crore, was valued at Rs 6,523 crore," submitted the government.
Cash crunch may hit Maytas' infrastructure projects
25 Feb 2009, ET Bureau
HYDERABAD: Maytas Infrastructure, the construction company promoted by B Ramalinga Raju (the jailed founder of Satyam Computer Services and his family, has decided to scale down activities at three of its verticals, oil & gas, water and transportation.
Succumbing to a cash crunch, coupled with the ongoing investigation and the realty slump, Maytas Infra has decided to scale down its operations significantly in these areas. However, when contacted, a Maytas Infra spokesperson denied this saying: “Funds requirement is a universal need and we will continually explore best possible modes.”
The spokesperson added: “There are no projects currently in hand for oil & gas sector. Transportation and buildings & structures (B&S) verticals have numerous ongoing projects. We are currently focusing on our ongoing projects.” The company declined to provide details on its current order book.
In the past, Maytas has executed orders close to Rs 1,500 crore in the oil & gas sector, Rs 319 crore in water sector and Rs 800 crore in the transportation vertical. An insider at Maytas Infra told ET, “Maytas Infra has been struggling to raise funds to execute its ongoing projects across verticals. The three verticals have been pruned and the staff working on site have been laid off.”
While irrigation and power are the only two operational verticals, the B&S vertical is battling to keep afloat due to cost and time overruns, the insider said. The company, which is functioning on a shoestring budget, has decided not to bid for new projects, as it is hardpressed for cash.
The revoking of bank guarantees by two of its major clients, Vedanta Alumina and Chennai-based Hirco, has also hit the company’s cash position. The progress of the irrigation projects has been impacted due to its inability to raise funds.
Maytas Infrastructure’s projects include the prestigious Hyderabad Metro (Rs 12,000 crore), 1,050-mw thermal power plant in Orissa (Rs 5,000 crore), Machilipatnam Port (Rs 1,650 crore) and Godavari Drinking Water Supply Scheme (Rs 810 crore). The Metro rail project and Machilipatnam port project are virtually off the table as the state government has decided to review all the projects awarded to the firm.
Maytas Infra’s proximity to Satyam has been the reason for its fall from grace, prompting the Union government to move to replace its board with a government-appointed one.
HYDERABAD: Maytas Infrastructure, the construction company promoted by B Ramalinga Raju (the jailed founder of Satyam Computer Services and his family, has decided to scale down activities at three of its verticals, oil & gas, water and transportation.
Succumbing to a cash crunch, coupled with the ongoing investigation and the realty slump, Maytas Infra has decided to scale down its operations significantly in these areas. However, when contacted, a Maytas Infra spokesperson denied this saying: “Funds requirement is a universal need and we will continually explore best possible modes.”
The spokesperson added: “There are no projects currently in hand for oil & gas sector. Transportation and buildings & structures (B&S) verticals have numerous ongoing projects. We are currently focusing on our ongoing projects.” The company declined to provide details on its current order book.
In the past, Maytas has executed orders close to Rs 1,500 crore in the oil & gas sector, Rs 319 crore in water sector and Rs 800 crore in the transportation vertical. An insider at Maytas Infra told ET, “Maytas Infra has been struggling to raise funds to execute its ongoing projects across verticals. The three verticals have been pruned and the staff working on site have been laid off.”
While irrigation and power are the only two operational verticals, the B&S vertical is battling to keep afloat due to cost and time overruns, the insider said. The company, which is functioning on a shoestring budget, has decided not to bid for new projects, as it is hardpressed for cash.
The revoking of bank guarantees by two of its major clients, Vedanta Alumina and Chennai-based Hirco, has also hit the company’s cash position. The progress of the irrigation projects has been impacted due to its inability to raise funds.
Maytas Infrastructure’s projects include the prestigious Hyderabad Metro (Rs 12,000 crore), 1,050-mw thermal power plant in Orissa (Rs 5,000 crore), Machilipatnam Port (Rs 1,650 crore) and Godavari Drinking Water Supply Scheme (Rs 810 crore). The Metro rail project and Machilipatnam port project are virtually off the table as the state government has decided to review all the projects awarded to the firm.
Maytas Infra’s proximity to Satyam has been the reason for its fall from grace, prompting the Union government to move to replace its board with a government-appointed one.
Monday, February 23, 2009
Why the hurry to marry Satyam off?
SEBI and the Company Law Board have shown great alacrity in the last few days, rewriting rules and granting exemptions from legal requirements to help Satyam find a new owner. Yet, with the restatement of the balance sheet still on, how will bidders and the new Board assess the worth of the company, asks RAGHUVIR SRINIVASAN.
The government appointed Board of Directors of Satyam Computer Services has made all the right moves in the last one month in its effort to first save the company from collapse, and then, get it back on its feet. Operating in an adverse atmosphere rife with rumours of customers walking away and imminent collapse of the company, the new Board has done remarkably well to bring Satyam to a stage where it can now hope to sell the company in one piece to a responsible buyer for a good price.
Yet the Board now faces its biggest, and most crucial, test in finalising a strategic buyer for the stricken company.
Even as the drama unfolds, the question that begs an answer is: Is it time to hand over the company to a strategic buyer?
The answer is: no. Satyam now is akin to a seriously ill patient who’s just been moved out of ICU into the nursing ward. How can one consider the patient’s marriage when she’s still in a delicate stage of convalescence?
Indeed, it is curious that at least four different buyers are in the race for Satyam even before its correct balance-sheet is drawn up. The restatement of its accounts is still on and it could be a few more weeks before the true financial picture is revealed.
Given this, how will the prospective buyers assess Satyam’s worth? What will the new Board base its asking price on? Surely not the current market price, because it is as misleading as the price based on SEBI’s open offer formula (average of the last six months’ market price).
Stabilising slowly
The market regulator, SEBI, and the Company Law Board have shown great alacrity in the last few days, rewriting rules and granting exemptions from legal requirements to help Satyam find a new owner. Why this seemingly unholy hurry among all concerned to marry Satyam off?
The company is gradually stabilising and this is the time for the Board to fully back the new CEO at the helm. Waiting for the operations to get back to normal and the balance sheet to be restated before inviting suitors does not appear to be a bad strategy at this point in time. Unless, of course, if it is feared that the restated balance sheet will reveal an ugly picture of Satyam’s real financial state.
Current indicators do not appear to point that way. Satyam’s business appears largely unhurt, even if a couple of its customers may have moved out.
It has actually bagged work-extensions and new orders worth $250 million in the period since the scandal became public.
The company has been able to meet its commitments to employees and vendors in the troubled period of the last month and has also been successful in securing bank funding of Rs 600 crore.
As the new Board has stated ad nauseam, the company has unencumbered assets in land and buildings and its employee count is what was stated at the time of its last financial results announcement in October, give or take a few due to natural attrition.
Yes, Satyam is certainly considerably lighter on cash assets as revealed in its last results but that does not make it a basket case that has to be sold off in a hurry.
Indeed, the considerable interest shown by the four suitors — L&T, B. K. Modi, Hinduja Group and Tech Mahindra — confirms that the value in Satyam, despite the plunder by Mr Ramalinga Raju, remains intact.
The prospective buyers seem to have either correctly assessed this or — as the L&T CEO Mr A. M. Naik said and got into trouble with SEBI for it — are privy to information not available in the public domain about Satyam’s correct financial position.
The urgency shown by at least two of them to bag the prize probably gives the game away. They seem to want to push through a deal at the lowest possible price, which is feasible only it is finalised now. And those concerned, the government, SEBI, CLB and indeed, even the new Board, seem to be wittingly or unwittingly helping the cause.
True value
In all this din, the public shareholder seems to have been forgotten. Consider the plight of shareholders who bought the Satyam stock even four months back when it was ruling at over Rs 300.
A deal with a strategic buyer, in the prevailing circumstances, may fetch them only a fraction of the price that they paid. Of course, equity investment is risky but will the price that they now get reflect the inherent, true value of Satyam?
There is thus, considerable responsibility riding on the shoulders of Satyam’s government-appointed Board.
On it devolves the onerous task of striking a balance between ensuring that Satyam gets a strong buyer who can take the company forward, and getting the best possible price from him for the existing minority shareholders.
Will Deepak Parekh and Co. succumb to the pressures from the prospective suitors and marry Satyam off in a hurry or will they wait and choose the best groom who can give her a good life? As in any arranged marriage, the elders — government and CLB — may well hold the answer.
Raghuvir Srinivasan B.L
The government appointed Board of Directors of Satyam Computer Services has made all the right moves in the last one month in its effort to first save the company from collapse, and then, get it back on its feet. Operating in an adverse atmosphere rife with rumours of customers walking away and imminent collapse of the company, the new Board has done remarkably well to bring Satyam to a stage where it can now hope to sell the company in one piece to a responsible buyer for a good price.
Yet the Board now faces its biggest, and most crucial, test in finalising a strategic buyer for the stricken company.
Even as the drama unfolds, the question that begs an answer is: Is it time to hand over the company to a strategic buyer?
The answer is: no. Satyam now is akin to a seriously ill patient who’s just been moved out of ICU into the nursing ward. How can one consider the patient’s marriage when she’s still in a delicate stage of convalescence?
Indeed, it is curious that at least four different buyers are in the race for Satyam even before its correct balance-sheet is drawn up. The restatement of its accounts is still on and it could be a few more weeks before the true financial picture is revealed.
Given this, how will the prospective buyers assess Satyam’s worth? What will the new Board base its asking price on? Surely not the current market price, because it is as misleading as the price based on SEBI’s open offer formula (average of the last six months’ market price).
Stabilising slowly
The market regulator, SEBI, and the Company Law Board have shown great alacrity in the last few days, rewriting rules and granting exemptions from legal requirements to help Satyam find a new owner. Why this seemingly unholy hurry among all concerned to marry Satyam off?
The company is gradually stabilising and this is the time for the Board to fully back the new CEO at the helm. Waiting for the operations to get back to normal and the balance sheet to be restated before inviting suitors does not appear to be a bad strategy at this point in time. Unless, of course, if it is feared that the restated balance sheet will reveal an ugly picture of Satyam’s real financial state.
Current indicators do not appear to point that way. Satyam’s business appears largely unhurt, even if a couple of its customers may have moved out.
It has actually bagged work-extensions and new orders worth $250 million in the period since the scandal became public.
The company has been able to meet its commitments to employees and vendors in the troubled period of the last month and has also been successful in securing bank funding of Rs 600 crore.
As the new Board has stated ad nauseam, the company has unencumbered assets in land and buildings and its employee count is what was stated at the time of its last financial results announcement in October, give or take a few due to natural attrition.
Yes, Satyam is certainly considerably lighter on cash assets as revealed in its last results but that does not make it a basket case that has to be sold off in a hurry.
Indeed, the considerable interest shown by the four suitors — L&T, B. K. Modi, Hinduja Group and Tech Mahindra — confirms that the value in Satyam, despite the plunder by Mr Ramalinga Raju, remains intact.
The prospective buyers seem to have either correctly assessed this or — as the L&T CEO Mr A. M. Naik said and got into trouble with SEBI for it — are privy to information not available in the public domain about Satyam’s correct financial position.
The urgency shown by at least two of them to bag the prize probably gives the game away. They seem to want to push through a deal at the lowest possible price, which is feasible only it is finalised now. And those concerned, the government, SEBI, CLB and indeed, even the new Board, seem to be wittingly or unwittingly helping the cause.
True value
In all this din, the public shareholder seems to have been forgotten. Consider the plight of shareholders who bought the Satyam stock even four months back when it was ruling at over Rs 300.
A deal with a strategic buyer, in the prevailing circumstances, may fetch them only a fraction of the price that they paid. Of course, equity investment is risky but will the price that they now get reflect the inherent, true value of Satyam?
There is thus, considerable responsibility riding on the shoulders of Satyam’s government-appointed Board.
On it devolves the onerous task of striking a balance between ensuring that Satyam gets a strong buyer who can take the company forward, and getting the best possible price from him for the existing minority shareholders.
Will Deepak Parekh and Co. succumb to the pressures from the prospective suitors and marry Satyam off in a hurry or will they wait and choose the best groom who can give her a good life? As in any arranged marriage, the elders — government and CLB — may well hold the answer.
Raghuvir Srinivasan B.L
Satyam gets nod to select buyer
22 Feb 2009, ET Bureau
Satyam Computer Services on Thursday won approval to increase its capital base and rope in strategic investors, setting the stage for
keenly-contested auction critical to ensure the company’s survival.
The Company Law Board (CLB) permitted the scandal-hit software company to raise its authorised capital to Rs 280 crore from Rs 160 crore, and allowed it to induct a strategic investor through a competitive auction process.
Engineering major L&T, Mahindra group firm Tech Mahindra and BK Modi-owned Spice Group are some of the suitors that have declared their interest in Satyam. The government-appointed board of Satyam is considering the option to impose a lock-in clause while making a preferential allotment to the strategic investor.
This is aimed at discouraging frivolous bidders from buying into the software firm. One option is to have a three-year lock-in on 26% of the preferential allotment of equity shares to be made to a strategic investor. Once a timeframe is finalised, the board will submit the plan to the CLB and then to SEBI.
Satyam Computer Services on Thursday won approval to increase its capital base and rope in strategic investors, setting the stage for
keenly-contested auction critical to ensure the company’s survival.
The Company Law Board (CLB) permitted the scandal-hit software company to raise its authorised capital to Rs 280 crore from Rs 160 crore, and allowed it to induct a strategic investor through a competitive auction process.
Engineering major L&T, Mahindra group firm Tech Mahindra and BK Modi-owned Spice Group are some of the suitors that have declared their interest in Satyam. The government-appointed board of Satyam is considering the option to impose a lock-in clause while making a preferential allotment to the strategic investor.
This is aimed at discouraging frivolous bidders from buying into the software firm. One option is to have a three-year lock-in on 26% of the preferential allotment of equity shares to be made to a strategic investor. Once a timeframe is finalised, the board will submit the plan to the CLB and then to SEBI.
