Hyderabad March 29, 2009
Court dismisses the bail applications of Raju brothers and the former chief financial officer.
A court today allowed the Serious Fraud Investigation Office (SFIO), a central government body, to question Satyam Computer Services founder B Ramalinga Raju, former managing director B Rama Raju, former chief financial officer Srinivas Vadlamani and two Price Waterhouse auditors, S Gopalakrishnan and Srinivas Talluri, for six days from March 29.
The judge said the questioning should be carried out in the presence of the counsel of the accused from 10.30am to 5pm. The SFIO would record the statements at the Chanchalguda Central Prison, where the accused are lodged after being arrested in connection with the Rs 7,800-crore accounting scam at Satyam.
The court also allowed the petition filed by the Institute of Chartered Accountants of India (ICAI) for recording the statements of Vadlamani, Gopalakrishnan and Talluri. They would be questioned on April 4 and 5 in the presence of their counsel.
Two members from the high-powered ICAI committee, formed to look into the role of the chartered accountants in the scam, would appear on behalf of the ICAI to record the statements.
Meanwhile, the court dismissed the bail applications of the Raju brothers and the former chief financial officer. The counsel for Price Waterhouse would file a bail application for auditors Gopalakrishnan and Talluri on Monday or Tuesday.
In a related development, the CBI filed a petition in the court seeking handwriting and signature samples of all the five accused. The CBI, in its petition, said the verification of signatures and handwriting was necessary as “most documents appeared to be fabricated”. It requested the court to direct the accused to furnish specimen handwritings and signatures. It would take help of handwriting experts to analyse the specimen. The CBI, which took over the investigation from the state investigating agency, CID, has now several trunk-loads of documents seized in connection with the scam.
The court also posted the CBI’s plea seeking permission to subject Raju and two others to polygraph (lie detection) test to April 1. The defence counsel sought time from the court till Wednesday to file the counter.
The CBI counsel said the accused were not forthright in their replies during interrogation. The CBI had questioned the five accused from March 10 to 17 and later sought two more days to interrogate the Raju brothers and the former chief financial officer.
Sunday, March 29, 2009
Spice says Satyam board not transparent, may drop bid
New Delhi (PTI): B K Modi's Spice Group on Wednesday said it may pull out of the bidding process to buy Satyam Computer, alleging lack of transparency from the board. "We feel there is no openness and transparency... The Satyam board is now talking about another shortlisting of bidders. We do not even know who are the bidders in the first short-listing... there is no e-auction also which was our main issue to maintain transparency," Spice Group chairman B K Modi told PTI.
When contacted, Satyam chairman Kiran Karnik said: "We can not comment anything on the bidding process. The due diligence of Satyam has started and will be open till April 4, according to one of the shortlisted bidders. The financial bids are likely to be called by April 9.
Modi said e-auction would have been a better option as it would have done away with human intervention. But they have not done that.
He said the board of Spice would meet on Wednesday night to take a call on whether to go ahead or not. "We are not satisfied with these kinds of developments. We have asked the board to share the CBI investigation details with us and other legal problems that are now part of Satyam. But no information is coming forth." Satyam shares were down 3.11 per cent at Rs 40.50.
When contacted, Satyam chairman Kiran Karnik said: "We can not comment anything on the bidding process. The due diligence of Satyam has started and will be open till April 4, according to one of the shortlisted bidders. The financial bids are likely to be called by April 9.
Modi said e-auction would have been a better option as it would have done away with human intervention. But they have not done that.
He said the board of Spice would meet on Wednesday night to take a call on whether to go ahead or not. "We are not satisfied with these kinds of developments. We have asked the board to share the CBI investigation details with us and other legal problems that are now part of Satyam. But no information is coming forth." Satyam shares were down 3.11 per cent at Rs 40.50.
Saturday, March 28, 2009
Satyam rules out change in bid process
28 Mar 2009, ET Bureau
HYDERABAD: The government-appointed board of Satyam Computer Services has ruled out any change in the bidding process, even as the BK Modi-promoted Spice group threatened to pull out of the race to buy the scam-hit firm, citing lack of transparency.
The Spice group wanted the board to disclose the identity of qualified suitors, preferred an e-auction and was against a second round of shortlisting of bidders, said Preethi Malhotra, director of Spice Innovation Technologies (SIT), a special purpose vehicle floated by the Spice group to buy Satyam.
Group chairman BK Modi told ET he was still awaiting a reply from Justice SP Bharucha, former Chief Justice of India, who is overseeing the bidding process. But the Satyam board will not yield to Mr Modi’s demand, said a person familiar with the development. Another suitor for the beleaguered IT firm, Tech Mahindra, kicked off its due diligence on Friday. The company, an arm of the Mahindra group, is right now focused only on the telecom vertical. The acquisition will help Tech Mahindra diversify into other lucrative business segments such as retail, manufacturing, pharma and healthcare.
AS Murty, chief executive officer of Satyam, and his team gave detailed presentations on the firm’s business and its revenue streams. Tech Mahindra was also given a list of fixed assets of the company and its order book position from top clients.
The company will make similar presentations to other bidders over the next two days. Engineering firm L&T, IBM, private equity firm Apax Partners, besides another MNC and a private equity firm are in the race as ET had earlier reported. All bidders will be given access to the same information pack, based on which they have to put a price tag on the company.
The value of current assets and liabilities was disclosed to Tech Mahindra. The current assets include receivables, or payments, due from clients, while liabilities include payments due to vendors and salary outgo. The estimated value as on date of assets and liabilities is around Rs 700-800 crore. Satyam also has long-term liabilities, including a bridge loan of Rs 600 crore from banks.
Chairman of the Satyam board Kiran Karnik and other members - HDFC chairman Deepak Parekh, LIC nominee SB Mainak, former member of Securities Appellate Tribunal C Achuthan, former president of Institute of Chartered Accountants of India TN Manoharan - were present at Friday’s meeting with Tech Mahindra.
Another round of shortlisting is on the cards, and eventually the highest financial bidder will be selected. However, the uncertainty on Satyam’s financial position and legal liabilities have discouraged several firms from bidding. The firm, once ranked as India’s fourth-largest software exporter, has been struggling for survival after its disgraced founder B Ramalinga Raju confessed to perpetrating a Rs 7,000-crore financial fraud.
HYDERABAD: The government-appointed board of Satyam Computer Services has ruled out any change in the bidding process, even as the BK Modi-promoted Spice group threatened to pull out of the race to buy the scam-hit firm, citing lack of transparency.
The Spice group wanted the board to disclose the identity of qualified suitors, preferred an e-auction and was against a second round of shortlisting of bidders, said Preethi Malhotra, director of Spice Innovation Technologies (SIT), a special purpose vehicle floated by the Spice group to buy Satyam.
Group chairman BK Modi told ET he was still awaiting a reply from Justice SP Bharucha, former Chief Justice of India, who is overseeing the bidding process. But the Satyam board will not yield to Mr Modi’s demand, said a person familiar with the development. Another suitor for the beleaguered IT firm, Tech Mahindra, kicked off its due diligence on Friday. The company, an arm of the Mahindra group, is right now focused only on the telecom vertical. The acquisition will help Tech Mahindra diversify into other lucrative business segments such as retail, manufacturing, pharma and healthcare.
AS Murty, chief executive officer of Satyam, and his team gave detailed presentations on the firm’s business and its revenue streams. Tech Mahindra was also given a list of fixed assets of the company and its order book position from top clients.
The company will make similar presentations to other bidders over the next two days. Engineering firm L&T, IBM, private equity firm Apax Partners, besides another MNC and a private equity firm are in the race as ET had earlier reported. All bidders will be given access to the same information pack, based on which they have to put a price tag on the company.
The value of current assets and liabilities was disclosed to Tech Mahindra. The current assets include receivables, or payments, due from clients, while liabilities include payments due to vendors and salary outgo. The estimated value as on date of assets and liabilities is around Rs 700-800 crore. Satyam also has long-term liabilities, including a bridge loan of Rs 600 crore from banks.
Chairman of the Satyam board Kiran Karnik and other members - HDFC chairman Deepak Parekh, LIC nominee SB Mainak, former member of Securities Appellate Tribunal C Achuthan, former president of Institute of Chartered Accountants of India TN Manoharan - were present at Friday’s meeting with Tech Mahindra.
Another round of shortlisting is on the cards, and eventually the highest financial bidder will be selected. However, the uncertainty on Satyam’s financial position and legal liabilities have discouraged several firms from bidding. The firm, once ranked as India’s fourth-largest software exporter, has been struggling for survival after its disgraced founder B Ramalinga Raju confessed to perpetrating a Rs 7,000-crore financial fraud.
Spice quits Satyam race
28 Mar 2009
NEW DELHI: Alleging "lack of transparency and openness" in the Satyam stake sale process, BK Modi's Spice Group withdrew from the race on Friday, protesting the manner in which the government-appointed board was conducting the exercise to find a buyer for the scam-hit company.
"There is no transparency and openness in the entire process. It is opaque and against the directive of the Company Law Board that ordered for an open, transparent, competitive price bid auction process," Preeti Malhotra, executive director of Spice Innovative Technologies, told TOI here.
Spice had tried to put forth its case before the Satyam board over the last few days, but was not satisfied by the response of the company. "We were among the shortlisted few and satisfied all the conditions set forth. But now there is talk of a new round of shortlisting as well as closed financial bidding. This is not acceptable," Malhotra said.
Spice wants that the Satyam board to make public the names of all those in fray. "We have a right to know who the other bidders are and who are we competing against. This would have also helped drive up the value of Satyam," Malhotra said.
The company has sent a letter to this effect to the Satyam board as well as former Chief Justice SP Bharucha, who is supervising the bid process. However, it has still kept a door open for re-entry into the process. "If the Satyam board is ready to offer an open, transparent price bid auction process, we are ready to come on board," she said.
Asked if Spice was looking to take legal action against the process, she said there were no such plans. "We do not want to stall the process as it will not be good for Satyam," Malhotra said.
When contacted, a spokesperson for Satyam refused comment. "We do not comment on the bid process. It is confidential," is all that the spokesperson said.
Spice is the third suitor which has walked out of the bid process after Hinduja group and iGate. The withdrawals are expected to take the heat out of the bidding for the company as it may now not be a keenly-fought affair. It is learnt that IBM has also pulled out of the race. Those still in reckoning include Larsen & Toubro and Tech Mahindra. Satyam had earlier said among the interested are international bidders, including private equity firms.
Unperturbed by the developments, the new board of Satyam hopes to finalise the buyer of a 51% stake in Satyam by April 30. And while making it clear that re-statement of accounts may not be possible before the bidding, the company has said selected bidders would be invited for due diligence by getting access to data containing "certain non-public information", while the management would provide an overview of operations and strategy.
NEW DELHI: Alleging "lack of transparency and openness" in the Satyam stake sale process, BK Modi's Spice Group withdrew from the race on Friday, protesting the manner in which the government-appointed board was conducting the exercise to find a buyer for the scam-hit company.
"There is no transparency and openness in the entire process. It is opaque and against the directive of the Company Law Board that ordered for an open, transparent, competitive price bid auction process," Preeti Malhotra, executive director of Spice Innovative Technologies, told TOI here.
Spice had tried to put forth its case before the Satyam board over the last few days, but was not satisfied by the response of the company. "We were among the shortlisted few and satisfied all the conditions set forth. But now there is talk of a new round of shortlisting as well as closed financial bidding. This is not acceptable," Malhotra said.
Spice wants that the Satyam board to make public the names of all those in fray. "We have a right to know who the other bidders are and who are we competing against. This would have also helped drive up the value of Satyam," Malhotra said.
The company has sent a letter to this effect to the Satyam board as well as former Chief Justice SP Bharucha, who is supervising the bid process. However, it has still kept a door open for re-entry into the process. "If the Satyam board is ready to offer an open, transparent price bid auction process, we are ready to come on board," she said.
Asked if Spice was looking to take legal action against the process, she said there were no such plans. "We do not want to stall the process as it will not be good for Satyam," Malhotra said.
When contacted, a spokesperson for Satyam refused comment. "We do not comment on the bid process. It is confidential," is all that the spokesperson said.
Spice is the third suitor which has walked out of the bid process after Hinduja group and iGate. The withdrawals are expected to take the heat out of the bidding for the company as it may now not be a keenly-fought affair. It is learnt that IBM has also pulled out of the race. Those still in reckoning include Larsen & Toubro and Tech Mahindra. Satyam had earlier said among the interested are international bidders, including private equity firms.
Unperturbed by the developments, the new board of Satyam hopes to finalise the buyer of a 51% stake in Satyam by April 30. And while making it clear that re-statement of accounts may not be possible before the bidding, the company has said selected bidders would be invited for due diligence by getting access to data containing "certain non-public information", while the management would provide an overview of operations and strategy.
Friday, March 27, 2009
Satyam Board member apprises PM of developments
27 Mar 2009, PTI
NEW DELHI: Tarun Das, CII's chief mentor and a member of the government-appointed Satyam Computer Board, on Friday met Prime Minister Manmohan Singh
and is believed to have discussed the fallout of the global financial crisis on Indian economy.
Das, who is actively involved in restructuring of the scam-hit IT firm, is also understood to have briefed the Prime Minister on the progress of the sale process of Satyam.
Singh has been meeting prominent industrialists for getting inputs ahead of his visit to London for the G-20 Summit on April 2.
The Prime Minister has called a meeting of corporate honchos including Ratan Tata, Mukesh Ambani, Anil Ambani, Azim Premji and others tomorrow to elicit their views on the summit and the state of economy.
NEW DELHI: Tarun Das, CII's chief mentor and a member of the government-appointed Satyam Computer Board, on Friday met Prime Minister Manmohan Singh
and is believed to have discussed the fallout of the global financial crisis on Indian economy.
Das, who is actively involved in restructuring of the scam-hit IT firm, is also understood to have briefed the Prime Minister on the progress of the sale process of Satyam.
Singh has been meeting prominent industrialists for getting inputs ahead of his visit to London for the G-20 Summit on April 2.
The Prime Minister has called a meeting of corporate honchos including Ratan Tata, Mukesh Ambani, Anil Ambani, Azim Premji and others tomorrow to elicit their views on the summit and the state of economy.
Will Satyam be an albatross around India Larsen's neck?
Fri Mar 27, 2009
BANGALORE (Reuters) - India's Larsen & Toubro (LART.BO) is seen as the front-runner to acquire fraud-tainted outsourcer Satyam Computer Services Ltd (SATY.BO) but a potential purchase could bring more pain than gain.
Not only will the acquisition be a tricky one due to uncertainty about Satyam's accounts and potential legal liabilities from U.S. lawsuits but also it would distract Larsen from its main engineering and construction business.
And at a time the slowing economy is hurting Larsen, the engineering conglomerate would be better off using the acquisition cash to retire debt and focus on its core business, some investors and analysts feel.
Larsen, which had cash and cash equivalents of $920 million at the end of 2008, holds a 12 percent stake in Satyam.
It is widely believed to be one of the preliminary bidders for the troubled firm whose market value has plunged to $550 million from $7 billion last May. Larsen has not commented publicly on its interest.
"We believe the acquisition could potentially be an unwelcome distraction despite damage capped at 10 percent of market cap," UBS analysts Suhas Harinarayanan and Pankaj Sharma wrote in a report on Thursday.
"The cash could have been used to lower debt or investing in core business," they said.
Satyam (SAY.N) has been struggling since founder and Chairman Ramalinga Raju shocked investors in January, saying profits had been overstated for years and assets falsified. Raju is being held in jail.
IT services firm Tech Mahindra (TEML.BO) and diversified Spice Group are among the suitors for Satyam. Local media has reported that IBM (IBM.N) is also among the bidders, but a source told Reuters on Thursday the U.S. firm was not in the race.
Analysts have said Satyam looks attractive because of its long list of marquee clients, including General Electric (GE.N) and Qantas Airways (QAN.AX), and due to the plunge in its market value.
However, bidders face a tough job in valuing the company due to uncertainty about its accounts and legal liabilities arising from the lawsuits filed in the United States by its shareholders.
'SUICIDAL'
Citigroup said in a report last week it would be difficult to quantify the value of Larsen's stake in Satyam post a potential win given a lack of clarity on its financials, business continuity, client losses and liabilities.
If Larsen does not bid for Satyam and repays about 40 billion rupees ($790 million) of excess debt on the books, Citi said it believed the engineering company's consolidated earnings per share would go up by more than 6 percent.
Larsen has a small software business unit, L&T Infotech, and hopes Satyam could provide the springboard to expand globally but potential risks abound, analysts said.
BANGALORE (Reuters) - India's Larsen & Toubro (LART.BO) is seen as the front-runner to acquire fraud-tainted outsourcer Satyam Computer Services Ltd (SATY.BO) but a potential purchase could bring more pain than gain.
Not only will the acquisition be a tricky one due to uncertainty about Satyam's accounts and potential legal liabilities from U.S. lawsuits but also it would distract Larsen from its main engineering and construction business.
And at a time the slowing economy is hurting Larsen, the engineering conglomerate would be better off using the acquisition cash to retire debt and focus on its core business, some investors and analysts feel.
Larsen, which had cash and cash equivalents of $920 million at the end of 2008, holds a 12 percent stake in Satyam.
It is widely believed to be one of the preliminary bidders for the troubled firm whose market value has plunged to $550 million from $7 billion last May. Larsen has not commented publicly on its interest.
"We believe the acquisition could potentially be an unwelcome distraction despite damage capped at 10 percent of market cap," UBS analysts Suhas Harinarayanan and Pankaj Sharma wrote in a report on Thursday.
"The cash could have been used to lower debt or investing in core business," they said.
Satyam (SAY.N) has been struggling since founder and Chairman Ramalinga Raju shocked investors in January, saying profits had been overstated for years and assets falsified. Raju is being held in jail.
IT services firm Tech Mahindra (TEML.BO) and diversified Spice Group are among the suitors for Satyam. Local media has reported that IBM (IBM.N) is also among the bidders, but a source told Reuters on Thursday the U.S. firm was not in the race.
Analysts have said Satyam looks attractive because of its long list of marquee clients, including General Electric (GE.N) and Qantas Airways (QAN.AX), and due to the plunge in its market value.
However, bidders face a tough job in valuing the company due to uncertainty about its accounts and legal liabilities arising from the lawsuits filed in the United States by its shareholders.
'SUICIDAL'
Citigroup said in a report last week it would be difficult to quantify the value of Larsen's stake in Satyam post a potential win given a lack of clarity on its financials, business continuity, client losses and liabilities.
If Larsen does not bid for Satyam and repays about 40 billion rupees ($790 million) of excess debt on the books, Citi said it believed the engineering company's consolidated earnings per share would go up by more than 6 percent.
Larsen has a small software business unit, L&T Infotech, and hopes Satyam could provide the springboard to expand globally but potential risks abound, analysts said.
Raju was trying to protect Satyam: Wife
Friday, March 27, 2009
Almost three months after India's biggest corporate fraud broke out, investigators looking into the Satyam case are still struggling to find answers to why Ramalinga Raju did what he did.
If the intention was to make too much money, then where is that money? If he diverted the funds, where is the money sitting right now? In the city of Hyderabad, Raju has become a villain and the poster boy of bad corporate governance, but it is not surprising that even now, his wife, Nandini Raju, is not willing to desert him.
While it was difficult to convince her to speak on camera, NDTV did manage to speak with her on issues relating to her husband's alleged misdeeds and the trauma and life beyond Satyam.
