13 Apr 2009, ET Bureau
MUMBAI: The successful bid by Tech Mahindra to acquire scam-tainted Satyam Computers has started a new trading strategy in the bourses. While most brokers ET spoke to, are wary of taking positional calls on either companies, the trading idea is to buy Infosys and TCS if the sectoral view is positive or short Tech Mahindra if the outlook on IT is negative.
At 12.40 pm, Tech Mahindra was trading 13.7% higher at Rs 364 while Satyam fared 7% higher at Rs 50.45. However the value was much lower than Tech Mahindra’s 52-week high of Rs 990 in May 2008.
Brokers said both counters witnessed sizeable trading volumes. "We’re not sure why the two counters are rallying so high. Positional calls of both stocks can only be taken post Infosys results," said Networth Stock Broking research head Deepak Sawhney. "If Infosys comes out with good fiscal fourth quarter numbers and a fairly good sectoral outlook, then we’d be able to say Tech Mahindra’s acquisition of Satyam will benefit both the companies. If Q4 numbers are bad and outlook negative, the Satyam acquisition will weigh heavy on Tech Mahindra," Mr Sawhney added.
On the valuation of the deal, Tech Mahindra offered Rs 58 per share for the Satyam bid, while engineering firm L&T made an offer of around Rs 49 for each Satyam share.
"One niggling worry is why did L&T bid at such a low price," said another Mumbai-based fund manager. "They sure did not want to pay anything more than what the company deserved. Tech Mahindra paying around Rs 9 more for Satyam will turn terrible expensive if sector outlook turns further negative," he added.
Brokers - who are positive on IT sector - are advising clients to buy Infosys and TCS; not many are advising clients to buy either Tech Mahindra or Satyam. Brokers possessing negative views on IT are asking clients to short Tech Mahindra, mutual fund sources said.
Monday, April 13, 2009
Company Law Board sees Satyam approval within 2-3 days
13 Apr 2009, REUTERS
NEW DELHI: The Company Law Board expects fraud-hit Satyam Computer Services to file for approval of the winning bidder within 2-3 days, its chairman
said on Monday.
The approval should not take more than 24 hours after filing, S. Balasubramanian told reporters.
Tech Mahindra has emerged as the wining bidder with an offer of 58 rupees a share.
NEW DELHI: The Company Law Board expects fraud-hit Satyam Computer Services to file for approval of the winning bidder within 2-3 days, its chairman
said on Monday.
The approval should not take more than 24 hours after filing, S. Balasubramanian told reporters.
Tech Mahindra has emerged as the wining bidder with an offer of 58 rupees a share.
L&T to hold on to Satyam stake: CFO
13 Apr 2009, REUTERS
MUMBAI: Larsen & Toubro, which has built up a 12 per cent stake in Satyam Computer Services, plans to hold on to the stake, its chief financial
officer said on a television channel.
Earlier Satyam named mid-sized outsourcer Tech Mahindra as the highest bidder for it.
MUMBAI: Larsen & Toubro, which has built up a 12 per cent stake in Satyam Computer Services, plans to hold on to the stake, its chief financial
officer said on a television channel.
Earlier Satyam named mid-sized outsourcer Tech Mahindra as the highest bidder for it.
Tech Mah's selection a new stage for Satyam: Kiran Karnik
13 Apr 2009, ET Bureau
HYDERABAD: Tech Mahindra, the new owner of Satyam Computer Services, was selected in a fair, open and transparent process, said Kiran Karnik, chairman of the government appointed board of Satyam Computer Services.
"Its (Tech Mahindra) selection signals a new stage for Satyam in its progress towards stabilization and growth. We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam's excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it re-positions the Company’s commitment to revival and good governance.” said Kiran.
Tech Mahindra will pay Rs 58 per share to buy a 31% stake in Satyam through a preferential allotment. Another 20% of the shares will be tendered in an open offer.
HYDERABAD: Tech Mahindra, the new owner of Satyam Computer Services, was selected in a fair, open and transparent process, said Kiran Karnik, chairman of the government appointed board of Satyam Computer Services.
"Its (Tech Mahindra) selection signals a new stage for Satyam in its progress towards stabilization and growth. We hope this will infuse greater confidence and comfort amongst customers, who continue to be happy with Satyam's excellent service delivery. This event ought to dispel the anxiety of all stakeholders as it re-positions the Company’s commitment to revival and good governance.” said Kiran.
Tech Mahindra will pay Rs 58 per share to buy a 31% stake in Satyam through a preferential allotment. Another 20% of the shares will be tendered in an open offer.
Tech Mahindra may gain $1 bn in annualised revenues from Satyam acquisition
13 Apr 2009, ET Bureau
HYDERABAD: Tech Mahindra, which emerged as a successful bidder to acquire a majority stake in Satyam Computer Services could gain around $800 million-$1 billion in annualized revenues from the acquisition, even as some customers consider shifting their projects to larger Indian vendors including TCS and Infosys.
“We estimate that over $300 million could be lost because of customer attrition over next six months,” said Sudin Apte, senior analyst, Forrester Research.