Satyam may announce how to select strategic partner this week
NEW DELHI: The board of Satyam is likely to announce the details of the process of inviting strategic partners into the company by the end of this week, the Chairman of the board, Kiran Karnik, said today.
"As per the CLB order we will approach SEBI and by the end of this week we expect to make the process public and after that we will invite proposals from the interested parties," Karnik said.
While the board did not announce the process at yesterday's meeting, leading to possible suitors seeking details on this, Karnik said the process that "we have devised is first to get approval from the regulatory authority as per the direction of the CLB. We expect to get approval this week and make it public at the same time".
Karnik did not divulge whether the board has decided in favour of inducting a strategic minority partner or selling 51 per cent of the company's equity.
However, sources said the board has not favoured a 51 per cent stake sale of the company. "Whether it is minority or majority sale the company needs strong management and a strong buyer who can bring in leadership and funds," a source said.
"As per the CLB order we will approach SEBI and by the end of this week we expect to make the process public and after that we will invite proposals from the interested parties," Karnik said.
While the board did not announce the process at yesterday's meeting, leading to possible suitors seeking details on this, Karnik said the process that "we have devised is first to get approval from the regulatory authority as per the direction of the CLB. We expect to get approval this week and make it public at the same time".
Karnik did not divulge whether the board has decided in favour of inducting a strategic minority partner or selling 51 per cent of the company's equity.
However, sources said the board has not favoured a 51 per cent stake sale of the company. "Whether it is minority or majority sale the company needs strong management and a strong buyer who can bring in leadership and funds," a source said.
Sunday, February 22, 2009
Govt looks to boot out Maytas' firm
22 Feb 2009
The government on Tuesday moved the Company Law Board (CLB), seeking supersession of the boards of Maytas Infra and Maytas Properties, two firms
promoted by sons of Satyam Computer Services founder B Ramalinga Raju.
It sought CLB’s nod to nominate government directors on the boards of the two firms. The move is expected to ensure orderly running of the firms till a change in management is effected. The government's petition will be heard before the CLB on February 24.
The government on Tuesday moved the Company Law Board (CLB), seeking supersession of the boards of Maytas Infra and Maytas Properties, two firms
promoted by sons of Satyam Computer Services founder B Ramalinga Raju.
It sought CLB’s nod to nominate government directors on the boards of the two firms. The move is expected to ensure orderly running of the firms till a change in management is effected. The government's petition will be heard before the CLB on February 24.
Maytas Infrastructure: Weak foundation
22 Feb 2009
MUMBAI: The Maytas Infrastructure story began the moment the announcement was made to merge it with Satyam Computer. Two companies were involved in that process, the listed Maytas Infrastructure and the unlisted Maytas Properties.
That was in December last year and since then Maytas Infra has had no reprieve. Its share price has seen a free fall from Rs 485 on December 16 to Rs 51 on February 20. Margins were not paid for the shares that have been pledged by the promoters with institutions.
If the lender IL&FS transfers these shares in its name, then it could result in IFCI, IL&FS and Sicom owning a majority stake in the company. Media reports, in the recent past, have said that these institutions have expressed a desire to have a seat on Maytas’ board.
That’s not all. A large number of bank lenders have an exposure of about $1 billion, (Rs 5000 crore) in the form of loans and bank guarantees. Most of this are locked in special purpose vehicles created by Maytas. Understandably, the lenders are a worried lot.
Here’s the situation at Maytas today. The government has now moved the company law board (CLB) to oust the board of Maytas Infra. As per a Maytas Infra spokesperson, Maytas Infra Limited, had filed a Caveat before the Company Law Board against the ministry of corporate affairs (MCA) petition.
In pursuance of the Caveat, the ministry of corporate affairs has to serve a copy of the petition filed before the Company Law Board to Maytas Infra Limited before it is being heard. The Company Law Board has directed the counsel appearing on behalf of the government to serve a copy of the petition on Maytas Infra Limited, and has listed the matter for hearing on February 14. However, on request of Maytas Infra, the CLB has adjourned the hearing to February, 26, 2009.
A decision on this will be taken on February 24. “The government is totally within its right to move the CLB in the interest of the public and gain control of the company,” says Akil Hirani, Partner, Majmudar and Co.
The projects on hand
Maytas Infra, run by Ramalinga Raju’s son, Teja Raju, has several projects across sectors like water, transportation, energy and irrigation. This is in addition to the Hyderabad metro and airport projects and a large number of projects for which it is working in partnership in the BOT (Build, Operate and Transfer) category.
Maytas Infra had an order from JSW Steels, Bellary in Karnataka to build an industrial township, valued at Rs 54 crore. JSW Steels since then has dropped Maytas form the project. In response to a query from ET a Maytas Infra spokesperson replied, “Maytas Infra has not received any official communication from JSW in this regard.”
Infrastructure Development Department (IDD), government of Karnataka had selected a consortium of Maytas Infra, NCC Infrastructure Holdings Ltd (NCC) and VIE India Project Development and Holding LLC to develop and operate airports proposed at Gulbarga and Shimoga on a BOT basis at a cost of Rs 240 crore each.
ET Bureau
MUMBAI: The Maytas Infrastructure story began the moment the announcement was made to merge it with Satyam Computer. Two companies were involved in that process, the listed Maytas Infrastructure and the unlisted Maytas Properties.
That was in December last year and since then Maytas Infra has had no reprieve. Its share price has seen a free fall from Rs 485 on December 16 to Rs 51 on February 20. Margins were not paid for the shares that have been pledged by the promoters with institutions.
If the lender IL&FS transfers these shares in its name, then it could result in IFCI, IL&FS and Sicom owning a majority stake in the company. Media reports, in the recent past, have said that these institutions have expressed a desire to have a seat on Maytas’ board.
That’s not all. A large number of bank lenders have an exposure of about $1 billion, (Rs 5000 crore) in the form of loans and bank guarantees. Most of this are locked in special purpose vehicles created by Maytas. Understandably, the lenders are a worried lot.
Here’s the situation at Maytas today. The government has now moved the company law board (CLB) to oust the board of Maytas Infra. As per a Maytas Infra spokesperson, Maytas Infra Limited, had filed a Caveat before the Company Law Board against the ministry of corporate affairs (MCA) petition.
In pursuance of the Caveat, the ministry of corporate affairs has to serve a copy of the petition filed before the Company Law Board to Maytas Infra Limited before it is being heard. The Company Law Board has directed the counsel appearing on behalf of the government to serve a copy of the petition on Maytas Infra Limited, and has listed the matter for hearing on February 14. However, on request of Maytas Infra, the CLB has adjourned the hearing to February, 26, 2009.
A decision on this will be taken on February 24. “The government is totally within its right to move the CLB in the interest of the public and gain control of the company,” says Akil Hirani, Partner, Majmudar and Co.
The projects on hand
Maytas Infra, run by Ramalinga Raju’s son, Teja Raju, has several projects across sectors like water, transportation, energy and irrigation. This is in addition to the Hyderabad metro and airport projects and a large number of projects for which it is working in partnership in the BOT (Build, Operate and Transfer) category.
Maytas Infra had an order from JSW Steels, Bellary in Karnataka to build an industrial township, valued at Rs 54 crore. JSW Steels since then has dropped Maytas form the project. In response to a query from ET a Maytas Infra spokesperson replied, “Maytas Infra has not received any official communication from JSW in this regard.”
Infrastructure Development Department (IDD), government of Karnataka had selected a consortium of Maytas Infra, NCC Infrastructure Holdings Ltd (NCC) and VIE India Project Development and Holding LLC to develop and operate airports proposed at Gulbarga and Shimoga on a BOT basis at a cost of Rs 240 crore each.
ET Bureau
Is Suryanarayana Raju holed up in Chennai?
22 Feb 2009
HYDERABAD: Has B Suryanarayana Raju, the absconding sibling of Ramalinga Raju, fled to Chennai? Reliable sources indicate that Suryanarayana, who investigating agencies have been looking for since last week, is presently holed up in a guest house in the Tamil Nadu capital. The sources said that this information was passed on to the CID at the same time as it was to this newspaper on Monday evening.
Those close to the family said that Suryanarayana's disappearance was sudden. "He went by road as he feared he would be arrested if he took a flight apprehending police presence at the airport,'' said a source close to the family.
Suryanarayana Raju is the little known second brother of Ramalinga Raju, but is now being found to have been the pointsman for major land dealings. This is precisely why investigating agencies are looking for him. CID officials say that Suryanarayana can come in handy to determine the origin of the Satyam fraud and may even be able to give clues to the money missing from Satyam's balance sheets.
SRSR Holding's general manager D V Gopala Krishnam Raju who was questioned last week by cops has reportedly confessed that it was Suryanarayana Raju who had instructed him to shift and conceal all the land documents. This is why the CID has all the more reason to chase him down. Suryanarayana was a director of this company, whose office was raided .
The CID had started looking for Suryanarayana last week, when it also raided his offices and residence. However, the younger sibling of Ramalinga Raju was "not accessible'' to them. Sources close to the family could not ascertain when exactly Suryanarayana would have fled from Hyderabad.
Nevertheless, it was also learnt that the guest house where Suryanarayana is being put up belongs to a relative of the Raju family. Sources close to the family guessed that Suryanarayana would have gone in a friend's car since all his vehicles remain parked at his residence in Satyam Enclave on the Medchal highway. Some family members were even looking for the driver who drove Suryanarayana to Chennai.
While the other two Raju brothers have held centrestage all these years, Suryanarayana Raju's role is said to have been limited to handling land dealings and liaising with politicians to get deals done. The third Raju did not study as much as his brothers who flaunt degrees from international universities.
Meanwhile, father-in-law of Rama Raju (senior) D S Raju who lives in Sundaram block has also moved out of the building after the marathon raids conducted by the CID there. Residents of Ramaraja Nagar said that his house was locked and he was not to be seen for the last two days.
HYDERABAD: Has B Suryanarayana Raju, the absconding sibling of Ramalinga Raju, fled to Chennai? Reliable sources indicate that Suryanarayana, who investigating agencies have been looking for since last week, is presently holed up in a guest house in the Tamil Nadu capital. The sources said that this information was passed on to the CID at the same time as it was to this newspaper on Monday evening.
Those close to the family said that Suryanarayana's disappearance was sudden. "He went by road as he feared he would be arrested if he took a flight apprehending police presence at the airport,'' said a source close to the family.
Suryanarayana Raju is the little known second brother of Ramalinga Raju, but is now being found to have been the pointsman for major land dealings. This is precisely why investigating agencies are looking for him. CID officials say that Suryanarayana can come in handy to determine the origin of the Satyam fraud and may even be able to give clues to the money missing from Satyam's balance sheets.
SRSR Holding's general manager D V Gopala Krishnam Raju who was questioned last week by cops has reportedly confessed that it was Suryanarayana Raju who had instructed him to shift and conceal all the land documents. This is why the CID has all the more reason to chase him down. Suryanarayana was a director of this company, whose office was raided .
The CID had started looking for Suryanarayana last week, when it also raided his offices and residence. However, the younger sibling of Ramalinga Raju was "not accessible'' to them. Sources close to the family could not ascertain when exactly Suryanarayana would have fled from Hyderabad.
Nevertheless, it was also learnt that the guest house where Suryanarayana is being put up belongs to a relative of the Raju family. Sources close to the family guessed that Suryanarayana would have gone in a friend's car since all his vehicles remain parked at his residence in Satyam Enclave on the Medchal highway. Some family members were even looking for the driver who drove Suryanarayana to Chennai.
While the other two Raju brothers have held centrestage all these years, Suryanarayana Raju's role is said to have been limited to handling land dealings and liaising with politicians to get deals done. The third Raju did not study as much as his brothers who flaunt degrees from international universities.
Meanwhile, father-in-law of Rama Raju (senior) D S Raju who lives in Sundaram block has also moved out of the building after the marathon raids conducted by the CID there. Residents of Ramaraja Nagar said that his house was locked and he was not to be seen for the last two days.
Raju may have invested abroad
22 Feb 2009
HYDERABAD: The Crime Investigation Department (CID) is likely to have a tough time in unearthing Satyam founder B Ramalinga Raju's accounts and properties in foreign countries. Satyam has operations and offices in 65 countries spread across several continents.
The investigating agency has gathered preliminary information that Satyam has been maintaining accounts in 17 countries. The officials suspect Ramalinga Raju might have diverted funds from Satyam and invested in some firms and bank accounts in those countries.
"Many foreign nations do not allow outside investigating agencies to probe in their countries. If any country requests its counterparts, they depute a team of police officials which will investigate based on the information provided by CID,'' a CID officer said.
Even if CID follows the normal procedures and protocol to route the request through the Interpol to the respective government, it might take more than a year, sources said.
Officials say apart from unearthing benami accounts and firms, it is also important to get information about bank accounts, investments and properties in foreign countries in the over Rs 7,800 crore fraud.
"Our investigations revealed that Raju inflated the head count of employees with Satyam. Apart from checking the employee database, information pertaining to accounts and properties need to be checked in various countries,'' a police officer said.
"This information is crucial for establishing the tainted money trail - diversion of funds, fudging of accounts and fraud - since criminal cases have been booked against the Satyam top brass," a CID officer said.
The CID, which has started parallel investigations in the fudging of accounts by Ramalinga Raju, his brother Rama Raju and others with SEBI and SFIO, fears the Centre might not move fast on their request.
To carry out a probe in a foreign country, the Andhra Pradesh police have to obtain Letters Rogatory (Letter of Request) from the court hearing the case. For this, the investigating officials have to provide prima facie information that Ramalinga Raju and Satyam have accounts and assets in foreign countries. After getting the Letters Rogatory, it has to be sent to the respective country through Interpol in New Delhi. This communication needs clearance from the Union home ministry and the external affairs ministry. The letter would be sent to the Indian Embassy of that country which will forward it to the government concerned through external affairs ministry of that country.
"As of now, we are scrutinising documents and information collected from various offices here. Once we get some clarity, we will formulate a plan on how to go about investigation in foreign countries,'' a senior CID official said.