On being asked why did Raju disclose everything on January 7, what happened, was there a particular reason, she replied that she came to know only one day before Raju wrote the letter and both the sons came to know about it through television on that day.
“Whatever Raju did, was to protect Satyam. He considered the company his baby and nurtured the company. He knew the company would go completely bankrupt and whatever is happening with Satyam now, they say, is exactly what he wanted.
To have a stable board and ensure that employees were secure and clients would stay. That's why he decided to disclose this now,” she further said.To a question on her say about the allegation that her husband's debacle is due to his excessive love for his sons and Maytas, She reacted that Raju did not help his sons by taking any money from Satyam and that no money had been diverted to either of the Maytas companies.
“Maytas Infra has enough money to execute all their projects on hand, but if various agencies are going to freeze everything how do they expect Maytas to function? If the government allows them to function, only then can they operate. If they give Maytas the opportunity, the companies will execute each project they have on hand,” she said.
Almost three months after India's biggest corporate fraud broke out, investigators looking into the Satyam case are still struggling to find answers to why Ramalinga Raju did what he did.
If the intention was to make too much money, then where is that money? If he diverted the funds, where is the money sitting right now? In the city of Hyderabad, Raju has become a villain and the poster boy of bad corporate governance, but it is not surprising that even now, his wife, Nandini Raju, is not willing to desert him.
While it was difficult to convince her to speak on camera, NDTV did manage to speak with her on issues relating to her husband's alleged misdeeds and the trauma and life beyond Satyam.
On being asked why did Raju disclose everything on January 7, what happened, was there a particular reason, she replied that she came to know only one day before Raju wrote the letter and both the sons came to know about it through television on that day.
“Whatever Raju did, was to protect Satyam. He considered the company his baby and nurtured the company. He knew the company would go completely bankrupt and whatever is happening with Satyam now, they say, is exactly what he wanted.
To have a stable board and ensure that employees were secure and clients would stay. That's why he decided to disclose this now,” she further said.To a question on her say about the allegation that her husband's debacle is due to his excessive love for his sons and Maytas, She reacted that Raju did not help his sons by taking any money from Satyam and that no money had been diverted to either of the Maytas companies.
“Maytas Infra has enough money to execute all their projects on hand, but if various agencies are going to freeze everything how do they expect Maytas to function? If the government allows them to function, only then can they operate. If they give Maytas the opportunity, the companies will execute each project they have on hand,” she said.
Krishnam replaces Ramalinga as Raju clan's new icon
27 Mar 2009, ET Bureau
HYDERABAD: Actor-turned politician Chiranjeevi pulled a coup of sorts by roping in his elder peer U V Krishnam Raju into his newly-formed Praja
Rajyam Party. Krishnam Raju, a la Manoj Kumar of the Telugu film world, was the minister of state for external affairs in the NDA government led by A B Vajpayee between 1999 and 2004. But many were surprised when he snapped his decade-old ties with BJP to join PRP this week.
Both Raju and Chiranjeevi hail from Mogaltur, a district in West Godavari, something that could perhaps explain their bonding. Skeptics say this could be short-lived, given the ideological differences between the two actors.
Krishnam Raju belongs to the Raju clan, which is concentrated in coastal Andhra, mainly Bhimavaram (West Godavari). The community, comprising about 5% of the state’s population, is economically empowered by virtue of being land owners. They are also a close-knit community.
Chiranjeevi, on the other hand, belongs to the Kapu clan, dominated by peasants in the state. According to an analyst, the Raju clan was looking at aligning with Chiranjeevi, soon after he floated the PRP. The PRP camp is now dominated by the Raju community with more than 80% of the party workers belonging to this little known clan.
"Krishnam Raju has been wielded as one of the most important candidate to revive the lost glory of the Raju community, that was apparently dented after B Ramalinga Raju, the defamed founder of Satyam Computer Services, admitted to doctoring Satyam’s books," said a PRP spokesperson.
There are also reports that several members from the Raju community who were denied tickets in the grand alliance and Congress hopped over to PRP as tickets are up for grabs in the newly-formed party.
The Raju community has its share of woes against Congress and TDP, both rivals of PRP. During his hey-days, Ramalinga Raju had the best of equations with the former chief minister and TDP leader, N Chandrababu Naidu. The poster boy of IT revolution in Andhra Pradesh, Mr Naidu drew mileage showcasing Satyam, once ranked as the fourth largest software exporter in the country.
He was equally comfortable with the ruling Congress when it came to power in 2004. TDP has alleged that Congress had favoured firms promoted by the Raju family and the rest as they say is history. The Raju clan is unhappy with both Congress and TDP and now see PRP as their new protector,” said an analyst
HYDERABAD: Actor-turned politician Chiranjeevi pulled a coup of sorts by roping in his elder peer U V Krishnam Raju into his newly-formed Praja
Rajyam Party. Krishnam Raju, a la Manoj Kumar of the Telugu film world, was the minister of state for external affairs in the NDA government led by A B Vajpayee between 1999 and 2004. But many were surprised when he snapped his decade-old ties with BJP to join PRP this week.
Both Raju and Chiranjeevi hail from Mogaltur, a district in West Godavari, something that could perhaps explain their bonding. Skeptics say this could be short-lived, given the ideological differences between the two actors.
Krishnam Raju belongs to the Raju clan, which is concentrated in coastal Andhra, mainly Bhimavaram (West Godavari). The community, comprising about 5% of the state’s population, is economically empowered by virtue of being land owners. They are also a close-knit community.
Chiranjeevi, on the other hand, belongs to the Kapu clan, dominated by peasants in the state. According to an analyst, the Raju clan was looking at aligning with Chiranjeevi, soon after he floated the PRP. The PRP camp is now dominated by the Raju community with more than 80% of the party workers belonging to this little known clan.
"Krishnam Raju has been wielded as one of the most important candidate to revive the lost glory of the Raju community, that was apparently dented after B Ramalinga Raju, the defamed founder of Satyam Computer Services, admitted to doctoring Satyam’s books," said a PRP spokesperson.
There are also reports that several members from the Raju community who were denied tickets in the grand alliance and Congress hopped over to PRP as tickets are up for grabs in the newly-formed party.
The Raju community has its share of woes against Congress and TDP, both rivals of PRP. During his hey-days, Ramalinga Raju had the best of equations with the former chief minister and TDP leader, N Chandrababu Naidu. The poster boy of IT revolution in Andhra Pradesh, Mr Naidu drew mileage showcasing Satyam, once ranked as the fourth largest software exporter in the country.
He was equally comfortable with the ruling Congress when it came to power in 2004. TDP has alleged that Congress had favoured firms promoted by the Raju family and the rest as they say is history. The Raju clan is unhappy with both Congress and TDP and now see PRP as their new protector,” said an analyst
Sunday, March 22, 2009
Satyam scam may be of over Rs 9,600 cr: CBI
22 Mar 2009, PTI
NEW DELHI: Its probe into the accounting fraud in Satyam Computer has given CBI enough reason to believe that the scam involves a much bigger amount, close to Rs 10,000 crore, than what was disclosed by the IT company's founder Ramalinga Raju, who is now awaiting trial.
Sources said the agency has retrieved over 7,000 fake invoices and forged documents showing fixed deposits and bank balances and their evaluation shows that the size of the scam is over Rs 9,600 crore, much more than the Rs 7,800 crore disclosed by Raju on January 7.
They said the investigating agency during the probe found that the accused relied heavily on technology to generate nearly 7,000 fake invoices to the tune of Rs 4,500 crore and fed the same into Satyam's books.
The sources said these inflated figures were also reflected in the balance sheet in the form of audit reports which helped the company to cheat the public who were purchasing its shares.
The buck did not stop here as the accused also have given false and fabricated statements, found by the CBI, about high capital of the company.
The accused forged documents and created fake fixed deposit receipts to the tune of Rs 3,300 crore.
The FDRs were shown by the accused as available deposits by the company, the sources said, adding the accused had also allegedly manipulated the bank guarantees to show the balance in bank accounts as Rs 1,800 crore.
The CBI alleged that the accused had forged bank documents showing the existence of the cash balance in five banks including ICICI Bank, HSBC, Citibank and BNP Paribas but the banks clarified that they do not have any cash balance in the name of the firm.
CBI is at present questioning the disgraced former chairman of Satyam, B Ramalinga Raju, and others including the auditors of PriceWaterhouse. Their custody was handed over to the CBI yesterday for two days.
Besides Raju, his brother Rama Raju, Satyam's former CFO Vadlamani Srinivas, PW partners S Gopalakrishnan and Talluri Srinivas are in jail awaiting trial in connection with the case dubbed as India's biggest corporate fraud.
In a related development, the CBI was examining the "digital evidence" about the share transactions at National Stock Exchange and Bombay Stock Exchange and did not rule out the possibility of questioning some officials of Securities and Exchange Board of India (Sebi), the capital market regulator. Sebi too is independently probing the fraud.
NEW DELHI: Its probe into the accounting fraud in Satyam Computer has given CBI enough reason to believe that the scam involves a much bigger amount, close to Rs 10,000 crore, than what was disclosed by the IT company's founder Ramalinga Raju, who is now awaiting trial.
Sources said the agency has retrieved over 7,000 fake invoices and forged documents showing fixed deposits and bank balances and their evaluation shows that the size of the scam is over Rs 9,600 crore, much more than the Rs 7,800 crore disclosed by Raju on January 7.
They said the investigating agency during the probe found that the accused relied heavily on technology to generate nearly 7,000 fake invoices to the tune of Rs 4,500 crore and fed the same into Satyam's books.
The sources said these inflated figures were also reflected in the balance sheet in the form of audit reports which helped the company to cheat the public who were purchasing its shares.
The buck did not stop here as the accused also have given false and fabricated statements, found by the CBI, about high capital of the company.
The accused forged documents and created fake fixed deposit receipts to the tune of Rs 3,300 crore.
The FDRs were shown by the accused as available deposits by the company, the sources said, adding the accused had also allegedly manipulated the bank guarantees to show the balance in bank accounts as Rs 1,800 crore.
The CBI alleged that the accused had forged bank documents showing the existence of the cash balance in five banks including ICICI Bank, HSBC, Citibank and BNP Paribas but the banks clarified that they do not have any cash balance in the name of the firm.
CBI is at present questioning the disgraced former chairman of Satyam, B Ramalinga Raju, and others including the auditors of PriceWaterhouse. Their custody was handed over to the CBI yesterday for two days.
Besides Raju, his brother Rama Raju, Satyam's former CFO Vadlamani Srinivas, PW partners S Gopalakrishnan and Talluri Srinivas are in jail awaiting trial in connection with the case dubbed as India's biggest corporate fraud.
In a related development, the CBI was examining the "digital evidence" about the share transactions at National Stock Exchange and Bombay Stock Exchange and did not rule out the possibility of questioning some officials of Securities and Exchange Board of India (Sebi), the capital market regulator. Sebi too is independently probing the fraud.
Satyam: L&T & Tech Mahindra are punters' favourites
22 Mar 2009, ET Bureau
NEW DELHI: It may not be a part of the formal process, but the country’s shadowy and illegal betting industry has put in its own “expression of Facts about Satyam interest” in the hotting battle to take over Satyam Computer Services. Well, kind of. With the Indian Premier League some weeks away and general elections longer still, the race to take over control of the scandal-hit company seems to have caught the fancy of the country’s punters, and betting circles are agog with odds on each of the potential suitors.
Engineering group Larsen & Toubro is reckoned as the clear frontrunner, and bookies are accepting bets of 100:105, which offer a payout of Rs 105 on every Rs 100 bet on the company.
Not far behind is Tech Mahindra, which has made no secret of its desire to buy Satyam, and on Friday confirmed that it had put in a formal expression of interest to buy Satyam. Bets in Tech Mahindra’s favour are said to be 100:110, which offer a gain of Rs 10 for every Rs 100 invested if the deal swings in the company’s favour.
“The bets have just started pouring in, as the bidding process starts and it gets more clear about which companies are actually in the race, it is expected that the amount and the interest will rise,” said a Delhi-based punter, who did not wish to be identified, not least because betting is illegal in India.
Unlike in the West where betting is an industry and there are legal betting shops owned by corporate groups, much of the betting in this country is secretive and takes in private circles, with the money involved sometimes used to settle business accounts. Betting activity has traditionally revolved around cricket or politics, but the Satyam saga has got bookmakers excited.
Satyam, which was brought to the brink of collapse earlier this year after its founder and former chairman admitted to cooking its books for years, is the first corporate name to make it to the so-called satta market and punters say the money involved is really big.
Bookmakers in major betting centres such as Delhi, Mumbai, Kolkata, Bangalore and Hyderabad are viewing this as a mega event, with bets being laid on who will win control of the company to the amount of the winning bid.
NEW DELHI: It may not be a part of the formal process, but the country’s shadowy and illegal betting industry has put in its own “expression of Facts about Satyam interest” in the hotting battle to take over Satyam Computer Services. Well, kind of. With the Indian Premier League some weeks away and general elections longer still, the race to take over control of the scandal-hit company seems to have caught the fancy of the country’s punters, and betting circles are agog with odds on each of the potential suitors.
Engineering group Larsen & Toubro is reckoned as the clear frontrunner, and bookies are accepting bets of 100:105, which offer a payout of Rs 105 on every Rs 100 bet on the company.
Not far behind is Tech Mahindra, which has made no secret of its desire to buy Satyam, and on Friday confirmed that it had put in a formal expression of interest to buy Satyam. Bets in Tech Mahindra’s favour are said to be 100:110, which offer a gain of Rs 10 for every Rs 100 invested if the deal swings in the company’s favour.
“The bets have just started pouring in, as the bidding process starts and it gets more clear about which companies are actually in the race, it is expected that the amount and the interest will rise,” said a Delhi-based punter, who did not wish to be identified, not least because betting is illegal in India.
Unlike in the West where betting is an industry and there are legal betting shops owned by corporate groups, much of the betting in this country is secretive and takes in private circles, with the money involved sometimes used to settle business accounts. Betting activity has traditionally revolved around cricket or politics, but the Satyam saga has got bookmakers excited.
Satyam, which was brought to the brink of collapse earlier this year after its founder and former chairman admitted to cooking its books for years, is the first corporate name to make it to the so-called satta market and punters say the money involved is really big.
Bookmakers in major betting centres such as Delhi, Mumbai, Kolkata, Bangalore and Hyderabad are viewing this as a mega event, with bets being laid on who will win control of the company to the amount of the winning bid.
Saturday, March 21, 2009
Third bidder joins race for Satyam
NEW DELHI- The board of India's Satyam Computer Services met Saturday to review a list of bidders for the fraud-hit outsourcer as a third company announced it had joined the race.
Potential bidders had until late Friday to show they had at least 15 billion rupees (300 million dollars) to back up their interest in the software services export giant whose finances were left in shambles by its founder.
Indian engineering giant Larsen & Toubro said it had shown proof of sufficient resources to pursue its bid after tycoon B.K. Modi's Spice Group and telecom software firm Tech Mahindra Ltd (TML) made similar statements.
Larsen & Toubro has already built up a 12 percent stake in Satyam and is seen as a front-runner for a 51 percent stake.
Satyam is battling to pay wages since founder B. Ramalinga Raju declared in January he inflated the balance sheet by more than a billion dollars and exaggerated profits.
A Satyam spokeswoman would not comment on whether there were more bidders in addition to the three firms to have announced their interest.
Media reports said international information technology heavyweights such as IBM may have registered their interest through third-party law firms or private equity ventures but this could not be immediately confirmed.
The government-appointed board, which has said it hopes to wrap up the sale within the next couple of months, met Saturday to scrutinise the bids.
"The process of short-listing will continue beyond Saturday but that will be pretty much done by investment bankers and they will continue to look to finish as soon as possible," a Satyam spokeswoman told AFP.
A shortlist was expected to be completed by March 25. Those accepted would be given "access to certain business, financial and legal diligence materials," the company said.
The bidding will be unusual in that Satyam cannot provide many figures needed for bidders to conduct normal due diligence on the accounts as they are still with auditors.
Potential bidders had until late Friday to show they had at least 15 billion rupees (300 million dollars) to back up their interest in the software services export giant whose finances were left in shambles by its founder.
Indian engineering giant Larsen & Toubro said it had shown proof of sufficient resources to pursue its bid after tycoon B.K. Modi's Spice Group and telecom software firm Tech Mahindra Ltd (TML) made similar statements.
Larsen & Toubro has already built up a 12 percent stake in Satyam and is seen as a front-runner for a 51 percent stake.
Satyam is battling to pay wages since founder B. Ramalinga Raju declared in January he inflated the balance sheet by more than a billion dollars and exaggerated profits.
A Satyam spokeswoman would not comment on whether there were more bidders in addition to the three firms to have announced their interest.
Media reports said international information technology heavyweights such as IBM may have registered their interest through third-party law firms or private equity ventures but this could not be immediately confirmed.
The government-appointed board, which has said it hopes to wrap up the sale within the next couple of months, met Saturday to scrutinise the bids.
"The process of short-listing will continue beyond Saturday but that will be pretty much done by investment bankers and they will continue to look to finish as soon as possible," a Satyam spokeswoman told AFP.
A shortlist was expected to be completed by March 25. Those accepted would be given "access to certain business, financial and legal diligence materials," the company said.
The bidding will be unusual in that Satyam cannot provide many figures needed for bidders to conduct normal due diligence on the accounts as they are still with auditors.
Spice, Tech Mahindra take next step in Satyam race
Fri Mar 20, 2009
BANGALORE (Reuters) - India's Spice Group and Tech Mahindra (TEML.BO) said on Friday they were in the race for fraud-hit Satyam Computer Services (SATY.BO), but as a deadline passed U.S.-based iGate Corp said it would not proceed.
Other potential suitors who registered last week, such as engineering firm Larsen & Toubro , had not said whether they submitted their required expressions of interest in a 51 percent stake in the outsourcing firm by Friday evening.
A meeting on Friday of the government-appointed board of Satyam, at which the stake sale was expected to have been discussed, was extended into Saturday. A spokeswoman declined to comment on the agenda of the meeting.
New York-listed Satyam (SAY.N) has been struggling since founder and Chairman Ramalinga Raju shocked investors in January, saying profits had been overstated for years and assets falsified in what has become India's biggest corporate scandal.
"Our bid price will depend on the kind of information we get and we will factor in the liabilities in the bid price," Spice Group Chairman B.K. Modi said, referring to the legal liabilities arising from class action lawsuits filed in the United States.
Potential bidders who had registered last week were required to submit a detailed expression of interest and show availability of at least 15 billion rupees ($300 million) by 5 p.m. (1130 GMT) on Friday to stay in the race.
From these, the board has said it would shortlist candidates who would be given access to certain business, finance and legal materials before submitting a bid for the firm that was ranked as India's fourth-largest outsourcer.
UNCERTAINTY
iGate said in a statement its decision not to pursue a bid followed further analysis of the Indian outsourcing firm.
A spokesman at Larsen & Toubro, which holds 12 percent stake in Satyam and is seen by many as a front-runner to acquire the troubled outsourcing firm, declined comment on its position.
Fitch Ratings said on Friday it had withdrawn its ratings of Tech Mahindra, citing uncertainties related to the possible acquisition of Satyam in terms of financing and consequent financial impact on the company.
Analysts have said Satyam looks attractive given the plunge in its share price and a long list of marquee clients, including General Electric and Qantas Airways
BANGALORE (Reuters) - India's Spice Group and Tech Mahindra (TEML.BO) said on Friday they were in the race for fraud-hit Satyam Computer Services (SATY.BO), but as a deadline passed U.S.-based iGate Corp said it would not proceed.
