Business Daily from THE HINDU group of publications
Monday, Jan 12, 2009
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Business Daily from THE HINDU group of publications Monday, Jan 12, 2009 ePaper | Mobile/PDA Version | Audio | Blogs |
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Our Bureau Hyderabad, Jan. 11 Top officials of Maytas Properties and Maytas Infra interacted with members of the Satyam Computer Board on the controversial December 16 meet when it was decided to acquire these two firms for a whopping $1.6 billion. The decision was reversed within hours bowing to investors voicing concerns of non-related acquisition. Some of the independent directors did voice their concerns about related party transactions and also about non-core focus area diversification. The valuations and title diligence for the controversial Satyam Computer’s acquisition of the Maytas Infra and Maytas Properties was handled by consultancy firms E&Y and Luthra and Luthra, a law firm, according to minutes of the December 16 board meeting. Prof. Mendu Rammohan Rao, Dean of Indian School of Business, who has since resigned from the board and also the ISB, chaired the meet as Mr B. Ramalinga Raju, Satyam Chairman, stepped out as they were interested parties. According to the minutes, Dr Mangalam Srinivasan, who was the first to resign from the Board, suggested that the Board members be involved right from the beginning of the process rather than merely used as rubber stamp to affirm decisions already taken. Prof Krishna Palepu and Mr Vinod Dham participated through video conference and Mr V. Srinivas, Satyam CFO, explained the financial implications and value addition the $1.6 billion buys could bring to the company. The CFO outlined how the Rs 7,914 crore or $1.615 billion acquisition will help add a land bank of 6,800 acres that will help develop 245 million sq. ft of built up space. He said that about 25 per cent of revenues for the company will come from these two firms by 2010.
While the CEO of Maytas Properties, Mr K. Thiagarajan, informed that the company had not leveraged private equity despite huge land bank, some of the directors including Mr T.R. Prasad and Dr Mangalam Srinivasan, asked about nature of guarantees and mortgages made. However, Dr Rao mentioned that the valuation for the two companies needed to be updated and advised that this be communicated to all the stakeholders. Mr T.R. Prasad further noted that final valuations be done for Maytas Properties for higher valuation to the satisfaction of the Board. Prof Palepu maintained that the proposed acquisitions have two complicated aspects — unrelated diversification and related party transactions. Both these issues will be of significant concern to investors and analysts. The company board also considered raising borrowing limits. More Stories on : Stocks | Economic Offences | Satyam Computer Services Ltd | Events
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