HYDERABAD: The Crime Investigation Department (CID) is likely to have a tough time in unearthing Satyam founder B Ramalinga Raju's accounts and properties in foreign countries. Satyam has operations and offices in 65 countries spread across several continents.
The investigating agency has gathered preliminary information that Satyam has been maintaining accounts in 17 countries. The officials suspect Ramalinga Raju might have diverted funds from Satyam and invested in some firms and bank accounts in those countries.
"Many foreign nations do not allow outside investigating agencies to probe in their countries. If any country requests its counterparts, they depute a team of police officials which will investigate based on the information provided by CID,'' a CID officer said.
Even if CID follows the normal procedures and protocol to route the request through the Interpol to the respective government, it might take more than a year, sources said.
Officials say apart from unearthing benami accounts and firms, it is also important to get information about bank accounts, investments and properties in foreign countries in the over Rs 7,800 crore fraud.
"Our investigations revealed that Raju inflated the head count of employees with Satyam. Apart from checking the employee database, information pertaining to accounts and properties need to be checked in various countries,'' a police officer said.
"This information is crucial for establishing the tainted money trail - diversion of funds, fudging of accounts and fraud - since criminal cases have been booked against the Satyam top brass," a CID officer said.
The CID, which has started parallel investigations in the fudging of accounts by Ramalinga Raju, his brother Rama Raju and others with SEBI and SFIO, fears the Centre might not move fast on their request.
To carry out a probe in a foreign country, the Andhra Pradesh police have to obtain Letters Rogatory (Letter of Request) from the court hearing the case. For this, the investigating officials have to provide prima facie information that Ramalinga Raju and Satyam have accounts and assets in foreign countries. After getting the Letters Rogatory, it has to be sent to the respective country through Interpol in New Delhi. This communication needs clearance from the Union home ministry and the external affairs ministry. The letter would be sent to the Indian Embassy of that country which will forward it to the government concerned through external affairs ministry of that country.
"As of now, we are scrutinising documents and information collected from various offices here. Once we get some clarity, we will formulate a plan on how to go about investigation in foreign countries,'' a senior CID official said.
Satyam to invite takeover bids, fire auditor PW
Satyam's new board on Saturday decided to invite bids from strategic investors to steer the company and fire its statutory auditor Price Waterhouse, which failed to detect a massive accounting fraud in the IT giant.
The decision of the government-appointed board will allow suitors to make formal offers to acquire Satyam, whose books, according to its founder B Ramalinga Raju, was fudged for many years.
Engineering giant Larsen and Toubro has acquired over 12 per cent stake in Satyam through open market transactions, while BK Modi-led Spice Corp has said it was interested in acquiring a controlling 51 per cent stake in the IT major -- ranked the fourth largest before the fraud came to light.
The Company Law Board on Thursday gave its nod for sale of a minimum 26 per cent stake in Satyam.
A statement from Satyam said the board, chaired by Kiran Karnik, also recommended to the government the removal of auditor Price Waterhouse and appointment of a new bookkeeper.
PW's partners S Gopalakrishnan and Talluri Srinivas, who were handling the Satyam account, are currently in judicial custody awaiting trial.
The statement also said Satyam has received new orders worth US$ 250 in the last seven weeks.
The decision of the government-appointed board will allow suitors to make formal offers to acquire Satyam, whose books, according to its founder B Ramalinga Raju, was fudged for many years.
Engineering giant Larsen and Toubro has acquired over 12 per cent stake in Satyam through open market transactions, while BK Modi-led Spice Corp has said it was interested in acquiring a controlling 51 per cent stake in the IT major -- ranked the fourth largest before the fraud came to light.
The Company Law Board on Thursday gave its nod for sale of a minimum 26 per cent stake in Satyam.
A statement from Satyam said the board, chaired by Kiran Karnik, also recommended to the government the removal of auditor Price Waterhouse and appointment of a new bookkeeper.
PW's partners S Gopalakrishnan and Talluri Srinivas, who were handling the Satyam account, are currently in judicial custody awaiting trial.
The statement also said Satyam has received new orders worth US$ 250 in the last seven weeks.
Friday, February 20, 2009
Govt wants Satyam to offer 51% to strategic investor
New Delhi February 21, 2009
Wants to ensure sufficient funds for working expenses, class action suit; board in favour of 26%.
The government is understood to be in favour of selling a 51 per cent stake in the beleaguered Satyam Computer Services, so that the ailing firm can raise sufficient funds to meet its working capital expenses and liabilities from the class-action suits.
This assumes significance because the six-member government-nominated board was in favour of Satyam divesting a 26 per cent shareholding, on the assumption that there would not be a sufficient number of bidders.
If the government’s view prevails, a successful bidder would have to pay between Rs 4,000 crore and Rs 5,000 crore for the 51 per cent stake. Acquisition of an additional 20 per cent shareholding through an open offer would be over and above these conditions, said sources close to the development.
The board is expected to take a final decision to this effect early next week.
The actions follow Company Law Board (CLB) approval yesterday for Satyam to sell equity to a strategic investor. In its order, the CLB said the strategic investor should be selected through an open-bidding process that will be overseen by a retired High Court chief or a Supreme Court judge.
The ministry of company affairs, sources noted, is in favour of these conditions since the ailing company needs sufficient funds to refurbish its balance sheet. The government, it is learnt, is also of the view that the strategic investor should bring in sufficient funds into the company to meet any eventuality that may arise out of the 13 class action suits filed in the United States.
If the board decides to invite bids for 51 per cent, Satyam will have to issue around 697 million shares of Rs 2 each to expand the capital base from the current base of 670 million shares. At the average market price of around Rs 50, the deal would fetch around Rs 3,500 crore.
On the other hand, if the company divests only 26 per cent, it would have to issue only 235 million shares and raise only Rs 1,200 crore, which may not be sufficient, sources said.
Moreover, if Satyam divests 51 per cent, the average share price for the open offer would be lower than if the company divests 26 per cent (because in this case, the shareholder would benefit rather than the company, since the pricing would be more aggressive).
Satyam board member Tarun Das recently revealed that six or seven companies — both Indian and global IT, manufacturing and PE firms — have approached the firm for a complete buyout. To evaluate this, the company’s legal advisors Amarchand Mangaldas have appointed KPMG and Deloitte, who will give their findings in six weeks.
The strategic investors include Larsen and Toubro (which now has a 12 per cent stake in Satyam and has invested around Rs 670 crore in the company so far), Tech Mahindra, Aegis BPO (which is only interested in the BPO business), and the iGate-PE combine. L&T, in fact, has categorically expressed its interest to the government in acquiring management control in Satyam.
Wants to ensure sufficient funds for working expenses, class action suit; board in favour of 26%.
The government is understood to be in favour of selling a 51 per cent stake in the beleaguered Satyam Computer Services, so that the ailing firm can raise sufficient funds to meet its working capital expenses and liabilities from the class-action suits.
This assumes significance because the six-member government-nominated board was in favour of Satyam divesting a 26 per cent shareholding, on the assumption that there would not be a sufficient number of bidders.
If the government’s view prevails, a successful bidder would have to pay between Rs 4,000 crore and Rs 5,000 crore for the 51 per cent stake. Acquisition of an additional 20 per cent shareholding through an open offer would be over and above these conditions, said sources close to the development.
The board is expected to take a final decision to this effect early next week.
The actions follow Company Law Board (CLB) approval yesterday for Satyam to sell equity to a strategic investor. In its order, the CLB said the strategic investor should be selected through an open-bidding process that will be overseen by a retired High Court chief or a Supreme Court judge.
The ministry of company affairs, sources noted, is in favour of these conditions since the ailing company needs sufficient funds to refurbish its balance sheet. The government, it is learnt, is also of the view that the strategic investor should bring in sufficient funds into the company to meet any eventuality that may arise out of the 13 class action suits filed in the United States.
If the board decides to invite bids for 51 per cent, Satyam will have to issue around 697 million shares of Rs 2 each to expand the capital base from the current base of 670 million shares. At the average market price of around Rs 50, the deal would fetch around Rs 3,500 crore.
On the other hand, if the company divests only 26 per cent, it would have to issue only 235 million shares and raise only Rs 1,200 crore, which may not be sufficient, sources said.
Moreover, if Satyam divests 51 per cent, the average share price for the open offer would be lower than if the company divests 26 per cent (because in this case, the shareholder would benefit rather than the company, since the pricing would be more aggressive).
Satyam board member Tarun Das recently revealed that six or seven companies — both Indian and global IT, manufacturing and PE firms — have approached the firm for a complete buyout. To evaluate this, the company’s legal advisors Amarchand Mangaldas have appointed KPMG and Deloitte, who will give their findings in six weeks.
The strategic investors include Larsen and Toubro (which now has a 12 per cent stake in Satyam and has invested around Rs 670 crore in the company so far), Tech Mahindra, Aegis BPO (which is only interested in the BPO business), and the iGate-PE combine. L&T, in fact, has categorically expressed its interest to the government in acquiring management control in Satyam.
Prabhu urges govt to merge Raju’s unlisted cos with Satyam
20 Feb 2009, ET Bureau
NEW DELHI: Pressure is mounting on the government to merge all the unlisted companies of the scam-tainted Satyam founder Ramalinga Raju with Satyam Computer Services, so that the assets of these unlisted companies acquired using money probably siphoned off from Satyam will come back to the software maker.
Former Cabinet minister and a member of the Parliamentary standing committee on finance, that looks into the Satyam scam, Suresh Prabhu has told the ministry of corporate affairs that the assets of all unlisted companies of Raju family should go to Satyam to salvage the software company struggling to raise funds to retain its employees and deliver projects on time.
“To make the firm creditworthy and to raise funds, it needs assets. The real solution is to merge Satyam with all the unlisted companies of the promoters’ family, including Maytas Properties,” Mr Prabhu told ET.
The chartered accountant-turned parliamentarian also said that freezing the assets of the Raju family will only lead to their eventual erosion of value, which may not help in reviving Satyam. Instead, if these companies are merged with Satyam, its balance sheet gets strengthened with assets.
“The charge (rights) of lenders over the assets of these companies will remain, in spite of a merger,” said Mr Prabhu. It is better for the lenders to have rights over the assets of company with stronger balance sheet, he added. Raju, too, had attempted to make Satyam acquire Maytas Properties and Maytas Infrastructure in a bid to replace the fictitious assets of Satyam with real assets, as per his own January 7 admission.
The government has already asked its specialised investigating agency Serious Fraud Investigation Office (SFIO) to probe into 325 companies connected with Satyam’s arrested founder Ramalinga Raju and family, in addition to companies like Maytas Properties (unlisted) and Maytas Infrastructure, a listed company run by the promoter family.
The government has also moved CLB to replace the board of directors of Maytas Infrastructure, which is executing the Hyderabad Metro Rail project. The CLB will hear the matter on February 24.
NEW DELHI: Pressure is mounting on the government to merge all the unlisted companies of the scam-tainted Satyam founder Ramalinga Raju with Satyam Computer Services, so that the assets of these unlisted companies acquired using money probably siphoned off from Satyam will come back to the software maker.
Former Cabinet minister and a member of the Parliamentary standing committee on finance, that looks into the Satyam scam, Suresh Prabhu has told the ministry of corporate affairs that the assets of all unlisted companies of Raju family should go to Satyam to salvage the software company struggling to raise funds to retain its employees and deliver projects on time.
“To make the firm creditworthy and to raise funds, it needs assets. The real solution is to merge Satyam with all the unlisted companies of the promoters’ family, including Maytas Properties,” Mr Prabhu told ET.
The chartered accountant-turned parliamentarian also said that freezing the assets of the Raju family will only lead to their eventual erosion of value, which may not help in reviving Satyam. Instead, if these companies are merged with Satyam, its balance sheet gets strengthened with assets.
“The charge (rights) of lenders over the assets of these companies will remain, in spite of a merger,” said Mr Prabhu. It is better for the lenders to have rights over the assets of company with stronger balance sheet, he added. Raju, too, had attempted to make Satyam acquire Maytas Properties and Maytas Infrastructure in a bid to replace the fictitious assets of Satyam with real assets, as per his own January 7 admission.
The government has already asked its specialised investigating agency Serious Fraud Investigation Office (SFIO) to probe into 325 companies connected with Satyam’s arrested founder Ramalinga Raju and family, in addition to companies like Maytas Properties (unlisted) and Maytas Infrastructure, a listed company run by the promoter family.
The government has also moved CLB to replace the board of directors of Maytas Infrastructure, which is executing the Hyderabad Metro Rail project. The CLB will hear the matter on February 24.
Satyam's board meets to discuss CLB's go ahead for sale
21 Feb 2009, PTI
HYDERABAD: The board of Satyam Computer Services began its meeting here on Saturday to discuss the process of finding a strategic partner after getting the Company Law Board's nod recently.
"The board meeting has started," a company spokesperson said.
The board would discuss the CLB's approval and consider induction of a strategic partner in the IT company, Satyam Chairman Kiran Karnik has said yesterday.
A number of suitors, including engineering giant Larsen & Toubro and Spice Group, have evinced interest in acquiring stake in the fraud-hit IT company.
HYDERABAD: The board of Satyam Computer Services began its meeting here on Saturday to discuss the process of finding a strategic partner after getting the Company Law Board's nod recently.
"The board meeting has started," a company spokesperson said.
The board would discuss the CLB's approval and consider induction of a strategic partner in the IT company, Satyam Chairman Kiran Karnik has said yesterday.
A number of suitors, including engineering giant Larsen & Toubro and Spice Group, have evinced interest in acquiring stake in the fraud-hit IT company.
Maytas still selling land
Maytas Infra, Maytas Properties and their subsidiaries are still completing transactions with the government looking the other way. Nine transactions were registered on Thursday, and at least 30 properties have been sold in a month.
Sources in the revenue department said that the higher ups in the government had given the green signal for registrations of the land deals even after the Serious Fraud Investigation Office, the Sebi, the company affairs ministry and income tax departments issued prohibitory orders.