Other potential suitors who registered last week, such as engineering firm Larsen & Toubro , had not said whether they submitted their required expressions of interest in a 51 percent stake in the outsourcing firm by Friday evening.
A meeting on Friday of the government-appointed board of Satyam, at which the stake sale was expected to have been discussed, was extended into Saturday. A spokeswoman declined to comment on the agenda of the meeting.
New York-listed Satyam (SAY.N) has been struggling since founder and Chairman Ramalinga Raju shocked investors in January, saying profits had been overstated for years and assets falsified in what has become India's biggest corporate scandal.
"Our bid price will depend on the kind of information we get and we will factor in the liabilities in the bid price," Spice Group Chairman B.K. Modi said, referring to the legal liabilities arising from class action lawsuits filed in the United States.
Potential bidders who had registered last week were required to submit a detailed expression of interest and show availability of at least 15 billion rupees ($300 million) by 5 p.m. (1130 GMT) on Friday to stay in the race.
From these, the board has said it would shortlist candidates who would be given access to certain business, finance and legal materials before submitting a bid for the firm that was ranked as India's fourth-largest outsourcer.
UNCERTAINTY
iGate said in a statement its decision not to pursue a bid followed further analysis of the Indian outsourcing firm.
A spokesman at Larsen & Toubro, which holds 12 percent stake in Satyam and is seen by many as a front-runner to acquire the troubled outsourcing firm, declined comment on its position.
Fitch Ratings said on Friday it had withdrawn its ratings of Tech Mahindra, citing uncertainties related to the possible acquisition of Satyam in terms of financing and consequent financial impact on the company.
Analysts have said Satyam looks attractive given the plunge in its share price and a long list of marquee clients, including General Electric and Qantas Airways
iGate exit, TM rating snub mar Satyam sale
21 Mar 2009, ET Bureau
MUMBAI: The sale of scandal-hit Satyam Computer Services appeared to have suffered a couple of glitches, with one bidder dropping out and rating agency Fitch withdrawing its rating for another at the second stage of bidding.
Nasdaq-listed iGate, which had reservations even earlier on customer exits and financial ambiguities, said based on further analysis, it had decided against participating in the bidding. It did not elaborate further and ET could not verify if failure to rope in a private equity investor forced iGate’s exit.
Tech Mahindra, which confirmed it had submitted a detailed Expression of Interest (EoI) on Friday, suffered an immediate fallout because of the risk it was undertaking in bidding for the software company.
Fitch, a credit rating agency, said it had withdrawn Tech Mahindra’s national issuer rating of AAA due to uncertainties on the final closure of the Satyam deal, the financing, and consequent financial impact on the company. The firm had $110 million (Rs 550 crore) of cash on its books as on December 31, 2008. ET had reported that Tech Mahindra had secured a line of credit from five banks to back its EoI.
Satyam shares on Friday closed at Rs 43.90 on the BSE. Besides Tech Mahindra, two other bidders—engineering firm L&T and the Spice group—moved to the next stage in the bidding process for Satyam, showing proof of funds of Rs 1,500 crore, a precondition to be shortlisted.
While a clutch of private equity investors is believed to have submitted their EoIs, they could drop out later. ET had earlier reported that PE firms such are Texas Pacific Group and Kohlberg Kravis and Roberts (KKR), besides IT giant IBM, were interested in Satyam. These entities have not officially confirmed their participation.
Standalone private equity investors will be allowed to take management control of the scandal-hit IT firm. However, if selected, the investor will not be allowed to sell new shares bought through a preferential allotment for three years and existing shares (in Satyam) for six months, said people familiar with the development. L&T, which holds 12% in Satyam, had cash and bank balances of Rs 1,560 crore as on March 31, 2008.
But there was no official communication from the bidder. Spice is participating in the bid process through Spice Innovative Technology, the group’s arm for IT-related activities. The government-appointed Satyam board, which met in Hyderabad on Friday, set up a “virtual data room” (or financial information) to be shared with qualified bidders to help them put a price tag on the company. It will meet in Mumbai on Saturday to scan the bids.
Shortlisted bidders are expected to submit their financial bids after April 10, given a new owner of Satyam will be in place by April 30. Potential bidders will not be allowed to engage with audit firms KPMG and Deloitte to carry out their due diligence. The two firms are re-stating Satyam’s accounts, after its disgraced chairman and founder B Ramalinga Raju admitted to an over $1-billion financial fraud two months ago.
The new owner of Satyam will have to buy up to 31% stake through a preferential offer and the balance 20% through an open offer to existing shareholders. The minimum mandatory public offer will also be made to American Depository Subscribers (ADS) through a depository in US. Satyam, once ranked as the fourth-largest IT services exporter, has seen a number of clients exit over the last two months. These are some of the concerns of the potential bidders, besides the estimated $100-million liabilities that could arise from the lawsuits against the company.
MUMBAI: The sale of scandal-hit Satyam Computer Services appeared to have suffered a couple of glitches, with one bidder dropping out and rating agency Fitch withdrawing its rating for another at the second stage of bidding.
Nasdaq-listed iGate, which had reservations even earlier on customer exits and financial ambiguities, said based on further analysis, it had decided against participating in the bidding. It did not elaborate further and ET could not verify if failure to rope in a private equity investor forced iGate’s exit.
Tech Mahindra, which confirmed it had submitted a detailed Expression of Interest (EoI) on Friday, suffered an immediate fallout because of the risk it was undertaking in bidding for the software company.
Fitch, a credit rating agency, said it had withdrawn Tech Mahindra’s national issuer rating of AAA due to uncertainties on the final closure of the Satyam deal, the financing, and consequent financial impact on the company. The firm had $110 million (Rs 550 crore) of cash on its books as on December 31, 2008. ET had reported that Tech Mahindra had secured a line of credit from five banks to back its EoI.
Satyam shares on Friday closed at Rs 43.90 on the BSE. Besides Tech Mahindra, two other bidders—engineering firm L&T and the Spice group—moved to the next stage in the bidding process for Satyam, showing proof of funds of Rs 1,500 crore, a precondition to be shortlisted.
While a clutch of private equity investors is believed to have submitted their EoIs, they could drop out later. ET had earlier reported that PE firms such are Texas Pacific Group and Kohlberg Kravis and Roberts (KKR), besides IT giant IBM, were interested in Satyam. These entities have not officially confirmed their participation.
Standalone private equity investors will be allowed to take management control of the scandal-hit IT firm. However, if selected, the investor will not be allowed to sell new shares bought through a preferential allotment for three years and existing shares (in Satyam) for six months, said people familiar with the development. L&T, which holds 12% in Satyam, had cash and bank balances of Rs 1,560 crore as on March 31, 2008.
But there was no official communication from the bidder. Spice is participating in the bid process through Spice Innovative Technology, the group’s arm for IT-related activities. The government-appointed Satyam board, which met in Hyderabad on Friday, set up a “virtual data room” (or financial information) to be shared with qualified bidders to help them put a price tag on the company. It will meet in Mumbai on Saturday to scan the bids.
Shortlisted bidders are expected to submit their financial bids after April 10, given a new owner of Satyam will be in place by April 30. Potential bidders will not be allowed to engage with audit firms KPMG and Deloitte to carry out their due diligence. The two firms are re-stating Satyam’s accounts, after its disgraced chairman and founder B Ramalinga Raju admitted to an over $1-billion financial fraud two months ago.
The new owner of Satyam will have to buy up to 31% stake through a preferential offer and the balance 20% through an open offer to existing shareholders. The minimum mandatory public offer will also be made to American Depository Subscribers (ADS) through a depository in US. Satyam, once ranked as the fourth-largest IT services exporter, has seen a number of clients exit over the last two months. These are some of the concerns of the potential bidders, besides the estimated $100-million liabilities that could arise from the lawsuits against the company.
Friday, March 20, 2009
New Maytas directors say no signs of Satyam fund in firm
Mar 19 2009,
The newly appointed board of Maytas Infra on Thursday said there appeared to be no sign of any Satyam money being put into the company.
“Prima facie, we have not found any signs of money having come from Satyam into Maytas,” government-appointed director Ved Jain said at a press conference.
Allegations about disgraced Satyam founder Ramalinga Raju diverting Satyam funds into Maytas Infra and group company Maytas Properties had surfaced after he owned up to a massive accounting fraud at the information technology firm. The Serious Fraud Investigation Office (SFIO) has been investigating the Maytas companies after the fraud at Satyam surfaced.
Thursday’s board meeting, the first since the new members joined the board, was chaired by the other government nominee O P Vaish. The newly appointed directors met the existing ones who shared information with them about the company, Vaish said.
The duo has asked for information about the projects being executed by the company. “Officials of Maytas Infra, who we have spoken to, seem confident that the company would stabilise and would be able to execute its projects. So far, we have no reason to disbelieve them,” Jain added. The directors had not noticed anything “seriously” wrong till now, he said.
Maytas Infra’s lenders are cooperating with the company and have asked the matter to be referred to the corporate restructuring board, Vaish said. “The lenders are aware that the company is in difficulty and they would be willing to cooperate with us. It is hoped that by March 25, an agreement will take place with the lenders for the matter to be referred to the corporate restructuring board,” he said.
Several banks, such as State Bank of India, ICICI Bank and HDFC Bank, reportedly have a collective exposure of about Rs 5000 crore in Maytas Infra, and the company is finding the going tough in raising further debt.
There would be no change in the statutory auditors of the company till the next annual general meeting (AGM), the directors said. “Statutory auditors can only be changed at an AGM. Hence, until the next AGM, the present auditors will continue,” Vaish said.
Jain, who has also been appointed director on the board of Maytas Properties, said he is engaged in taking stock of where the real estate company stood and who the stakeholders were.
“There have been some concerns raised about people who have booked flats in one of Maytas Properties’ projects. We would have an informal interaction with them on March 25 to reassure them,” he added.
The newly appointed board of Maytas Infra on Thursday said there appeared to be no sign of any Satyam money being put into the company.
“Prima facie, we have not found any signs of money having come from Satyam into Maytas,” government-appointed director Ved Jain said at a press conference.
Allegations about disgraced Satyam founder Ramalinga Raju diverting Satyam funds into Maytas Infra and group company Maytas Properties had surfaced after he owned up to a massive accounting fraud at the information technology firm. The Serious Fraud Investigation Office (SFIO) has been investigating the Maytas companies after the fraud at Satyam surfaced.
Thursday’s board meeting, the first since the new members joined the board, was chaired by the other government nominee O P Vaish. The newly appointed directors met the existing ones who shared information with them about the company, Vaish said.
The duo has asked for information about the projects being executed by the company. “Officials of Maytas Infra, who we have spoken to, seem confident that the company would stabilise and would be able to execute its projects. So far, we have no reason to disbelieve them,” Jain added. The directors had not noticed anything “seriously” wrong till now, he said.
Maytas Infra’s lenders are cooperating with the company and have asked the matter to be referred to the corporate restructuring board, Vaish said. “The lenders are aware that the company is in difficulty and they would be willing to cooperate with us. It is hoped that by March 25, an agreement will take place with the lenders for the matter to be referred to the corporate restructuring board,” he said.
Several banks, such as State Bank of India, ICICI Bank and HDFC Bank, reportedly have a collective exposure of about Rs 5000 crore in Maytas Infra, and the company is finding the going tough in raising further debt.
There would be no change in the statutory auditors of the company till the next annual general meeting (AGM), the directors said. “Statutory auditors can only be changed at an AGM. Hence, until the next AGM, the present auditors will continue,” Vaish said.
Jain, who has also been appointed director on the board of Maytas Properties, said he is engaged in taking stock of where the real estate company stood and who the stakeholders were.
“There have been some concerns raised about people who have booked flats in one of Maytas Properties’ projects. We would have an informal interaction with them on March 25 to reassure them,” he added.
Maytas may exit projects
20 Mar 2009 ET Bureau
HYDERABAD: Maytas Infra is set to fully divest its stakes in some projects that it will not be able to execute.
The company will appoint investment advisors to value the projects that Maytas wants to exit, said officials familiar with the development.
The company has an order book of around Rs 20,000 crore and is a partner in several consortia, including the Hyderabad Metro Rail.
HYDERABAD: Maytas Infra is set to fully divest its stakes in some projects that it will not be able to execute.
The company will appoint investment advisors to value the projects that Maytas wants to exit, said officials familiar with the development.
The company has an order book of around Rs 20,000 crore and is a partner in several consortia, including the Hyderabad Metro Rail.
Maytas Infra may opt for corporate debt restructuring, says committed to projects
Hyderabad: The board of Maytas Infra Ltd represented by the two government-appointed nominees — O P Vaish and Ved Jain — along with B Teja Raju, R P Raju and B Narasimha Rao met here today and has considered the option of referring the company to the corporate debt restructuring (CDR) board, if necessary. A decision on this would be taken after an informal meeting with all the lenders on March 25, to assess the situation of the company.
Speaking to mediapersons after chairing the board meeting, Vaish said that lenders to the company had raised concerns and have advised that the company be referred to the CDR board. “We will be interacting with them and all the other stakeholders on March 25 to understand their concerns. And if need arises, the company will be referred to the CDR board,” Vaish said adding that debt restructuring is a normal process and it happens everywhere.
“Today, we had first hand information from the company. The existing board members made their presentations and we have sought for some more information and clarifications. They should be able provide us details within the next three days. We are currently assessing the situation. And since it is our first meeting, it is too early for us to comment about the state of affairs of the company,” he said.
According to Jain, the Government has appointed him and Vaish on the board to ensure smooth functioning and also to put the company on the right track. “We will take care of the interests of all stakeholders including the shareholders, lenders, vendors and also customers. We are also here boast confidence levels which might have eroded over the past few days. On March 25, besides meeting the stakeholders we have also suggested that we will meet the employees of the company,’’ Jain said. The board is planning to meet again next week, he added.
Talking about the various projects of the company, he said, Maytas Infra has a number of projects. The company has sought extension for achieving financial closure for the Hyderabad Metro Rail Project and the matter is with the government now.
“Since the company has applied for an extension, it only shows that Maytas is committed to the project,” he said adding, “We are not making any adverse comment on the company, which only means that so far we have not seen anything adverse in their functioning.”
Speaking to mediapersons after chairing the board meeting, Vaish said that lenders to the company had raised concerns and have advised that the company be referred to the CDR board. “We will be interacting with them and all the other stakeholders on March 25 to understand their concerns. And if need arises, the company will be referred to the CDR board,” Vaish said adding that debt restructuring is a normal process and it happens everywhere.
“Today, we had first hand information from the company. The existing board members made their presentations and we have sought for some more information and clarifications. They should be able provide us details within the next three days. We are currently assessing the situation. And since it is our first meeting, it is too early for us to comment about the state of affairs of the company,” he said.
According to Jain, the Government has appointed him and Vaish on the board to ensure smooth functioning and also to put the company on the right track. “We will take care of the interests of all stakeholders including the shareholders, lenders, vendors and also customers. We are also here boast confidence levels which might have eroded over the past few days. On March 25, besides meeting the stakeholders we have also suggested that we will meet the employees of the company,’’ Jain said. The board is planning to meet again next week, he added.
Talking about the various projects of the company, he said, Maytas Infra has a number of projects. The company has sought extension for achieving financial closure for the Hyderabad Metro Rail Project and the matter is with the government now.
“Since the company has applied for an extension, it only shows that Maytas is committed to the project,” he said adding, “We are not making any adverse comment on the company, which only means that so far we have not seen anything adverse in their functioning.”
Lenders want Maytas Infra recast
Hyderabad March 20, 2009
Reconstituted board meets, to talk to lenders.
The lenders of Maytas Infra Ltd, promoted by the family of Ramalinga Raju, the disgraced founder of Satyam Computer Services, have sought restructuring of the firm.
The newly appointed (by the government) board members, OP Vaish and Ved Jain, said the company and its lenders were expected to reach an agreement in this regard by March 25.
The board met here under the chairmanship of Vaish and sought information on the state of the company and the various projects it was implementing and negotiating. The company’s Vice-Chairman, B Teja Raju, and Additional Director B Narasimha Rao, were present. The board will reconvene next week.
Meanwhile, the two new board members said they would hold an informal meeting with all stakeholders, including lenders.
The board of Maytas Properties, a sister company, had met yesterday. The meeting was also chaired by Jain. He said the company had called for a meeting on March 25 of all those who had booked flats or houses with the company.
In the Maytas Infra meeting, a presentation was made to the board, which wanted more information in three days. The effort is to protect the interests of all stakeholders. The board is supposed to have begun planning for this.
On if the company was looking for a suitor like Satyam, Vaish said the case of Maytas Infra was different from Satyam and there appeared no need for a suitor. The company has not fixed a timeframe to declare the third-quarter results. The board, however, asked it to do so as soon as possible. Asserting that the company had a large order book, he said the board was not in a position to comment on the individual projects being implemented.
“There is no man-biting-dog situation yet,” Vaish said in reply to a query if the board had found anything unusual with the fund flow and if the company was financially sound enough to go on with various projects. “We are not giving a certificate to Maytas. We do not know now if there is diversion of funds from Satyam to Maytas. We do not have any information on that,” he said.
Post January 7 (when Raju confessed to fraud), the credibility of the company had taken a beating and that resulted in delays in execution, Jain said. The company was, however, confident of continuing the business, he added.
The duo did not comment on whether the company had deposited the Rs 240 crore performance guarantee while seeking the extension of the deadline for financial closure for the Hyderabad Metro Rail project.
“The company is interested in executing the project,” Jain said, adding that the board would also meet other members of the consortium that had won the high-profile project
The company had 1,800 employees, Vaish said, adding that nobody had been asked to leave.
Reconstituted board meets, to talk to lenders.
The lenders of Maytas Infra Ltd, promoted by the family of Ramalinga Raju, the disgraced founder of Satyam Computer Services, have sought restructuring of the firm.
The newly appointed (by the government) board members, OP Vaish and Ved Jain, said the company and its lenders were expected to reach an agreement in this regard by March 25.
The board met here under the chairmanship of Vaish and sought information on the state of the company and the various projects it was implementing and negotiating. The company’s Vice-Chairman, B Teja Raju, and Additional Director B Narasimha Rao, were present. The board will reconvene next week.
Meanwhile, the two new board members said they would hold an informal meeting with all stakeholders, including lenders.
The board of Maytas Properties, a sister company, had met yesterday. The meeting was also chaired by Jain. He said the company had called for a meeting on March 25 of all those who had booked flats or houses with the company.
In the Maytas Infra meeting, a presentation was made to the board, which wanted more information in three days. The effort is to protect the interests of all stakeholders. The board is supposed to have begun planning for this.
On if the company was looking for a suitor like Satyam, Vaish said the case of Maytas Infra was different from Satyam and there appeared no need for a suitor. The company has not fixed a timeframe to declare the third-quarter results. The board, however, asked it to do so as soon as possible. Asserting that the company had a large order book, he said the board was not in a position to comment on the individual projects being implemented.
“There is no man-biting-dog situation yet,” Vaish said in reply to a query if the board had found anything unusual with the fund flow and if the company was financially sound enough to go on with various projects. “We are not giving a certificate to Maytas. We do not know now if there is diversion of funds from Satyam to Maytas. We do not have any information on that,” he said.
Post January 7 (when Raju confessed to fraud), the credibility of the company had taken a beating and that resulted in delays in execution, Jain said. The company was, however, confident of continuing the business, he added.