He added that Tech Mahindra will have to face the challenges of integrating teams from different service lines apart from convincing clients about business continuity.
According to sources who requested anonymity, Tech Mahindra offered Rs 58 per share for the Satyam bid, while engineering firm L&T made an offer of around Rs 49 for each Satyam share.
The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.
Satyam, which serves customers such as GE, GM and Ford, will also help Tech Mahindra build a better portfolio of customers.
Even as over 40 Satyam customers have either moved their projects, or are in the process of shifting to other vendors, leading companies such as GE, Nestle, Dupont, Nissan and National Bank of Australia continue to work with the scandal-hit company. The company has won around $30 million worth of contract from customers in Australia and Europe over past few days, a person familiar with these new wins said on conditions of anonymity
HYDERABAD: Tech Mahindra, which emerged as a successful bidder to acquire a majority stake in Satyam Computer Services could gain around $800 million-$1 billion in annualized revenues from the acquisition, even as some customers consider shifting their projects to larger Indian vendors including TCS and Infosys.
“We estimate that over $300 million could be lost because of customer attrition over next six months,” said Sudin Apte, senior analyst, Forrester Research.
He added that Tech Mahindra will have to face the challenges of integrating teams from different service lines apart from convincing clients about business continuity.
According to sources who requested anonymity, Tech Mahindra offered Rs 58 per share for the Satyam bid, while engineering firm L&T made an offer of around Rs 49 for each Satyam share.
The Satyam acquisition will help Tech Mahindra diversify its software services business, and compete aggressively with bigger rivals such as TCS, IBM, Infosys and Wipro.
Satyam, which serves customers such as GE, GM and Ford, will also help Tech Mahindra build a better portfolio of customers.
Even as over 40 Satyam customers have either moved their projects, or are in the process of shifting to other vendors, leading companies such as GE, Nestle, Dupont, Nissan and National Bank of Australia continue to work with the scandal-hit company. The company has won around $30 million worth of contract from customers in Australia and Europe over past few days, a person familiar with these new wins said on conditions of anonymity
Tech Mahindra joins India's top tier with Satyam
Mon Apr 13, 2009 MUMBAI (Reuters) - Indian mid-sized IT outsourcer Tech Mahindra won a bidding auction for a majority stake in fraud-hit Satyam Computer Services Ltd , edging out Larsen & Toubro , seen by some analysts as the favorite bidder.
Tech Mahindra's shares surged by a quarter, before trimming gains.
Before Satyam's scandal was disclosed in January, Satyam was ranked India's fourth-largest outsourcing firm and Tech Mahindra was sixth-largest so the combined firm, even allowing for overstatement of accounts by Satyam, is expected to be the top-tier outsourcer.
The Satyam buy will help Tech Mahindra, in which Britain's BT Group holds about 31 percent stake, diversify its services by reducing its reliance on the telecoms industry.
The sale should help restore confidence in the local industry at a time the economic downturn has already slowed growth. So, the sale is supportive for leading Indian outsourcing rivals Tata Consultancy Services , Infosys Technologies and Wipro
Leading IT companies have always maintained Satyam was a one-off, not a reflection of the broader industry.
Tech Mahindra gets more than half its revenue from Europe, and the Satyam purchase would help it significantly expand its presence in the United States.
Tech Mahindra played the bid well, being most publicly reluctant to commit and continually expressed worries over Satyam's liabilities.
It has been three months and one week since India's biggest corporate scandal broke, and the government has been keen to limit the impact of the scandal. The decision comes just days before month-long voting in national elections starts.
Tech Mahindra's shares surged by a quarter, before trimming gains.
Before Satyam's scandal was disclosed in January, Satyam was ranked India's fourth-largest outsourcing firm and Tech Mahindra was sixth-largest so the combined firm, even allowing for overstatement of accounts by Satyam, is expected to be the top-tier outsourcer.
The Satyam buy will help Tech Mahindra, in which Britain's BT Group holds about 31 percent stake, diversify its services by reducing its reliance on the telecoms industry.
The sale should help restore confidence in the local industry at a time the economic downturn has already slowed growth. So, the sale is supportive for leading Indian outsourcing rivals Tata Consultancy Services , Infosys Technologies and Wipro
Leading IT companies have always maintained Satyam was a one-off, not a reflection of the broader industry.
Tech Mahindra gets more than half its revenue from Europe, and the Satyam purchase would help it significantly expand its presence in the United States.
Tech Mahindra played the bid well, being most publicly reluctant to commit and continually expressed worries over Satyam's liabilities.
It has been three months and one week since India's biggest corporate scandal broke, and the government has been keen to limit the impact of the scandal. The decision comes just days before month-long voting in national elections starts.
Friday, April 10, 2009
Satyam fiasco: LIC lost Rs 950 crore
10 Apr 2009,
HYDERABAD: If one were to put aside the magnitude of loss suffered by the investors in Satyam, the money with which the Raju brothers played in Satyam scam was to the tune of Rs 6,000 crore. Of this, the amount they cornered for themseleves and their family was Rs 2,580 crore. The whereabouts of this money and the properties they bought with it and the key persons that helped them in perpetrating this scam is yet to be known. This is the crux of the charge sheet filed by the CBI two days ago in the local CBI court in which nine persons including B Ramalinga Raju, B Rama Raju and B Suryanarayana Raju are the accused.