After the arrest of Mr Gopala Krishnam Raju , the person in-charge of land dealings of Maytas, Mr Kanumuri V.V. Krishnam Raju , has taken over his post. He, along with Mr M. Teja Pratap Raju, representative of Maytas Properties, has been registering the lands to private parties.
This newspaper has found out several registrations that were conducted even after the ban was imposed. On January 27, Mr Krishnam Raju and Mr Teja Pratap Raju registered a property to Mr Muunooori Srinivasa Raju at Kutbullapur sub-registrar office with file no. 00482/2009 and documents numbering P 449144.
As per the documents, Mr Krishnam Raju represents Swarnamuki Greenfields and Mr Teja Pratap Raju Maytas Properties.
The concerned property at Medchal Mandal was owned by Maytas Properties along with 13 other front companies including Swarnamuki, Himagiri, Sindhu , Goman, Nagavali, Vindya, Swarnagiri, Konar, Warda, Medravati, Yamuna, Vamsadara and Uttarashada agro and Greenfield. Though Mr Krishnam Raju and Mr Teja Pratap Raju were present, nobody else attended on behalf of the remaining 12 firms. The modus operandi was simple. Certain persons gave representations to the commissioner of registrations complaining that they had paid money to Maytas Properties and had entered into agreements, but the registrations were stalled because of the ban.
On February 5, Mr V.S.N. Raju made a representation for registration followed by another representation by Mr R.V.V. Prasada Raju. There were many other representations, some of them thought to be fictitious.
Following this, registrations were undertaken on February 5,10,12,17 and 18. “Yesterday (Thursday_ there were nine transactions and Mr Krishnam Raju attended all of them,” said a revenue official. “This month he completed 25-30 transactions.”
The sub-registrar wrote a letter to the commissioner on February 4 asking for further clarification on the transactions of Maytas. Surprisingly, after this letter was written, transactions resumed again.
Sources in the revenue department said that the higher ups in the government had given the green signal for registrations of the land deals even after the Serious Fraud Investigation Office, the Sebi, the company affairs ministry and income tax departments issued prohibitory orders.
After the arrest of Mr Gopala Krishnam Raju , the person in-charge of land dealings of Maytas, Mr Kanumuri V.V. Krishnam Raju , has taken over his post. He, along with Mr M. Teja Pratap Raju, representative of Maytas Properties, has been registering the lands to private parties.
This newspaper has found out several registrations that were conducted even after the ban was imposed. On January 27, Mr Krishnam Raju and Mr Teja Pratap Raju registered a property to Mr Muunooori Srinivasa Raju at Kutbullapur sub-registrar office with file no. 00482/2009 and documents numbering P 449144.
As per the documents, Mr Krishnam Raju represents Swarnamuki Greenfields and Mr Teja Pratap Raju Maytas Properties.
The concerned property at Medchal Mandal was owned by Maytas Properties along with 13 other front companies including Swarnamuki, Himagiri, Sindhu , Goman, Nagavali, Vindya, Swarnagiri, Konar, Warda, Medravati, Yamuna, Vamsadara and Uttarashada agro and Greenfield. Though Mr Krishnam Raju and Mr Teja Pratap Raju were present, nobody else attended on behalf of the remaining 12 firms. The modus operandi was simple. Certain persons gave representations to the commissioner of registrations complaining that they had paid money to Maytas Properties and had entered into agreements, but the registrations were stalled because of the ban.
On February 5, Mr V.S.N. Raju made a representation for registration followed by another representation by Mr R.V.V. Prasada Raju. There were many other representations, some of them thought to be fictitious.
Following this, registrations were undertaken on February 5,10,12,17 and 18. “Yesterday (Thursday_ there were nine transactions and Mr Krishnam Raju attended all of them,” said a revenue official. “This month he completed 25-30 transactions.”
The sub-registrar wrote a letter to the commissioner on February 4 asking for further clarification on the transactions of Maytas. Surprisingly, after this letter was written, transactions resumed again.
CLB adjourns hearing on Maytas boards till Feb 26
The Company Law Board on Friday adjourned the hearing on the takeover of the boards of Maytas Infra and Maytas Properties -- two companies promoted by the kin of former Satyam Computer Chairman B Ramalinga Raju -- till February 26.
Admitting the application of Matyas Infra and Teja Raju, the Company Law Board (CLB) adjourned the dates after the counsel appearing for them requested more time.
Senior advocate U K Choudhary, appearing for Matyas Infra, submitted before the CLB that he recieved the required papers and documents on Thursday only and so he needs 2-3 days more to go through them.
On this, CLB Chairman S Balasubramaniam told the government representative that “you have not served all the copies and papers ... I expect you to serve (them) immediately and you know tomorrow is Saturday.”
However, a deputy director appearing for the government opposed the request and said that the petitions and documents were served by the RoC Hyderabad office at the company’s headquarters.
Earlier this week, the government had moved the CLB to take over the boards of the two Matyas firms. However, the CLB declined to pass the order and directed the government to serve the copies to the companies and had enlisted the matter for hearing on February 24.
Admitting the application of Matyas Infra and Teja Raju, the Company Law Board (CLB) adjourned the dates after the counsel appearing for them requested more time.
Senior advocate U K Choudhary, appearing for Matyas Infra, submitted before the CLB that he recieved the required papers and documents on Thursday only and so he needs 2-3 days more to go through them.
On this, CLB Chairman S Balasubramaniam told the government representative that “you have not served all the copies and papers ... I expect you to serve (them) immediately and you know tomorrow is Saturday.”
However, a deputy director appearing for the government opposed the request and said that the petitions and documents were served by the RoC Hyderabad office at the company’s headquarters.
Earlier this week, the government had moved the CLB to take over the boards of the two Matyas firms. However, the CLB declined to pass the order and directed the government to serve the copies to the companies and had enlisted the matter for hearing on February 24.
IL&FS asks SEBI to widen circuit-filter limit on Maytas Infra
20 Feb 2009,
MUMBAI: Infrastructure Leasing & Finance Services (IL&FS) has written to the capital market regulator Sebi to widen the circuit-filter limit on the Maytas Infrastructure stock from the existing 5% to 15%.
IL &FS feels that the widening the limit would help create a free market for Maytas Infrastructure shares and thus help it to exit from the company. The disgraced Raju family has pledged 37% stake in Maytas Infra with IL&FS. The financial institution also has Rs 300 crore exposure to the company.
“We do not understand why there is a 5% circuit filter on this scrip when there are some scrips which have circuit filters as high as 10% and 15% and some which have none at all,” a source close to the IL&FS board said requesting anonymity.
This person said that with a 5% filter, the Maytas Infrastructure stock moves up by only Rs 2 or Rs 2.5, thereby preventing any real trading on the stock. IL&FS hopes to exit the company by unloading its shares in tranches. In fact, IL&FS has already opened talks with private equity players to buy out its stake in the company.
Meanwhile, post the government’s decision to supersede the Maytas board, both IL&FS and IFCI, institutional shareholders of the company have started sending feelers to gain a seat on the new board.
IL&FS is now awaiting the February 24 hearing, when the Company Law Board will take a view on constitution of a new board for Maytas. The person quoted earlier said that IL&FS would not mind exiting Maytas shares if the government or the existing promoters shortlist an outside investor.
On Thursday, Maytas Infrastructure slipped 5% to close at Rs 53.65.
ET Bureau
MUMBAI: Infrastructure Leasing & Finance Services (IL&FS) has written to the capital market regulator Sebi to widen the circuit-filter limit on the Maytas Infrastructure stock from the existing 5% to 15%.
IL &FS feels that the widening the limit would help create a free market for Maytas Infrastructure shares and thus help it to exit from the company. The disgraced Raju family has pledged 37% stake in Maytas Infra with IL&FS. The financial institution also has Rs 300 crore exposure to the company.
“We do not understand why there is a 5% circuit filter on this scrip when there are some scrips which have circuit filters as high as 10% and 15% and some which have none at all,” a source close to the IL&FS board said requesting anonymity.
This person said that with a 5% filter, the Maytas Infrastructure stock moves up by only Rs 2 or Rs 2.5, thereby preventing any real trading on the stock. IL&FS hopes to exit the company by unloading its shares in tranches. In fact, IL&FS has already opened talks with private equity players to buy out its stake in the company.
Meanwhile, post the government’s decision to supersede the Maytas board, both IL&FS and IFCI, institutional shareholders of the company have started sending feelers to gain a seat on the new board.
IL&FS is now awaiting the February 24 hearing, when the Company Law Board will take a view on constitution of a new board for Maytas. The person quoted earlier said that IL&FS would not mind exiting Maytas shares if the government or the existing promoters shortlist an outside investor.
On Thursday, Maytas Infrastructure slipped 5% to close at Rs 53.65.
ET Bureau
IFCI ready to take up important role in Maytas Infra
19 Feb 2009 ET Bureau
CHENNAI: IFCI, which holds 17.44% stake in troubled firm Maytas Infrastructure, has asserted that it is competent to run the Hyderabad-based company, which was founded by disgraced Satyam founder Ramalinga Raju's family.
The institution made the investment in Maytas in October 2008, just one and half months before the Satyam fiasco rocked India's corporate world.
"The government has taken the first step by announcing the re-constitution of the board, since the present management of the company would not be in the position to run the show. It is up to the government to hand over the job to us," IFCI's chairman and MD, Atul Kumar Rai at the sidelines of the inauguration of IFIN corporate office here on Thursday.
"If given responsibility, we are ready to don the role," he said, adding, till then the institution would play the role of minority shareholder with responsibilities. "IFCI as an institution has done it earlier with very many companies," he further added.
"If we are overlooked, we have to play the role of 17.44%," Mr Rai said. But he was clear the company should first clear its links with Satyam. "Maytas must first get its name cleared from Satyam. Then we can see what we can do from investors point of view," Mr Rai added,
On L&T and IFCI showing interest to run Satyam and Maytas respectively, he said, "It is two different cases. L&T utilised market condition to increase its share in Satyam, while we already have 17.44% in Maytas even before the problem started." The institution has already revoked guarantee on a Rs 95 crore that Maytas got from ICICI.
CHENNAI: IFCI, which holds 17.44% stake in troubled firm Maytas Infrastructure, has asserted that it is competent to run the Hyderabad-based company, which was founded by disgraced Satyam founder Ramalinga Raju's family.
The institution made the investment in Maytas in October 2008, just one and half months before the Satyam fiasco rocked India's corporate world.
"The government has taken the first step by announcing the re-constitution of the board, since the present management of the company would not be in the position to run the show. It is up to the government to hand over the job to us," IFCI's chairman and MD, Atul Kumar Rai at the sidelines of the inauguration of IFIN corporate office here on Thursday.
"If given responsibility, we are ready to don the role," he said, adding, till then the institution would play the role of minority shareholder with responsibilities. "IFCI as an institution has done it earlier with very many companies," he further added.
"If we are overlooked, we have to play the role of 17.44%," Mr Rai said. But he was clear the company should first clear its links with Satyam. "Maytas must first get its name cleared from Satyam. Then we can see what we can do from investors point of view," Mr Rai added,
On L&T and IFCI showing interest to run Satyam and Maytas respectively, he said, "It is two different cases. L&T utilised market condition to increase its share in Satyam, while we already have 17.44% in Maytas even before the problem started." The institution has already revoked guarantee on a Rs 95 crore that Maytas got from ICICI.
Wednesday, February 18, 2009
Lobbying begins for Maytas Infra board seats
19 Feb 2009,
HYDERABAD: Hectic lobbying for board seats in Maytas Infra has begun, a day after the government decided to move the Company Law Board (CLB) to oust the current board of Maytas Infra. IFCI, which holds 17% stake in Maytas Infra, on Wednesday pitched for a seat on the new board of Maytas Infra, whenever it is reconstituted. “The existing management faces a crisis of confidence, and we are keen on getting a representation in a non-partisan board not aligned with any interest,” said a senior IFCI official.
IFCI, along with IL&FS and Maharashtra government-run Sicom, hold close to a majority stake in the firm. The three financial institutions came to own the stake of the promoters, who pledged their shares and were unable to meet margin calls.
Last month, IL&FS too had sought a representation on the board citing concerns over the orderly running of Maytas Infra, a firm linked to the disgraced promoter of Satyam Computer Services B Ramalinga Raju. The proposal was backed by banks that have a huge exposure in Maytas Infra. But these institutional lenders will not be able to off-load their stakes till stability is restored in the company, said sources.
Maytas Infra is strapped of funds after Icra downgraded the ratings it had assigned to the debt programmes and bank facilities of the firm. Lenders are desperately looking at ways to protect their exposure to the company. A consortium of banks are on course to set up a supervisory committee to oversee the functioning of Maytas Infra, said a senior banker.
A consortium of 19 banks, which includes two of the country’s largest banks — State Bank of India and ICICI Bank — have lent over Rs 5,000 crore to the company. A senior official from a large bank said their primary focus was to ensure that the clients of Maytas do not cancel contracts midway. Secondly, they also want to ensure that Maytas Infra completes the projects on hand within the stipulated time.
Bankers to Maytas Infra are also considering the appointment of an independent auditor to re-assess the company’s balance sheet. “Maytas Infra does not have much of assets and liabilities on its books. They have spun off different special purpose vehicles (SPVs) for different projects.
There are over 50 SPVs, as they have won at least 62 contracts in various sectors. If we have to get back our money, we have to see to it the clients do not walk out of Maytas mid-way, and the existing contracts are completed. For this, we need a committee to oversee the operations of SPV,” said a senior banker in the consortium.
Last week, the Bombay High Court had dismissed a joint ICICI Bank-IDBI Bank appeal seeking an injunction on the various parties dealing with Maytas Infra. Bankers wanted a status quo, apprehending that clients of Maytas may terminate their contracts and guarantees given by banks would be invoked.
ET Bureau
HYDERABAD: Hectic lobbying for board seats in Maytas Infra has begun, a day after the government decided to move the Company Law Board (CLB) to oust the current board of Maytas Infra. IFCI, which holds 17% stake in Maytas Infra, on Wednesday pitched for a seat on the new board of Maytas Infra, whenever it is reconstituted. “The existing management faces a crisis of confidence, and we are keen on getting a representation in a non-partisan board not aligned with any interest,” said a senior IFCI official.