The duo did not comment on whether the company had deposited the Rs 240 crore performance guarantee while seeking the extension of the deadline for financial closure for the Hyderabad Metro Rail project.
“The company is interested in executing the project,” Jain said, adding that the board would also meet other members of the consortium that had won the high-profile project
The company had 1,800 employees, Vaish said, adding that nobody had been asked to leave.
Shares may be overpriced, says iGate
US-based iGATE Corp said on Monday that its bid for Satyam Computer Services Ltd would be well short of the company’s current share price, triggering a fresh round of questions on the valuation of the fraud-mauled company mired in uncertainties over its financial and legal liabilities.
“(From) what we have picked up in terms of the financials, I do believe our bid will be quite a bit south of the 90 cents a share, which is currently the market price of Satyam,” Phaneesh Murthy told CNBC TV18.
Satyam shares traded 0.4 per cent lower at Rs 45.30 (88 cents) in line with Bombay Stock Exchange broad indices.
Murthy said bidding for the controlling stake would be a tough task due to the uncertainty about Satyam’s finances and liabilities arising from the class action lawsuits filed in the United States on behalf of Satyam’s shareholders there.
“I think it’s a big struggle for any public company to bid for this company,” he said.
“(From) what we have picked up in terms of the financials, I do believe our bid will be quite a bit south of the 90 cents a share, which is currently the market price of Satyam,” Phaneesh Murthy told CNBC TV18.
Satyam shares traded 0.4 per cent lower at Rs 45.30 (88 cents) in line with Bombay Stock Exchange broad indices.
Murthy said bidding for the controlling stake would be a tough task due to the uncertainty about Satyam’s finances and liabilities arising from the class action lawsuits filed in the United States on behalf of Satyam’s shareholders there.
“I think it’s a big struggle for any public company to bid for this company,” he said.
Tech Mahindra bags Rs 1,500-cr credit line to back its Satyam EoI
20 Mar 2009, ET Bureau
NEW DELHI/MUMBAI: Tech Mahindra has secured a line of credit for Rs 1,500 crore from five banks - SBI, IDBI, Kotak Mahindra Bank, HSBC and PNB
back its expression of interest (EoI) for Satyam Computer Services, said a person familiar with the situation. The company is submitting a solo EoI, though it may tie up with a private equity player to make a final bid, said a person with direct knowledge of the development.
When contacted by ET, Tech Mahindra CEO, Vineet Nayyar declined to comment. All the potential suitors that have registered for Satyam have been sent a request for proposal (RFP) by the Satyam board and are expected to submit an EoI by March 20. The RFP states that any bidder must show proof of Rs 1,500 crore as cash balance when submitting the EoI.
While the other two main Indian bidders - L&T and the Spice Group - have the requisite money, Tech Mahindra has less than Rs 100 crore as cash on its books. The person with knowledge of the situation also said parent Mahindra & Mahindra may infuse part of the money for the bid, if required.
IBM, Fidelity and private equity firm KKR have also registered for bidding for Satyam. Based on the submitted EoIs, eligible bidders will be short-listed and given access to certain business, financial and legal diligence material relating to Satyam, provided they have executed a non-disclosure and non-solicitation agreement, a stand-still agreement and a “no-claims” undertaking. The successful bidder will have four days to deposit with the company the entire subscription amount, and the requisite funds for the public offer in an escrow account.
Meanwhile, the bidders that ET spoke to said they will not make aggressive bids for the accounting fraud-hit company. The suitors cite the legal liabilities and the unknown financial hole in Satyam balance sheet for their conservative bid estimates. While L&T officials refused to comment on the issue, a member of its board said the management is expected to abide by the board’s earlier advice that it should be conservative on its bid for the company.
The company has still not called a board meeting to discuss the financial bid for Satyam, the director said asking not to be quoted.
NEW DELHI/MUMBAI: Tech Mahindra has secured a line of credit for Rs 1,500 crore from five banks - SBI, IDBI, Kotak Mahindra Bank, HSBC and PNB
back its expression of interest (EoI) for Satyam Computer Services, said a person familiar with the situation. The company is submitting a solo EoI, though it may tie up with a private equity player to make a final bid, said a person with direct knowledge of the development.
When contacted by ET, Tech Mahindra CEO, Vineet Nayyar declined to comment. All the potential suitors that have registered for Satyam have been sent a request for proposal (RFP) by the Satyam board and are expected to submit an EoI by March 20. The RFP states that any bidder must show proof of Rs 1,500 crore as cash balance when submitting the EoI.
While the other two main Indian bidders - L&T and the Spice Group - have the requisite money, Tech Mahindra has less than Rs 100 crore as cash on its books. The person with knowledge of the situation also said parent Mahindra & Mahindra may infuse part of the money for the bid, if required.
IBM, Fidelity and private equity firm KKR have also registered for bidding for Satyam. Based on the submitted EoIs, eligible bidders will be short-listed and given access to certain business, financial and legal diligence material relating to Satyam, provided they have executed a non-disclosure and non-solicitation agreement, a stand-still agreement and a “no-claims” undertaking. The successful bidder will have four days to deposit with the company the entire subscription amount, and the requisite funds for the public offer in an escrow account.
Meanwhile, the bidders that ET spoke to said they will not make aggressive bids for the accounting fraud-hit company. The suitors cite the legal liabilities and the unknown financial hole in Satyam balance sheet for their conservative bid estimates. While L&T officials refused to comment on the issue, a member of its board said the management is expected to abide by the board’s earlier advice that it should be conservative on its bid for the company.
The company has still not called a board meeting to discuss the financial bid for Satyam, the director said asking not to be quoted.
KPMG, Deloitte to submit Satyam investigation report
20 Mar 2009, ET Bureau
HYDERABAD: Global audit firms KPMG and Deloitte apart from investment bankers Goldman Sachs and Avendus begin their presentations at the Satyam headquarters in Hyderabad, where the scandal-hit company’s board is meeting for evaluating bids from potential investors.
KPMG and Deloitte are expected to provide preliminary details about Satyam’s financial health by around noon on Friday in Hyderabad.
According to sources, almost 40 member forensic team from KPMG is currently in Hyderabad apart from professionals from Deloitte.
“The audit firms have discussed preliminary report yesterday, and today they are going to submit a formal investigation report,” said a person familiar with the investigation being carried by the audit firms. “Deloitte looked at Satyam’s UK, and other European operations, while KPMG did the rest,” he added on conditions of anonymity.
ET could not independently verify the details about these investigations.
Board members of India’s beleaguered Satyam Computer Services are meeting today in Hyderabad for evaluating takeover bids from potential investors apart from assessing the company’s actual financial health based on inputs from newly-appointed audit firms KPMG and Deloitte.
Potential bidders such as Tech Mahindra, L&T, Spice and iGate, apart from several other companies including IBM are expected to decide their bids based on whatever information is provided to them after the board meeting on Friday.
HYDERABAD: Global audit firms KPMG and Deloitte apart from investment bankers Goldman Sachs and Avendus begin their presentations at the Satyam headquarters in Hyderabad, where the scandal-hit company’s board is meeting for evaluating bids from potential investors.
KPMG and Deloitte are expected to provide preliminary details about Satyam’s financial health by around noon on Friday in Hyderabad.
According to sources, almost 40 member forensic team from KPMG is currently in Hyderabad apart from professionals from Deloitte.
“The audit firms have discussed preliminary report yesterday, and today they are going to submit a formal investigation report,” said a person familiar with the investigation being carried by the audit firms. “Deloitte looked at Satyam’s UK, and other European operations, while KPMG did the rest,” he added on conditions of anonymity.
ET could not independently verify the details about these investigations.
Board members of India’s beleaguered Satyam Computer Services are meeting today in Hyderabad for evaluating takeover bids from potential investors apart from assessing the company’s actual financial health based on inputs from newly-appointed audit firms KPMG and Deloitte.
Potential bidders such as Tech Mahindra, L&T, Spice and iGate, apart from several other companies including IBM are expected to decide their bids based on whatever information is provided to them after the board meeting on Friday.
Satyam board meets today to evaluate bidders
20 Mar 2009, ET Bureau
HYDERABAD: Board members of India's beleaguered Satyam Computer Services are meeting today in Hyderabad for evaluating takeover bids from potential investors apart from assessing the company’s actual financial health based on inputs from newly-appointed audit firms KPMG and Deloitte.
The global audit firms will be making a presentation on Satyam’s revenues and other financial information based upon the investigation carried out by them over past few weeks. Potential bidders such as Tech Mahindra, L&T, Spice and iGate, apart from several other companies including IBM are expected to decide their bids based on whatever information is provided to them after the board meeting on Friday.
The Satyam board is also expected to provide an update on the customer exits and employee attrition. Around 46 customers including State Farm Insurance and Telstra have either snapped ties with Satyam or are in the process of shifting to rival tech firms such as TCS, Wipro and IBM that would impact future revenue streams. On its part, the company said it had bagged orders and work extensions aggregating to $ 250 million over the last two months.
Board members of Satyam include Deepak S. Parekh, Kiran Karnik, C Achuthan, TN Manoharan, Tarun Das and S Balakrishna Mainak.
As reported by ET on Thursday, the scandal-hit Satyam is set to lower its reported revenues over the last seven years by at least 10-15%, according to preliminary estimates.
Tech Mahindra has already lined up around Rs 1500 crore required to make a bid for Satyam from several banks.
HYDERABAD: Board members of India's beleaguered Satyam Computer Services are meeting today in Hyderabad for evaluating takeover bids from potential investors apart from assessing the company’s actual financial health based on inputs from newly-appointed audit firms KPMG and Deloitte.
The global audit firms will be making a presentation on Satyam’s revenues and other financial information based upon the investigation carried out by them over past few weeks. Potential bidders such as Tech Mahindra, L&T, Spice and iGate, apart from several other companies including IBM are expected to decide their bids based on whatever information is provided to them after the board meeting on Friday.
The Satyam board is also expected to provide an update on the customer exits and employee attrition. Around 46 customers including State Farm Insurance and Telstra have either snapped ties with Satyam or are in the process of shifting to rival tech firms such as TCS, Wipro and IBM that would impact future revenue streams. On its part, the company said it had bagged orders and work extensions aggregating to $ 250 million over the last two months.
Board members of Satyam include Deepak S. Parekh, Kiran Karnik, C Achuthan, TN Manoharan, Tarun Das and S Balakrishna Mainak.
As reported by ET on Thursday, the scandal-hit Satyam is set to lower its reported revenues over the last seven years by at least 10-15%, according to preliminary estimates.
Tech Mahindra has already lined up around Rs 1500 crore required to make a bid for Satyam from several banks.
Tuesday, March 17, 2009
Maytas Infra seeks six-month extension for Metro project
March 18, 2009
Maytas Infra Ltd, promoted by the family of beleaguered Satyam Computer Services founder B Ramalinga Raju, has sought an extension of deadline for financial closure of the Rs 12,132 crore Hyderabad Metro project. A consortium led by Maytas was to achieve the financial closure today.
The company will now have to submit a Rs 240 crore bank guarantee and will get a 60-day breather by paying a penalty. “I am yet to know if the Rs 240 crore performance guarantee has been deposited or not,” said the company spokesperson.
“The global recession and the consequent credit squeeze in national and international capital markets has created a force majeure (a clause in contracts that essentially frees both parties from any liability when faced with an extraordinary event) situation. Besides, the ongoing PIL (public interest litigation) is having an extremely deleterious effect on our ability to achieve the financial closure,” said the company. The PIL was filed by the Forum for Better Hyderabad, a non-government organisation.
“We are affected by the global recession and raising of debt (including external commercial borrowing) is proving to be a challenge,” said a company spokesperson.
Hyderabad Metro Rail Limited (HMRL) Chairman CVSK Sarma said Maytas had sought a six-month extension. “We will examine their request and study the legal aspects involved,” he said. He said it was too early to comment on the penalty clause. Earlier, HMRL Managing Director NVS Reddy had said that the decision on the project vested with government. “HMRL is a facilitating agency,” he said.
The 71.6-km rail project is to be executed on a build, operate and transfer basis by a public-private partnership. The government’s contribution will predominantly be land. The government had issued the letter of acceptance for the project in August last year.
Maytas Infra Ltd, promoted by the family of beleaguered Satyam Computer Services founder B Ramalinga Raju, has sought an extension of deadline for financial closure of the Rs 12,132 crore Hyderabad Metro project. A consortium led by Maytas was to achieve the financial closure today.
The company will now have to submit a Rs 240 crore bank guarantee and will get a 60-day breather by paying a penalty. “I am yet to know if the Rs 240 crore performance guarantee has been deposited or not,” said the company spokesperson.
“The global recession and the consequent credit squeeze in national and international capital markets has created a force majeure (a clause in contracts that essentially frees both parties from any liability when faced with an extraordinary event) situation. Besides, the ongoing PIL (public interest litigation) is having an extremely deleterious effect on our ability to achieve the financial closure,” said the company. The PIL was filed by the Forum for Better Hyderabad, a non-government organisation.
“We are affected by the global recession and raising of debt (including external commercial borrowing) is proving to be a challenge,” said a company spokesperson.
Hyderabad Metro Rail Limited (HMRL) Chairman CVSK Sarma said Maytas had sought a six-month extension. “We will examine their request and study the legal aspects involved,” he said. He said it was too early to comment on the penalty clause. Earlier, HMRL Managing Director NVS Reddy had said that the decision on the project vested with government. “HMRL is a facilitating agency,” he said.
The 71.6-km rail project is to be executed on a build, operate and transfer basis by a public-private partnership. The government’s contribution will predominantly be land. The government had issued the letter of acceptance for the project in August last year.
Maytas seeks more time for financial closure for Metro Rail
Hyderabad, Mar 17 (PTI) Maytas Infra Ltd a company owned by former Satyam Chairman B Ramalinga Raju's siblings, has requested the state government to grant extension of time for achieving financial closure for Metro Rail Project.
"The company needs additional time to achieve the milestones mentioned in the Concession Agreement, which includes achievement of financial closure." "The global recession and the consequent credit squeeze in national and international capital markets has created a Force Majeure (super force) situation. Besides, the ongoing PIL is having an extremely deleterious effect on our ability to achieve the Financial Closure," a company's spokesman said in a release here today.
Justifying the extension of time, the spokesman said that topographic surveys, alignment designs, architectural layouts of stations and preliminary designs for civil works are complete, while GAD for railway crossings have been submitted to railway authorities for their approval.
"Inspection by railway authorities has also been completed. World-class consultants have been appointed for engineering and project management, financial advisory and debt syndications, tax planning and insurance," the company said. PTI
"The company needs additional time to achieve the milestones mentioned in the Concession Agreement, which includes achievement of financial closure." "The global recession and the consequent credit squeeze in national and international capital markets has created a Force Majeure (super force) situation. Besides, the ongoing PIL is having an extremely deleterious effect on our ability to achieve the Financial Closure," a company's spokesman said in a release here today.
Justifying the extension of time, the spokesman said that topographic surveys, alignment designs, architectural layouts of stations and preliminary designs for civil works are complete, while GAD for railway crossings have been submitted to railway authorities for their approval.
"Inspection by railway authorities has also been completed. World-class consultants have been appointed for engineering and project management, financial advisory and debt syndications, tax planning and insurance," the company said. PTI
Satyam clients knock doors of TCS, Wipro, IBM
Tuesday,17 March 2009,
Bangalore: Beleaguered Satyam Computers is losing its customer base as around 46 customers have shifted their outsourcing contracts to rival firms such as TCS, Wipro, IBM and Accenture, after the scandal hit hard the company. Most recently, Abu Dhabi Bank has moved out of Satyam and shifted its contract to 3I Infotech, reported The Economic Times.
As most of the clients seek to mitigate the operational risks by working with more stable vendors, customers such as Applied Materials, Kansas State Bank, Telstra, Emerson, Nissan, State Farm Insurance and Sony apart from dozens others have either moved out their projects, or are about to approach other outsourcing vendors.
Companies such as Tech Mahindra, L&T, Spice and iGate are eying at a majority stake in Satyam, while their financial bids will depend upon the amount of business Satyam has from its existing customers. "We are waiting for details on the number of customers existing at Satyam, and the revenue visibility there," said a senior executive at one of the tech firms preparing to bid for a majority stake of Satyam.
According to industry experts who requested anonymity, outsourcing contracts worth anywhere between $350-$500 million are up for renewal by Satyam customers this year, making it critical for the company to ensure that none of these contracts go to a rival firm such as TCS, Wipro and Infosys.
Meanwhile, in some cases vendors are ready to accept contracts from Satyam customers at less than 25 percent, including transition costs.
Siliconindia news bureau
Bangalore: Beleaguered Satyam Computers is losing its customer base as around 46 customers have shifted their outsourcing contracts to rival firms such as TCS, Wipro, IBM and Accenture, after the scandal hit hard the company. Most recently, Abu Dhabi Bank has moved out of Satyam and shifted its contract to 3I Infotech, reported The Economic Times.
As most of the clients seek to mitigate the operational risks by working with more stable vendors, customers such as Applied Materials, Kansas State Bank, Telstra, Emerson, Nissan, State Farm Insurance and Sony apart from dozens others have either moved out their projects, or are about to approach other outsourcing vendors.
Companies such as Tech Mahindra, L&T, Spice and iGate are eying at a majority stake in Satyam, while their financial bids will depend upon the amount of business Satyam has from its existing customers. "We are waiting for details on the number of customers existing at Satyam, and the revenue visibility there," said a senior executive at one of the tech firms preparing to bid for a majority stake of Satyam.
According to industry experts who requested anonymity, outsourcing contracts worth anywhere between $350-$500 million are up for renewal by Satyam customers this year, making it critical for the company to ensure that none of these contracts go to a rival firm such as TCS, Wipro and Infosys.
Meanwhile, in some cases vendors are ready to accept contracts from Satyam customers at less than 25 percent, including transition costs.
Siliconindia news bureau
First the shock, then the groping, now returning hope
New Delhi March 18, 2009,
“It was a shocker,” says an associate of Satyam Computer Services, recalling what he went through on January 7. “We came to the office as usual and all of a sudden people started calling about the television channels which were running this expose and started asking things over the phone. We were totally dumbfounded... They (people, relatives) thought the organisation was going to crumble to pieces. ‘Are you still there? Do you still have a job?’ — we had to face these questions almost continuously.”
This quote, printed in one of the newsletters Satyam has published in the past 45 days, gives us a peek into the mind of Satyam employees, an aspect largely ignored as everyone has focused on the sensational fallout of Ramalinga Raju’s confessions.
Very little has come out of the company as communication, with the exception of an email interview given by AS Murty, the new CEO, which went through several stages of legal clearances, and some off-the-record quotes. But the newsletters hold a mirror to the company’s psyche. They include inspirational quotes from the likes of Winston Churchill, Harrison Ford, Viktor Frankl (who braved the Nazi concentration camp), Francis Bacon and even Confucius. Here are some glimpses of an organisation in transition.
February 6: “Today, I stand before you with all humility, humbled by the onerous task that lies in front of us, but determined to reinstate Satyam to the rightful place in the industry.” — AS Murty, appointed CEO by the government-appointed board.
February 9: “There have been some claims made in the media based on an external email circulation, that large-scale layoffs are being planned in Satyam. As stated earlier, four task forces have been formed. One of the task forces pertains to the issue of cost optimisation. This will involve exploring various options such as optimising infrastructure costs, non-billable travel, balancing onsite-offshore people-related costs, sabbaticals, etc, to keep our expenses in tune with our revenues. Large-scale layoff is definitely not among the options the company is considering at this time.” — Global HR head, SV Krishnan.
