16/12: The plight of two Rajus

December 16, 2008 is a day two high-profile corporate honchos from Andhra Pradesh will not forget in a hurry.

It was on this day when the head of the Rs 12,500-crore (Rs 125 billion) Nagarjuna Group, K S Raju, was sent to jail on judicial remand for a fortnight for defaulting on repayment of deposits collected from the public.

The same day, another pioneering industrialist from the state, B Ramalinga Raju, announced that the country's fourth largest software services provider -- Satyam Computer Services -- will acquire Maytas Infra and Maytas Properties for Rs 7,680 crore (Rs 76.80 billion).

Within 24 hours, Raju had to call off these acquisitions following strong opposition from investors and fund managers.

In the process, Satyam's share value plunged by nearly 30 per cent with the company losing the confidence of its shareholders.

The issue of flouting corporate governance norms also cropped up, more so with Raju's two sons sitting on the boards of the two Maytas firms and Raju and other promoters of Satyam having only 8.74 per cent shareholding in the company. The public shareholding in Satyam, including that of FIIs and FIs, is 71.80 per cent.

Incidentally, both K S Raju and Ramalinga Raju have their ancestral roots in the two fertile Godavari districts of Andhra Pradesh, which are considered to be the rice bowl of India. Both their forefathers also have the same agricultural background.

K S Raju is the only son of K V K Raju, a first generation industrialist who founded the Nagarjuna Group by establishing Nagarjuna Steel and Nagarjuna Fertilizer and Chemicals. After the death of his illustrious father, K S Raju steered the group into diverse areas of agrichemicals, irrigation systems and energy.

While the Nagarjuna Group continued to flourish and almost became a household name in the coastal areas of the state, it had set up Nagarjuna Finance in 1982 with the objective of entering into financial services.

The group's reputation was so high that several thousands of people, including farmers, deposited their hard-earned