IFCI, along with IL&FS and Maharashtra government-run Sicom, hold close to a majority stake in the firm. The three financial institutions came to own the stake of the promoters, who pledged their shares and were unable to meet margin calls.
Last month, IL&FS too had sought a representation on the board citing concerns over the orderly running of Maytas Infra, a firm linked to the disgraced promoter of Satyam Computer Services B Ramalinga Raju. The proposal was backed by banks that have a huge exposure in Maytas Infra. But these institutional lenders will not be able to off-load their stakes till stability is restored in the company, said sources.
Maytas Infra is strapped of funds after Icra downgraded the ratings it had assigned to the debt programmes and bank facilities of the firm. Lenders are desperately looking at ways to protect their exposure to the company. A consortium of banks are on course to set up a supervisory committee to oversee the functioning of Maytas Infra, said a senior banker.
A consortium of 19 banks, which includes two of the country’s largest banks — State Bank of India and ICICI Bank — have lent over Rs 5,000 crore to the company. A senior official from a large bank said their primary focus was to ensure that the clients of Maytas do not cancel contracts midway. Secondly, they also want to ensure that Maytas Infra completes the projects on hand within the stipulated time.
Bankers to Maytas Infra are also considering the appointment of an independent auditor to re-assess the company’s balance sheet. “Maytas Infra does not have much of assets and liabilities on its books. They have spun off different special purpose vehicles (SPVs) for different projects.
There are over 50 SPVs, as they have won at least 62 contracts in various sectors. If we have to get back our money, we have to see to it the clients do not walk out of Maytas mid-way, and the existing contracts are completed. For this, we need a committee to oversee the operations of SPV,” said a senior banker in the consortium.
Last week, the Bombay High Court had dismissed a joint ICICI Bank-IDBI Bank appeal seeking an injunction on the various parties dealing with Maytas Infra. Bankers wanted a status quo, apprehending that clients of Maytas may terminate their contracts and guarantees given by banks would be invoked.
ET Bureau
Maytas Infra contests Centre’s move
HYDERABAD: Maytas Infra has decided to contest the move of the Union Government to supersede its board of directors and filed a caveat in the Company Law Board (CLB) seeking copies of the petition filed by the Centre on Wednesday.
The company, which is headed by B. Teja Raju, elder son of former chairman of Satyam Computer Services B. Ramalinga Raju ran into trouble after Satyam announced its proposal to acquire 51 per cent controlling stake in Maytas Infra on December 16, 2008.
A statement by the company said that the Ministry of Corporate Affairs (MCA) had approached the CLB and filed a petition on Tuesday seeking change in the board of directors of Maytas Infra.
The company, in turn, filed a caveat before the CLB, according to which the MCA would have to serve a copy of the petition before it was heard.
The bench of the CLB directed the counsel for the Government to serve a copy of the petition on Maytas Infra and listed the matter for hearing on February 24.
Maytas Infra has not yet received any copy of such petition till date. However, the company has decided to contest the said petition.
Maytas Infra had increased its turnover from Rs. 151 crore in 2004-05 to Rs. 1,764 crore in 2007-08. Following the fraud cast on Satyam Computer surfaced, most of the directors on the board of Maytas Infra resigned. Its CEO P. K. Madhav stepped down following his arrest in the Nagarjuna Finance case last month.
Sources said that even Maytas Properties, a privately-held company promoted by Mr. Raju’s younger son, Rama Raju Jr., is planning to challenge the move of the Centre.
The company, which is headed by B. Teja Raju, elder son of former chairman of Satyam Computer Services B. Ramalinga Raju ran into trouble after Satyam announced its proposal to acquire 51 per cent controlling stake in Maytas Infra on December 16, 2008.
A statement by the company said that the Ministry of Corporate Affairs (MCA) had approached the CLB and filed a petition on Tuesday seeking change in the board of directors of Maytas Infra.
The company, in turn, filed a caveat before the CLB, according to which the MCA would have to serve a copy of the petition before it was heard.
The bench of the CLB directed the counsel for the Government to serve a copy of the petition on Maytas Infra and listed the matter for hearing on February 24.
Maytas Infra has not yet received any copy of such petition till date. However, the company has decided to contest the said petition.
Maytas Infra had increased its turnover from Rs. 151 crore in 2004-05 to Rs. 1,764 crore in 2007-08. Following the fraud cast on Satyam Computer surfaced, most of the directors on the board of Maytas Infra resigned. Its CEO P. K. Madhav stepped down following his arrest in the Nagarjuna Finance case last month.
Sources said that even Maytas Properties, a privately-held company promoted by Mr. Raju’s younger son, Rama Raju Jr., is planning to challenge the move of the Centre.
Maytas Infra set to oppose government move in CLB
19 Feb 2009
HYDERABAD: In a rearguard action, the management of Maytas Infra has decided to contest the Department of Company Affairs petition to supersede the board of directors and takeover the management of the company. The opposition from Maytas Infra will be expressed at the Company Law Board (CLB) when the matter comes up for hearing on Febraury 24, a press release from the company suggested. The press release said that the company has already filed a caveat before the CLB and sought a copy of the DCA application. However as of yet, Maytas Infra has not yet got a copy of this.
Analysts were surprised to hear Maytas' contention and averred that this was a last ditch effort by the Rajus to save at least part of their empire. "Ramalinga Raju knows that Satyam has slipped out of his hands. He probably wants to at least save Maytas," an analyst said. Lawyers were not ready to guess the line that would be taken by the Rajus before the CLB but averred that they could argue that it would be unfair to tarnish Maytas with the same brush as Satyam. They would also argue that there was nothing found in the investigations to suggest wrong doing in the company. " And if something wrong has been found why a police complaint hasn't been filed, they might argue," analysts said.
There was however no release from Maytas Properties suggesting that they too would file a similar caveat before the CLB. But analysts did not rule out the possibility of this happening.
Incidentally the entire shareholdings of the Rajus in Maytas Infra has been pledged to financial institutions. Since the Rajus are apparently in no position to buy back these shares, the companies can be said to be promotorless. But analysts however wondered if the Rajus still owned some equity in Maytas Infra through some body corporates. This could be the basis for their contention for allowing them to remain as promoters.
Government of Andhra Pradesh representatives who had been meeting the whole of Wednesday to figure out the fall out of the Department of Company Affairs bid to takeover the company, remained non committal on their stand on the whole affair, including the rearguard action by the Rajus.
As of now, Ramalinga's elder son Teja is the acting chairman of Maytas. There are two other directors: one of them has been inducted last fortnight, while the other is a radiologist from the US.
HYDERABAD: In a rearguard action, the management of Maytas Infra has decided to contest the Department of Company Affairs petition to supersede the board of directors and takeover the management of the company. The opposition from Maytas Infra will be expressed at the Company Law Board (CLB) when the matter comes up for hearing on Febraury 24, a press release from the company suggested. The press release said that the company has already filed a caveat before the CLB and sought a copy of the DCA application. However as of yet, Maytas Infra has not yet got a copy of this.
Analysts were surprised to hear Maytas' contention and averred that this was a last ditch effort by the Rajus to save at least part of their empire. "Ramalinga Raju knows that Satyam has slipped out of his hands. He probably wants to at least save Maytas," an analyst said. Lawyers were not ready to guess the line that would be taken by the Rajus before the CLB but averred that they could argue that it would be unfair to tarnish Maytas with the same brush as Satyam. They would also argue that there was nothing found in the investigations to suggest wrong doing in the company. " And if something wrong has been found why a police complaint hasn't been filed, they might argue," analysts said.
There was however no release from Maytas Properties suggesting that they too would file a similar caveat before the CLB. But analysts did not rule out the possibility of this happening.
Incidentally the entire shareholdings of the Rajus in Maytas Infra has been pledged to financial institutions. Since the Rajus are apparently in no position to buy back these shares, the companies can be said to be promotorless. But analysts however wondered if the Rajus still owned some equity in Maytas Infra through some body corporates. This could be the basis for their contention for allowing them to remain as promoters.
Government of Andhra Pradesh representatives who had been meeting the whole of Wednesday to figure out the fall out of the Department of Company Affairs bid to takeover the company, remained non committal on their stand on the whole affair, including the rearguard action by the Rajus.
As of now, Ramalinga's elder son Teja is the acting chairman of Maytas. There are two other directors: one of them has been inducted last fortnight, while the other is a radiologist from the US.
Maytas likely to lose Karnataka airport projects
19 Feb 2009, ET Bureau
BANGALORE: Maytas Infra, headed by fraud-hit Satyam’s former chief Ramalinga Raju’s son Teja Raju, is on the way out from Karnataka’s two ambitious infrastructure projects of building airports in chief minister BS Yeddyurappa’s home district of Shimoga and Gulbarga.
The company, which had emerged as the successful bidders, as part of a consortia with Nagarjuna Construction Company (NCC) and Vienna International Airport’s arm VIE India Project Development and Holding LLC for building the two airports would be issued notices on terminating the contracts, as it had not shown any interest in implementation.
Briefing reporters on the decisions taken at the state cabinet meeting, primary and secondary education minister Vishweshwar Hegde Kageri said that the government would take appropriate decisions on retendering after completion of the formalities in cancelling the Maytas tender.
Maytas Infra and NCC were to hold 37% each, with VIE holding 26%, in the two airport ventures. Both the projects envisaged an initial investment of Rs 50 crore each and were to be set up in 650 acres of land. However, the state cabinet has approved construction of an approach road to the Shimoga airport project at a cost of Rs 18 crore, with Rs 5.40 crore to be released immediately.
BANGALORE: Maytas Infra, headed by fraud-hit Satyam’s former chief Ramalinga Raju’s son Teja Raju, is on the way out from Karnataka’s two ambitious infrastructure projects of building airports in chief minister BS Yeddyurappa’s home district of Shimoga and Gulbarga.
The company, which had emerged as the successful bidders, as part of a consortia with Nagarjuna Construction Company (NCC) and Vienna International Airport’s arm VIE India Project Development and Holding LLC for building the two airports would be issued notices on terminating the contracts, as it had not shown any interest in implementation.
Briefing reporters on the decisions taken at the state cabinet meeting, primary and secondary education minister Vishweshwar Hegde Kageri said that the government would take appropriate decisions on retendering after completion of the formalities in cancelling the Maytas tender.
Maytas Infra and NCC were to hold 37% each, with VIE holding 26%, in the two airport ventures. Both the projects envisaged an initial investment of Rs 50 crore each and were to be set up in 650 acres of land. However, the state cabinet has approved construction of an approach road to the Shimoga airport project at a cost of Rs 18 crore, with Rs 5.40 crore to be released immediately.
Satyam probe: CBI to team up with ministries, institutions
CBI took over the case one day before the Lok Sabha is to discuss the scam, which has shaken investors and raised questions over India’s corporate governance standards
New Delhi: The Central Bureau of Investigation (CBI) will assemble a “multi-dimensional” team to probe the Rs7,136 crore fraud at software maker Satyam Computer Services Ltd.
CBI, India’s premier investigating agency, took over the investigation of the country’s biggest accounting fraud on Wednesday.
Jigsaw puzzle: A file photo of Satyam founder B. Ramalinga Raju (right) seen through a car windscreen as state criminal investigation department takes him in custody in Hyderabad on 18 January. Mahesh Kumar A / AP“A joint consultative and coordinating mechanism is being worked out with concerned ministries, departments and institutions for providing necessary assistance to CBI,” a spokesperson for the agency said.
CBI took over the case one day before the Lok Sabha is to discuss the scam, which has shaken investors and raised questions over India’s corporate governance standards. Minister for corporate affairs P.C. Gupta is likely to reply to the discussion.
The investigating team that CBI is forming will be based in Hyderabad, home to Satyam, whose founder and former chairman B. Ramalinga Raju, brother and former managing director B. Rama Raju and former chief financial officer Srinivas Vadlamani are in a jail in the city after being arrested in connection with the swindle.
With the case being transferred to it from the crime investigation department of the Andhra Pradesh police, CBI can gain custody of Raju for up to nine days to question him over the scam. CBI officials who didn’t want to be named said records and other material associated with the Satyam probe were being taken over by the agency, which would register a case soon.
Raju was arrested after confessing on 7 January that he had been cooking the company’s books over several years by inflating revenue and profit and creating fictitious profits.
The Andhra Pradesh Police, the Serious Fraud Investigation Office, market regulator Securities and Exchange Board of India (Sebi) and the Institute of Chartered Accountants of India, the country’s main accounting body, and the Income-tax (I-T) department are involved in probing various aspects of the Satyam fraud.
A local court in Hyderabad on Wednesday allowed the I-T department to interrogate Raju on 21 February. Sebi officials questioned and recorded the statement of Raju and his brother for three days from 4 February in Hyderabad’s Chanchalguda jail.
Bail petitions filed by the Raju brothers and Vadlamani were dismissed by the court, which also allowed Sebi to question the former chief financial officer and former Price Waterhouse partners S. Gopalakrishan and Talluri Srinivas, also arrested in connection with the scam.
Satyam’s accounts are being examined by the audit firms Deloitte Touche Tohmatsu and KPMG, whose India chief operating officer Richard Rekhy said the restatement of accounts could take as long as six months. “It is not a one-year account, you have to go back three-four years...,” Rekhy said.
The Central government dissolved Satyam’s board and appointed directors led by Kiran Karnik, former president of the industry body National Association of Software and Service Companies, after the scandal broke. On Tuesday, the government decided to supersede the boards of Maytas Infra Ltd and Maytas Properties Ltd, firms promoted by members of the Raju family.
Maytas Infra shares rose Rs2.70, or 5%, to Rs56.70 on Wednesday as investors cheered the news. Maytas Infra said in a statement that it will contest the government’s move to remove the construction firm’s directors before the Company Law Board.
The Andhra Pradesh government said it will not act in haste against Maytas Infra. “The government will not cancel the projects awarded to Maytas just because the management is changing. The agreement has been signed with the company and it would be responsible for carrying the projects forward,” state finance minister K. Rosaiah said.
