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LIC believes Satyam can be revived
January 22, 2009 15:55 IST
Keeping an eye on engineering giant L&T's moves on the Satyam [Get Quote] front, Life Insurance Corporation of India, which has equity investment and board representation in both the companies, today said the IT firm was still valuable and could be revived with right leadership.
"We have an investment there (Satyam). If better returns come from a sale, then we (will) go for a sale," LIC [Get Quote] chairman told PTI but added that he would not give any instruction to two nominees that the insurer has on L&T board on the issue.
The country's top life insurer, which has over four per cent stake in Satyam, however, ruled out joining the race for acquiring the troubled IT firm, either alone or with L&T.
"We don't have the expertise to run an IT company. We are clear on Satyam issue that we are an investor... We are not interested in controlling the company. We are interested in the prosperity of the company as our money is still there," Vijayan said.
Asked given its position as the single largest investor in L&T with about 18 per cent stake, LIC would want the engineering major to take over the IT firm, Vijayan said, "We are the single largest shareholder, but L&T is a board-driven company. It is not proper for me to discuss."
On its suggestion to LIC nominees on L&T board, he said that the insurer had two members on L&T board, but their brief was to focus on proposals made at the meeting and the issues arising out of those.
Asked what LIC would prefer between a takeover or revival of Satyam, Vijayan said, "If somebody is taking over and giving us a better return, then we will do it.
"But, we are a long-term player in Satyam. We are ready to wait for 2-3 years. Let the board discussions take place then we will know what is giving value to our policy holders in a 2-3 year timeframe. . .Then we will take decisions."
"Now, we have a board member in Satyam. The board is having its meetings...funding in a company is based on basic balancesheet, but in this case, the balance sheet of Satyam did not reveal (the true picture)...
"If a company is doing very bad, then the chances of LIC putting additional money will be remote, unless there was a big chance of its revival. . . we have already made some investment and we have to salvage our investment."
Earlier this month, Sataym's founder and then chairman B Ramalinga Raju disclosed a massive financial fraud at the IT firm, subsequent to which the government disbanded its board and nominated its own directors, which include S Balakrishna Mainak of LIC.
Vijayan said that LIC has not thought of getting out of Satyam, which he said was 'considered as a very strong company. . .one of the the top four in the IT sector. Even when the IT sector was not doing so great, it never crossed our mind. I should confess that."
Asked if he hoped that Satyam could be revived, Vijayan said, "Very strong commercial decisions need to be taken. IT companies are about the people working there and their ability to attract the contract and execute it.
"People are still there. Contracts are still there. It may be the case that some clients have withdrawn. It is not that the entire value of the company has been eroded. Cash is not there. but value of the company to a large extent is still there and if a proper and strong leadership is given, this definitely can be put on track."
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