February 17: “Spending time with the associates (as staffers are termed) in face-to-face interaction is indeed very rewarding, though we may not have answers to all their questions. We personally try to answer them in the best possible way; we also we try to meet them in groups of 50-60 and normally time such meetings with a crucial story like whether Satyam has 53,000 employees or not and whether they will get their salaries.” — Vijay Rangineni, COO, Satyam BPO.
February 18: “It is almost like you are in a boxing match and you get hit so hard that you are flat on the ground, but you still have enough passion, energy and spirit left in you that you can still come up and take on your opponent with confidence…We need to break the timeline from here on. I would probably break the timeline to maybe the next six-eight weeks and then another two months after that and then I would have a good sense of where we have reached.” — Rajan Nagarajan, head, solutions.
February 25: An internal survey with about 120 respondents showed the support associates received from family and friends during these times. “A lot depended on how we explained to our families, they formed ideas on our feedback, too, stress levels were high then, but now it is ok, we‘ll take it.” – Sudha, an associate.
“You (Satyam employees) are the primary reason because of which Satyam will be able to return to its leadership position... Fortunately, baseless rumours and inaccurate reports are beginning to die out as people see that Satyam has made its way back and is doing so well.” – Kiran Karnik, chairman of the new government-appointed board.
March 17: “It will take some time for us to get accustomed to the HR policies of the investor that takes over the company. We find solace in the board’s decisions to safeguard the interests of the employees and barring the to-be investor from selling the company’s assets for at least three years after it takes over. We are still committed to Satyam and will continue to do so even after an investor acquires it, as we will still be associated with the same brand.” — a Hyderabad-based Satyam associate.
The last one is not from a newsletter. The company no longer shares these with the media.
“It was a shocker,” says an associate of Satyam Computer Services, recalling what he went through on January 7. “We came to the office as usual and all of a sudden people started calling about the television channels which were running this expose and started asking things over the phone. We were totally dumbfounded... They (people, relatives) thought the organisation was going to crumble to pieces. ‘Are you still there? Do you still have a job?’ — we had to face these questions almost continuously.”
This quote, printed in one of the newsletters Satyam has published in the past 45 days, gives us a peek into the mind of Satyam employees, an aspect largely ignored as everyone has focused on the sensational fallout of Ramalinga Raju’s confessions.
Very little has come out of the company as communication, with the exception of an email interview given by AS Murty, the new CEO, which went through several stages of legal clearances, and some off-the-record quotes. But the newsletters hold a mirror to the company’s psyche. They include inspirational quotes from the likes of Winston Churchill, Harrison Ford, Viktor Frankl (who braved the Nazi concentration camp), Francis Bacon and even Confucius. Here are some glimpses of an organisation in transition.
February 6: “Today, I stand before you with all humility, humbled by the onerous task that lies in front of us, but determined to reinstate Satyam to the rightful place in the industry.” — AS Murty, appointed CEO by the government-appointed board.
February 9: “There have been some claims made in the media based on an external email circulation, that large-scale layoffs are being planned in Satyam. As stated earlier, four task forces have been formed. One of the task forces pertains to the issue of cost optimisation. This will involve exploring various options such as optimising infrastructure costs, non-billable travel, balancing onsite-offshore people-related costs, sabbaticals, etc, to keep our expenses in tune with our revenues. Large-scale layoff is definitely not among the options the company is considering at this time.” — Global HR head, SV Krishnan.
February 17: “Spending time with the associates (as staffers are termed) in face-to-face interaction is indeed very rewarding, though we may not have answers to all their questions. We personally try to answer them in the best possible way; we also we try to meet them in groups of 50-60 and normally time such meetings with a crucial story like whether Satyam has 53,000 employees or not and whether they will get their salaries.” — Vijay Rangineni, COO, Satyam BPO.
February 18: “It is almost like you are in a boxing match and you get hit so hard that you are flat on the ground, but you still have enough passion, energy and spirit left in you that you can still come up and take on your opponent with confidence…We need to break the timeline from here on. I would probably break the timeline to maybe the next six-eight weeks and then another two months after that and then I would have a good sense of where we have reached.” — Rajan Nagarajan, head, solutions.
February 25: An internal survey with about 120 respondents showed the support associates received from family and friends during these times. “A lot depended on how we explained to our families, they formed ideas on our feedback, too, stress levels were high then, but now it is ok, we‘ll take it.” – Sudha, an associate.
“You (Satyam employees) are the primary reason because of which Satyam will be able to return to its leadership position... Fortunately, baseless rumours and inaccurate reports are beginning to die out as people see that Satyam has made its way back and is doing so well.” – Kiran Karnik, chairman of the new government-appointed board.
March 17: “It will take some time for us to get accustomed to the HR policies of the investor that takes over the company. We find solace in the board’s decisions to safeguard the interests of the employees and barring the to-be investor from selling the company’s assets for at least three years after it takes over. We are still committed to Satyam and will continue to do so even after an investor acquires it, as we will still be associated with the same brand.” — a Hyderabad-based Satyam associate.
The last one is not from a newsletter. The company no longer shares these with the media.
Telstra ends 32 mn-Aus dlr contract with Satyam: Report
Mar 17 (PTI) Australian telecom giant Telstra has reportedly dropped outsourcing partner Satyam Computer Services from an applications support contract worth 32 million Aus dollar annually.
The troubled Indian outsourcing firm's IT contracts with Telstra will be passed on to EDS, according to sources that were quoted by a 'The Australian' daily here today.
Telstra Chief Executive Sol Trujillo, who leaves the company on June 30, sat on the board of EDS before joining the telco in 2005, the report said.
According to the daily, Telstra refused to comment on the report of dumping Satyam and said the decision about its supply arrangements with individual vendors was not for media release.
'The Australian' further said that new Satyam Chief Executive A S Murty is understood to have flown to Australia last week in a last-ditch bid to retain the Telstra contract and the Indian IT company placed a compelling case to continue with Telstra.
The recent fraud at Satyam is believed to have led to the fallout, but a source close to the deal denied that the IT firm's scandal was responsible for Telstra's decision to tear up its contract, saying it was instead linked to the Indian outsourcer's performance. PTI
The troubled Indian outsourcing firm's IT contracts with Telstra will be passed on to EDS, according to sources that were quoted by a 'The Australian' daily here today.
Telstra Chief Executive Sol Trujillo, who leaves the company on June 30, sat on the board of EDS before joining the telco in 2005, the report said.
According to the daily, Telstra refused to comment on the report of dumping Satyam and said the decision about its supply arrangements with individual vendors was not for media release.
'The Australian' further said that new Satyam Chief Executive A S Murty is understood to have flown to Australia last week in a last-ditch bid to retain the Telstra contract and the Indian IT company placed a compelling case to continue with Telstra.
The recent fraud at Satyam is believed to have led to the fallout, but a source close to the deal denied that the IT firm's scandal was responsible for Telstra's decision to tear up its contract, saying it was instead linked to the Indian outsourcer's performance. PTI
Satyam facing attrition woes
17 Mar, 2009,
HYDERABAD: The beleaguered IT firm Satyam is facing a huge attrition problem with about 3,500 employees having quit the firm over the last one month.
The firm, which has initiated a bidding process to select a strategic investor, had 47,570 employees in employee address book on January 9, two days after Ramalinga Raju had admitted to his fraud. On March 16, however, employee numbers slipped to 44,130.
“We check the address book on a daily basis and saw this rapid decline over the last few days,'' a senior associate said. Employees shared that people, whether on bench or on projects, were quitting in droves. They said that what seems like a sudden exodus is due to the frenetic job hunting activity that had started soon after Raju admitted to his fraud.
“If earlier, people would get jobs within days, now it takes at least a couple of months. The spurt in number of people leaving could be because jobs are materialising,'' an associate said, adding that three of his team members had quit in the last one week itself.
While many on the bench in Satyam quit for fear of being laid off, irrespective of how the company's future shapes up, many working on projects have also taken the plunge, joining rival firms or even their clients for some much needed stability.
“I had started looking out in January itself, after Raju made his confession. But, nothing seemed to be working out at that time. I finally bagged a good offer about ten days ago,” said a US-based associate, who is now serving his notice period.
Observers said that people moving out wasn't exactly a worrisome sign for the firm, unless of course they were involved in important projects. Employees shared that while initially some of their colleagues had to even take a salary cut or join another firm at the same scale as in Satyam, things were looking up now.
HYDERABAD: The beleaguered IT firm Satyam is facing a huge attrition problem with about 3,500 employees having quit the firm over the last one month.
The firm, which has initiated a bidding process to select a strategic investor, had 47,570 employees in employee address book on January 9, two days after Ramalinga Raju had admitted to his fraud. On March 16, however, employee numbers slipped to 44,130.
“We check the address book on a daily basis and saw this rapid decline over the last few days,'' a senior associate said. Employees shared that people, whether on bench or on projects, were quitting in droves. They said that what seems like a sudden exodus is due to the frenetic job hunting activity that had started soon after Raju admitted to his fraud.
“If earlier, people would get jobs within days, now it takes at least a couple of months. The spurt in number of people leaving could be because jobs are materialising,'' an associate said, adding that three of his team members had quit in the last one week itself.
While many on the bench in Satyam quit for fear of being laid off, irrespective of how the company's future shapes up, many working on projects have also taken the plunge, joining rival firms or even their clients for some much needed stability.
“I had started looking out in January itself, after Raju made his confession. But, nothing seemed to be working out at that time. I finally bagged a good offer about ten days ago,” said a US-based associate, who is now serving his notice period.
Observers said that people moving out wasn't exactly a worrisome sign for the firm, unless of course they were involved in important projects. Employees shared that while initially some of their colleagues had to even take a salary cut or join another firm at the same scale as in Satyam, things were looking up now.
Brakes on Hyderabad Metro project
March 17, 2009
The IT industry in Hyderabad has taken a hit thanks to Ramalinga Raju. And now, the city's wait for decongestion in traffic gets longer thanks to his son Teja Raju who owns Maytas Infra.
The nearly bankrupt construction company has not shown any signs that it can execute the project costing Rs 12,000 crore.
They have to provide a bank guarantee of Rs 240 crore to the government on the day of financial closure, March 17.
"There will be a lot of suspicion if they submit any document as they will have to make it available to the public. How will they managed it?" said C Ramchandriah, a member of Citizens for a Better Public Transport.
The government now has two options -- scrap the deal or extend the date of closure, something Maytas would want. But the latter would only invite criticism of a deal between Chief Minister YS Rajasekhara Reddy and the Raju family, which would be a no-no at election time.
Sources say that Maytas Infra, owned by Ramalinga Raju's son Teja Raju has in the last two months laid off professionals working on this very project and has been unable to even pay salaries. It is an indication that the Metro rail project in Hyderabad has derailed even before it started.
The IT industry in Hyderabad has taken a hit thanks to Ramalinga Raju. And now, the city's wait for decongestion in traffic gets longer thanks to his son Teja Raju who owns Maytas Infra.
The nearly bankrupt construction company has not shown any signs that it can execute the project costing Rs 12,000 crore.
They have to provide a bank guarantee of Rs 240 crore to the government on the day of financial closure, March 17.
"There will be a lot of suspicion if they submit any document as they will have to make it available to the public. How will they managed it?" said C Ramchandriah, a member of Citizens for a Better Public Transport.
The government now has two options -- scrap the deal or extend the date of closure, something Maytas would want. But the latter would only invite criticism of a deal between Chief Minister YS Rajasekhara Reddy and the Raju family, which would be a no-no at election time.
Sources say that Maytas Infra, owned by Ramalinga Raju's son Teja Raju has in the last two months laid off professionals working on this very project and has been unable to even pay salaries. It is an indication that the Metro rail project in Hyderabad has derailed even before it started.
Maytas to seek extension for financial closure
Express News Service 17 Mar 2009
Maytas Infrastructure, which bagged the Rs 12,000- crore Hyderabad Metro Rail Project, is likely to seek extension from the State Government to achieve financial closure. Sources said, since the company couldn’t achieve financial closure by March 17, it will write to the authorities citing its inability to raise necessary funds from banks and financial institutions due to the ongoing economic crisis.
“They (Maytas) will communicate with the officials about the reasons for the delay in achieving financial closure and borrow time,” said a company official. As per the bid agreement, the financial closure should be done within 180 days of winning the contract.
The project was awarded to Nava Bharat-led consortium, which has Maytas as the lead partner, on September 19, 2008. It also has Infrastructure Leasing and Financial Service Ltd (IL&FS) and Italian- Thai Development Public Company Ltd, Thailand’s largest civil and infrastructure construction company as other partners. By executing the project, the consortium, also agreed to pay Rs 1,240 crore per annum to the Government as revenue.
While the total cost of the 71 km project is estimated to be Rs 12,000 crore, Maytas is expected to raise equity of Rs 4,000 crore besides a debt component of Rs 6,000 crore.
Besides, they are also expected to furnish performance security of Rs 240 crore as bank guarantee by March 17 and the Government is expected to allocate land within the next 60 days.
Incidentally, even if the company fails to achieve the financial closure, one of the clauses in the contract will rescue Maytas. They can deposit the bank guarantee of Rs 240 crore and get 60 days for financial closure. But Maytas will have to pay 1 per cent of the Rs 240 crore -- Rs 24 lakh per day -- as penalty, payable every week as advance.
Now, whether Maytas will be successful in seeking additional time and thereby achieve financial closure in these tough times, remains to be seen.
Maytas Infrastructure, which bagged the Rs 12,000- crore Hyderabad Metro Rail Project, is likely to seek extension from the State Government to achieve financial closure. Sources said, since the company couldn’t achieve financial closure by March 17, it will write to the authorities citing its inability to raise necessary funds from banks and financial institutions due to the ongoing economic crisis.
“They (Maytas) will communicate with the officials about the reasons for the delay in achieving financial closure and borrow time,” said a company official. As per the bid agreement, the financial closure should be done within 180 days of winning the contract.
The project was awarded to Nava Bharat-led consortium, which has Maytas as the lead partner, on September 19, 2008. It also has Infrastructure Leasing and Financial Service Ltd (IL&FS) and Italian- Thai Development Public Company Ltd, Thailand’s largest civil and infrastructure construction company as other partners. By executing the project, the consortium, also agreed to pay Rs 1,240 crore per annum to the Government as revenue.
While the total cost of the 71 km project is estimated to be Rs 12,000 crore, Maytas is expected to raise equity of Rs 4,000 crore besides a debt component of Rs 6,000 crore.
Besides, they are also expected to furnish performance security of Rs 240 crore as bank guarantee by March 17 and the Government is expected to allocate land within the next 60 days.
Incidentally, even if the company fails to achieve the financial closure, one of the clauses in the contract will rescue Maytas. They can deposit the bank guarantee of Rs 240 crore and get 60 days for financial closure. But Maytas will have to pay 1 per cent of the Rs 240 crore -- Rs 24 lakh per day -- as penalty, payable every week as advance.
Now, whether Maytas will be successful in seeking additional time and thereby achieve financial closure in these tough times, remains to be seen.
HC notice to Maytas Infra, stays case on Vedanta
17 Mar 2009
HYDERABAD:Justice K C Bhanu of the AP High Court on Monday stayed all the criminal proceedings launched by Punjagutta police in Hyderabad against Vedanta Aluminium Limited. It can be recalled Maytas Infra company had filed a criminal complaint against the company following its alleged unilateral invoking of bank guarantee worth Rs 47 crore furnished by Maytas Infra to Vedanta Aluminium.
The judge, while hearing the petition filed by Vedanta which justified the invoking of bank guarantee, gave notice to Maytas Infra asking it to file its reply and stayed the criminal proceedings for a period of six weeks.
Vedanta wanted a township for its employees to be built by Maytas Infra at a cost of Rs 232 crore at Jharsiguda in Orissa. According to it, Maytas failed in fulfilling the work and hence as per the contractual obligations revoked the bank guarantee because it had already paid mobilisation advances to Maytas Infra.
HYDERABAD:Justice K C Bhanu of the AP High Court on Monday stayed all the criminal proceedings launched by Punjagutta police in Hyderabad against Vedanta Aluminium Limited. It can be recalled Maytas Infra company had filed a criminal complaint against the company following its alleged unilateral invoking of bank guarantee worth Rs 47 crore furnished by Maytas Infra to Vedanta Aluminium.
The judge, while hearing the petition filed by Vedanta which justified the invoking of bank guarantee, gave notice to Maytas Infra asking it to file its reply and stayed the criminal proceedings for a period of six weeks.
Vedanta wanted a township for its employees to be built by Maytas Infra at a cost of Rs 232 crore at Jharsiguda in Orissa. According to it, Maytas failed in fulfilling the work and hence as per the contractual obligations revoked the bank guarantee because it had already paid mobilisation advances to Maytas Infra.
US-based PE firm to partner iGate to bid for Satyam
17 Mar 2009, ET Bureau
MUMBAI: A US-based private equity firm will partner with Phaneesh Murthy’s iGate to bid for Satyam Computer Services. Although the PE firm has not put in an expression of interest, the partnership with iGate is in line with Satyam board’s stipulations that companies bidding to acquire the software company need to have access to sufficient funds, said iGate CEO Phaneesh Murty.
The unnamed PE firm has funds worth around $5.5 billion under its management. The firm is partnering with iGate because of the management expertise in running an IT business, Mr Murty added.
As per the conditions laid out by the Satyam board, iGate will have to show access to a minimum amount of Rs 1,500 crore on or before March 20, to be eligible for the bidding process. In the next stage, the company will get access to financial, legal and business documents based on which it will put in its bid, along with the PE player.
iGate had earlier decided not to bid for Satyam but later revised its stance and put in an expression of interest. However, the decision for an initial bid is based on the understanding that the restated financials of satyam for January 2009 and February 2009, will be provided, as well as a management estimate of the business in 2009.
"There are three issues here: to what extent are the revenues flawed, have customers moved away and are still moving away, and the recession," said Mr Murthy.
MUMBAI: A US-based private equity firm will partner with Phaneesh Murthy’s iGate to bid for Satyam Computer Services. Although the PE firm has not put in an expression of interest, the partnership with iGate is in line with Satyam board’s stipulations that companies bidding to acquire the software company need to have access to sufficient funds, said iGate CEO Phaneesh Murty.
The unnamed PE firm has funds worth around $5.5 billion under its management. The firm is partnering with iGate because of the management expertise in running an IT business, Mr Murty added.
As per the conditions laid out by the Satyam board, iGate will have to show access to a minimum amount of Rs 1,500 crore on or before March 20, to be eligible for the bidding process. In the next stage, the company will get access to financial, legal and business documents based on which it will put in its bid, along with the PE player.
iGate had earlier decided not to bid for Satyam but later revised its stance and put in an expression of interest. However, the decision for an initial bid is based on the understanding that the restated financials of satyam for January 2009 and February 2009, will be provided, as well as a management estimate of the business in 2009.
"There are three issues here: to what extent are the revenues flawed, have customers moved away and are still moving away, and the recession," said Mr Murthy.
iGate not to bid for Satyam at current market price: Murthy
16 Mar 2009, PTI
NEW DELHI: US-based outsourcing company iGate on Monday said it would not go for Satyam Computer at its current market price and sought more clarity on the financials and liabilities of the target company before the final bidding.