Among the main projects awarded to Maytas Infra and its joint venture partners is the Rs12,200-crore Hyderabad Metro Rail, for which financial closure is supposed to be achieved by March-end.
In a separate development, Union labour minister Oscar Fernandes said Satyam has 43,622 workers, citing the records of the government’s pension fund authority.
On Tuesday, corporate affairs minister Gupta told lawmakers that Satyam has 53,000 workers, adding that the government had no knowledge of bogus workers.
The Hyderabad-based company padded employee numbers to siphon off cash, a prosecutor alleged at a hearing last month.
Satyam employees earning more than Rs6,500 a month can opt not to join the government-run pension fund, according to the Employees’ Provident Fund Organization’s rules. Overseas employees of Satyam also aren’t required to join the pension plan.
New Delhi: The Central Bureau of Investigation (CBI) will assemble a “multi-dimensional” team to probe the Rs7,136 crore fraud at software maker Satyam Computer Services Ltd.
CBI, India’s premier investigating agency, took over the investigation of the country’s biggest accounting fraud on Wednesday.
Jigsaw puzzle: A file photo of Satyam founder B. Ramalinga Raju (right) seen through a car windscreen as state criminal investigation department takes him in custody in Hyderabad on 18 January. Mahesh Kumar A / AP“A joint consultative and coordinating mechanism is being worked out with concerned ministries, departments and institutions for providing necessary assistance to CBI,” a spokesperson for the agency said.
CBI took over the case one day before the Lok Sabha is to discuss the scam, which has shaken investors and raised questions over India’s corporate governance standards. Minister for corporate affairs P.C. Gupta is likely to reply to the discussion.
The investigating team that CBI is forming will be based in Hyderabad, home to Satyam, whose founder and former chairman B. Ramalinga Raju, brother and former managing director B. Rama Raju and former chief financial officer Srinivas Vadlamani are in a jail in the city after being arrested in connection with the swindle.
With the case being transferred to it from the crime investigation department of the Andhra Pradesh police, CBI can gain custody of Raju for up to nine days to question him over the scam. CBI officials who didn’t want to be named said records and other material associated with the Satyam probe were being taken over by the agency, which would register a case soon.
Raju was arrested after confessing on 7 January that he had been cooking the company’s books over several years by inflating revenue and profit and creating fictitious profits.
The Andhra Pradesh Police, the Serious Fraud Investigation Office, market regulator Securities and Exchange Board of India (Sebi) and the Institute of Chartered Accountants of India, the country’s main accounting body, and the Income-tax (I-T) department are involved in probing various aspects of the Satyam fraud.
A local court in Hyderabad on Wednesday allowed the I-T department to interrogate Raju on 21 February. Sebi officials questioned and recorded the statement of Raju and his brother for three days from 4 February in Hyderabad’s Chanchalguda jail.
Bail petitions filed by the Raju brothers and Vadlamani were dismissed by the court, which also allowed Sebi to question the former chief financial officer and former Price Waterhouse partners S. Gopalakrishan and Talluri Srinivas, also arrested in connection with the scam.
Satyam’s accounts are being examined by the audit firms Deloitte Touche Tohmatsu and KPMG, whose India chief operating officer Richard Rekhy said the restatement of accounts could take as long as six months. “It is not a one-year account, you have to go back three-four years...,” Rekhy said.
The Central government dissolved Satyam’s board and appointed directors led by Kiran Karnik, former president of the industry body National Association of Software and Service Companies, after the scandal broke. On Tuesday, the government decided to supersede the boards of Maytas Infra Ltd and Maytas Properties Ltd, firms promoted by members of the Raju family.
Maytas Infra shares rose Rs2.70, or 5%, to Rs56.70 on Wednesday as investors cheered the news. Maytas Infra said in a statement that it will contest the government’s move to remove the construction firm’s directors before the Company Law Board.
The Andhra Pradesh government said it will not act in haste against Maytas Infra. “The government will not cancel the projects awarded to Maytas just because the management is changing. The agreement has been signed with the company and it would be responsible for carrying the projects forward,” state finance minister K. Rosaiah said.
Among the main projects awarded to Maytas Infra and its joint venture partners is the Rs12,200-crore Hyderabad Metro Rail, for which financial closure is supposed to be achieved by March-end.
In a separate development, Union labour minister Oscar Fernandes said Satyam has 43,622 workers, citing the records of the government’s pension fund authority.
On Tuesday, corporate affairs minister Gupta told lawmakers that Satyam has 53,000 workers, adding that the government had no knowledge of bogus workers.
The Hyderabad-based company padded employee numbers to siphon off cash, a prosecutor alleged at a hearing last month.
Satyam employees earning more than Rs6,500 a month can opt not to join the government-run pension fund, according to the Employees’ Provident Fund Organization’s rules. Overseas employees of Satyam also aren’t required to join the pension plan.
CLB directs govt to issue notices to Maytas firms
February 19, 2009
The Company Law Board (CLB) today directed the government to issue notices to Maytas Infra and Maytas Properties to present their cases in response to the caveat the two firms had filed last week against any ex parte decision by the government.
Yesterday, the government had moved the CLB to supersede their boards but the CLB could take no action due to the ex parte (that is, a decision after hearing the plea of just one party) caveat. The two companies, which said they have decided to contest the decision, will get a chance to present their views on February 24, after which the principal bench of the CLB will take a decision.
Both firms (Maytas is Satyam spelt backward) are owned by the family of the disgraced former chairman of Satyam Computer Services, B Ramalinga Raju, who admitted to a Rs 7,800 crore financial fraud in January. Maytas Infrastructure is listed on the stock markets.
"The CLB has directed the government to issue notices to the caveators along with a copy of petition," a CLB official told Business Standard. Unlike the Satyam case, where the CLB took an ex parte decision based on the confessional letter of Ramalinga Raju, there are more people involved with the overall operations of the company. So, an ex parte decision cannot be taken, said the official.
Both these companies will have the option of filing an appeal to the high court under Section 10F of the Companies Act, the official added. Any person aggrieved by any CLB decision may file an appeal in the high court within 60 days from the date of communication of the decision or the order.
If the CLB favours the government move to supersede the board of Maytas Infrastructure, it will help a potential acquirer to avail of the exemption given by market regulator Securities and Exchange Board of India (Sebi) to takeover a distressed company, said a banker.
Last week, Sebi had made it mandatory that any company’s board — which seeks an exemption from the average of last six month’s price to issue fresh shares on a private placement basis — first needs to be superseded by the government.
According to a leading firm which has significant exposure in the company, the move will help them protect the company. “Without superseding the board, it would be difficult to find a suitor for the company, which in turn would have affected the prospect of all the projects that need fresh funds,” the banker said, adding “the company is implementing many important infrastructure projects and has also borrowed over Rs 5,000 crore from banks”.
Meanwhile, the Andhra Pradesh government today said it would not hesitate to terminate projects awarded to Maytas Infra if the need arises. It, however, would also not act in haste and the effort would be to protect the interests of the state, according to state finance minister K Rosaiah.
“The government will not cancel the projects given to Maytas just because the management is changing. The government has signed the agreement with the company and it would be responsible for carrying forward the projects,’’ he told reporters in Hyderabad today.
The government has awarded over Rs 36,000 crore infrastructure projects to Maytas Infra either individually or through joint ventures and consortiums. The company is supposed to achieve financial closure for the Rs 12,000-crore Hyderabad Metro Rail project on March 17. The state finance minister, however, did not respond to a query on whether the government would extend the financial closure deadline in view of the latest developments.
The change in the management at the company might delay the implementation of various projects but would not jeopardise them, the minister said. “There would be costs that the government would have to pay if it was the first one to terminate the contracts, which have been awarded following due procedures,” he pointed out.
Satyam developments: Meanwhile, the sixth additional chief metropolitan magistrate today dismissed the bail plea of Satyam founder B Ramalinga Raju, his brother B Rama Raju and former chief financial officer Srinivas Vadlamani. The court also allowed the Income-Tax department to question Ramalinga Raju on February 21. The I-T department said it would confront Ramalinga Raju with the documents already submitted to the department. It would try to establish the veracity of the various documents.
Earlier in the day, the court allowed Sebi to record the statements of Srinivas Vadlamani today and Price Waterhouse auditors S Gopalakrishnan and Srinivas Talluri on February 19. Following this, the Sebi counsel filed a petition saying that half day had lapsed when the court pronounced its orders and that it required more time to question the former CFO. Later, the court said SEBI could question Vadlamani on February 20.
Meanwhile, the counsel for Price Waterhouse auditors filed a fresh bail petitionfor them.
The Company Law Board (CLB) today directed the government to issue notices to Maytas Infra and Maytas Properties to present their cases in response to the caveat the two firms had filed last week against any ex parte decision by the government.
Yesterday, the government had moved the CLB to supersede their boards but the CLB could take no action due to the ex parte (that is, a decision after hearing the plea of just one party) caveat. The two companies, which said they have decided to contest the decision, will get a chance to present their views on February 24, after which the principal bench of the CLB will take a decision.
Both firms (Maytas is Satyam spelt backward) are owned by the family of the disgraced former chairman of Satyam Computer Services, B Ramalinga Raju, who admitted to a Rs 7,800 crore financial fraud in January. Maytas Infrastructure is listed on the stock markets.
"The CLB has directed the government to issue notices to the caveators along with a copy of petition," a CLB official told Business Standard. Unlike the Satyam case, where the CLB took an ex parte decision based on the confessional letter of Ramalinga Raju, there are more people involved with the overall operations of the company. So, an ex parte decision cannot be taken, said the official.
Both these companies will have the option of filing an appeal to the high court under Section 10F of the Companies Act, the official added. Any person aggrieved by any CLB decision may file an appeal in the high court within 60 days from the date of communication of the decision or the order.
If the CLB favours the government move to supersede the board of Maytas Infrastructure, it will help a potential acquirer to avail of the exemption given by market regulator Securities and Exchange Board of India (Sebi) to takeover a distressed company, said a banker.
Last week, Sebi had made it mandatory that any company’s board — which seeks an exemption from the average of last six month’s price to issue fresh shares on a private placement basis — first needs to be superseded by the government.
According to a leading firm which has significant exposure in the company, the move will help them protect the company. “Without superseding the board, it would be difficult to find a suitor for the company, which in turn would have affected the prospect of all the projects that need fresh funds,” the banker said, adding “the company is implementing many important infrastructure projects and has also borrowed over Rs 5,000 crore from banks”.
Meanwhile, the Andhra Pradesh government today said it would not hesitate to terminate projects awarded to Maytas Infra if the need arises. It, however, would also not act in haste and the effort would be to protect the interests of the state, according to state finance minister K Rosaiah.
“The government will not cancel the projects given to Maytas just because the management is changing. The government has signed the agreement with the company and it would be responsible for carrying forward the projects,’’ he told reporters in Hyderabad today.
The government has awarded over Rs 36,000 crore infrastructure projects to Maytas Infra either individually or through joint ventures and consortiums. The company is supposed to achieve financial closure for the Rs 12,000-crore Hyderabad Metro Rail project on March 17. The state finance minister, however, did not respond to a query on whether the government would extend the financial closure deadline in view of the latest developments.
The change in the management at the company might delay the implementation of various projects but would not jeopardise them, the minister said. “There would be costs that the government would have to pay if it was the first one to terminate the contracts, which have been awarded following due procedures,” he pointed out.
Satyam developments: Meanwhile, the sixth additional chief metropolitan magistrate today dismissed the bail plea of Satyam founder B Ramalinga Raju, his brother B Rama Raju and former chief financial officer Srinivas Vadlamani. The court also allowed the Income-Tax department to question Ramalinga Raju on February 21. The I-T department said it would confront Ramalinga Raju with the documents already submitted to the department. It would try to establish the veracity of the various documents.
Earlier in the day, the court allowed Sebi to record the statements of Srinivas Vadlamani today and Price Waterhouse auditors S Gopalakrishnan and Srinivas Talluri on February 19. Following this, the Sebi counsel filed a petition saying that half day had lapsed when the court pronounced its orders and that it required more time to question the former CFO. Later, the court said SEBI could question Vadlamani on February 20.
Meanwhile, the counsel for Price Waterhouse auditors filed a fresh bail petitionfor them.
SEBI quizzing of Satyam accused starts
18 Feb 2009, PTI
HYDERABAD: The Sixth Additional Chief Metropolitan Magistrate on Wednesday allowed SEBI to quiz Satyam Computer's former CFO Vadlamani Srinivas and
ex-Price Waterhouse partners S Gopalakrishan and Talluri Srinivas.
The permission was granted on a petition by market regulator SEBI.
While the interrogation of V Srinivas has already begun and will continue till afternoon, the Price Waterhouse auditors would be grilled tomorrow, in the presence of their counsels.
Satyam Computer founder Ramalinga Raju, his brother Rama Raju, the company's former CFO Vadlamani Srinivas and the two auditors are in judicial custody in connection with the Rs 7,800-crore accounting fraud in the IT company.
Earlier, on the direction of the Supreme Court, the market regulator interrogated and recorded the statements of B Ramalinga Raju and his brother Rama Raju for three days from February 4 at the Chanchalguda jail here.
Satyam buyer may emerge by Feb end: Parekh
HYDERABAD: The Sixth Additional Chief Metropolitan Magistrate on Wednesday allowed SEBI to quiz Satyam Computer's former CFO Vadlamani Srinivas and
ex-Price Waterhouse partners S Gopalakrishan and Talluri Srinivas.
The permission was granted on a petition by market regulator SEBI.
While the interrogation of V Srinivas has already begun and will continue till afternoon, the Price Waterhouse auditors would be grilled tomorrow, in the presence of their counsels.
Satyam Computer founder Ramalinga Raju, his brother Rama Raju, the company's former CFO Vadlamani Srinivas and the two auditors are in judicial custody in connection with the Rs 7,800-crore accounting fraud in the IT company.
Earlier, on the direction of the Supreme Court, the market regulator interrogated and recorded the statements of B Ramalinga Raju and his brother Rama Raju for three days from February 4 at the Chanchalguda jail here.
