The Hyderabad police has registered cheating and criminal breach of trust cases against the promoters of Maytas Properties, an unlisted company owned by the family of Satyam Computer Services Ltd founder B Ramalinga Raju, who is in jail after confessing to manipulating Satyam’s accounts.
Speaking to Business Standard, Deputy Commissioner of Police (Detective) R S Praveen Kumar said the police registered the cases yesterday following a complaint from a member who bought property at Hill County, Bachupally, a residential project promoted by Maytas Properties on the outskirts of the city.
The complainant told the police that he paid about Rs 77 lakh to buy the property and the company promised to deliver it in March 2008 but did not do so, citing the crash in the real estate market.
The police have registered cases under Section 406 (criminal breach of trust) and Section 420 (cheating). “We will investigate the case based on the complaint,” Kumar said, adding that that the cases were filed against B Rama Raju, Maytas Properties, vice-chairman and younger son of Ramalinga Raju.
People who bought flats at Hill County have been on the warpath for some weeks now since pressure from their monthly loan instalments was building up. They have held demonstrations at the construction site, at Rama Raju’s residence and also staged a hunger strike in protest against the delay.
Hill County is a Rs 1,100-crore project out of which the company has collected Rs 654 crore by selling residential property. It currently has Rs 100 crore as receivables and Rs 200 crore as vendor liabilities. The project envisaged construction of 840 apartments and 326 independent villas. The flats were priced between Rs 50 lakh and Rs 1.5 crore, while the price of villas ranged from Rs 1.5 crore to Rs 2.5 crore.
Last week, the company’s government-appointed director Ved Jain announced that it was looking at parting with a stake in the residential project.
Sunday, July 26, 2009
Maytas Properties writes to angry clients
Hyderabad July 23, 2009
Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.
Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.
“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.
The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.
“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.
Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.
The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.
Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.
“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.
He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’
Maytas Properties, hit by both the recession in real estate and the Satyam accounting scam, has written to angry clients to give it more time.
Vice-Chairman B Rama Raju has written to the Hill County Home Owners Welfare Association, the body of clients in its prestigious project here which is now stuck for want of money. The customers, all of whom have paid a huge amount for a promised luxury home, are threatening prosecution.
“I am committed to do the project,’’ he promised in the letter, adding assurances of positive developments soon.
The police have registered cases against Rama Raju and Maytas Infra vice chairman Teja Raju, both sons of Satyam Computer Services’ founder B Ramalinga Raju, following a complaint from two members of the association for delaying the project.
“Several conditions, both internal and external, have contributed to the challenges that the company was facing in raising the funds to complete the Hill County project”, Rama Raju stated in the letter, a copy of which is available with Business Standard.
Maytas Properties is one of the two companies the Satyam founder had made an abortive bid to acquire in December last year to cover the huge scam that he finally couldn’t keep hidden. Maytas ran into problems after it failed to keep its promise of delivering the homes at the Rs 1,100-crore Hill County project in March 2008. Hill County, located at Bachupally on the city outskirts, was to have 840 apartments and 326 bungalows. These were priced between Rs 50 lakh and Rs 2.5 crore.
The company had collected Rs 654 crore from property buyers, who says they are paying monthly installments of Rs 50,000 upwards, though the flats and independent houses are yet to be ready.
Rama Raju says the current economic conditions, including the slowdown of demand in real estate, lack of investor interest and tightening of credit by financial institutions have made the company’s pursuit for funds a lot more difficult.
“In addition, what appears to be a never-ending pursuit by investigating agencies had to be dealt with immediately, thus diverting our attention” from the core issue of raising funds, he said. Adding that the company was now in discussion with some investors and financial institutions to complete the construction at Hill County.
He added the promoters have offered to provide additional collateral to realise the required funds. “Barring any unforeseen events, we are looking forward for a positive outcome soon.’’
'No trace of Maytas funds in Satyam'
22 July 2009
HYDERABAD: In a fresh twist to the Satyam-Maytas saga, the top honchos of Mahindra Satyam denied having any knowledge of Rs 600 crore having found its way from Maytas Infra and Maytas Properties coffers into Satyam.
Vineet Nayyar, executive vice-chairman of Mahindra Satyam, told TOI that they have not received any communication from the two Maytas companies seeking a refund. "People can claim anything. But as far as we are concerned, till the Satyam accounts are restated we cannot say how much money has gone out of Satyam or into it," said Nayyar. "The forensics are being done by our finance team to untangle the financial manipulations at Satyam. We are in the process of restating the accounts," he added.
It was only on Saturday that government-appointed director of Maytas Infra and Maytas Properties, Ved Jain had declared that the two companies, promoted by Ramalinga Raju's sons, had given Rs 380 crore and Rs 220 crore, respectively, by way of inter-corporate deposits (ICDs) to Satyam and that they had initiated proceedings to get the money back. Jain had claimed that there were records that the money had ended up at Satyam from Maytas Infra and Maytas Properties via certain Maytas controlled companies and that they had the documentary proof to support their claims.
Gearing up to battle class action lawsuits filed in US, new owners of Satyam do not seem to be in a mood to entertain the latest in a series of claims by the Rajus. Even as the Mahindras had, on an earlier occasion, said that they had found no evidence of Satyam having received any cash from Maytas, Ramalinga Raju's brother Suryanarayana Raju had staked claim to Rs 1230 crore.
He had claimed, in a letter that Satyam owed the money to a clutch of private companies owned by him. The Mahindras, who just upped their stake in Satyam to 42.7% through subsidiary Venturbay early last week, are already grappling with the legal issues facing the company.
HYDERABAD: In a fresh twist to the Satyam-Maytas saga, the top honchos of Mahindra Satyam denied having any knowledge of Rs 600 crore having found its way from Maytas Infra and Maytas Properties coffers into Satyam.
Vineet Nayyar, executive vice-chairman of Mahindra Satyam, told TOI that they have not received any communication from the two Maytas companies seeking a refund. "People can claim anything. But as far as we are concerned, till the Satyam accounts are restated we cannot say how much money has gone out of Satyam or into it," said Nayyar. "The forensics are being done by our finance team to untangle the financial manipulations at Satyam. We are in the process of restating the accounts," he added.
It was only on Saturday that government-appointed director of Maytas Infra and Maytas Properties, Ved Jain had declared that the two companies, promoted by Ramalinga Raju's sons, had given Rs 380 crore and Rs 220 crore, respectively, by way of inter-corporate deposits (ICDs) to Satyam and that they had initiated proceedings to get the money back. Jain had claimed that there were records that the money had ended up at Satyam from Maytas Infra and Maytas Properties via certain Maytas controlled companies and that they had the documentary proof to support their claims.
Gearing up to battle class action lawsuits filed in US, new owners of Satyam do not seem to be in a mood to entertain the latest in a series of claims by the Rajus. Even as the Mahindras had, on an earlier occasion, said that they had found no evidence of Satyam having received any cash from Maytas, Ramalinga Raju's brother Suryanarayana Raju had staked claim to Rs 1230 crore.
He had claimed, in a letter that Satyam owed the money to a clutch of private companies owned by him. The Mahindras, who just upped their stake in Satyam to 42.7% through subsidiary Venturbay early last week, are already grappling with the legal issues facing the company.
US SEC reviews progress on restatement of Satyam a/cs
24 Jul 2009, ET Bureau
HYDERABAD: A high-level US Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services on Thursday with audit firm KPMG, Mahindra Satyam CEO CP Gurnani told ET.
The US SEC team, accompanied by Sebi officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.
Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B Ramalinga Raju confessed to fudging the books for seven years.
The US SEC is probing the violation of US Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the US. Shareholders alleged that the executives issued false and misleading statements.
A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. Sebi is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.
In an interim report on the Satyam investigation, SEBI has recommended prohibiting Satyam’s esrtwhile auditors and the audit firm Price Waterhouse from auditing accounts of listed companies for a certain period.
HYDERABAD: A high-level US Securities and Exchange Commission team reviewed the progress on the restatement of accounts of Satyam Computer Services on Thursday with audit firm KPMG, Mahindra Satyam CEO CP Gurnani told ET.
The US SEC team, accompanied by Sebi officials also met Tech Mahindra officials, the new owners of Satyam, to discuss a host of issues including re-statement of the manipulated accounts.
Global audit firms KPMG and Deloitte have been commissioned to conduct a forensic audit of Satyam’s accounts, after founder B Ramalinga Raju confessed to fudging the books for seven years.
The US SEC is probing the violation of US Securities law by former Satyam executives after a clutch of class action suits were filed by law firms representing shareholders of Satyam in the US. Shareholders alleged that the executives issued false and misleading statements.
A senior Mahindra Satyam official said the restatement exercise is on track and is likely to the completed by December this year. Sebi is probing the insider trading of shares by Raju and his family as investigating agencies including the CBI suspect that the promoters made windfall gains by rigging share prices and invested the money in realty deals.
In an interim report on the Satyam investigation, SEBI has recommended prohibiting Satyam’s esrtwhile auditors and the audit firm Price Waterhouse from auditing accounts of listed companies for a certain period.
CBI chief calls on senior officials at Satyam
Hyderabad July 25, 2009
Central Bureau of Investigation (CBI) sleuths, led by its director Ashwini Kumar, met senior officials of fraud-hit Satyam Computer Services, now rebranded as Mahindra Satyam, at its headquarters here on Friday.
“The CBI team was here to get first-hand information on the possible acquaintance of some staff with the company’s (jailed) founder, Ramalinga Raju. We don’t know further details of the closed-door meeting, as about 30 CBI security personnel cordoned off the entire office area. Several officials of the company, along with some senior management members, were present in the meeting,” a company source said.
He indicated the CBI team was likely to visit the IT outsourcing major’s headquarters again in a day or two. The CBI chief arrived here on Thursday to review the progress made by the bureau on its investigation into the multi-crore accounting fraud at Satyam.
Meanwhile, a petition filed by legal counsel for Ramalinga Raju yesterday, asking for quashing of the July 9 order of a lower court which allowed the CBI to conduct a lie detector test (polygraph test) and brain mapping (F300 testing) on Raju and his brother and former managing director B Rama Raju, and former chief financial officer Srinivas Vadlamani, all accused in the multi-crore scam, came up for hearing today.
Raju’s counsel contended the tests violated fundamental rights of the accused and would subject them to pressure. The confessions, anyway, would not be admissible in court. The CBI counsel sought time till July 27 from the court to file a reply. He told the court it would not conduct the tests till July 30. The CBI feels crores of rupees were also misappropriated from Satyam, for which they have yet to get proof. The accused, on whom the forensic tests were to be conducted, did not reveal the information with regard to the alleged defalcation and therefore, these were necessary to aid in the investigation.
The lower court felt it was a fit case to agree to allow the lie detector test and brain mapping.
Central Bureau of Investigation (CBI) sleuths, led by its director Ashwini Kumar, met senior officials of fraud-hit Satyam Computer Services, now rebranded as Mahindra Satyam, at its headquarters here on Friday.
“The CBI team was here to get first-hand information on the possible acquaintance of some staff with the company’s (jailed) founder, Ramalinga Raju. We don’t know further details of the closed-door meeting, as about 30 CBI security personnel cordoned off the entire office area. Several officials of the company, along with some senior management members, were present in the meeting,” a company source said.
He indicated the CBI team was likely to visit the IT outsourcing major’s headquarters again in a day or two. The CBI chief arrived here on Thursday to review the progress made by the bureau on its investigation into the multi-crore accounting fraud at Satyam.
Meanwhile, a petition filed by legal counsel for Ramalinga Raju yesterday, asking for quashing of the July 9 order of a lower court which allowed the CBI to conduct a lie detector test (polygraph test) and brain mapping (F300 testing) on Raju and his brother and former managing director B Rama Raju, and former chief financial officer Srinivas Vadlamani, all accused in the multi-crore scam, came up for hearing today.
Raju’s counsel contended the tests violated fundamental rights of the accused and would subject them to pressure. The confessions, anyway, would not be admissible in court. The CBI counsel sought time till July 27 from the court to file a reply. He told the court it would not conduct the tests till July 30. The CBI feels crores of rupees were also misappropriated from Satyam, for which they have yet to get proof. The accused, on whom the forensic tests were to be conducted, did not reveal the information with regard to the alleged defalcation and therefore, these were necessary to aid in the investigation.
The lower court felt it was a fit case to agree to allow the lie detector test and brain mapping.
Satyam scam: SEC team meets CBI, SEBI, KPMG officials
Hyderabad, July 25 The United States’ Securities Exchange Commission (SEC) team has held discussions with Mr Ashwani Kumar, CBI Director, and the Securities and Exchange Board of India (SEBI), on the Rs 7,136-crore Satyam scam at the IT major’s Infocity campus at Madhapur here on Friday.
The three-member SEC team also quizzed auditors of KPMG, which is taking part in the restatement of the balance sheets of the company. KPMG is doing a forensic study on how the scam was perpetrated over the years.
The SEC team, which conducted a preliminary probe in February 2009 soon after the scam broke out, had sought the permission from the Union Government and the CBI to carry out its own investigation into the issue.
Mr Ashwani Kumar, who reviewed the CBI’s probe into the scam, went to the Satyam campus along with his colleagues in the Multi-Discliplinary Investigating Team on Friday. The SEC team reportedly enquired into the role played by PriceWaterhouse, the statutory auditors for Satyam for years during the scam period.
Case adjourned
Meanwhile, the Andhra Pradesh High Court has adjourned hearing on the appeal by the counsel of Mr B. Ramalinga Raju (the former Satyam Chairman), questioning a lower court’s decision to permit CBI to conduct a lie-detector test and brain-mapping on Mr Raju. “Hearing has been deferred to July 28. The CBI gave an undertaking that it would not conduct the tests before that date,” said Mr S. Bharatkumar, counsel for Mr Raju.
The three-member SEC team also quizzed auditors of KPMG, which is taking part in the restatement of the balance sheets of the company. KPMG is doing a forensic study on how the scam was perpetrated over the years.
The SEC team, which conducted a preliminary probe in February 2009 soon after the scam broke out, had sought the permission from the Union Government and the CBI to carry out its own investigation into the issue.
Mr Ashwani Kumar, who reviewed the CBI’s probe into the scam, went to the Satyam campus along with his colleagues in the Multi-Discliplinary Investigating Team on Friday. The SEC team reportedly enquired into the role played by PriceWaterhouse, the statutory auditors for Satyam for years during the scam period.
Case adjourned
Meanwhile, the Andhra Pradesh High Court has adjourned hearing on the appeal by the counsel of Mr B. Ramalinga Raju (the former Satyam Chairman), questioning a lower court’s decision to permit CBI to conduct a lie-detector test and brain-mapping on Mr Raju. “Hearing has been deferred to July 28. The CBI gave an undertaking that it would not conduct the tests before that date,” said Mr S. Bharatkumar, counsel for Mr Raju.