At Monday's share price of Rs 45.30 (88 cents), Satyam is valued at Rs 3,049 crore. Murthy had earlier said the company could bid below 90 cents a share.
Though he did not comment on valuation, he said the value of Satyam Computer is continuously being eroded.
"We have heard that customers and employees of (Satyam) were leaving and are concerned about the value erosion. The January and February numbers may not necessarily capture the future impact of customer loss in those months. Hence, I believe the estimate of 2009 revenue outlook is an important piece of information to have, especially in this current slowdown environment", he said.
iGate joined the fray for acquiring Satyam after dithering for some time. Murthy said he is yet to even take call if at all iGate would bid.
"If I dont get the fresh set of financial information including the January and February numbers, I would not be interested in bidding. If we get the full financial information, we need to study and understand the extent of liabilities for us to take a call on whether we want to take it forward", he said.
"From the information that we have gathered, I think our bid will be lower than the current market price. But we will have more clarity once we have access to the new financial numbers and once we have studied and analysed the fresh set of numbers, including the extent of liabilities," Murthy said.
Satyam Computer, which has a few class action suits filed against it in the US, is struggling for survival since January when its founder B Ramalinga Raju disclosed that he has falsified accounts and inflated profits for years .
Following the revelation, the government took over the board and the company is now in process of selling a majority stake to a strategic investor.
Besides iGate, engineering giant L&T, IT firm Tech Mahindra and Spice Group have submitted their expressions of interest for acquiring 51 per cent in Satyam.
NEW DELHI: US-based outsourcing company iGate on Monday said it would not go for Satyam Computer at its current market price and sought more clarity on the financials and liabilities of the target company before the final bidding.
At Monday's share price of Rs 45.30 (88 cents), Satyam is valued at Rs 3,049 crore. Murthy had earlier said the company could bid below 90 cents a share.
Though he did not comment on valuation, he said the value of Satyam Computer is continuously being eroded.
"We have heard that customers and employees of (Satyam) were leaving and are concerned about the value erosion. The January and February numbers may not necessarily capture the future impact of customer loss in those months. Hence, I believe the estimate of 2009 revenue outlook is an important piece of information to have, especially in this current slowdown environment", he said.
iGate joined the fray for acquiring Satyam after dithering for some time. Murthy said he is yet to even take call if at all iGate would bid.
"If I dont get the fresh set of financial information including the January and February numbers, I would not be interested in bidding. If we get the full financial information, we need to study and understand the extent of liabilities for us to take a call on whether we want to take it forward", he said.
"From the information that we have gathered, I think our bid will be lower than the current market price. But we will have more clarity once we have access to the new financial numbers and once we have studied and analysed the fresh set of numbers, including the extent of liabilities," Murthy said.
Satyam Computer, which has a few class action suits filed against it in the US, is struggling for survival since January when its founder B Ramalinga Raju disclosed that he has falsified accounts and inflated profits for years .
Following the revelation, the government took over the board and the company is now in process of selling a majority stake to a strategic investor.
Besides iGate, engineering giant L&T, IT firm Tech Mahindra and Spice Group have submitted their expressions of interest for acquiring 51 per cent in Satyam.
Monday, March 16, 2009
Satyam bidder will have to stay put in SPV for 3 years
16 Mar 2009, ET Bureau
HYDERABAD: The government-appointed board of Satyam Computer Services has attempted to ensure that an investor or a group that gains controlling stake in the IT firm will have the responsibilities of steering the firm out of the current crisis and stabilising its operations.
The ground rules for suitors, laid down by the board, make it clear that a bidder, who floats a special purpose vehicle (SPV) to buy into Satyam, cannot sell his stake in the entity (SPV) for three years. The extra caution has been taken to ensure that if an SPV acquires Satyam, it does not jump the ship mid-way.
The new owner, in any case, cannot sell shares of Satyam that he acquires through a preferential allotment for three years. The board has fixed a minimum lock in of three years to keep frivolous bidders away.
In addition to this stipulation, the board has also said there cannot be any change in the controlling interest in an SPV for three years from the date of the preferential allotment, if the bidder uses this route. A change, if any, in the shareholding pattern of the SPV, would require prior approval of the capital market regulator Sebi and the Company Law Board (CLB), said sources privy to the development.
An SPV is a separate legal entity created to handle a venture on behalf of a parent company, and has a structure that makes its obligations secure even if the parent goes bankrupt.
Bidders, that need to raise money to acquire Satyam, are likely to float SPVs. There could be different permutations and combinations, including tie-ups with private equity firms, for SPV. A clutch of private equity firms, including Texas Pacific Group and Kohlberg Kravis and Roberts (KKR), are in the race for Satyam, besides IBM and domestic firms L&T, Tech Mahindra and BK Modi-promoted Spice Group.
Satyam needs a capital infusion of Rs 1,000 crore, of which around Rs 700 crore will be used to repay loans. The bidder will have to show proof of availability of Rs 1,500 crore ($190 million) while submitting the detailed expression of interest (EOI). Bidders will have to submit their detailed EOI by March 20, and those shortlisted will then be given access to information on Satyam.
The board has, however, said it cannot, with certainty or accuracy, re-state Satyam’s accounts. But lack of clarity on the financials and legal liabilities of Satyam may make it tough for bidders to put a price tag on the firm.
The IT firm is struggling for survival after its defamed founder B Ramalinga Raju admitted to perpetrating a Rs 7,000-crore financial fraud. A successful bidder will have to deposit funds needed to buy the company ahead of the preferential allotment of shares in the troubled company, and could find its bid disqualified if it fails to put in place the required funds, people familiar with the matter said.
As reported by ET on Sunday last, qualified bidders will have to furnish a Rs 100-crore guarantee while putting in their final financial bids and suitors will not be allowed to change the bid p
HYDERABAD: The government-appointed board of Satyam Computer Services has attempted to ensure that an investor or a group that gains controlling stake in the IT firm will have the responsibilities of steering the firm out of the current crisis and stabilising its operations.
The ground rules for suitors, laid down by the board, make it clear that a bidder, who floats a special purpose vehicle (SPV) to buy into Satyam, cannot sell his stake in the entity (SPV) for three years. The extra caution has been taken to ensure that if an SPV acquires Satyam, it does not jump the ship mid-way.
The new owner, in any case, cannot sell shares of Satyam that he acquires through a preferential allotment for three years. The board has fixed a minimum lock in of three years to keep frivolous bidders away.
In addition to this stipulation, the board has also said there cannot be any change in the controlling interest in an SPV for three years from the date of the preferential allotment, if the bidder uses this route. A change, if any, in the shareholding pattern of the SPV, would require prior approval of the capital market regulator Sebi and the Company Law Board (CLB), said sources privy to the development.
An SPV is a separate legal entity created to handle a venture on behalf of a parent company, and has a structure that makes its obligations secure even if the parent goes bankrupt.
Bidders, that need to raise money to acquire Satyam, are likely to float SPVs. There could be different permutations and combinations, including tie-ups with private equity firms, for SPV. A clutch of private equity firms, including Texas Pacific Group and Kohlberg Kravis and Roberts (KKR), are in the race for Satyam, besides IBM and domestic firms L&T, Tech Mahindra and BK Modi-promoted Spice Group.
Satyam needs a capital infusion of Rs 1,000 crore, of which around Rs 700 crore will be used to repay loans. The bidder will have to show proof of availability of Rs 1,500 crore ($190 million) while submitting the detailed expression of interest (EOI). Bidders will have to submit their detailed EOI by March 20, and those shortlisted will then be given access to information on Satyam.
The board has, however, said it cannot, with certainty or accuracy, re-state Satyam’s accounts. But lack of clarity on the financials and legal liabilities of Satyam may make it tough for bidders to put a price tag on the firm.
The IT firm is struggling for survival after its defamed founder B Ramalinga Raju admitted to perpetrating a Rs 7,000-crore financial fraud. A successful bidder will have to deposit funds needed to buy the company ahead of the preferential allotment of shares in the troubled company, and could find its bid disqualified if it fails to put in place the required funds, people familiar with the matter said.
As reported by ET on Sunday last, qualified bidders will have to furnish a Rs 100-crore guarantee while putting in their final financial bids and suitors will not be allowed to change the bid p
(SFIO), has sought clarifications from 24 Indian companies
16 Mar 2009, ET Bureau
NEW DELHI: The government’s specialised investigation agency, the Serious Fraud Investigation Office (SFIO), has sought clarifications from 24 Indian companies after it found that the former management of scam-hit Satyam Computer Services had forged invoices against them. The companies are from sectors like aviation, telecom and consumer durables.
SFIO has shot-off letters to the management of these companies asking for details of payments that have been made to Satyam on many instances.
“SFIO is verifying several transactions that were made on behalf of Satyam. The agency is seeking details from these companies, that purportedly made payments to the I-T company for its services to them,” a senior government official, who did not wish to be named, said.
SFIO’s move to seek independent clarifications from companies is aimed at finding the veracity of transactions. Satyam has a list of clients that include over 150 fortune-500 companies, many of them foreign companies.
SFIO, which was asked to investigate the Satyam scam on January 13, has one more month left to submit its final report to the ministry of corporate affairs. The agency is looking into the veracity of invoices to track the flow of funds into and out of the company.
The government has already said that fraudulent diversion of funds from Satyam cannot be ruled out. SFIO, which comprises officers from agencies like the department of income-tax, revenue, Sebi and Enforcement Directorate, is looking into the affairs of 325 companies related to Satyam and its disgraced founder Ramalinga Raju.
It is also investigating into the affairs of Maytas Properties and Maytas Infra, promoted by the Raju family. Apart from SFIO, capital market regulator Sebi and ED are also independently investigating into the affairs of Satyam, which prior to the scam was India’s fourth-largest software exporter.
NEW DELHI: The government’s specialised investigation agency, the Serious Fraud Investigation Office (SFIO), has sought clarifications from 24 Indian companies after it found that the former management of scam-hit Satyam Computer Services had forged invoices against them. The companies are from sectors like aviation, telecom and consumer durables.
SFIO has shot-off letters to the management of these companies asking for details of payments that have been made to Satyam on many instances.
“SFIO is verifying several transactions that were made on behalf of Satyam. The agency is seeking details from these companies, that purportedly made payments to the I-T company for its services to them,” a senior government official, who did not wish to be named, said.
SFIO’s move to seek independent clarifications from companies is aimed at finding the veracity of transactions. Satyam has a list of clients that include over 150 fortune-500 companies, many of them foreign companies.
SFIO, which was asked to investigate the Satyam scam on January 13, has one more month left to submit its final report to the ministry of corporate affairs. The agency is looking into the veracity of invoices to track the flow of funds into and out of the company.
The government has already said that fraudulent diversion of funds from Satyam cannot be ruled out. SFIO, which comprises officers from agencies like the department of income-tax, revenue, Sebi and Enforcement Directorate, is looking into the affairs of 325 companies related to Satyam and its disgraced founder Ramalinga Raju.
It is also investigating into the affairs of Maytas Properties and Maytas Infra, promoted by the Raju family. Apart from SFIO, capital market regulator Sebi and ED are also independently investigating into the affairs of Satyam, which prior to the scam was India’s fourth-largest software exporter.
Role of regulators being probed in Satyam case: CBI
15 Mar 2009 PTI
NEW DELHI: The CBI appears to have got hold of evidence to prove how Satyam Computer's revenues were inflated and has sent its officials to Mumbai to probe the role of regulators in the case pertaining to the Rs 7,800 crore accounting fraud in the IT firm.
Official sources said that a CBI team was in Mumbai to understand the share transactions of the Satyam group of companies on the National Stock Exchange and the Bombay Stock Exchange.
They said the modus operandi used by the accused involved generating fake invoices and further showing the imaginary money as being pumping into the financial system and showing profit which was never there.
CBI, at present, is questioning the disgraced former Chairman of Satyam, B Ramalinga Raju, and four others, including the suspended auditors of Price Waterhouse. Their custody was handed over to CBI recently.
Besides Ramalinga Raju, his brother Rama Raju, Satyam's former CFO Srinivas Vadlamani, G Gopalakrishnan and Srinivas Talluri have been arrested in the case.
The agency was probing the rotation of funds and role of front companies used in rotation of funds, the sources said, adding that besides this, the conduct of the regulators was also being probed and if need be, some officials may also be probed.
NEW DELHI: The CBI appears to have got hold of evidence to prove how Satyam Computer's revenues were inflated and has sent its officials to Mumbai to probe the role of regulators in the case pertaining to the Rs 7,800 crore accounting fraud in the IT firm.
Official sources said that a CBI team was in Mumbai to understand the share transactions of the Satyam group of companies on the National Stock Exchange and the Bombay Stock Exchange.
They said the modus operandi used by the accused involved generating fake invoices and further showing the imaginary money as being pumping into the financial system and showing profit which was never there.
CBI, at present, is questioning the disgraced former Chairman of Satyam, B Ramalinga Raju, and four others, including the suspended auditors of Price Waterhouse. Their custody was handed over to CBI recently.
Besides Ramalinga Raju, his brother Rama Raju, Satyam's former CFO Srinivas Vadlamani, G Gopalakrishnan and Srinivas Talluri have been arrested in the case.
The agency was probing the rotation of funds and role of front companies used in rotation of funds, the sources said, adding that besides this, the conduct of the regulators was also being probed and if need be, some officials may also be probed.
Friday, March 13, 2009
Indian, global players, PE firms bid for Satyam: Board
14 Mar 2009
HYDERABAD: Taking the process of finding a suitable strategic partner forward, Satyam Computer Services Ltd said on Friday that the process of registration of bidders, which ended on Thursday, has received adequate response from both Indian and international bidders, including private equity firms.
At its meeting on Friday, Satyam's board of directors said that it had taken steps to release the request for proposals (RFPs) in the course of the day to all registered bidders. Further, as announced earlier that it would get a retired justice or chief justice of the Supreme Court to oversee and guide the board throughout the selection process, the release said that the board had requested former Chief Justice of India, S P Bharucha, to oversee the selection process, to which he has agreed.
The board met with Bharucha on March 11, 2009 in Mumbai and discussed the proposed process for the induction of a strategic investor.
Under the procedure finalised by the board, the expression of interest (EOI) from interested bidders along with proof of funds of Rs 1,500 crore ($ 290 million based on exchange rate of Rs 51.635 to $1) is expected to be received by 5 pm Indian Standard Time on Friday, March 20, 2009.
Bidders who have submitted compliant EOIs and executed certain pre-transaction documents, will have access to data and information regarding the Company to enable them to submit technical and financial bids. The release added.
Meanwhile, iGate, an integrated technology and operations company, made a surprising volte face as it announced that it has filed a formal expression of interest in Satyam based on the process specified by the board of Satyam. iGate is now expecting to receive from Satyam Computer Services the latest financial statements, including those for the quarter ended December 2008 and the months of January and February 2009, and updated position on liabilities and potential liabilities of the company. In the event of iGate not receiving this information immediately, it has no option but to withdraw its expression of interest, the company said in a release.
iGate, which first evinced in acquiring parts of Satyam in January, backed off later saying that the scam-hit company has lost its value with customers moving out of the company. "The process has taken time, customers have moved out and Satyam has lost its value. We have lost interest in buying the company," Phaneesh Murthy CEO told TOI a few weeks ago. "Until the new board releases new account, nobody is going to move. That is the first picture," he added.
"We continue to be concerned about the probability of significant value erosion at Satyam. However, our interest to pursue this transaction is subject to the evaluation of the financial position of Satyam and the extent of its possible value erosion. Since the board of Satyam had put a deadline, we filed our expression of interest. We still believe that it is a long shot for us to consummate this transaction in its current form," said Murthy.
HYDERABAD: Taking the process of finding a suitable strategic partner forward, Satyam Computer Services Ltd said on Friday that the process of registration of bidders, which ended on Thursday, has received adequate response from both Indian and international bidders, including private equity firms.
At its meeting on Friday, Satyam's board of directors said that it had taken steps to release the request for proposals (RFPs) in the course of the day to all registered bidders. Further, as announced earlier that it would get a retired justice or chief justice of the Supreme Court to oversee and guide the board throughout the selection process, the release said that the board had requested former Chief Justice of India, S P Bharucha, to oversee the selection process, to which he has agreed.
The board met with Bharucha on March 11, 2009 in Mumbai and discussed the proposed process for the induction of a strategic investor.
Under the procedure finalised by the board, the expression of interest (EOI) from interested bidders along with proof of funds of Rs 1,500 crore ($ 290 million based on exchange rate of Rs 51.635 to $1) is expected to be received by 5 pm Indian Standard Time on Friday, March 20, 2009.
Bidders who have submitted compliant EOIs and executed certain pre-transaction documents, will have access to data and information regarding the Company to enable them to submit technical and financial bids. The release added.
Meanwhile, iGate, an integrated technology and operations company, made a surprising volte face as it announced that it has filed a formal expression of interest in Satyam based on the process specified by the board of Satyam. iGate is now expecting to receive from Satyam Computer Services the latest financial statements, including those for the quarter ended December 2008 and the months of January and February 2009, and updated position on liabilities and potential liabilities of the company. In the event of iGate not receiving this information immediately, it has no option but to withdraw its expression of interest, the company said in a release.
iGate, which first evinced in acquiring parts of Satyam in January, backed off later saying that the scam-hit company has lost its value with customers moving out of the company. "The process has taken time, customers have moved out and Satyam has lost its value. We have lost interest in buying the company," Phaneesh Murthy CEO told TOI a few weeks ago. "Until the new board releases new account, nobody is going to move. That is the first picture," he added.
"We continue to be concerned about the probability of significant value erosion at Satyam. However, our interest to pursue this transaction is subject to the evaluation of the financial position of Satyam and the extent of its possible value erosion. Since the board of Satyam had put a deadline, we filed our expression of interest. We still believe that it is a long shot for us to consummate this transaction in its current form," said Murthy.
Satyam gets over 100 applications
Hyderabad March 13
The Satyam Computer Services’ call for registrations for the bidding process has received an overwhelming response, with over 100 requests coming in from India and abroad.
Sources close to the development say that a true picture would emerge only on March 20, when the deadline closes for the submission of Expression of Interests (EoIs). A good number of the applications are from lawyers representing various firms, individuals, consultancies, private equity firms and companies,” they said.
Retired judge to oversee
The Satyam board, which met here on Friday, announced that Justice (Retd) S. P. Bharucha, former Chief Justice of India, had agreed to oversee the sale process of the company. The board met Mr Bharucha in Mumbai on Tuesday and persuaded him to supervise the bidding process to ensure transparency in selecting the strategic investor.
Satyam, however, has not disclosed the names of these entities. “We will send Request for Proposals to all the registered entities that have shown interest to take part in the process,” a Satyam spokesperson said here. The registered entities are required to submit the EoIs along with proof of availability of funds to the tune of Rs 1,500 crore by March 20, 2009.
iGATE joins race
iGATE, which had earlier announced that it was interested in only one Satyam vertical, sprang a surprise by announcing that it too had joined the race.
“We continue to be concerned about the probability of significant value erosion at Satyam. However, our interest to pursue this transaction is subject to the evaluation of the financial position of Satyam and the extent of its possible value erosion,” Mr Phaneesh Murthy, Chief Executive Officer of iGATE, said.
“We still believe that it is a long shot for us to consummate this transaction in its current form” he said.
According to the SEBI-approved plan, the Satyam board would consider the EoIs and short-list the prospective bidders. Only they would be given access to the financial, business and legal issues. This would be followed by submission of financial and technical bids, the penultimate step in the selection of the investor.