Satyam buyer may emerge by Feb end: Parekh
Satyam buyer may emerge by Feb end: Parekh
17 Feb 2009, REUTERS
NEW DELHI: Buyers for fraud-hit Satyam Computer Services are likely to emerge by the end of February, a senior board member said on Tuesday.
Asked whether he saw any buyer coming forward for Satyam, Deepak Parekh said: "Yes. By the end of this month."
Last week Satyam said it would accelerate plans to find a suitor after India's market regulator amended takeover rules.
Satyam is looking to trim the number of its senior managers, a company spokeswoman said as the cash-starved outsourcer plans to find a suitor.
"Two managers have gone. We do not have a number but it is likely more will go," Archana Muthappa, head of media relations in India said over telephone. "It is part of a rationalisation of the organisation structure."
She declined to put a time frame for the process but said the government appointed board was discussing it.
The two officials who have quit are Subu D Subramanian, global head of manufacturing and automotives division and Anil Kumar, a senior vice-president at Satyam's financial services division, she said.
Satyam, India's fourth-largest outsourcer, is battling for survival since Jan. 7 when its founder Ramalinga Raju quit as chairman revealing profits have been falsified for years and $1 billion of cash and bank balances did not exist in the country's biggest corporate scandal.
The government dissolved Satyam's board and appointed six directors to save Satyam and its 50,000 employees. The new board has appointed Goldman Sachs and Avendus, an Indian investment bank, to help find potential investors.
NEW DELHI: Buyers for fraud-hit Satyam Computer Services are likely to emerge by the end of February, a senior board member said on Tuesday.
Asked whether he saw any buyer coming forward for Satyam, Deepak Parekh said: "Yes. By the end of this month."
Last week Satyam said it would accelerate plans to find a suitor after India's market regulator amended takeover rules.
Satyam is looking to trim the number of its senior managers, a company spokeswoman said as the cash-starved outsourcer plans to find a suitor.
"Two managers have gone. We do not have a number but it is likely more will go," Archana Muthappa, head of media relations in India said over telephone. "It is part of a rationalisation of the organisation structure."
She declined to put a time frame for the process but said the government appointed board was discussing it.
The two officials who have quit are Subu D Subramanian, global head of manufacturing and automotives division and Anil Kumar, a senior vice-president at Satyam's financial services division, she said.
Satyam, India's fourth-largest outsourcer, is battling for survival since Jan. 7 when its founder Ramalinga Raju quit as chairman revealing profits have been falsified for years and $1 billion of cash and bank balances did not exist in the country's biggest corporate scandal.
The government dissolved Satyam's board and appointed six directors to save Satyam and its 50,000 employees. The new board has appointed Goldman Sachs and Avendus, an Indian investment bank, to help find potential investors.
Agencies nail fund diversion at Satyam
16 Feb 2009, ET Bureau
HYDERABAD: Investigating agencies probing the Satyam Computer Services scam have proof that money was diverted into Maytas Infra, Maytas Properties The
various front companies linked to B Ramalinga Raju, the disgraced promoter of the software firm, and his family members.
Key agencies, including the Serious Frauds Investigation Office (SFIO), will soon assess the quantum of diversion, based on records seized from these firms.
SFIO's interrogation of Raju, his brother Rama Raju and former Satyam CFO Vadlamani Srinivas on Saturday and two auditors of Price Waterhouse on Sunday could provide clues on the modus operandi.
The investigating agency is understood to have questioned Raju and his brother Rama Raju on the mystery of the missing Rs 1,700 crore from the company's account in an overseas branch of a state-owned bank.
Raju's elder son Teja Raju runs Maytas Infra while his younger son, Rama Raju Jr, runs Maytas Properties. Besides this, Raju and his family also floated 350-odd front companies, mainly for land deals.
"Investigations show that the inter-corporate loans and investments made by Maytas Infrastructure and Maytas Properties far outstripped the limits laid down under the Companies Act, raising suspicion on diversion of funds to benefit the promoters' companies," said an official involved in the investigation.
Under the Companies Act, a firm needs shareholders' approval to make any loan or investment, give a guarantee or provide security beyond 60% of its paid-up capital and free reserves, or 100% of its free reserves, whichever is higher.
Maytas Properties had a paid-up capital of only Rs 5 lakh. However, in 2007-08, the firm made investments to the tune of Rs 90 crore and had loans and advances totalling Rs 419.63 crore. The company had also received funds through unsecured loans for around Rs 600 crore. It used the borrowed funds for inter-corporate investments and loans.
HYDERABAD: Investigating agencies probing the Satyam Computer Services scam have proof that money was diverted into Maytas Infra, Maytas Properties The
various front companies linked to B Ramalinga Raju, the disgraced promoter of the software firm, and his family members.
Key agencies, including the Serious Frauds Investigation Office (SFIO), will soon assess the quantum of diversion, based on records seized from these firms.
SFIO's interrogation of Raju, his brother Rama Raju and former Satyam CFO Vadlamani Srinivas on Saturday and two auditors of Price Waterhouse on Sunday could provide clues on the modus operandi.
The investigating agency is understood to have questioned Raju and his brother Rama Raju on the mystery of the missing Rs 1,700 crore from the company's account in an overseas branch of a state-owned bank.
Raju's elder son Teja Raju runs Maytas Infra while his younger son, Rama Raju Jr, runs Maytas Properties. Besides this, Raju and his family also floated 350-odd front companies, mainly for land deals.
"Investigations show that the inter-corporate loans and investments made by Maytas Infrastructure and Maytas Properties far outstripped the limits laid down under the Companies Act, raising suspicion on diversion of funds to benefit the promoters' companies," said an official involved in the investigation.
Under the Companies Act, a firm needs shareholders' approval to make any loan or investment, give a guarantee or provide security beyond 60% of its paid-up capital and free reserves, or 100% of its free reserves, whichever is higher.
Maytas Properties had a paid-up capital of only Rs 5 lakh. However, in 2007-08, the firm made investments to the tune of Rs 90 crore and had loans and advances totalling Rs 419.63 crore. The company had also received funds through unsecured loans for around Rs 600 crore. It used the borrowed funds for inter-corporate investments and loans.
Gammon India finds takers on Maytas Infra takeover talk
17 Feb 2009, ET Bureau
MUMBAI: Investors have reacted positively to reports that Gammon India is in race to take over Hyderabad-based Maytas Infrastructure.
According to analysts, Gammon India will benefit a lot by acquiring Maytas, thanks to its several projects inside and outside the state. “This is an easier and quicker route to get a slice of the action and grow,” pointed an industry analyst.
He added that financial institution IL&FS too is joining the trio and is in talks for the purpose. IL&FS owns a part of the pledged shares of the Rajus. Sources, however, said that the suitors are seeking indemnity from actions taken by the previous management before they take the plunge.
According to sources, the suitors are seeking indemnity from actions taken by the previous management before they take the plunge.
Gammon India which is the process of executing many contracts in the state but had hogged the limelight two years ago when an under construction flyover had collapsed in Hyderabad is being suported by two small time local players in this endeavour.
Sources say that these two players: Ritwik Projects and SEW Infrastructure (formerly SEW Constructions) are jointly trying to acquire Maytas with Gammon for the time being in the background.
Gammon India, a very old construction company that changed hands a few years ago is presently on an aggressive mode. It is executing many road and irrigation projects in the state.
However, analysts averred that the central government could officially supersede the board of directors of Maytas and allow the new management to negotiate with the bidder. This would be in the same pattern as is being envisaged for Satyam.
MUMBAI: Investors have reacted positively to reports that Gammon India is in race to take over Hyderabad-based Maytas Infrastructure.
According to analysts, Gammon India will benefit a lot by acquiring Maytas, thanks to its several projects inside and outside the state. “This is an easier and quicker route to get a slice of the action and grow,” pointed an industry analyst.
He added that financial institution IL&FS too is joining the trio and is in talks for the purpose. IL&FS owns a part of the pledged shares of the Rajus. Sources, however, said that the suitors are seeking indemnity from actions taken by the previous management before they take the plunge.
According to sources, the suitors are seeking indemnity from actions taken by the previous management before they take the plunge.
Gammon India which is the process of executing many contracts in the state but had hogged the limelight two years ago when an under construction flyover had collapsed in Hyderabad is being suported by two small time local players in this endeavour.
Sources say that these two players: Ritwik Projects and SEW Infrastructure (formerly SEW Constructions) are jointly trying to acquire Maytas with Gammon for the time being in the background.
Gammon India, a very old construction company that changed hands a few years ago is presently on an aggressive mode. It is executing many road and irrigation projects in the state.
However, analysts averred that the central government could officially supersede the board of directors of Maytas and allow the new management to negotiate with the bidder. This would be in the same pattern as is being envisaged for Satyam.
Centre to take over Maytas firms
February 18th, 2009
Feb. 17: The Centre, in a dramatic move, on Tuesday decided to take over Maytas Infra and Matyas Properties run by the sons of Mr B. Ramalinga Raju, the disgraced former chairman of Satyam Computers.
“We have moved the Company Law Board to remove the existing directors of these companies and to declare them as ineligible for appointment as directors in any other company,” said the corporate affairs minister, Mr Prem Chand Gupta.
The Centre has moved swiftly to take over the fir-ms after getting wind of a major scam brewing there. “We find a strong possibility that the affairs of Maytas Infra and Maytas Properties have been conducted by its present management with fraudulent intent and breach of trust to the stakeholders of the company,” said the minister, justifying the takeover.
He added that the persistent neglect of the board had badly affected of the business and operations of these two companies. “We needed some information to act,” he said, explaining the delay in the Centre’s action.
Mr Raju’s elder son, Mr Teja Raju, runs Maytas Infra while younger son, Mr Rama Raju Jr, manages Maytas Properties. The government now plans to nominate its own directors on the board and take over their reins.
At present, Maytas Infra has three directors — Mr B. Teja Raju, Dr R.P. Raju and B. Narasimha Rao — while three others, including chairman, Mr R.C. Sinha, Mr C.S. Bansal and Mr P.K. Madhav, quit last month.
Maytas Properties, which is a privately held company of the Raju family, has three directors — Mr B. Ramaraju, Mr B. Tejaraju and Mr Datla Gopala Krishnam Raju. The government has also asked CLB to prevent the directors of these two companies from selling or mortgaging assets owned or controlled by them without permission. The CLB will hear the government’s petition on February 24.
Maytas Infra, along with a few joint venture partners, is executing around 93 projects worth Rs 40,000-crore across India especially AP, Maharas-htra, Karnataka and Orissa.
Feb. 17: The Centre, in a dramatic move, on Tuesday decided to take over Maytas Infra and Matyas Properties run by the sons of Mr B. Ramalinga Raju, the disgraced former chairman of Satyam Computers.
“We have moved the Company Law Board to remove the existing directors of these companies and to declare them as ineligible for appointment as directors in any other company,” said the corporate affairs minister, Mr Prem Chand Gupta.
The Centre has moved swiftly to take over the fir-ms after getting wind of a major scam brewing there. “We find a strong possibility that the affairs of Maytas Infra and Maytas Properties have been conducted by its present management with fraudulent intent and breach of trust to the stakeholders of the company,” said the minister, justifying the takeover.
He added that the persistent neglect of the board had badly affected of the business and operations of these two companies. “We needed some information to act,” he said, explaining the delay in the Centre’s action.
Mr Raju’s elder son, Mr Teja Raju, runs Maytas Infra while younger son, Mr Rama Raju Jr, manages Maytas Properties. The government now plans to nominate its own directors on the board and take over their reins.
At present, Maytas Infra has three directors — Mr B. Teja Raju, Dr R.P. Raju and B. Narasimha Rao — while three others, including chairman, Mr R.C. Sinha, Mr C.S. Bansal and Mr P.K. Madhav, quit last month.
Maytas Properties, which is a privately held company of the Raju family, has three directors — Mr B. Ramaraju, Mr B. Tejaraju and Mr Datla Gopala Krishnam Raju. The government has also asked CLB to prevent the directors of these two companies from selling or mortgaging assets owned or controlled by them without permission. The CLB will hear the government’s petition on February 24.
Maytas Infra, along with a few joint venture partners, is executing around 93 projects worth Rs 40,000-crore across India especially AP, Maharas-htra, Karnataka and Orissa.
India Wants Maytas Directors Out Article
NEW DELHI -- The Indian government Tuesday said it has found possible fraud at Maytas Infra Ltd. and unlisted Maytas Properties Ltd., and that it has asked the country's Company Law Board to remove the two companies' directors.
"On the basis of the information available, the government finds a strong possibility that the affairs of Maytas Infra and Properties were conducted by its present management with fraudulent intent," Corporate Affairs Minister P.C. Gupta told reporters.
Both companies are controlled by the family of the founders of software exporter Satyam Computer Services Ltd., which is being probed for financial irregularities.
Mr. Gupta said that the government Tuesday asked the Company Law Board, or CLB, to nominate directors to the boards of the two companies.
The CLB -- an independent, quasi-judicial body -- will hear the matter Feb. 24., Mr. Gupta said.
Hyderabad-based Satyam was plunged into turmoil following revelations by founder B. Ramalinga Raju in early January that he had overstated profits over several years and created a fictitious cash balance of more than $1 billion.
Maytas Infra and Maytas Properties officials couldn't be immediately reached for comment.
"On the basis of the information available, the government finds a strong possibility that the affairs of Maytas Infra and Properties were conducted by its present management with fraudulent intent," Corporate Affairs Minister P.C. Gupta told reporters.
Both companies are controlled by the family of the founders of software exporter Satyam Computer Services Ltd., which is being probed for financial irregularities.
Mr. Gupta said that the government Tuesday asked the Company Law Board, or CLB, to nominate directors to the boards of the two companies.
The CLB -- an independent, quasi-judicial body -- will hear the matter Feb. 24., Mr. Gupta said.
Hyderabad-based Satyam was plunged into turmoil following revelations by founder B. Ramalinga Raju in early January that he had overstated profits over several years and created a fictitious cash balance of more than $1 billion.