The Satyam Saga - As it Unfolds
22 September 2008: Satyam Computer Services won the Golden Peacock Global Award for excellence in corporate governance for 2008 given by the World Council for Corporate Governance. On that day, the Satyam stock ended down 4.69% at Rs 352.75.
16 December 2008: Satyam announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and chairman B Ramalinga Raju and other insiders held 36% in Maytas Infra and 35% in Maytas Properties. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services. The announcement was made after market shut on that day.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to cope with slowing outsourcing business. Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development.
Following the surprising announcement, Satyam's American depository receipt (ADR) plunged on 16 December 2008 as investors reacted negatively to its plan to buy two related companies. The ADR of Satyam Computer Services, which closed down $6.85, or 55%, at $5.70 on the New York Stock Exchange, jumped 50% in after-hours trading to $8.89. Even after the evening rally they were still down 28% from 15 December 2008's close of $12.30. On that day, the Satyam stock ended up 0.49% at Rs 226.50.
17 December 2008: Folowing a negative investor reaction, Satyam called off the deal which it had announced after trading hours in India on 16 December 2008. Satyam announced the decision to call off the deal before trading hours in India on 17 December 2008. However, the Satyam stock slumped 30.22% to end at Rs 158.05 on 17 December 2008 as investors judged Satyam's move as a total disregard for corporate governance and shareholders. On that day, the Satyam stock slumped 30.22% to end at Rs 158.05.
18 December 2008: Shares of Satyam spurted 7.15% to end at Rs 169.35 after the company said during trading hours on that day that its board will meet on 29 December 2008 to consider buyback of shares.
Satyam's decision to consider buyback was aimed at soothing investors nerves after the stock slumped 30.22% to Rs 158.05 on 17 December 2008, hitting a five-year low in intraday trade, with investors exiting the counter due to poor corporate governance. Satyam claimed of having a large cash pile of $1.1 billion, which marketmen hoped the company could use for buyback. On that day, the Satyam stock jumped 7.15% to end at Rs 169.35.
19 December 2009: UK-based online and mobile payment services player Upaid Systems filed a motion against Satyam in a state court, requesting testimony of Satyam's chairman B Ramalinga Raju, chief financial officer Srinivas Vadlamani and global head of corporate governance G Jayaram in connection with Satyam's failed attempt to strip all surplus cash from Satyam to to buy two closely held companies.
Upaid had urged the top Satyam officials to clarify as to why the company went through with the Maytas deal, in case they were looking at moving cash out of the books largely because they feared Satyam could loose the Upaid's earlier filed case.
Upaid and Satyam are locked in a two-pronged legal battle, one, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion, and the other, a disparagement case levelled by Satyam against the little known UKbased company.
The forgery case dates back to early 2000, when Satyam was working on a contract job for U-paid . Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms due to forgery by Satyam officials. On that day, the Satyam stock ended down 3.87% at Rs 162.80.
23 December 2008: The World Bank confirmed that it has barred Satyam Computer from doing business with it for eight years, starting September 2008, due to data theft and paying bribes to its staff. The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices. On that day, the Satyam stock slipped 13.55% to end at Rs 140.40.
25 December 2008: Satyam Computer asked the World Bank to withdraw 'inappropriate' statements about the Indian outsourcer and to issue an apology for harm done to the company.
Earlier On 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September 2008. Media reports had suggested that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it. Equity markets were shut on that day on account of Christmas holiday.
26 December 2008: Satyam said Mangalam Srinivasan, non-executive and independent director of Satyam resigned from the company effective 25 December 2008. On that day, the satyam stock ended 0.41% up at Rs 135.50.
29 December 2008: Satyam said Professor Krishna G Palepu, non-executive director and Vinod K Dham, non-executive and independent director of the company resigned from the company effective 28 December 2008. The outsourcer did not give any reason for the resignations.
Satyam, before trading hours on the same day had postponed the board meeting set on 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details. On that day, the satyam stock ended 9.41% up at Rs 148.25.
30 December 2008: Media reports suggested some institutional investors in the company had approached IT firms and private equity players for a stake sale. The report cited market participants as its sources. On that day, the satyam stock ended 8.33% up at Rs 160.60.
31 December 2008: Media reports suggested US-based computer firm Hewlett-Packard may buy a stake in Satyam. Hewlett-Packard (HP) was reported to be attracted by the Satyam's lucrative business software practice. Reports suggested that buying stake in Satyam could give HP an opportunity to challenge its rival IBM with bigger, low-cost offshore capabilities. On that day, the satyam stock ended 5.95% up at Rs 170.15.
3 January 2009 (Saturday): Founder-promoters stake declined from 8.64% to 5.13%t as financial institutions with whom the entire stake was pledged dumped the shares. Of the remaining 5.13% stake (around 3.45 crore shares) with the promoters, around 2.19 crore shares (or roughly 63% of the holdings) were still reported to be pledged with various lenders.
6 January 2009: Satyam denied media reports that suggested that Tech Mahindra had approached Satyam for an all-share merger. On the same day, Satyam had announced that the share of promoters' group in the company had further dwindled with lending agency IL&FS Trust Company selling off 1.03 crore shares afresh. On that day, the satyam stock ended 7.31% up at Rs 179.10.
7 January 2009: Satyam's chairman Ramalinga Raju resigned the company and admitted fraud of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.
Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent.
The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.
Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.
Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.
On the same day, Satyam Computer announced of forming a new team to look into its day-to-day affairs, following the resignation of its chairman Ramalinga. The interim CEO of Satyam, Ram Mynampati, sent a letter to the management and staff, announcing the formation of a new team that consisted of persons who have spent 10 years in the company and twenty years in the industry. On that day, the satyam stock tumbled 77.69% up at Rs 39.95.
8 January 2009: Media reports suggested Satyam's banker Citibank froze more than 30 operational accounts of Satyam Computer. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm. Equity markets were shut on that day on account of Moharram.
11 January 2009 (Sunday): In a swift action to salvage the beleaguered Satyam Computer Services, the government, after market hours on Friday (9 January 2009), sacked the remaining three directors erstwhile board on Satyam, including the interim CEO Ram Mynampati. The government then set up a three-member board on 11 January 2009 in a bid to restore confidence in the outsourcing company rocked by India's biggest corporate scandal.
The new three-member board consists of Deepak Parekh, chairman of Housing Development Finance Corporation. Kiran Karnik, former president of the National Association of Software and Service Companies (Nasscom), a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi). All the three members would act as independent directors. Corporate Affairs Minister Prem Chand Gupta expressed the hope that the new board would be able to provide the necessary vision, along with responsible and accountable leadership, to the company in this hour of crisis.
23 January 2009: Larsen & Toubro raised its holding in Satyam Computer Services to 12% from 4% earlier. L&T hiked stake in Satyam as the initial cost of investment in Satyam was at risk.
Following the additional share purchase, L&T's average acquisition price of around 12% stake in Satyam dipped to Rs 80 a share from the Rs 174, it paid earlier.
L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm.
If the stake reaches 15%, L&T will then, as per the regulator's takeover guidelines, have to make an open offer for an additional 20% stake in Satyam.
27 January 2009: The government-appointed board of Satyam Computer Services appointed the Boston Consulting Group (BCG) as the management advisor to support the directors and the Satyam leadership team.
Goldman Sachs and Avendus were appointed investment bankers to advise the company on the way forward. A dedicated three-member BCG will work closely, free of charge, during this revival process, Deepak Parekh, board member, had said.
