Eight years after Sify (the Internet company of Satyam Computers- sold off a few years back) bought the Indiaworld.Com channels in a whopping Rs. 499 crore cash deal, the promoters and management of Satyam Computers have indulged in their next tomfoolery again. By agreeing to take stakes in Maytas properties and Maytas Infra, both of which are controlled by the same family, the Raju's, Satyam Management & more importantly the board have engaged in the action that makes investors feel stupid.
It is even inconceivable that Raju's and their henchmen thought this deal would go along. How is it possible that a publicly listed company, buys the shares of another, without discussing with the investors and where there is a direct conflict of interest? A look at the valuation for Maytas and any novice would find the ridiculous numbers. The deal would make Satyam a net debt company!! The synergies are not very compelling either. What is the value proposition? "We will build offices, provide infrastructure and software"? The promoters and the management should be kicked for their actions and the board must be summarily fired and legal action needs to be taken for such a impudent move to approve this acquisition.
The bigger problem is that companies like Satyam do lot of hedging, sit on a pile of cash citing risk management during turbulent times. Now all they have done is to engage in most unethical, shameful activities that just makes their pockets bigger, short-changes the investors and puts India Inc. to shame. Satyam is sitting on a Rs. 8000 crore pile. A few days back it was reported by 'analysts' that Satyam would be the safest company to tide over the meltdown storm. But Captain Raju and his crew have ensured that they dont mind sinking the ship if it will mean profits to the family.
This is not expected of a person like Raju, who is hailed as a visionary and has got a number of awards like Businessman of the year and Entrepreneur of the year from E&Y, Dataquest etc. Satyam has now reversed the bid, but investors, clients and associates will start to wonder seriously about the vision of the management and if they have the skills and ethics to lead them forward.
It is time that we form a United Shareholders of India, similar to the one created by Carl Icahn in US and fight for minority shareholder rights.
Disclosure: The author is an investor in Satyam Computers and also was a long term associate of the company in a middle level leadership position.
It is even inconceivable that Raju's and their henchmen thought this deal would go along. How is it possible that a publicly listed company, buys the shares of another, without discussing with the investors and where there is a direct conflict of interest? A look at the valuation for Maytas and any novice would find the ridiculous numbers. The deal would make Satyam a net debt company!! The synergies are not very compelling either. What is the value proposition? "We will build offices, provide infrastructure and software"? The promoters and the management should be kicked for their actions and the board must be summarily fired and legal action needs to be taken for such a impudent move to approve this acquisition.
The bigger problem is that companies like Satyam do lot of hedging, sit on a pile of cash citing risk management during turbulent times. Now all they have done is to engage in most unethical, shameful activities that just makes their pockets bigger, short-changes the investors and puts India Inc. to shame. Satyam is sitting on a Rs. 8000 crore pile. A few days back it was reported by 'analysts' that Satyam would be the safest company to tide over the meltdown storm. But Captain Raju and his crew have ensured that they dont mind sinking the ship if it will mean profits to the family.
This is not expected of a person like Raju, who is hailed as a visionary and has got a number of awards like Businessman of the year and Entrepreneur of the year from E&Y, Dataquest etc. Satyam has now reversed the bid, but investors, clients and associates will start to wonder seriously about the vision of the management and if they have the skills and ethics to lead them forward.
It is time that we form a United Shareholders of India, similar to the one created by Carl Icahn in US and fight for minority shareholder rights.
Disclosure: The author is an investor in Satyam Computers and also was a long term associate of the company in a middle level leadership position.
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1 comment:
The manner in which the management planned to take investors for a ride has shaken the confidence of one and all.
Please read my post link below;
http://whatnonsanz.blogspot.com/2008/12/satyam-about-monkey-attack.html
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