Minority shareholders of Mahindra Satyam have made a vociferous demand for a change in the swap ratio of shares as the company braces for a merger with Tech Mahindra.

Several shareholders, including IL&FS, have alleged that the swap ratio favoured Tech Mahindra and did little to benefit them.

They also wanted the company to consider March 31, 2012, as the cut-off date for the merger as it performed much better in that year as compared to March 31, 2011. They wanted a ratio of 1:4 (one TechM share of Rs 10 each for every four Satyam shares of Rs 2 each) and not 1:8.5 as announced by the company.

The silver jubilee annual general meeting (AGM), which was held here on Friday, witnessed sharp criticism from investors, particularly on the poor valuation of Mahindra Satyam.

They said the underlying value of the firm is much higher than that of Tech Mahindra.

Another investor pointed out that the odds were against Tech Mahindra following reduced work from companies such as BT.

Interestingly, an elderly woman investor wondered why the investors had to settle for less when the company had been claiming that it was doing well.

Let down

The strongest criticism has come from an investor, G. N. Ravi, who read out a five-page point-by-point criticism on the timing of the merger, valuation and swap ratio.

“Vineet Nayyar had stated in August 2011 that the company had not recovered fully by December 2011. Declaring the merger just 10 days before the end of the financial year 2011-12 and back-dating the merger with effect from April 1, 2011, was immoral. Tech Mahindra lost a big contract from Etisalat and BT was unwinding its stake as well as IT budget,” he said.

‘Valuation method flawed’

He found fault with the company for showing Rs 2,700-crore demand from Income Tax Department as a liability. “The company has provided for Rs 600 crore and said the remaining claim is not tenable and that it is an attempt to tax non-existent income,” he said.

> kurmanath.kanchi@thehindu.co.in

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