5 February 2009: The government-appointed board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty, a Satyam executive for 15 years, as chief executive officer (CEO). Murty will be the chief executive with immediate effect, the company said in a statement. Murty was the Global Business Head of Satyam.
The board also said it has received bank lines of credit for Rs 600 crore toward working capital requirements. The money will help the company tide over its financial challenges, the board said.
The board said it had brought on two additional advisers: Homi Khusrokhan, who has served as managing director of Tata Chemicals, Tata Tea, Glaxo Laboratories India and Wellcome India; and Partho Datta, a chartered accountant who will focus on restating the company's scrambled third-quarter results.
6 February 2009: The government announced the appointment of Nasscom past-president Kiran Karnik as chairman of its six-member board.
13 February 2009: The Securities & Exchange Board of India (Sebi) relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. This smoothened the way for a possible sale of Satyam Computer Service, the only company that currently fits this description.
19 February 2009: The Company Law Board (CLB) allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.
Currently, the authorised capital of Satyam is 80 crore shares of Rs 2 each, of which 67.3 crore shares have already been issued. The CLB has authorised the Satyam board to pass a resolution to amend the capital clause of the Memorandum of Association to raise its authorised capital. Accordingly, the authorised capital of Satyam will increase from Rs 160 crore comprising 80 crore shares, to Rs 280 crore comprising 140 crore shares.
The Satyam board has been directed to devise a mechanism for transparent, open and competitive process without furthering the interest of any particular acquire. Besides, the board will also have to obtain requisite approvals from the Securities & Exchange Board of India. The process of selection of a strategic investor will be overseen by a retired judge of the Supreme Court or former Chief Justice of India.
6 March 2009: The Sebi approved selling 51% stake in Satyam through global bidding process.
As part of the two-phased bidding process, a chosen investor will acquire newly issued equity shares representing 31% of Satyam's share capital and then make a mandatory minimum public offer to buy a further 20% stake. The bidders are expected to have total net assets in excess of $150 million.
9 March 2009: Satyam commenced a competitive bidding process for selection of an investor to acquire 51% equity stake. Interested bidders were asked to submit a detailed expression of interest and the proof of availability of at least Rs 1500 crore by 20 March 2009.
4 April 2009: The government appointed board of Satyam extended the deadline for submitting financial bids for acquiring a controlling stake in the firm to 13 April 2009 from 9 April 2009 as bidders sought more information.
13 April 2009: Tech Mahindra was declared as the winning bidder for a majority stake in Satyam Computer with a winning bid of Rs 58 a share. Tech Mahindra to pay Rs 1750 crore for a preferential allotment of 30.28 crore shares, amounting to 31% of Satyam's equity. This will be followed by an open offer to acquire an additional 20% within 55 days. The acquisition is expected to cost the company around Rs 2,900 crore.
After evaluating each bidder's technical bid the government appointed board of Satyam Computer and Justice Barucha confirmed Tech Mahindra as the highest bidder as there was no bid within atleast 90% of the Tech Mahindra's bid. Larsen & Toubro (L&T), and Wilbur Ross were others who put in technical bid for Satyam Computer Services. L&T had bid at Rs 45.90 a share and Wilbur Ross at Rs 20.
20 April 2009:Tech Mahindra deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer. Tech Mahindra was to pay Rs 1750 million for a 31% preferential allotment of new shares and would then make an open offer for a further 20% of Satyam.
Funds for the 31% stake as well as the open offer have been deposited by Tech Mahindra, Satyam's government-appointed chairman Kiran Karnik had told media at Satyam's headquarters in Hyderabad.
22 April 2009:Tech Mahindra said its open offer for an additional 20% stake in Satyam Computer at Rs 58 per share will begin on 12 June 2009 and close on 1 July 2009. The open offer to Satyam’s shareholders was made by Venturbay Consultants, an unlisted arm of Tech Mahindra.
The maximum consideration payable under the open offer is Rs 1154 crore. Pursuant to successful completion of the offer, Tech Mahindra's holding in Satyam would go up to 51%. Kotak Mahindra Capital Company is the manager to the offer.
21 June 2009: Satyam Computer Services has been renamed Mahindra Satyam, two months after being taken over by Bangalore-based Tech Mahindra. The new robust brand is envisaged to represent the core values of the Mahindra group and the inherent strength of the Satyam brand.
16 December 2008: Satyam announced that it will acquire 100% in unlisted Maytas Properties for $1.3 billion and 51% of construction firm Maytas Infra for $300 million. Satyam founder and chairman B Ramalinga Raju and other insiders held 36% in Maytas Infra and 35% in Maytas Properties. Ramalinga Raju originally promoted the deal by saying it would de-risk Satyam's core business in IT services. The announcement was made after market shut on that day.
Satyam had planned to fund 75% of the acquisition with cash and the rest by selling debt. Satyam planned to acquire 31% in Maytas Infra from its promoters, or company insiders, at a price of Rs 475 a share. Satyam also planned to make an open offer for an additional 20% at a price of Rs 525 a share.
The acquisitions made little sense at a time when technology outsourcing companies are preserving cash to cope with slowing outsourcing business. Maytas Properties is into urban infrastructure development whereas Maytas Infra is into infrastructure construction and asset development.
Following the surprising announcement, Satyam's American depository receipt (ADR) plunged on 16 December 2008 as investors reacted negatively to its plan to buy two related companies. The ADR of Satyam Computer Services, which closed down $6.85, or 55%, at $5.70 on the New York Stock Exchange, jumped 50% in after-hours trading to $8.89. Even after the evening rally they were still down 28% from 15 December 2008's close of $12.30. On that day, the Satyam stock ended up 0.49% at Rs 226.50.
17 December 2008: Folowing a negative investor reaction, Satyam called off the deal which it had announced after trading hours in India on 16 December 2008. Satyam announced the decision to call off the deal before trading hours in India on 17 December 2008. However, the Satyam stock slumped 30.22% to end at Rs 158.05 on 17 December 2008 as investors judged Satyam's move as a total disregard for corporate governance and shareholders. On that day, the Satyam stock slumped 30.22% to end at Rs 158.05.
18 December 2008: Shares of Satyam spurted 7.15% to end at Rs 169.35 after the company said during trading hours on that day that its board will meet on 29 December 2008 to consider buyback of shares.
Satyam's decision to consider buyback was aimed at soothing investors nerves after the stock slumped 30.22% to Rs 158.05 on 17 December 2008, hitting a five-year low in intraday trade, with investors exiting the counter due to poor corporate governance. Satyam claimed of having a large cash pile of $1.1 billion, which marketmen hoped the company could use for buyback. On that day, the Satyam stock jumped 7.15% to end at Rs 169.35.
19 December 2009: UK-based online and mobile payment services player Upaid Systems filed a motion against Satyam in a state court, requesting testimony of Satyam's chairman B Ramalinga Raju, chief financial officer Srinivas Vadlamani and global head of corporate governance G Jayaram in connection with Satyam's failed attempt to strip all surplus cash from Satyam to to buy two closely held companies.
Upaid had urged the top Satyam officials to clarify as to why the company went through with the Maytas deal, in case they were looking at moving cash out of the books largely because they feared Satyam could loose the Upaid's earlier filed case.
Upaid and Satyam are locked in a two-pronged legal battle, one, a forgery case filed by Upaid against the Satyam management seeking damages of over $1 billion, and the other, a disparagement case levelled by Satyam against the little known UKbased company.
