'No regrets over Satyam'

11 May 2009, ET Bureau

For Larsen & Toubro (L&T), Satyam is history, says chairman & MD AM Naik, who is more occupied with his pet project of identifying and grooming next-gen leaders at India's largest engineering firm. Only that will get rid of the company's legacy of seniority-driven promotion policy, which has created a leadership "vacuum", he says. The next chairman, who will succeed Mr Naik, when he retires in September 2012, may be in the saddle for only three to five years. But the one who comes next will serve a 10-year term, says Mr Naik.

How's life after Satyam?

Life is as usual. Satyam came as a sudden opportunity, and we tried to bag it. We had bid at a price which we thought was right. We could not stretch our bid because we had already picked up Satyam shares at higher price. We bought a 4% stake before the scam broke, and later we purchased another 8% to bring down to the average price of acquisition to Rs 82 a share. We submitted a bid of Rs 46 a share, which, if we were to win, would put our average acquisition cost at Rs 56 a share. It was pretty close to Tech Mahindra's winning bid of Rs 58 a share. If L&T had to beat Tech Mahindra in the first round, it would have to put a price of Rs 65, which would make our average cost of acquisition Rs 71. In that case, Satyam would have been overvalued.

Is it an opportunity lost?

Every opportunity one misses looks to be a loss, and sometimes appears to be a gain. Satyam was an opportunity, which we would love to have won, but the fact that we lost it also gave a chance to go back to our core operations. So I don't regret. In the process, we got a consolation prize as well. L&T Infotech has become a known brand in the overseas markets, thanks to our participation in the Satyam auction. Our sales guys tell me that now they at least get an audience with important foreign players.

Was it a personal disappointment?

We had put in huge efforts to bid for Satyam and a lot of expectation was created amongst the Satyam employees and customers. So, it was a disappointment initially but I overcame it quickly. For me, Satyam is history. We have left it far behind us. I wish all the best to Tech Mahindra management, which has got a tremendous track record of success. And we want to get our investment of Rs 700 crore back.