Satyam Computers' independent directors are mounting pressure on founder B Ramalinga Raju to reveal details of the controversial board meeting that proposed the acquisition of two promoter-related companies, after a director resigned yesterday owning moral responsibility.Directors want Satyam's founders to make public the minutes of the meeting at which around Rs 5,500 crore of the company's cash was proposed to be paid to acquire Maytas Infra and Maytas Properties.
The government is understood to have ordered a probe into Satyam Computer Services' controversial decision to buy two group-promoted companies and then reversing the deal within a few hours under pressure from investors.
The government had removed all directors related to the Raju family from the board of Satyam before it was handed to the Mahindra group.
The process will be initiated on July 16 and completed by November 15, according to state municipal administration minister Aanam Ramanarayana Reddy. Last week, the state government cancelled the contract awarded to Maytas Infra-led consortium after it failed to tie up funds despite a three-month extension. Maytas Infra is promoted by kin of disgraced Satyam founder B Ramalinga Raju.
Maytas Infra has requested the government-appointed directors on its board -- O P Vaish and Ved Jain -- to furnish their consent and declarations.
The CLB principal bench, headed by chairman S Balasubramanian, has suggested the Maytas' board should retain its current board and also have government-nominated independent directors. The bench also hinted giving board representation to its lenders, IDBI Bank and ICICI Bank. However, it was against giving a board seat to IL&FS, as the financial institution had given loans to the promoters against pledging of shares.
Andhra Pradesh Finance Minister K Rosaiah said the government would not cancel the projects awarded to Satyam sister concern Maytas Infra or blacklist the company. Instead, it would prefer to tackle each project individually. There would be legal complications and a price the government would have to pay if it calls off a project awarded to a company and vice-versa. Also, the re-tendering of the same work may be costlier due to the variation in prices, he said.
As a fallout of the financial irregularities in Satyam Computer Services, a section of the United Progressive Alliance government is in favour of cancelling the award of the Hyderabad Metro Rail project. The project was won by the Nava Bharat-led consortium, in which Maytas Infra, a listed firm related to Satyam's promoters, is one of the partners.
Unlikely to launch formal probe into IT firm's Maytas move.
Satyam Computer Services did not consult Mendu Rammohan Rao, dean of the Indian School of Business and an independent director on the board of India's fourth largest IT services provider, when it called off the deal to acquire Maytas Infra and Maytas Properties following shareholder protests. Rao had chaired the board meeting that endorsed the company's proposal to buy the two firms linked to the family of Satyam's founder and chairman B Ramalinga Raju.
"Now it is more of a corporate governance issue projected by the investor community and the media. Whatever we have done, is well within the powers of the Board of Directors," NYSE listed Satyam CFO Srinivas Valdamani told PTI. The deal was touted as something that would help Satyam diversify its business, especially when there was slowdown in the IT business in key markets such as the US and Europe.
At a time when professionals charge hefty sitting fees, the government-appointed directors who worked long-hours to revive crisis-hit Maytas Infra worked for free.
The Andhra Pradesh government will review the concession agreement it has signed with Maytas-led consortium for developing the Machilipatnam Port as the winning bidder for the over Rs 1,500-crore (Rs 15 billion) project has failed to tie up funds within the stipulated time.
The company failed to achieve financial closure for the Rs 12,100-crore (Rs 121 billion) metro project in March and had sought extension of the deadline by another six months. The decision on it is pending with the state government. Doubts were also expressed about its capabilities to execute the Rs 1,650-crore (Rs 16.5 billion) Machilipatnam project.
The family of B Ramalinga Raju, the main accused in the multi-crore fraud at Satyam Computer, has approached a local court seeking a direction to de-freeze bank accounts and return seized electronic items.
Interestingly, mutual funds had increased their holdings in Satyam to 38.6 million shares in December, after its controversial proposal to acquire promoter-family firms Maytas Infra and Maytas Properties was blocked by institutional players. Fund managers believed then that Satyam was available cheap. However, on January 7, Ramalinga Raju delivered a fatal blow by declaring he had fudged the company's balance sheet for seven years.
In the coming days, other lenders are expected to initiate similar steps to recover their dues from the company, which is facing the prospects of a change of management. IFCI executives said that the company revoked the guarantee earlier this month to recover its dues amounting to Rs 95 crore from Maytas Infra.
Work on the Hyderabad metro rail will begin by May next year and some sections will be opened for traffic by March 2014. The entire project will be completed by end of 2014.
Maytas Properties and Maytas Infra are promoted by Raju's family and have interests in realty and construction. Noting that there is no problem with the Maytas accounts, Bhatt said all the exposure are collateralised and accounts are regular.
Satyam Computer Services, India's fourth-largest software services provider, today came under fire from institutional investors after the company announced its acquisition of two companies -- Maytas Infra and Maytas Properties--for $1.6 billion (around Rs 7,680 crore).
Maytas Infra will now have to submit a Rs 240 crore bank guarantee and will get a 60 day breather by paying a penalty. "The global recession and the consequent credit squeeze in national and international capital markets has created a force majeure situation. Besides, the ongoing PIL (filed by an NGO) is having an extremely deleterious effect on our ability to achieve the financial closure," said the company.
In the case of Satyam Computer Services, L&T had acquired 8 per cent stake after the company's founder B Ramalinga Raju admitted to fraud, and had demanded representation on the company's board. The plea, however, did not find support. The promoters of Maytas had pledged shares with the two institutions and Sicom to raise funds.
Hyderabad-based KVK Energy and Infrastructure has parted ways with its beleaguered joint venture partner, Maytas Infra, in setting up a 1,050-Mw thermal power plant in Orissa under the banner of KVK Nilachal Power Pvt Ltd.
The latest penalties for insider trading follows an earlier disgorgement order passed by Sebi in July last year.
On February 17, 2009, Satyam case was handed over to CBI.
Besides the chief minister of Telangana, Modi was accompanied by Governor of Andhra Pradesh and Telangana E S L Narasimhan, Union Minister for Housing and Urban Affairs Hardeep Singh Puri, Telangana's IT Minister K T Rama Rao and state Bharatiya Janata Party chief K Laxman in the much-awaited train's inaugural run.
The Sensex ended down 251 points at 27,351 and the Nifty shed 65 points to close at 8,228.
The tribunal posted the matter for further hearing in December, when it will decide whether to admit the pleas of the Raju brothers and others against Sebi order.
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