Maytas Infra and Maytas Properties officials couldn't be immediately reached for comment.
E Shreedharan DMRC Warnings come true
Though the consortium is still intact, Maytas was finding it hard to achieve financial closure.
The fate of the prestigious Hyderabad Metro Rail Project has become uncertain after the Centre decided to take over the Maytas firms. Maytas Infrastructure Limited, headed by Teja Raju, elder son of B Ramalinga Raju, had bagged the Rs 12,132 crores project last August.
The Maytas consortium's model of public-private partnership was dubbed by the Andhra Pradesh Government as innovative and unique based on a design, build, finance, operate and transfer of the 71-km long metro rail. The consortium comprises Navabharat Ventures Limited, Maytas Infra Limited, Italian-Thai Development Public Company Limited and Infrastructure Leasing and Financial Services Limited.
Though the consortium is still intact, Maytas Infra was finding it hard to achieve financial closure. "The state Government felt that Maytas had time till March 31 to achieve financial closure but the firm is in trouble after Ramalinga Raju revealed the Satyam fraud. Now that the Centre has taken over, the project becomes uncertain because it will take time to complete the legal formalities to hand over to a new board to be appointed by the Centre," an official of Hyderabad Metro Rail said on Wednesday.
The project had courted controversy right from the beginning. E Shreedharan, MD of the Delhi Metro Rail Corporation, had expressed reservations and doubts over the viability of the project.
As per Maytas model, the Andhra Pradesh Government didn't have to spend a single penny on the project. Instead, the Maytas Metro Limited which would have spent Rs 12,132 crores to build the elevated metro rail would also have paid the Government for being allowed to execute the project. Over the 35 years concession period of the project, Maytas would pay the state Rs 30,311 crores as a payback: Rs 11 crores on signing of the agreement, Rs 50 crores on achieveing financial closure, Rs 200 crores in the fourth year, Rs 100 crores a year from seventh to ninth year and, Rs 1,750 crores from 18th to 34th year.
The Maytas hoped to generate its revenues by developing prime real estate and leasing space for commercial use along the elevated project: at stake was nearly 18 million square feet of virtual space or 269 acres available at 66 stations and three depots along the 71-km metro rail. Maytas planned to develop shopping malls, multiplexes, residential apartments, office spaces etc within the applicable laws, and give them on lease. After Shreedharan's comments, the HMR ended the contract with the DMRC as its prime consultant.
The fate of the prestigious Hyderabad Metro Rail Project has become uncertain after the Centre decided to take over the Maytas firms. Maytas Infrastructure Limited, headed by Teja Raju, elder son of B Ramalinga Raju, had bagged the Rs 12,132 crores project last August.
The Maytas consortium's model of public-private partnership was dubbed by the Andhra Pradesh Government as innovative and unique based on a design, build, finance, operate and transfer of the 71-km long metro rail. The consortium comprises Navabharat Ventures Limited, Maytas Infra Limited, Italian-Thai Development Public Company Limited and Infrastructure Leasing and Financial Services Limited.
Though the consortium is still intact, Maytas Infra was finding it hard to achieve financial closure. "The state Government felt that Maytas had time till March 31 to achieve financial closure but the firm is in trouble after Ramalinga Raju revealed the Satyam fraud. Now that the Centre has taken over, the project becomes uncertain because it will take time to complete the legal formalities to hand over to a new board to be appointed by the Centre," an official of Hyderabad Metro Rail said on Wednesday.
The project had courted controversy right from the beginning. E Shreedharan, MD of the Delhi Metro Rail Corporation, had expressed reservations and doubts over the viability of the project.
As per Maytas model, the Andhra Pradesh Government didn't have to spend a single penny on the project. Instead, the Maytas Metro Limited which would have spent Rs 12,132 crores to build the elevated metro rail would also have paid the Government for being allowed to execute the project. Over the 35 years concession period of the project, Maytas would pay the state Rs 30,311 crores as a payback: Rs 11 crores on signing of the agreement, Rs 50 crores on achieveing financial closure, Rs 200 crores in the fourth year, Rs 100 crores a year from seventh to ninth year and, Rs 1,750 crores from 18th to 34th year.
The Maytas hoped to generate its revenues by developing prime real estate and leasing space for commercial use along the elevated project: at stake was nearly 18 million square feet of virtual space or 269 acres available at 66 stations and three depots along the 71-km metro rail. Maytas planned to develop shopping malls, multiplexes, residential apartments, office spaces etc within the applicable laws, and give them on lease. After Shreedharan's comments, the HMR ended the contract with the DMRC as its prime consultant.
Maytas gets AP fundsFebruary 4th, 2009
Feb. 3: After making a few noises, the state government has sanctioned payment of Rs 117 crore to the Satyam scam-tainted Maytas and its joint venture partners to begin work on two projects.
In the wake of the scam, the government had said it was going to ask other joint venture partners to take up the Maytas’ share to complete many major projects.
Instead, it has tried to get support of the other companies in favour of Maytas and has released the money even before the Satyam affiliate has been cleared by investigators.
In the backdrop of serious allegations that Satyam funds had been diverted illegally to Maytas, the government had asked the chief secretary, Mr P. Ramakanth Reddy to review the Maytas’ projects.
The chief secretary cleared the projects stating that no deviation was observed while granting the contracts.
In the wake of the scam, the government had said it was going to ask other joint venture partners to take up the Maytas’ share to complete many major projects.
Instead, it has tried to get support of the other companies in favour of Maytas and has released the money even before the Satyam affiliate has been cleared by investigators.
In the backdrop of serious allegations that Satyam funds had been diverted illegally to Maytas, the government had asked the chief secretary, Mr P. Ramakanth Reddy to review the Maytas’ projects.
The chief secretary cleared the projects stating that no deviation was observed while granting the contracts.
Maytas won't be ousted in haste-19th Jan News
The finance minister, Mr K. Rosaiah, on Sunday said the state government will not cancel any of the projects taken up by Maytas in haste unless the company withdrew or violated agreement conditions.
Speaking to mediapersons, the minister said any decision taken in haste would not only lead to legal complications but result in financial loss to the exchequer.
“We will not cancel projects in haste. We have to show valid reasons. Similarly, we will not extend any favour by continuing with the company if it fails to meet the prescribed deadlines as per the agreement,” he said.
The minister said all the departments concerned were closely watching the day-to-day developments following the Satyam scam and will strictly follow the rules while taking any decision on withdrawing works from Maytas.
The minister further said that the projects include the Pranahitha-Chevella which is still on paper.
The irrigation department will not cancel the deal as there are chances of the company approaching the arbitrator, the minister added.
Refuting allegations of undue favours being extended to Maytas, Mr Rosaiah said all the works were allotted through bidding in which the company or its joint ventures bagged the works.
The Maytas-led consortium was the single bidder for the Machilipatnam port works while it offered net present value of Rs 1,200 crore against Rs 250 crore of the competitor in the Hyderabad Metro Rail project.
In the Rs 120-crore Gandikota road work, however, the government allotted works on a nomination basis to the contractor of the dam works to avoid delay in relief and rehabilitation work, he added.
According to the minister, the Telugu Desam had sanctioned Rs 278.74-crore worth irrigation works which was 12.2 per cent of the total works sanctioned by it, while the Congress gave Rs 5,439-crore
worth works to Maytas out of the Rs 79,418-crore Jalayagnam works which is 6.8 per cent.
Mr Rosaiah said the government had paid mobilisation advance of Rs 188 crore to Maytas of which Rs 103 crore was recovered. The department has bank guarantee for the remaining amount.
This apart, the company’s bills worth Rs 156 crore are yet to be cleared by the government, he added.
The finance minister dismissed the Opposition’s demand to make the files relating to Maytas works open stating that anyone could obtain details under the Right to Information Act.
Speaking to mediapersons, the minister said any decision taken in haste would not only lead to legal complications but result in financial loss to the exchequer.
“We will not cancel projects in haste. We have to show valid reasons. Similarly, we will not extend any favour by continuing with the company if it fails to meet the prescribed deadlines as per the agreement,” he said.
The minister said all the departments concerned were closely watching the day-to-day developments following the Satyam scam and will strictly follow the rules while taking any decision on withdrawing works from Maytas.
The minister further said that the projects include the Pranahitha-Chevella which is still on paper.
The irrigation department will not cancel the deal as there are chances of the company approaching the arbitrator, the minister added.
Refuting allegations of undue favours being extended to Maytas, Mr Rosaiah said all the works were allotted through bidding in which the company or its joint ventures bagged the works.
The Maytas-led consortium was the single bidder for the Machilipatnam port works while it offered net present value of Rs 1,200 crore against Rs 250 crore of the competitor in the Hyderabad Metro Rail project.
In the Rs 120-crore Gandikota road work, however, the government allotted works on a nomination basis to the contractor of the dam works to avoid delay in relief and rehabilitation work, he added.
According to the minister, the Telugu Desam had sanctioned Rs 278.74-crore worth irrigation works which was 12.2 per cent of the total works sanctioned by it, while the Congress gave Rs 5,439-crore
worth works to Maytas out of the Rs 79,418-crore Jalayagnam works which is 6.8 per cent.
Mr Rosaiah said the government had paid mobilisation advance of Rs 188 crore to Maytas of which Rs 103 crore was recovered. The department has bank guarantee for the remaining amount.
This apart, the company’s bills worth Rs 156 crore are yet to be cleared by the government, he added.
The finance minister dismissed the Opposition’s demand to make the files relating to Maytas works open stating that anyone could obtain details under the Right to Information Act.
Maytas fraud to be probed 19th Jan News
January 20th, 2009
Jan. 19: The Centre has extended its ongoing probe into the Satyam fraud to cover Maytas Infra and Maytas Properties promoted by the family of Mr B. Ramalinga Raju.
The development came af-ter investigators in Hydera-bad reported that the Maytas firms had got hundreds of crores of rupees from a Ma-uritius-based entity, and that it was suspected that Saty-am funds were used to fina-nce Maytas land purchases.
“The government has approved and authorised the SFIO (Serious Fraud Invest-igation Office) inspectors to obtain such books, records, papers as they deem necessary from Maytas Properties and Maytas Infra,” the corporate affairs minister, Mr Prem Chand Gupta, told reporters in Delhi.
The SFIO investigation will cover all aspects whet-her they are directors, board members, banks, creditors, debtors and “whenever they (investigators) feel there is doubt in their mind, they can always expand (scope of probe) it.” The investigations have been called under Section 235 and 237 of Companies Act.
Meanwhile, Mr P.K. Mad-hav, the chief executive off-icer of Maytas Infra, resig-ned on Monday. He is alre-ady facing charges in a case relating to defaulting of payments by Nagarjuna Finance, where he was previously employed.
The minister said, “inspectors investigating the matters relating to Satyam have informed about the apparent nexus between the events that have taken place in Satyam and Maytas Prope-rties and Maytas Infra.”
On whether the government would supercede the board of Maytas Infra — Maytas Properties is a privately held firm — Mr Gupta said, “whatever is required, government would definitely look into that.”
The SFIO has already found that there is huge flow of funds, estimated at hundreds of crores of rupees, from a Mauritius-based firm into Maytas Infra. They are now in the process of tracking how the funds moved.
SFIO officials inspected the account books and documents of eight companies including Maytas Infra and Maytas Properties which are owned by Mr Raju and his family.
An official of SFIO said, “Our report says that it is suspected Satyam money was diverted to purchase land for Maytas companies.
The six other companies are not of much interest for us. They are either merged or taken over by Satyam.
SFIO sources said hundreds of crores of money has been pumped into Maytas from Mauritius.
Meanwhile, sleuths of Enforcement Directorate and Directorate of Revenue Intelligence sleuths met Registrar of Companies and sought details on the Satyam case.
Sleuths are also looking into hawala angle in the entire episode.
Jan. 19: The Centre has extended its ongoing probe into the Satyam fraud to cover Maytas Infra and Maytas Properties promoted by the family of Mr B. Ramalinga Raju.
The development came af-ter investigators in Hydera-bad reported that the Maytas firms had got hundreds of crores of rupees from a Ma-uritius-based entity, and that it was suspected that Saty-am funds were used to fina-nce Maytas land purchases.
“The government has approved and authorised the SFIO (Serious Fraud Invest-igation Office) inspectors to obtain such books, records, papers as they deem necessary from Maytas Properties and Maytas Infra,” the corporate affairs minister, Mr Prem Chand Gupta, told reporters in Delhi.
The SFIO investigation will cover all aspects whet-her they are directors, board members, banks, creditors, debtors and “whenever they (investigators) feel there is doubt in their mind, they can always expand (scope of probe) it.” The investigations have been called under Section 235 and 237 of Companies Act.
Meanwhile, Mr P.K. Mad-hav, the chief executive off-icer of Maytas Infra, resig-ned on Monday. He is alre-ady facing charges in a case relating to defaulting of payments by Nagarjuna Finance, where he was previously employed.
The minister said, “inspectors investigating the matters relating to Satyam have informed about the apparent nexus between the events that have taken place in Satyam and Maytas Prope-rties and Maytas Infra.”
On whether the government would supercede the board of Maytas Infra — Maytas Properties is a privately held firm — Mr Gupta said, “whatever is required, government would definitely look into that.”
The SFIO has already found that there is huge flow of funds, estimated at hundreds of crores of rupees, from a Mauritius-based firm into Maytas Infra. They are now in the process of tracking how the funds moved.
SFIO officials inspected the account books and documents of eight companies including Maytas Infra and Maytas Properties which are owned by Mr Raju and his family.
An official of SFIO said, “Our report says that it is suspected Satyam money was diverted to purchase land for Maytas companies.
The six other companies are not of much interest for us. They are either merged or taken over by Satyam.
SFIO sources said hundreds of crores of money has been pumped into Maytas from Mauritius.
Meanwhile, sleuths of Enforcement Directorate and Directorate of Revenue Intelligence sleuths met Registrar of Companies and sought details on the Satyam case.
Sleuths are also looking into hawala angle in the entire episode.
Subscribe to:
Posts (Atom)