The forgery case dates back to early 2000, when Satyam was working on a contract job for U-paid . Upaid says that it ran into problems with Qualcomm and Verizon and had to settle the case with them under grossly unfavourable terms due to forgery by Satyam officials. On that day, the Satyam stock ended down 3.87% at Rs 162.80.
23 December 2008: The World Bank confirmed that it has barred Satyam Computer from doing business with it for eight years, starting September 2008, due to data theft and paying bribes to its staff. The World Bank, which had signed a $100-million billing per annum contract, had been an important client for Satyam. Since 2003, Satyam had been writing and maintaining all software for World Bank across all locations. This also included maintenance of software in back-end offices. On that day, the Satyam stock slipped 13.55% to end at Rs 140.40.
25 December 2008: Satyam Computer asked the World Bank to withdraw 'inappropriate' statements about the Indian outsourcer and to issue an apology for harm done to the company.
Earlier On 23 December 2008, the World Bank had issued a statement saying Satyam was debarred from getting direct contracts from it under its corporate procurement programme for eight years from September 2008. Media reports had suggested that data theft was one of the reasons why the World Bank had barred Satyam from doing business with it. Equity markets were shut on that day on account of Christmas holiday.
26 December 2008: Satyam said Mangalam Srinivasan, non-executive and independent director of Satyam resigned from the company effective 25 December 2008. On that day, the satyam stock ended 0.41% up at Rs 135.50.
29 December 2008: Satyam said Professor Krishna G Palepu, non-executive director and Vinod K Dham, non-executive and independent director of the company resigned from the company effective 28 December 2008. The outsourcer did not give any reason for the resignations.
Satyam, before trading hours on the same day had postponed the board meeting set on 29 December 2008 to 10 January 2009 to mull options beyond just a possible share buyback. The company said in a statement its board would consider moves to strengthen the firm's governance structure, including increasing the size and altering the composition of the board. It also said it had hired DSP Merrill Lynch to review the company's 'strategic options' to enhance shareholder value, but did not give further details. On that day, the satyam stock ended 9.41% up at Rs 148.25.
30 December 2008: Media reports suggested some institutional investors in the company had approached IT firms and private equity players for a stake sale. The report cited market participants as its sources. On that day, the satyam stock ended 8.33% up at Rs 160.60.
31 December 2008: Media reports suggested US-based computer firm Hewlett-Packard may buy a stake in Satyam. Hewlett-Packard (HP) was reported to be attracted by the Satyam's lucrative business software practice. Reports suggested that buying stake in Satyam could give HP an opportunity to challenge its rival IBM with bigger, low-cost offshore capabilities. On that day, the satyam stock ended 5.95% up at Rs 170.15.
3 January 2009 (Saturday): Founder-promoters stake declined from 8.64% to 5.13%t as financial institutions with whom the entire stake was pledged dumped the shares. Of the remaining 5.13% stake (around 3.45 crore shares) with the promoters, around 2.19 crore shares (or roughly 63% of the holdings) were still reported to be pledged with various lenders.
6 January 2009: Satyam denied media reports that suggested that Tech Mahindra had approached Satyam for an all-share merger. On the same day, Satyam had announced that the share of promoters' group in the company had further dwindled with lending agency IL&FS Trust Company selling off 1.03 crore shares afresh. On that day, the satyam stock ended 7.31% up at Rs 179.10.
7 January 2009: Satyam's chairman Ramalinga Raju resigned the company and admitted fraud of reporting inflated figures in the accounts of the firm. As per the announcement, Satyam's balance sheet as on 30 September 2008 had inflated cash and bank balances of Rs 5040 crore, inflated debtors of Rs 490 crore and non-existent accrued interest of Rs 376 crore. Against this the liability was understated by Rs 1230 crore.
Raju said the Q2 September 2008 results had overstated operating revenues by Rs 588 crore, thereby overstating the operating profits and cash to that extent.
The gap in the balance sheet has arisen purely on account of inflated profits over the period of last several years, Raju confessed adding that every attempt made to eliminate the gap failed. As the promoters held a small percentage of equity, the concern was the poor performance would result in a takeover, thereby exposing the gap, Raju said.
Raju said in the last 2 years a net amount of Rs 1230 crore was arranged to keep operations going. He said this was done by pledging all the promoter shares and raising funds from known sources by giving all kinds of assurances. Significant dividend payments, acquisitions, capital expenditure to provide for growth did not help matters. Every attempt was made to keep the wheel moving. The last straw was the selling of most of the pledged share by the lenders on account of margin triggers, Raju said.
The aborted Maytas acquisition deal was the last attempt to fill the fictitious assets with real ones, Raju said. Maytas's investors were convinced that this is a good divestment opportunity and a strategic fit, he said.
Raju ended the statement with an apology to Satyam's staff and shareholders and said he was prepared to face the legal consequences.
On the same day, Satyam Computer announced of forming a new team to look into its day-to-day affairs, following the resignation of its chairman Ramalinga. The interim CEO of Satyam, Ram Mynampati, sent a letter to the management and staff, announcing the formation of a new team that consisted of persons who have spent 10 years in the company and twenty years in the industry. On that day, the satyam stock tumbled 77.69% up at Rs 39.95.
8 January 2009: Media reports suggested Satyam's banker Citibank froze more than 30 operational accounts of Satyam Computer. These are trade receivable accounts, and the aim may be to protect the bank's $70-million exposure to the troubled technology firm. Equity markets were shut on that day on account of Moharram.
11 January 2009 (Sunday): In a swift action to salvage the beleaguered Satyam Computer Services, the government, after market hours on Friday (9 January 2009), sacked the remaining three directors erstwhile board on Satyam, including the interim CEO Ram Mynampati. The government then set up a three-member board on 11 January 2009 in a bid to restore confidence in the outsourcing company rocked by India's biggest corporate scandal.
The new three-member board consists of Deepak Parekh, chairman of Housing Development Finance Corporation. Kiran Karnik, former president of the National Association of Software and Service Companies (Nasscom), a technology lobbying group, and C Achutan, a former official at the Securities and Exchange Board of India (Sebi). All the three members would act as independent directors. Corporate Affairs Minister Prem Chand Gupta expressed the hope that the new board would be able to provide the necessary vision, along with responsible and accountable leadership, to the company in this hour of crisis.
23 January 2009: Larsen & Toubro raised its holding in Satyam Computer Services to 12% from 4% earlier. L&T hiked stake in Satyam as the initial cost of investment in Satyam was at risk.
Following the additional share purchase, L&T's average acquisition price of around 12% stake in Satyam dipped to Rs 80 a share from the Rs 174, it paid earlier.
L&T had acquired 4% in Satyam at Rs 174 per share before Satyam's founder B Ramalinga Raju admitted on 7 January 2009 of a Rs 7,000-crore accounting fraud at the IT firm.
If the stake reaches 15%, L&T will then, as per the regulator's takeover guidelines, have to make an open offer for an additional 20% stake in Satyam.
27 January 2009: The government-appointed board of Satyam Computer Services appointed the Boston Consulting Group (BCG) as the management advisor to support the directors and the Satyam leadership team.
Goldman Sachs and Avendus were appointed investment bankers to advise the company on the way forward. A dedicated three-member BCG will work closely, free of charge, during this revival process, Deepak Parekh, board member, had said.
5 February 2009: The government-appointed board of fraud-scarred Satyam Computer Services on Thursday, 5 February 2009, appointed A S Murty, a Satyam executive for 15 years, as chief executive officer (CEO). Murty will be the chief executive with immediate effect, the company said in a statement. Murty was the Global Business Head of Satyam.