The Satyam scrip, however, continued to slide, though marginally on Friday.
Murty heads to US
Mr A. S. Murty, Chief Executive Officer of Satyam, told the board that he would go to the US as part of the confidence-building efforts.
The Satyam Computer Services’ call for registrations for the bidding process has received an overwhelming response, with over 100 requests coming in from India and abroad.
Sources close to the development say that a true picture would emerge only on March 20, when the deadline closes for the submission of Expression of Interests (EoIs). A good number of the applications are from lawyers representing various firms, individuals, consultancies, private equity firms and companies,” they said.
Retired judge to oversee
The Satyam board, which met here on Friday, announced that Justice (Retd) S. P. Bharucha, former Chief Justice of India, had agreed to oversee the sale process of the company. The board met Mr Bharucha in Mumbai on Tuesday and persuaded him to supervise the bidding process to ensure transparency in selecting the strategic investor.
Satyam, however, has not disclosed the names of these entities. “We will send Request for Proposals to all the registered entities that have shown interest to take part in the process,” a Satyam spokesperson said here. The registered entities are required to submit the EoIs along with proof of availability of funds to the tune of Rs 1,500 crore by March 20, 2009.
iGATE joins race
iGATE, which had earlier announced that it was interested in only one Satyam vertical, sprang a surprise by announcing that it too had joined the race.
“We continue to be concerned about the probability of significant value erosion at Satyam. However, our interest to pursue this transaction is subject to the evaluation of the financial position of Satyam and the extent of its possible value erosion,” Mr Phaneesh Murthy, Chief Executive Officer of iGATE, said.
“We still believe that it is a long shot for us to consummate this transaction in its current form” he said.
According to the SEBI-approved plan, the Satyam board would consider the EoIs and short-list the prospective bidders. Only they would be given access to the financial, business and legal issues. This would be followed by submission of financial and technical bids, the penultimate step in the selection of the investor.
The Satyam scrip, however, continued to slide, though marginally on Friday.
Murty heads to US
Mr A. S. Murty, Chief Executive Officer of Satyam, told the board that he would go to the US as part of the confidence-building efforts.
Indian, foreign firms register for Satyam
Fri Mar 13, 2009
BANGALORE (Reuters) - Fraud-hit Satyam Computer Services Ltd (SATY.BO: Quote, Profile, Research) said on Friday that Indian and international firms, including private equity companies, had registered to bid for a controlling stake.
The outsourcing company said it had received an adequate response but did not name or number the bidders.
Two investment banking sources told Reuters some eight potential suitors had registered to bid for a 51 percent stake.
"There have been at least 5-8 bids. We expect a much, much smaller number to proceed to the next stage of putting in a financial bid," said a banker with knowledge of the deal who asked not to be identified.
Indian engineering firm Larsen & Toubro (LART.BO: Quote, Profile, Research), IT services firm Tech Mahindra (TEML.BO: Quote, Profile, Research), diversified Spice Group and U.S. outsourcer iGate Corp (IGTE.O: Quote, Profile, Research) all said they had registered as potential bidders.
Bidders must submit a detailed expression of interest and have available at least 15 billion rupees ($290 million) by March 20.
Satyam Chairman Kiran Karnik told Reuters the registration process did not require companies to meet any conditions.
"The names could include PE firms or law firms which are representing somebody else. At this stage we have not asked them to divulge who their partner is or who they are," he said.
BANGALORE (Reuters) - Fraud-hit Satyam Computer Services Ltd (SATY.BO: Quote, Profile, Research) said on Friday that Indian and international firms, including private equity companies, had registered to bid for a controlling stake.
The outsourcing company said it had received an adequate response but did not name or number the bidders.
Two investment banking sources told Reuters some eight potential suitors had registered to bid for a 51 percent stake.
"There have been at least 5-8 bids. We expect a much, much smaller number to proceed to the next stage of putting in a financial bid," said a banker with knowledge of the deal who asked not to be identified.
Indian engineering firm Larsen & Toubro (LART.BO: Quote, Profile, Research), IT services firm Tech Mahindra (TEML.BO: Quote, Profile, Research), diversified Spice Group and U.S. outsourcer iGate Corp (IGTE.O: Quote, Profile, Research) all said they had registered as potential bidders.
Bidders must submit a detailed expression of interest and have available at least 15 billion rupees ($290 million) by March 20.
Satyam Chairman Kiran Karnik told Reuters the registration process did not require companies to meet any conditions.
"The names could include PE firms or law firms which are representing somebody else. At this stage we have not asked them to divulge who their partner is or who they are," he said.
Former SC chief justice to guide Satyam board on strategic investor
13 Mar 2009,
HYDERABAD: Former Supreme Court chief justice S P Bharucha will guide the Satyam Computer Services board in selecting the strategic investor from the Indian and overseas bidders, the scam-hit company said on Friday.
"Justice Bharucha has agreed to oversee and guide the board in selecting the strategic investor," the IT bellwether said in a statement after the board met here to discuss the expressions of interest (EoI), submitted by four bidders till Thursday.
The four bidders, which have shown interest in buying 51 percent majority stake in the software firm, are infrastructure major Larson and Toubro (L&T), Mahindra Group's IT arm Tech Mahindra, B.K. Modi-controlled Spice Corp and iGATE Corp, headed by former Infosys sales and marketing head Phaneesh Murthy.
L&T holds 12 percent of the company's equity.
The board has decided to release the request for proposals (RFP) to the bidders.
"The response so far has been adequate from Indian and international bidders, including private equity (PE) firms," the statement noted.
Under the procedure, the bidders are required to submit their EoI along with proof of funds of Rs.15 billion (Rs.1,500 crore/$290 million) by March 20.
The bidders will have access to the company's data and information to enable them to submit technical and financial bids.
Satyam chief executive A.S. Murty briefed the board on his recent visit to Singapore and Australia to meet clients and employees. He is scheduled to visit the US on a similar trip.
The software major has been mired in a controversy for the Rs.78-billion (Rs.7,800-crore) accounting fraud its founder B. Ramalinga Raju publicly admitted.
Raju Jan 7 confessed that he had cooked the company's account books and inflated profits over the past several years.
Satyam March 9 invited registrations to start the selling process by way of a global auction after market regulator Securities and Exchange Board of India (SEBI) gave it the go-ahead March 6 to do so.
The government-nominated board will select the successful bidder after evaluating the bids and the successful bidder will be given four days to deposit with the company the entire subscription amount and the requisite funds for the public offer in an escrow account.
The strategic investor will also have to make a mandatory open public offer to purchase a minimum of 20 percent of the company's share capital, as per the relaxed takeover norms prescribed by SEBI.
HYDERABAD: Former Supreme Court chief justice S P Bharucha will guide the Satyam Computer Services board in selecting the strategic investor from the Indian and overseas bidders, the scam-hit company said on Friday.
"Justice Bharucha has agreed to oversee and guide the board in selecting the strategic investor," the IT bellwether said in a statement after the board met here to discuss the expressions of interest (EoI), submitted by four bidders till Thursday.
The four bidders, which have shown interest in buying 51 percent majority stake in the software firm, are infrastructure major Larson and Toubro (L&T), Mahindra Group's IT arm Tech Mahindra, B.K. Modi-controlled Spice Corp and iGATE Corp, headed by former Infosys sales and marketing head Phaneesh Murthy.
L&T holds 12 percent of the company's equity.
The board has decided to release the request for proposals (RFP) to the bidders.
"The response so far has been adequate from Indian and international bidders, including private equity (PE) firms," the statement noted.
Under the procedure, the bidders are required to submit their EoI along with proof of funds of Rs.15 billion (Rs.1,500 crore/$290 million) by March 20.
The bidders will have access to the company's data and information to enable them to submit technical and financial bids.
Satyam chief executive A.S. Murty briefed the board on his recent visit to Singapore and Australia to meet clients and employees. He is scheduled to visit the US on a similar trip.
The software major has been mired in a controversy for the Rs.78-billion (Rs.7,800-crore) accounting fraud its founder B. Ramalinga Raju publicly admitted.
Raju Jan 7 confessed that he had cooked the company's account books and inflated profits over the past several years.
Satyam March 9 invited registrations to start the selling process by way of a global auction after market regulator Securities and Exchange Board of India (SEBI) gave it the go-ahead March 6 to do so.
The government-nominated board will select the successful bidder after evaluating the bids and the successful bidder will be given four days to deposit with the company the entire subscription amount and the requisite funds for the public offer in an escrow account.
The strategic investor will also have to make a mandatory open public offer to purchase a minimum of 20 percent of the company's share capital, as per the relaxed takeover norms prescribed by SEBI.
iGATE joins fray to buy majority stake in Satyam
13 Mar 2009,
NEW YORK: Nasdaq listed IT and outsourcing solutions major iGATE Friday announced its interest in acquiring a 51-percent stake in scam-hit Indian firm Satyam Computer Services by registering for a global auction.
This brings up to four the number of firms interested in buying a majority stake in Satyam, whose founder Ramalinga Raju confessed to a Rs.74 billion ($1.5 billion) fraud in January.
"We are now expecting to receive from Satyam the latest financial statements, including those for the quarter ended December 2008 and the months of January and February 2009, and updated position on liabilities and potential liabilities of the company," said iGATE in a press statement.
"In the event of iGATE not receiving this information immediately, it has no option but to withdraw its expression of interest," the statement added.
iGATE, which has its Indian headquarters in Bangalore, is led by former Infosys' worldwide head of sales and marketing Phaneesh Murthy.
Thursday was the last day for registering interest in the bidding. With iGATE declaring its interest in the Hyderabad based computer giant, the total number of known contenders in the global bid has gone up to four.
The others are infrastructure major Larsen and Toubro (L&T), Mahindra and Mahindra's IT arm Tech Mahindra and the B.K. Modi controlled Spice Group.
L&T already holds about 12 percent equity stake in Satyam.
The Hinduja Group, which had expressed interest earlier, has reportedly withdrawn from the bid.
NEW YORK: Nasdaq listed IT and outsourcing solutions major iGATE Friday announced its interest in acquiring a 51-percent stake in scam-hit Indian firm Satyam Computer Services by registering for a global auction.
This brings up to four the number of firms interested in buying a majority stake in Satyam, whose founder Ramalinga Raju confessed to a Rs.74 billion ($1.5 billion) fraud in January.
"We are now expecting to receive from Satyam the latest financial statements, including those for the quarter ended December 2008 and the months of January and February 2009, and updated position on liabilities and potential liabilities of the company," said iGATE in a press statement.
"In the event of iGATE not receiving this information immediately, it has no option but to withdraw its expression of interest," the statement added.
iGATE, which has its Indian headquarters in Bangalore, is led by former Infosys' worldwide head of sales and marketing Phaneesh Murthy.
Thursday was the last day for registering interest in the bidding. With iGATE declaring its interest in the Hyderabad based computer giant, the total number of known contenders in the global bid has gone up to four.
The others are infrastructure major Larsen and Toubro (L&T), Mahindra and Mahindra's IT arm Tech Mahindra and the B.K. Modi controlled Spice Group.
L&T already holds about 12 percent equity stake in Satyam.
The Hinduja Group, which had expressed interest earlier, has reportedly withdrawn from the bid.
L&T, Tech Mahindra, Spice put in EoI for Satyam; Hindujas pull out
12 Mar 2009, ET Bureau
L&T, Tech Mahindra and the Spice group have all put in an expression of interest (EOI) for Satyam Computer Services .
The government appointed Satyam Computer Services board will now meet tomorrow to scrutinize the Expression on Interest (EoI) submitted by potential bidders for the company.
The Hindujas, however, have pulled out of the Satyam race citing the unquantifiable legal liabilities of the Hyderabad-based company.
"We would rather wait for the restated accounts and status of legal liabilities of the company. That's why we did not register today," a top Hinduja official told ET.
The official said the legal liabilities of upto $840 million makes it a big risk factor for the group to make any bid for Satyam. "Even if we get the company for free... we would think twice," the official said asking not to be quoted. The last date for Satyam suitors to register today expires today at 5 pm (IST).
The source said it would be better to sell Satyam after the company restates its accounts and settles its legal liabilities. "If we take into account the return on capital employed and the free cash flow of Satyam, then it makes the company quite unattractive," he said.
The official deadline to submit the bid and proof of adequate funds is March 20.
Satyam has been in turmoil since founder B. Ramalinga Raju confessed on January 7 that he overstated the company's profits over several years and created a fictitious cash balances of more than Rs 7,000 crore.
Based on the evaluation of bids, the Satyam board will induct a strategic investor to take management control of the firm
L&T, Tech Mahindra and the Spice group have all put in an expression of interest (EOI) for Satyam Computer Services .
The government appointed Satyam Computer Services board will now meet tomorrow to scrutinize the Expression on Interest (EoI) submitted by potential bidders for the company.
The Hindujas, however, have pulled out of the Satyam race citing the unquantifiable legal liabilities of the Hyderabad-based company.
"We would rather wait for the restated accounts and status of legal liabilities of the company. That's why we did not register today," a top Hinduja official told ET.
The official said the legal liabilities of upto $840 million makes it a big risk factor for the group to make any bid for Satyam. "Even if we get the company for free... we would think twice," the official said asking not to be quoted. The last date for Satyam suitors to register today expires today at 5 pm (IST).
The source said it would be better to sell Satyam after the company restates its accounts and settles its legal liabilities. "If we take into account the return on capital employed and the free cash flow of Satyam, then it makes the company quite unattractive," he said.
The official deadline to submit the bid and proof of adequate funds is March 20.
Satyam has been in turmoil since founder B. Ramalinga Raju confessed on January 7 that he overstated the company's profits over several years and created a fictitious cash balances of more than Rs 7,000 crore.
Based on the evaluation of bids, the Satyam board will induct a strategic investor to take management control of the firm
Maytas asks govt. nominee directors to make declaration
Mumbai (PTI)
Maytas Infra has requested the government-appointed directors on its board — O.P. Vaish and Ved Jain — to furnish their consent and declarations.
Pursuant to the receipt of the confirmation from the Ministry of Corporate Affairs about the appointment of the two government nominees on board, "We have requested the concerned directors to furnish their consent and other declarations as may be required," the firm said in a filing to the Bombay Stock Exchange.
Former ICAI president Mr. Jain and noted tax lawyer Mr. Vaish was named as new board members of Maytas Infra following Company Law Board permitting the government to appoint four nominee directors, including a chairman, on the company's board.
Last month, the government had sought authorisation of the CLB to supersede the boards of Maytas Infra and Maytas Properties, the firms promoted by the kin of disgraced Satyam founder B. Ramalinga Raju, to prevent mis-management and enable transparency in their functioning.
"The details regarding further appointment of remaining two directors by the CLB would be issued separately," the filing added.
Maytas Infra has requested the government-appointed directors on its board — O.P. Vaish and Ved Jain — to furnish their consent and declarations.
Pursuant to the receipt of the confirmation from the Ministry of Corporate Affairs about the appointment of the two government nominees on board, "We have requested the concerned directors to furnish their consent and other declarations as may be required," the firm said in a filing to the Bombay Stock Exchange.
Former ICAI president Mr. Jain and noted tax lawyer Mr. Vaish was named as new board members of Maytas Infra following Company Law Board permitting the government to appoint four nominee directors, including a chairman, on the company's board.
Last month, the government had sought authorisation of the CLB to supersede the boards of Maytas Infra and Maytas Properties, the firms promoted by the kin of disgraced Satyam founder B. Ramalinga Raju, to prevent mis-management and enable transparency in their functioning.
"The details regarding further appointment of remaining two directors by the CLB would be issued separately," the filing added.
Satyam still has ‘significant’ TDS dues
I-T Dept probing into non-deduction of TDS from some salaries.
Maytas Properties also has significant dues
Approximately, 20% of salaries paid by Satyam come under TDS
It had paid about Rs 250 crore as TDS for the financial year 2007-08
Hyderabad, March 12 Satyam Computer Services is yet to pay old dues of TDS (Tax deducted at source) cut from the 53,000-odd employees.
“Satyam Computer still has significant dues under TDS to be paid to the department. We are following it up with the company,” a source in the IT Department told Business Line.
When asked about the period to which the dues belonged, the official said, “They pertain to all periods.”
Interestingly, Maytas Properties, promoted by the former Chairman of Satyam, Mr B. Ramalinga Raju and now in crisis, also has significant dues.
While the non-payment of dues is one issue for the department, it is also probing into the possibility of non-deduction of TDS in some salaries paid by the old management of Satyam.
The issue assumed importance as there were allegations that some fictitious salary accounts were maintained in the company prior to its takeover by the Govt-appointed board.
“We cannot comment on the fictitious salary accounts at this point. But in general there is practice of non-deduction of TDS in one or some salaries to benefit the employees,” he added.
Approximately, 20 per cent of salaries paid by Satyam come under TDS, he added.
The company had paid about Rs 250 crore as TDS for the financial year 2007-08. The company has a salary and personnel expenditure running up to Rs 500 crore a month.
Maytas Infra, another company promoted by Mr Raju’s family, has no dues on the TDS front, the IT department sources said.
Maytas Properties also has significant dues
Approximately, 20% of salaries paid by Satyam come under TDS
It had paid about Rs 250 crore as TDS for the financial year 2007-08
Hyderabad, March 12 Satyam Computer Services is yet to pay old dues of TDS (Tax deducted at source) cut from the 53,000-odd employees.
“Satyam Computer still has significant dues under TDS to be paid to the department. We are following it up with the company,” a source in the IT Department told Business Line.
When asked about the period to which the dues belonged, the official said, “They pertain to all periods.”
Interestingly, Maytas Properties, promoted by the former Chairman of Satyam, Mr B. Ramalinga Raju and now in crisis, also has significant dues.
While the non-payment of dues is one issue for the department, it is also probing into the possibility of non-deduction of TDS in some salaries paid by the old management of Satyam.
The issue assumed importance as there were allegations that some fictitious salary accounts were maintained in the company prior to its takeover by the Govt-appointed board.
“We cannot comment on the fictitious salary accounts at this point. But in general there is practice of non-deduction of TDS in one or some salaries to benefit the employees,” he added.
Approximately, 20 per cent of salaries paid by Satyam come under TDS, he added.
The company had paid about Rs 250 crore as TDS for the financial year 2007-08. The company has a salary and personnel expenditure running up to Rs 500 crore a month.
Maytas Infra, another company promoted by Mr Raju’s family, has no dues on the TDS front, the IT department sources said.
Thursday, March 12, 2009
Satyam staff worried as bidding process begins
Hyderabad, March 11
With the Satyam Computer Services Board setting the ball rolling for selecting the strategic investors, associates at different levels are a worried lot – as to what will happen to their future when a new management takes over.
“The request for proposal (RFP), which would be given to the prospective bidders, may contain certain indications to protect their interests,” a senior Satyam executive said.
The Chief Executive Officer of Satyam, Mr A.S. Murty, however, has not responded to a query whether the company would factor in the concerns of associates and would require the new investor to protect the jobs.
Interestingly, the SEBI-approved process prescribed a three-year lock-in period for new promoters for sale of equity.
Reflecting the concerns of several associates, Satyam staffers spoken to by Business Line said “what will happen if the new investor wants to resize the workforce. They should incorporate clauses in the bid process to protect us.”
This apprehension was reflected in a top-level executive too. “The new management would come in with its own set of managers. They would study the situation thoroughly and might go in for optimisation of human resources. Also, this might create some friction at the top level,” he felt.