Interestingly, Life Insurance Corporation (LIC) has emerged as the single largest institutional investor which lost as much as Rs 950 crore. Others like Allahabad Bank, Union Bank of India, Punjab National Bank, Oriental Bank of Commerce, Corporation Bank etc have together lost only Rs 10 crore put together.
The core of the chargesheet, running into 75 pages, mentioned what the CBI understood so far about the scam. Some highlights: When the actual cash available with the company was only Rs 139 crore, the accused had shown an inflated figure of Rs 5,160 crore and also claimed an interest of Rs 375 crore on that while the actual interest accrued was only Rs 7 lakh. On this, the accused had claimed that they had paid a tax of Rs 30 crore whereas the tax that was deducted on this income was only Rs 1.5 lakh.
Amazingly the number of fake invoices they generated was 7,561 and Rs 5,117 crore in value. Sales of the company was also inflated by 18% from Rs 23,434 crore to Rs 27,691 crore and the figure under the debtors account was shown as Rs 481 crore.
The chargesheet said that the Raju brothers had first sold their shares for Rs 75 crore, which they gave as gifts to their wives and family members. Later, in 2002, they sold the Satyam shares held by their family members, earning Rs 707 crore and purchased several properties with that money. They cornered another Rs 115 crore as dividend.
Between 2006 and 2008, Raju brothers had mortgaged their shares and got Rs 1,744 crore as loans from several non banking financial institutions. The shares held by the Raju family in Satyam fell from 18 per cent in 1992 to 1.87 per cent by 2008 but was not noticed by anybody. The 327 frontal companies floated by Raju brothers as agro based companies did nothing related to agri industries but were busy rotating the money they swindled for purchasing real estate. Even the bench strength of the company is only 62 per cent and they inflated this to 75 per cent and though the growth of the company is only three per cent, the accused have shown 22 per cent as operating margin. They also suppressed a liability of Rs 1,230 crore they have to pay to various institutions.
The CBI also found fault with the auditors and held them as chief accomplices responsible for the largescale fraud. For nearly seven to eight years, these auditors were certifying all the fake FDRs and ignored their prime responsibility of verifying the realities, it said.
HYDERABAD: If one were to put aside the magnitude of loss suffered by the investors in Satyam, the money with which the Raju brothers played in Satyam scam was to the tune of Rs 6,000 crore. Of this, the amount they cornered for themseleves and their family was Rs 2,580 crore. The whereabouts of this money and the properties they bought with it and the key persons that helped them in perpetrating this scam is yet to be known. This is the crux of the charge sheet filed by the CBI two days ago in the local CBI court in which nine persons including B Ramalinga Raju, B Rama Raju and B Suryanarayana Raju are the accused.
Interestingly, Life Insurance Corporation (LIC) has emerged as the single largest institutional investor which lost as much as Rs 950 crore. Others like Allahabad Bank, Union Bank of India, Punjab National Bank, Oriental Bank of Commerce, Corporation Bank etc have together lost only Rs 10 crore put together.
The core of the chargesheet, running into 75 pages, mentioned what the CBI understood so far about the scam. Some highlights: When the actual cash available with the company was only Rs 139 crore, the accused had shown an inflated figure of Rs 5,160 crore and also claimed an interest of Rs 375 crore on that while the actual interest accrued was only Rs 7 lakh. On this, the accused had claimed that they had paid a tax of Rs 30 crore whereas the tax that was deducted on this income was only Rs 1.5 lakh.
Amazingly the number of fake invoices they generated was 7,561 and Rs 5,117 crore in value. Sales of the company was also inflated by 18% from Rs 23,434 crore to Rs 27,691 crore and the figure under the debtors account was shown as Rs 481 crore.
The chargesheet said that the Raju brothers had first sold their shares for Rs 75 crore, which they gave as gifts to their wives and family members. Later, in 2002, they sold the Satyam shares held by their family members, earning Rs 707 crore and purchased several properties with that money. They cornered another Rs 115 crore as dividend.
Between 2006 and 2008, Raju brothers had mortgaged their shares and got Rs 1,744 crore as loans from several non banking financial institutions. The shares held by the Raju family in Satyam fell from 18 per cent in 1992 to 1.87 per cent by 2008 but was not noticed by anybody. The 327 frontal companies floated by Raju brothers as agro based companies did nothing related to agri industries but were busy rotating the money they swindled for purchasing real estate. Even the bench strength of the company is only 62 per cent and they inflated this to 75 per cent and though the growth of the company is only three per cent, the accused have shown 22 per cent as operating margin. They also suppressed a liability of Rs 1,230 crore they have to pay to various institutions.
The CBI also found fault with the auditors and held them as chief accomplices responsible for the largescale fraud. For nearly seven to eight years, these auditors were certifying all the fake FDRs and ignored their prime responsibility of verifying the realities, it said.
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