The board also said it has received bank lines of credit for Rs 600 crore toward working capital requirements. The money will help the company tide over its financial challenges, the board said.
The board said it had brought on two additional advisers: Homi Khusrokhan, who has served as managing director of Tata Chemicals, Tata Tea, Glaxo Laboratories India and Wellcome India; and Partho Datta, a chartered accountant who will focus on restating the company's scrambled third-quarter results.
6 February 2009: The government announced the appointment of Nasscom past-president Kiran Karnik as chairman of its six-member board.
13 February 2009: The Securities & Exchange Board of India (Sebi) relaxed takeover regulations for companies whose boards have been superseded and replaced by the Government or other regulatory authority. This smoothened the way for a possible sale of Satyam Computer Service, the only company that currently fits this description.
19 February 2009: The Company Law Board (CLB) allowed the government-appointed board of Satyam to bring in a strategic investor through an open bidding process. For this purpose, the CLB also permitted the board to increase the authorised share capital and issue preferential shares.
Currently, the authorised capital of Satyam is 80 crore shares of Rs 2 each, of which 67.3 crore shares have already been issued. The CLB has authorised the Satyam board to pass a resolution to amend the capital clause of the Memorandum of Association to raise its authorised capital. Accordingly, the authorised capital of Satyam will increase from Rs 160 crore comprising 80 crore shares, to Rs 280 crore comprising 140 crore shares.
The Satyam board has been directed to devise a mechanism for transparent, open and competitive process without furthering the interest of any particular acquire. Besides, the board will also have to obtain requisite approvals from the Securities & Exchange Board of India. The process of selection of a strategic investor will be overseen by a retired judge of the Supreme Court or former Chief Justice of India.
6 March 2009: The Sebi approved selling 51% stake in Satyam through global bidding process.
As part of the two-phased bidding process, a chosen investor will acquire newly issued equity shares representing 31% of Satyam's share capital and then make a mandatory minimum public offer to buy a further 20% stake. The bidders are expected to have total net assets in excess of $150 million.
9 March 2009: Satyam commenced a competitive bidding process for selection of an investor to acquire 51% equity stake. Interested bidders were asked to submit a detailed expression of interest and the proof of availability of at least Rs 1500 crore by 20 March 2009.
4 April 2009: The government appointed board of Satyam extended the deadline for submitting financial bids for acquiring a controlling stake in the firm to 13 April 2009 from 9 April 2009 as bidders sought more information.
13 April 2009: Tech Mahindra was declared as the winning bidder for a majority stake in Satyam Computer with a winning bid of Rs 58 a share. Tech Mahindra to pay Rs 1750 crore for a preferential allotment of 30.28 crore shares, amounting to 31% of Satyam's equity. This will be followed by an open offer to acquire an additional 20% within 55 days. The acquisition is expected to cost the company around Rs 2,900 crore.
After evaluating each bidder's technical bid the government appointed board of Satyam Computer and Justice Barucha confirmed Tech Mahindra as the highest bidder as there was no bid within atleast 90% of the Tech Mahindra's bid. Larsen & Toubro (L&T), and Wilbur Ross were others who put in technical bid for Satyam Computer Services. L&T had bid at Rs 45.90 a share and Wilbur Ross at Rs 20.
20 April 2009:Tech Mahindra deposited the funds needed for taking the majority stake in fraud-hit Satyam Computer. Tech Mahindra was to pay Rs 1750 million for a 31% preferential allotment of new shares and would then make an open offer for a further 20% of Satyam.
Funds for the 31% stake as well as the open offer have been deposited by Tech Mahindra, Satyam's government-appointed chairman Kiran Karnik had told media at Satyam's headquarters in Hyderabad.
22 April 2009:Tech Mahindra said its open offer for an additional 20% stake in Satyam Computer at Rs 58 per share will begin on 12 June 2009 and close on 1 July 2009. The open offer to Satyam’s shareholders was made by Venturbay Consultants, an unlisted arm of Tech Mahindra.
The maximum consideration payable under the open offer is Rs 1154 crore. Pursuant to successful completion of the offer, Tech Mahindra's holding in Satyam would go up to 51%. Kotak Mahindra Capital Company is the manager to the offer.
21 June 2009: Satyam Computer Services has been renamed Mahindra Satyam, two months after being taken over by Bangalore-based Tech Mahindra. The new robust brand is envisaged to represent the core values of the Mahindra group and the inherent strength of the Satyam brand.
Friday, July 3, 2009
Satyam bullish under 'umbrella of governance'
ZDNet Asia, July 03, 2009
SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.
The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.
Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.
Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.
"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.
Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.
"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."
Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.
Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.
Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.
In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.
"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.
Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.
The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).
Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.
The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.
Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.
SINGAPORE--It has had the dubious honor of being dubbed the "Enron of India", but the revamped Satyam is now "extremely bullish" about its Asia-Pacific market prospects and confident of its governance, say company executives.
The newly-minted Mahindra Satyam--after the successful bid by Indian services giant Tech Mahindra--has tweaked its model of governance, which had been a "perceivable flaw", said Vineet Nayyar, executive vice chairman of Tech Mahindra and Mahindra Satyam.
Former Satyam Chairman B. Ramalinga Raju admitted to fraud and resigned in January amid a scandal over inflated profit reporting.
Speaking at a media briefing in Singapore Friday, Nayyar noted that the company's governance model has since been reorganized to allow greater responsibility and accountability. He added that incentives between sales and delivery teams have also been realigned, and there is greater transparency in the reporting of costs and profitability in the various business units.
"What you see in Mahindra Satyam is the congruence of the capabilities, skills and depth of knowledge of Satyam...now under the umbrella of governance which will adhere to the highest ethical standards [that Mahindra is known for]," he said.
Region's business picking up
Nayyar acknowledged that Satyam lost out on a large Telstra request-for-proposal issued earlier this year, but said the company's customers in the region still have "fairly positive" sentiments toward the company.
"It's not as if we've been banned or barred... We did lose a very large order, but there's still life beyond that [Telstra] order," he said. "On the other hand, all other clients [that] have stayed with us are staying with us, and are giving us further orders."
Philip Carter, IDC's associate research director for services in the Asia-Pacific region, told ZDNet Asia that apart from Mahindra Satyam losing a couple of key clients such as Telstra and the National Australia Bank, the company has made at least one recent deal in the region. Singapore's Land Transport Authority, he said, had awarded Mahindra Satyam a contract several weeks ago.
Over in the United Kingdom and Ireland, Satyam's existing clientele had signed US$2.5 million worth of contracts with the company during the first quarter of financial year 2009, Satyam's U.K. and Ireland head for noted earlier this month.
Carter said Tech Mahindra's coming into the Satyam picture has had a positive touch, but there were also challenges moving forward. A number of Mahindra Satyam executives hailed from Tech Mahindra, essentially a second-tier player focused on one vertical--telecoms. That presents management credibility issues, as well as a danger of talent attrition given management changes.
In addition, while the backing of Tech Mahindra may offer credibility in terms of financial stability and corporate governance, there is a "long process" in terms of sustaining and that credibility in the regional market, said Carter.
"There's been positive energy in terms of credibility building up, but I won't go as far to say they'll make the shortlist for every single major services contract," he pointed out.
Expansion in the pipeline
According to Mahindra Satyam's Asia-Pacific managing director Rohit Ghandi, the company is "extremely bullish" about the way forward.
The new Satyam, he added, would "be gunning very strongly for new business", through a combination of selling additional services to existing clients and pushing for new customer wins. For instance, the company is planning to roll out infrastructure services as well as BPO (business process outsourcing) services in Australia and New Zealand (ANZ).