Ranbaxy deal example
He, however, pointed out there should be enough insulation for the staff. Citing the example of the Ranbaxy-Daiichi Sankyo deal, he said: “The deal ensured continuation of the board and management for five years, ensuring normal operations.”
The Chief Executive Officer and Managing Director of Ranbaxy, Mr Malvinder Mohan Singh, had said that the commitment ensured continuation of the existing management.
SEBI RULES
“According to the normal SEBI rules, my contract is for a period of five years and will be renewed, thereafter,” he had said.
The situation, however, is not that gloomy. The whole exercise had begun after the Government decided to protect the company from collapsing, safeguarding the interests of employees.
The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, and the Minister for Corporate Affairs, Mr P.C. Gupta, too went on record stating that the primary concern of the Government was to see to it that the jobs of about 53,000 were protected.
With the Satyam Computer Services Board setting the ball rolling for selecting the strategic investors, associates at different levels are a worried lot – as to what will happen to their future when a new management takes over.
“The request for proposal (RFP), which would be given to the prospective bidders, may contain certain indications to protect their interests,” a senior Satyam executive said.
The Chief Executive Officer of Satyam, Mr A.S. Murty, however, has not responded to a query whether the company would factor in the concerns of associates and would require the new investor to protect the jobs.
Interestingly, the SEBI-approved process prescribed a three-year lock-in period for new promoters for sale of equity.
Reflecting the concerns of several associates, Satyam staffers spoken to by Business Line said “what will happen if the new investor wants to resize the workforce. They should incorporate clauses in the bid process to protect us.”
This apprehension was reflected in a top-level executive too. “The new management would come in with its own set of managers. They would study the situation thoroughly and might go in for optimisation of human resources. Also, this might create some friction at the top level,” he felt.
Ranbaxy deal example
He, however, pointed out there should be enough insulation for the staff. Citing the example of the Ranbaxy-Daiichi Sankyo deal, he said: “The deal ensured continuation of the board and management for five years, ensuring normal operations.”
The Chief Executive Officer and Managing Director of Ranbaxy, Mr Malvinder Mohan Singh, had said that the commitment ensured continuation of the existing management.
SEBI RULES
“According to the normal SEBI rules, my contract is for a period of five years and will be renewed, thereafter,” he had said.
The situation, however, is not that gloomy. The whole exercise had begun after the Government decided to protect the company from collapsing, safeguarding the interests of employees.
The Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy, and the Minister for Corporate Affairs, Mr P.C. Gupta, too went on record stating that the primary concern of the Government was to see to it that the jobs of about 53,000 were protected.
Satyam U.S. lawsuits may cost $440-$840 million: report
Mar 12, 2009
MUMBAI (Reuters) U.S. lawsuits filed against fraud-hit Satyam Computer Services (SATY.BO) could cause a liability of between $440 million and $840 million, the Times of India said on Thursday, quoting a potential bidder for the outsourcer.
"We have received a report from our legal advisers Gibson, Dunn & Crutcher LLP and they said the liabilities could range between $440-$840 million. We have to factor this in," the newspaper quoted Spice Group Chairman B.K. Modi as saying.
The diversified Spice Group, which has said it is interested in Satyam, plans to register with the outsourcer on Thursday to participate in a bidding for a majority stake, the paper said.
Modi could not be immediately reached for comment. Gibson, Dunn & Crutcher's Singapore office did not reply to an email query.
Satyam, which now has a stock market value of about $640 million, has been struggling for survival since founder and chairman Ramalinga Raju shocked investors in January, saying the outsourcer's profits had been overstated for years and assets falsified in India's biggest corporate scandal.
It kicked off a bidding process on Monday to sell a 51 percent stake and said bidders need to register by Thursday.
Bidders will be asked to submit a detailed expression of interest and show availability of at least 15 billion rupees ($291 million) by March 20.
($1=51.6 rupees)
MUMBAI (Reuters) U.S. lawsuits filed against fraud-hit Satyam Computer Services (SATY.BO) could cause a liability of between $440 million and $840 million, the Times of India said on Thursday, quoting a potential bidder for the outsourcer.
"We have received a report from our legal advisers Gibson, Dunn & Crutcher LLP and they said the liabilities could range between $440-$840 million. We have to factor this in," the newspaper quoted Spice Group Chairman B.K. Modi as saying.
The diversified Spice Group, which has said it is interested in Satyam, plans to register with the outsourcer on Thursday to participate in a bidding for a majority stake, the paper said.
Modi could not be immediately reached for comment. Gibson, Dunn & Crutcher's Singapore office did not reply to an email query.
Satyam, which now has a stock market value of about $640 million, has been struggling for survival since founder and chairman Ramalinga Raju shocked investors in January, saying the outsourcer's profits had been overstated for years and assets falsified in India's biggest corporate scandal.
It kicked off a bidding process on Monday to sell a 51 percent stake and said bidders need to register by Thursday.
Bidders will be asked to submit a detailed expression of interest and show availability of at least 15 billion rupees ($291 million) by March 20.
($1=51.6 rupees)
Satyam suitors to declare bidding intentions today
12 Mar 2009
NEW DELHI: Suitors for fraud-hit Satyam have to give notice on Thursday that they are interested in bidding for the Indian outsourcing giant amid lingering uncertainty over the true state of its finances.
Satyam has been battling for survival since January when its founder B. Ramalinga Raju, now in jail, declared he inflated the firm's balance sheet by more than one billion dollars and fudged its profits for years.
All interested buyers should register their interest in participating in the bidding process by 5:00 PM Indian Standard Time (1130 GMT) on Thursday, the company said in a statement on its web site.
A newspaper report on Wednesday said the government-appointed board may give prospective buyers financial statements for the two most recent quarters to help them decide whether to make a full-fledged offer.
The statements would include revenue figures, client additions and operating margins but would not give bidders an idea of liabilities that Satyam may face, a daily newspaper said, citing an unidentified source.
There was no immediate comment available from a Satyam spokesman on the report.
Any bidder for India's fourth-largest software services outsourcer has to consider potential liabilities from at least 13 lawsuits filed in US courts by defrauded shareholders who have seen the value of their shares slide.
Satyam's board announced on Monday it had started the bidding process to sell off a 51-percent stake in the company based in the southern city of Hyderabad. At least two companies are expected to file "expressions of interest" for a such a stake.
They are India's biggest engineering company Larsen & Toubro which already holds 12 percent of Satyam. India's Spice Group conglomerate, controlled by tycoon B.K. Modi, has also said it will file an expression of interest.
Satyam is valued at about 650 million dollars, a fraction of the seven billion dollars it was worth last May before India's stock market tumbled sharply and the fraud became known.
The company operates in nearly 70 countries and has close to 700 clients including 185 firms ranked in the Fortune 500. Its strong customer base could make it an attractive purchase, but its potential liabilities may act as a major deterrent, analysts say.
The sale of Satyam has taken on a sense of urgency with customer uncertainty over the company's future reportedly mounting following India's biggest ever corporate fraud.
Fund managers have been skeptical about the bidding process in the absence of accurate valuations for the firm. Satyam's auditors have said it could take up to six months for its full financial picture to emerge.
"There is no clarity on Satyam's valuations. On what basis can a bidder determine the true value?" said Hitesh Agrawal, head of research at Angel Broking.
Modi has said liabilities from the US lawsuits could range between 440 and 840 million dollars, according to Spice Group's legal advisors. Any formal bid has to factor that in, he added.
NEW DELHI: Suitors for fraud-hit Satyam have to give notice on Thursday that they are interested in bidding for the Indian outsourcing giant amid lingering uncertainty over the true state of its finances.
Satyam has been battling for survival since January when its founder B. Ramalinga Raju, now in jail, declared he inflated the firm's balance sheet by more than one billion dollars and fudged its profits for years.
All interested buyers should register their interest in participating in the bidding process by 5:00 PM Indian Standard Time (1130 GMT) on Thursday, the company said in a statement on its web site.
A newspaper report on Wednesday said the government-appointed board may give prospective buyers financial statements for the two most recent quarters to help them decide whether to make a full-fledged offer.
The statements would include revenue figures, client additions and operating margins but would not give bidders an idea of liabilities that Satyam may face, a daily newspaper said, citing an unidentified source.
There was no immediate comment available from a Satyam spokesman on the report.
Any bidder for India's fourth-largest software services outsourcer has to consider potential liabilities from at least 13 lawsuits filed in US courts by defrauded shareholders who have seen the value of their shares slide.
Satyam's board announced on Monday it had started the bidding process to sell off a 51-percent stake in the company based in the southern city of Hyderabad. At least two companies are expected to file "expressions of interest" for a such a stake.
They are India's biggest engineering company Larsen & Toubro which already holds 12 percent of Satyam. India's Spice Group conglomerate, controlled by tycoon B.K. Modi, has also said it will file an expression of interest.
Satyam is valued at about 650 million dollars, a fraction of the seven billion dollars it was worth last May before India's stock market tumbled sharply and the fraud became known.
The company operates in nearly 70 countries and has close to 700 clients including 185 firms ranked in the Fortune 500. Its strong customer base could make it an attractive purchase, but its potential liabilities may act as a major deterrent, analysts say.
The sale of Satyam has taken on a sense of urgency with customer uncertainty over the company's future reportedly mounting following India's biggest ever corporate fraud.
Fund managers have been skeptical about the bidding process in the absence of accurate valuations for the firm. Satyam's auditors have said it could take up to six months for its full financial picture to emerge.
"There is no clarity on Satyam's valuations. On what basis can a bidder determine the true value?" said Hitesh Agrawal, head of research at Angel Broking.
Modi has said liabilities from the US lawsuits could range between 440 and 840 million dollars, according to Spice Group's legal advisors. Any formal bid has to factor that in, he added.
Satyam suitors may get info for last 2 quarters
March 12, 2009
The Satyam board may present prospective bidders for the troubled Satyam Computer Services with operating statements for two quarters - October-December 2008 and January-March 2009 - to help them arrive at a decision.
The statement will include the revenue figures, client additions and operating margins but will not give bidders a sense of the liabilities. It will also include the tenure of some of the major contracts, major competitors with regard to the large clients and mention the number of deals that are coming up for renewal shortly, but will not disclose any names.
This is necessary, said a source close to the development, since the restatement of Satyam's accounts is unlikely to be over by March 31 as anticipated earlier. Satyam's accounts are under forensic scrutiny after the company's promoter, Ramalinga Raju, confessed to long-term fraud on January 7.
"Despite a huge team of Deloitte and KPMG on this job, there will be a significant delay in this regard," said the source. Satyam's fixed assets are understood to have been valued by the government-appointed board at around Rs 1,800 crore (Rs 18 billion).
Raju and several Satyam executives are in jail and a government-appointed board has invited bids for 31 per cent in what was India's fourth largest software services firm.
On the liability front, at least 13 class action lawsuits were filed in the US federal courts about two months ago. "The liability could be anywhere between $700 million and $900 million (Rs 3,500 crore and Rs 4,500 crore)," said a prospective bidder. B K Modi, chairman of Spice group - who confirmed he will bid for Satyam - said his lawyers had pegged the liability at between $440-840 million (around Rs 2,200-4,200 crore).
Besides, UK-based mobile solutions firm Upaid's case against Satyam comes up for hearing in June 2009 in Texas. The damages can run up to $1.1 billion.
"Putting a value to Satyam currently is a shot in the dark," admitted a prospective bidder, adding: "Hence, we expect the bids to be conservative." Clients are already said to be moving out, and some key account managers too are said to have left Satyam. The timelines of some contracts also could have suffered, said sources close to the development. Any delay in completing contracts on time attracts hefty penalties, according to the service level agreements.
An analysis by Edelweiss pointed out that around 70 per cent of revenues (a large proportion is non-annuity based) are up for renegotiation or renewal in Q1 and Q2 of this fiscal.
Satyam, on its part, dismisses these claims, saying the company has won new purchase orders and work extensions totalling over $250 million (around Rs 1,250 crore) since January 7 this year.
Surprising, say analysts, when other major IT firms are facing the heat.
The Satyam board may present prospective bidders for the troubled Satyam Computer Services with operating statements for two quarters - October-December 2008 and January-March 2009 - to help them arrive at a decision.
The statement will include the revenue figures, client additions and operating margins but will not give bidders a sense of the liabilities. It will also include the tenure of some of the major contracts, major competitors with regard to the large clients and mention the number of deals that are coming up for renewal shortly, but will not disclose any names.
This is necessary, said a source close to the development, since the restatement of Satyam's accounts is unlikely to be over by March 31 as anticipated earlier. Satyam's accounts are under forensic scrutiny after the company's promoter, Ramalinga Raju, confessed to long-term fraud on January 7.
"Despite a huge team of Deloitte and KPMG on this job, there will be a significant delay in this regard," said the source. Satyam's fixed assets are understood to have been valued by the government-appointed board at around Rs 1,800 crore (Rs 18 billion).
Raju and several Satyam executives are in jail and a government-appointed board has invited bids for 31 per cent in what was India's fourth largest software services firm.
On the liability front, at least 13 class action lawsuits were filed in the US federal courts about two months ago. "The liability could be anywhere between $700 million and $900 million (Rs 3,500 crore and Rs 4,500 crore)," said a prospective bidder. B K Modi, chairman of Spice group - who confirmed he will bid for Satyam - said his lawyers had pegged the liability at between $440-840 million (around Rs 2,200-4,200 crore).
Besides, UK-based mobile solutions firm Upaid's case against Satyam comes up for hearing in June 2009 in Texas. The damages can run up to $1.1 billion.
"Putting a value to Satyam currently is a shot in the dark," admitted a prospective bidder, adding: "Hence, we expect the bids to be conservative." Clients are already said to be moving out, and some key account managers too are said to have left Satyam. The timelines of some contracts also could have suffered, said sources close to the development. Any delay in completing contracts on time attracts hefty penalties, according to the service level agreements.
An analysis by Edelweiss pointed out that around 70 per cent of revenues (a large proportion is non-annuity based) are up for renegotiation or renewal in Q1 and Q2 of this fiscal.
Satyam, on its part, dismisses these claims, saying the company has won new purchase orders and work extensions totalling over $250 million (around Rs 1,250 crore) since January 7 this year.
Surprising, say analysts, when other major IT firms are facing the heat.
Monday, March 9, 2009
Firms join chase for 51% stake in Satyam
Reuters, March 10, 2009
BANGALORE, India: Satyam Computer Services began a bidding process Monday to sell a 51 percent stake in itself, and two potential buyers quickly confirmed that they would join the race for the scandal-tainted outsourcer.
The largest engineering firm in India, Larsen & Toubro, which controls about 12 percent of Satyam, will put in an expression of interest, but a formal bid will depend upon clarity on financial statements and the extent of Satyam's liabilities.
"It is not possible for us to say that at any cost we will bid," Y.M. Deosthalee, chief financial officer at Larsen & Toubro, told a private television channel.
Spice Group also said it would submit an expression of interest. Its chairman, B.K. Modi, said he was comfortable with the bidding rules and hoped the entire bidding exercise would be transparent. "I hope there are a lot of parties; then only there is fun in bidding," he said.
Shares in Satyam jumped as much as 19 percent in Mumbai after gaining 20 percent Friday, valuing the company at about $650 million - still just one-tenth of the $7 billion it was worth last May.
Today in Business with Reuters
To halt slide, apply debt or control?Merck agrees to acquire Schering-Plough for $41 billionA hiring bind for non-U.S. citizens and banks"Nobody would like to take a short in the dark, so the final bid price and outcome will clearly depend on the kind of information they are able to get about the company," said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services.
Satyam's government-appointed board is eager to bring in an investor to restore confidence among its among its approximately 50,000 staff members and more than 600 customers, including General Electric and Qantas Airways.
Analysts said bidders had been attracted by Satyam's strong client base and its large work force but setting a bidding price would be difficult without any audited accounts and clarity about its liabilities.
Larsen & Toubro, which also has interests in shipping and financial services, wants to buy Satyam to expand its software business, which brings in less than 10 percent of its revenue. Its challenge will be to sustain growth while spending on Satyam, said Rupa Shah, an analyst with Prabhudas Lilladher.
"There's no clarity yet on what Satyam's liabilities are," Shah said. "Also, Larsen will divert its funds to Satyam, so its planned expenditures in its core business may suffer."
Satyam said in a statement that bidders needed to submit their interest by Thursday to buy a majority stake. The bidders will then be asked to submit detailed expressions of interest and prove availability of at least 15 billion rupees, or $290 million, by March 20. Satyam said qualified bidders would then be given access to certain business, financial and legal materials before submitting a bid.
Satyam has been struggling for survival since its founder and chairman, B. Ramalinga Raju, said in January that Satyam's profits had been overstated and its assets falsified for years in what has become India's biggest corporate scandal. Raju quit and was later arrested, as were his brother, B. Rama Raju, the company's managing director, and Srinivas Vadlamani, its chief financial officer.
BANGALORE, India: Satyam Computer Services began a bidding process Monday to sell a 51 percent stake in itself, and two potential buyers quickly confirmed that they would join the race for the scandal-tainted outsourcer.
The largest engineering firm in India, Larsen & Toubro, which controls about 12 percent of Satyam, will put in an expression of interest, but a formal bid will depend upon clarity on financial statements and the extent of Satyam's liabilities.
"It is not possible for us to say that at any cost we will bid," Y.M. Deosthalee, chief financial officer at Larsen & Toubro, told a private television channel.
Spice Group also said it would submit an expression of interest. Its chairman, B.K. Modi, said he was comfortable with the bidding rules and hoped the entire bidding exercise would be transparent. "I hope there are a lot of parties; then only there is fun in bidding," he said.
Shares in Satyam jumped as much as 19 percent in Mumbai after gaining 20 percent Friday, valuing the company at about $650 million - still just one-tenth of the $7 billion it was worth last May.
Today in Business with Reuters
To halt slide, apply debt or control?Merck agrees to acquire Schering-Plough for $41 billionA hiring bind for non-U.S. citizens and banks"Nobody would like to take a short in the dark, so the final bid price and outcome will clearly depend on the kind of information they are able to get about the company," said Tarun Sisodia, a Mumbai-based analyst at Anand Rathi Financial Services.
Satyam's government-appointed board is eager to bring in an investor to restore confidence among its among its approximately 50,000 staff members and more than 600 customers, including General Electric and Qantas Airways.
Analysts said bidders had been attracted by Satyam's strong client base and its large work force but setting a bidding price would be difficult without any audited accounts and clarity about its liabilities.
Larsen & Toubro, which also has interests in shipping and financial services, wants to buy Satyam to expand its software business, which brings in less than 10 percent of its revenue. Its challenge will be to sustain growth while spending on Satyam, said Rupa Shah, an analyst with Prabhudas Lilladher.
"There's no clarity yet on what Satyam's liabilities are," Shah said. "Also, Larsen will divert its funds to Satyam, so its planned expenditures in its core business may suffer."
Satyam said in a statement that bidders needed to submit their interest by Thursday to buy a majority stake. The bidders will then be asked to submit detailed expressions of interest and prove availability of at least 15 billion rupees, or $290 million, by March 20. Satyam said qualified bidders would then be given access to certain business, financial and legal materials before submitting a bid.
Satyam has been struggling for survival since its founder and chairman, B. Ramalinga Raju, said in January that Satyam's profits had been overstated and its assets falsified for years in what has become India's biggest corporate scandal. Raju quit and was later arrested, as were his brother, B. Rama Raju, the company's managing director, and Srinivas Vadlamani, its chief financial officer.
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