Ghandi said Mahindra Satyam would concentrate on growing market share in countries Satyam formerly was active in--ANZ, China, Japan, Malaysia, Singapore and Thailand--before making expansion moves. However, Indonesia is a likely target as Tech Mahindra has an existing strong presence in the market.
The Asia-Pacific region, he added, is targeted to contribute 10 percent to 15 percent to Mahindra Satyam's overall revenues. Singapore, with headcount in excess of 400, will remain the regional headquarters for the company. Mahindra Satyam has over 2,000 employees across the region.
Nayyar added that Tech Mahindra and Mahindra Satyam will "for the time being" be run as separate entities but will tap on each other's relevant expertise as well as cross-selling opportunities. The two companies, he noted, have synergies that may result the merging of operations, but that would not take place at least in the next one to two years.
Who's who in Mahindra Satyam
Executive New post Former post
Vineet Nayyar Executive vice chairman, Tech Mahindra and Mahindra Satyam Vice chairman and managing director, Tech Mahindra
C.P. Gurnani CEO Head of global operations, sales and marketing, Tech Mahindra
S. Durga Shankar CFO Senior vice president, mergers & acquisitions, Mahindra & Mahindra
A.S. Murthy CTO CEO, Satyam
Rakesh Soni COO; head of delivery for manufacturing, banking and financial services, emerging verticals and strategic accounts COO, Tech Mahindra
Keshab Panda Head, business development and operations for manufacturing, banking and financial services, emerging verticals and strategic accounts Chief of Continental Europe, energy and utilities and manufacturing operations, Satyam
Atul Kanwar Head, business development and operations for regional business groups Chief business development officer, Tech Mahindra
Manish Mehta Head, delivery for regional business groups Head, system, analysis and program (SAP) development, Satyam
T.R. Anand Head, business development and operations for telecoms, tech infrastructure, media & entertainment, and semiconductor (TIMES); head, channel business Director and senior vice president for TIMES, Satyam
Ravi Bommakanti Head, delivery for TIMES Director and senior vice president and global head of insurance, Satyam
Hari T Chief people officer and chief marketing officer Global marketing head, Satyam
Source: Mahindra Satyam and HT Media
As Reported by-:ZDNet Asia
Vineet Nayyar Executive vice chairman, Tech Mahindra and Mahindra Satyam Vice chairman and managing director, Tech Mahindra
C.P. Gurnani CEO Head of global operations, sales and marketing, Tech Mahindra
S. Durga Shankar CFO Senior vice president, mergers & acquisitions, Mahindra & Mahindra
A.S. Murthy CTO CEO, Satyam
Rakesh Soni COO; head of delivery for manufacturing, banking and financial services, emerging verticals and strategic accounts COO, Tech Mahindra
Keshab Panda Head, business development and operations for manufacturing, banking and financial services, emerging verticals and strategic accounts Chief of Continental Europe, energy and utilities and manufacturing operations, Satyam
Atul Kanwar Head, business development and operations for regional business groups Chief business development officer, Tech Mahindra
Manish Mehta Head, delivery for regional business groups Head, system, analysis and program (SAP) development, Satyam
T.R. Anand Head, business development and operations for telecoms, tech infrastructure, media & entertainment, and semiconductor (TIMES); head, channel business Director and senior vice president for TIMES, Satyam
Ravi Bommakanti Head, delivery for TIMES Director and senior vice president and global head of insurance, Satyam
Hari T Chief people officer and chief marketing officer Global marketing head, Satyam
Source: Mahindra Satyam and HT Media
As Reported by-:ZDNet Asia
Tech M stake in Satyam to be 42.7% after preferential issue
Business Standard / New Delhi July 3, 2009
Tech Mahindra, the new owner of Satyam Computer Services (which is being rebranded as Mahindra Satyam), is in the process of approaching the Satyam board and the Company Law Board (CLB) to acquire additional shares via preferential allotment. The company had tendered an open offer to acquire an additional 20 per cent at Rs 58 a share but there were few takers, since the secondary market price hovered over Rs 70. Tech Mahindra, through its subsidiary Venturbay, had already acquired a 31 per cent stake in the company. Tech Mahindra's Chief Financial Officer Sonjoy Anand explains the company's stance on the issue.
What will be your next step, since the open offer did not get the desired result?
Our open offer was for acquiring the additional 20 per cent of Satyam, which is around 199 million shares. But since the share prices have gone up, the open offer has not been successful (the company’s stock is trading at 30 per cent higher than the open offer price of Rs 58). Some did tender to the open offer, but the number is very small.
So you will now acquire the additional equity through a preferential allotment...
Yes. This has been mentioned in the open offer, too. So now we will go back to Satyam with a request for a preferential offer. We did mention this earlier, that, in such a scenario we will subscribe to shares to make good the difference between the requirement of 199 million shares and the number of shares tendered in the open offer. This will bring our stake in the company to approximately 42.7 per cent. A spokesperson added: The open offer ended as of yesterday and we are in the process of collating the final numbers. The board will take a decision at the earliest, keeping these in consideration.
...and the outlay for this remains the same?
Yes, the outlay for acquiring through preferential offer route remains the same at Rs 1,155 crore. This will be fresh equity being issued by Satyam and the number of shares being acquired as well as the price remains the same.
How soon will this process be over?
It will take some time. We will be approaching the CLB soon. As of now, we have decided only about the preferential offer.
Tech Mahindra, the new owner of Satyam Computer Services (which is being rebranded as Mahindra Satyam), is in the process of approaching the Satyam board and the Company Law Board (CLB) to acquire additional shares via preferential allotment. The company had tendered an open offer to acquire an additional 20 per cent at Rs 58 a share but there were few takers, since the secondary market price hovered over Rs 70. Tech Mahindra, through its subsidiary Venturbay, had already acquired a 31 per cent stake in the company. Tech Mahindra's Chief Financial Officer Sonjoy Anand explains the company's stance on the issue.
What will be your next step, since the open offer did not get the desired result?
Our open offer was for acquiring the additional 20 per cent of Satyam, which is around 199 million shares. But since the share prices have gone up, the open offer has not been successful (the company’s stock is trading at 30 per cent higher than the open offer price of Rs 58). Some did tender to the open offer, but the number is very small.
So you will now acquire the additional equity through a preferential allotment...
Yes. This has been mentioned in the open offer, too. So now we will go back to Satyam with a request for a preferential offer. We did mention this earlier, that, in such a scenario we will subscribe to shares to make good the difference between the requirement of 199 million shares and the number of shares tendered in the open offer. This will bring our stake in the company to approximately 42.7 per cent. A spokesperson added: The open offer ended as of yesterday and we are in the process of collating the final numbers. The board will take a decision at the earliest, keeping these in consideration.
...and the outlay for this remains the same?
Yes, the outlay for acquiring through preferential offer route remains the same at Rs 1,155 crore. This will be fresh equity being issued by Satyam and the number of shares being acquired as well as the price remains the same.
How soon will this process be over?
It will take some time. We will be approaching the CLB soon. As of now, we have decided only about the preferential offer.
Satyam: PwC CEO raises more questions
2 Jul 2009
HYDERABAD: Chairman and CEO of PricewaterhouseCoopers, India, Ramesh Rajan’s statement given to the Central Bureau of Investigation (CBI) last week has raised more questions. Even as Rajan admitted to the CBI that Satyam’s audit was not done by Price Waterhouse (PW) and that S Gopalakrishnan and Srinivas Talluri were in no way attached to the firm PW, chartered accountants are surprised as to how the CEO never issued such statements on earlier occasions, when balance sheets of several listed companies were signed under the name of PW, by partners of Lovelock & Lewes.
Apart from Gopalakrishnan and Talluri, this list includes the names of P Ramakrishna, Sharmila A Karve, Anuradha Tuli and Kaushik Dutta. Among the various companies whose books have been audited by these six people are, GMR, Lanco, Saint Gobain, Moser Baer India Limited, Rain Commodities Limited, Infoedge and Satyam.
The balance sheets of these companies for 2007 and 2008, some of which are in the possession of this newspaper, clearly states that the firm’s share holders had formally appointed PW as its statutory auditor. The books have, however, been signed by either of these auditors who are not partners with PW but Lovelock & Lewes.
“How is it that PW never made an issue of this then? The only explanation perhaps is that the firm was also receiving certain benefits from these auditors and, hence, chose to keep quiet,” alleges a city-based chartered accountant. But this is not the only trap PW is caught in.
Considering that the firm did not refute this partnership by estoppels (or presumption), as called in auditing parlance, with the six auditors, PW can at any point be pulled up under the Companies Act of 1956.
Section 11 of this Act clearly states that “no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying out any other business (apart from banking)...”. However, if these six auditors are added to the list of existing partners of PW the number exceeds this figure. Elaborating on this, another CA says, “There are two firms by the name PW in India. The one with head office in Kolkata has 20 partners and the other with head office in New Delhi has 18 partners (as per ICAI records, also available to TOI). Now, if we add these six auditors to any of these firms the number will be more than 20.”
“This in turn declares the two PW firms as unregistered companies according to the Act and, hence, under Section 226 of the same Act, does not authorise any of its partners to audit the books of any company,” said sources further adding, “In that case the audits conducted by these partners so far stand invalid.”
Questioning why PW has remained quiet about all this until now, CAs and other auditors in the country say that the firm is also punishable for this under various sections of the Companies Act.
HYDERABAD: Chairman and CEO of PricewaterhouseCoopers, India, Ramesh Rajan’s statement given to the Central Bureau of Investigation (CBI) last week has raised more questions. Even as Rajan admitted to the CBI that Satyam’s audit was not done by Price Waterhouse (PW) and that S Gopalakrishnan and Srinivas Talluri were in no way attached to the firm PW, chartered accountants are surprised as to how the CEO never issued such statements on earlier occasions, when balance sheets of several listed companies were signed under the name of PW, by partners of Lovelock & Lewes.
Apart from Gopalakrishnan and Talluri, this list includes the names of P Ramakrishna, Sharmila A Karve, Anuradha Tuli and Kaushik Dutta. Among the various companies whose books have been audited by these six people are, GMR, Lanco, Saint Gobain, Moser Baer India Limited, Rain Commodities Limited, Infoedge and Satyam.
The balance sheets of these companies for 2007 and 2008, some of which are in the possession of this newspaper, clearly states that the firm’s share holders had formally appointed PW as its statutory auditor. The books have, however, been signed by either of these auditors who are not partners with PW but Lovelock & Lewes.
“How is it that PW never made an issue of this then? The only explanation perhaps is that the firm was also receiving certain benefits from these auditors and, hence, chose to keep quiet,” alleges a city-based chartered accountant. But this is not the only trap PW is caught in.
Considering that the firm did not refute this partnership by estoppels (or presumption), as called in auditing parlance, with the six auditors, PW can at any point be pulled up under the Companies Act of 1956.
Section 11 of this Act clearly states that “no company, association or partnership consisting of more than 20 persons shall be formed for the purpose of carrying out any other business (apart from banking)...”. However, if these six auditors are added to the list of existing partners of PW the number exceeds this figure. Elaborating on this, another CA says, “There are two firms by the name PW in India. The one with head office in Kolkata has 20 partners and the other with head office in New Delhi has 18 partners (as per ICAI records, also available to TOI). Now, if we add these six auditors to any of these firms the number will be more than 20.”
“This in turn declares the two PW firms as unregistered companies according to the Act and, hence, under Section 226 of the same Act, does not authorise any of its partners to audit the books of any company,” said sources further adding, “In that case the audits conducted by these partners so far stand invalid.”
Questioning why PW has remained quiet about all this until now, CAs and other auditors in the country say that the firm is also punishable for this under various sections of the Companies Act.
Andhra Pradesh includes inflated Satyam figures in IT export revenues
2 Jul 2009
HYDERABAD: The Andhra Pradesh government on Thursday said the state has posted a 24.5 per cent growth in information technology export revenues during 2008-09, higher than the projected national growth of 20.65 per cent, but this includes the inflated figures submitted by the scam-tainted Satyam Computer Services.
The exports during the year were Rs 32,509 crore against Rs 26,122 crore during 2007-08. The growth rate, however, has come down to 24.5 percent from 41 percent in the previous year.
The IT/ITES export figures for the last financial year include Rs 4,231.93 crore of Satyam, making it the top most exporter. The fraud-hit IT major had claimed exports of Rs 3,331.30 crore during 2007-08.
Officials of Software Technology Parks of India (STPI) here said they had to go by the figures submitted by the previous management of Satyam.
"We have included the figures after due certification process," STPI Hyderabad director P Venugopal told a news conference Thursday.
He, however, hastened to add that validation of the same would be done only in September.
Satyam founder and former chairman B. Ramalinga Raju shocked corporate India in January this by admitting to committing a Rs 7,800-crore accounting fraud by inflating the company's profits over several years.
Tech Mahindra bought Satyam in an open auction in April and last month re-named it as Mahindra Satyam.
STPI director general N. Krishnan said there could be 5 to 10 percent variation in the export figures submitted by the company and the actual exports. The audited figures will be available in August or September, he said.
Krishnan said the exports from STPI units were estimated at Rs 204,662 crore against Rs 180,155 crore 2007-08.
"The national growth rate has been lower than that of Andhra Pradesh," he said
HYDERABAD: The Andhra Pradesh government on Thursday said the state has posted a 24.5 per cent growth in information technology export revenues during 2008-09, higher than the projected national growth of 20.65 per cent, but this includes the inflated figures submitted by the scam-tainted Satyam Computer Services.
The exports during the year were Rs 32,509 crore against Rs 26,122 crore during 2007-08. The growth rate, however, has come down to 24.5 percent from 41 percent in the previous year.
The IT/ITES export figures for the last financial year include Rs 4,231.93 crore of Satyam, making it the top most exporter. The fraud-hit IT major had claimed exports of Rs 3,331.30 crore during 2007-08.
Officials of Software Technology Parks of India (STPI) here said they had to go by the figures submitted by the previous management of Satyam.
"We have included the figures after due certification process," STPI Hyderabad director P Venugopal told a news conference Thursday.
He, however, hastened to add that validation of the same would be done only in September.
Satyam founder and former chairman B. Ramalinga Raju shocked corporate India in January this by admitting to committing a Rs 7,800-crore accounting fraud by inflating the company's profits over several years.
Tech Mahindra bought Satyam in an open auction in April and last month re-named it as Mahindra Satyam.
STPI director general N. Krishnan said there could be 5 to 10 percent variation in the export figures submitted by the company and the actual exports. The audited figures will be available in August or September, he said.
Krishnan said the exports from STPI units were estimated at Rs 204,662 crore against Rs 180,155 crore 2007-08.
"The national growth rate has been lower than that of Andhra Pradesh," he said
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