The failed Maytas deal has come as a big blow to Satyam, which for all its brutal HR policies, were seen as Investor's darling.
Here are blogs of note regarding Satyam - Maytas deal
Satyam - name and reputation are upside down
""Mr Raju said the two companies would be helped by Satyam's 'soft' skills in infrastructure vertical."
Synergy between software and real estate development? Whoa, and saying that with a straight face on TV was truly an achievement of sorts for Ramalinga Raju.
My second favourite cynical quote of Raju is: "With regard to Maytas Infra, he said the valuation was based on SEBI guidelines." Whoa, so now it's SEBI's fault that you grossly overvalued your sons' companies? Raju bhai, SEBI prescribes minimum standards of governance and valuation disclosures not valuation levels and their fairness – and most of them are geared towards honest arms length transactions.
"
(http://blogs.livemint.com/blogs/initial_private_opinion/archive/2008/12/17/satyam-name-and-reputation-is-upside-down.aspx)
Raju's sons have senior posts in both firms - Rama Raju Jnr is vice chairman of Maytas Properties and B Teja Raju is vice chairman of Maytas Infra"
When Indian companies realise this is unacceptable, they can compare themselves with the best of the Western companies. You'd never see IBM behaving in such a way - why did it take an investor revolt to bring the senior execs to their senses ? The CEO of Satyam should resign over this.
amanfromMars - IMHO resignation of the sons should have happened before the deal was even conceived !
(http://www.channelregister.co.uk/2008/12/18/takeover_abandoned/comments/)
Raju with 8% holding was trying for a day-light robbery.This is atrocious and there must be a regulation stipulating a minimum share holding to be a CEO or the CEO must be a professional. He or his family starts a company, run it for some time, manipulate the valuation and then merge it with a bigger IT company wherein he is a minority share holder. This sucks. All the other major shareholders should join and force Raju to quit.
What Raju did is unpardonable and he has lost the faith i had in the company.He must go!!!
As someone who has followed the fame and fortune of the big 4 in India for the last decade, one definitely gets the feeling that this is more a case of misunderstood intentions or expectations rather than malafide intent.
One must remember, that a minority promoter by working in the best interests of the investor has made Satyam one of the most profitable, fastest growing and most cash rich IT organisation in India. To an outside observer, while this event itself could be a source of discomfort, 25 years of success and ethical success shoule be a source of comfort.
there is a large degree of involvement in terms of the governance of the organisation and the management focus that is provided by the promoters of this organisation.
Without a doubt a few market signals seem to have been misinterpreted, without a doubt a larger buy in would've helped in creating far greater credibility to the event than what it ended up doing, without a doubt, at a sensitive time like this, transparency would've been a much healthier alternative, that said, persecution beyond a point comes across as a witch hunt.
as the actions stand corrected, its a lesson that we all take in and move forward.
(http://blogs.reuters.com/india/2008/12/17/its-all-in-the-family-for-indian-tech-firm/)
 |
9 comments:
Hi,
I suggest you refrain from using strong terms such as 'Day light robbery' etc. This issue is not due to an illegal money laundering stunt or anything like that. This whole episode was perfectly legal, but fell through the cracks of Company law and SEBI guidelines. However, i don't think an elite firm like Satyam which needs to maintain a lot of international brand equity will be a victim of ulterior motives. Valuation is subjective. All tough there is an exhaustive management science behind it but it still rides on the approvers machinery, be is SEBI,the investment bankers or the investors.
Asking for the Chairman to resign or mandating a change in management is not the solution. Just like changing a chief minister won't solve a terrorism problem. If you fail in one subject, do you stop your college education? Or does the college remove you from the roles?
This episode of Satyam should be seen in wake of 20 years on non-controversial existence of Satyam. Had it been a Reliance company being summoned for Corporate tax evasion, then it is not an abrasion. They do this all the time.Firms like Satyam, Infosys are supposed to maintain high standards of compliance and brand image in the international scene. It just happened that the management's strategy was not liked by the investor community. 'Liked' is the operative work, not legal or illegal.
The investors did not LIKE satyam's decision, notwithstanding Wipro moving to IT from selling Dalda vanaspati, Shikakai Soap, or a Tata selling trucks moving into IT, or HCL moving to IT from making computers, or Birla selling cement moving into IT.Or for that matter IBM turning into a service oriented company changing the game they played for over 30 years!!...Lot of IBM investors shouted for what IBM did!
Satyam wanted to diversify into an emerging market to protect historical levels of growth...the decision was just. Only the timing was a little early!Premature if i can say so.
The investors just did not deliberate on the big picture and demanded resignations...as if that will fix the situation!
Even statistically, one spike in 20 years is an outlier and does not indicate any trend. So lets leave the issue and move on!
I think the comments made are quiet harsh,
when we are saying about Raju we should remember he is the someone who has grown as one of the Icon by his commitment to the business and the society. And building a company worth few billion dollars will not happen without the trust of shareholders. I think when Raju has called back the deal based on the feed back of shareholders, thats fairly within norms of corporate governance.
As far as the change in policies/guidelines for someone to be a CEO can very well be done under corporate law.
So lets not give him too many negative points based on a single decisions either good or bad because the impact of decision we are predicting no one knows how that would have translated.
We should as rightly said by rcshekaran be thankful that companies like GE or TATAs or Reliance were not questioned and made to backtrack on their diversification plans.
I had worked with Satyam and close to the Top Management team before moving to another of the Tier I companies and i can vouch that Mr. Raju is One the The Best Business Leaders that India has ever produced. He is a true visionary and a business man with a heart. One should read about the activities of Satyam Foundation and Byrraju Foundation to know about this.
It is quite inappopriate and immature to expect or rather to even voice an opinion that Mr. Raju should resign.
We all understand that leaders might make an error in judgement in terms of investor sentiments. The Board did not cross any legal or ethical boundaries by this decision, infact one needs to appreciate the fact that they respected the sentiment of the investor community and withdrew the acquisition plan.
Let us move on in life and not spread rumours or discuss aspects that might hurt One of our Ivy League firms. Am sure Satyam is going to bounce back to being a more stronger organisation.
Not sure if Raju's resignation has to do with any moral responsibility. Good that he accepted the back-stabbing the deal would have done to retail investors
But Satyam and for that instance, IT industry without Ramalinga Raju is unimaginable. He was one of the most aggresive leaders in Indian IT industry.
R C Shekaran
I must share a few facts with you and others to reiterate that Satyam still fundamentally sound company:
1. Satyam has Presence across the Globe (20 Industries ,65 Countries) more diverse than Wipro & INFY. This does happen by accident. This spread helps Satyam in tough economic conditions. Did you know outside India in Asia Pac Satyam revenue are more than any of the Top 3 Indian IT services firm. De-risked Geographic revenue distribution 21% Europe, 17% Asia Pac, 62% America’s. Best present to leverage emerging markets.
2. Satyam has Mature Practices DWBI & ERP. HCL had to spend over 0.5 Bn to get the ERP skills which we already have. they just save $ 0.5 Bn
3. Revenues & Net Income have Grown Five-fold over last 5 years. This by sheer hard work by 50,000 people. Not by accident
4. FY08 was the 5th successive year of >35% Growth in Net Income. Show’s how they have got profits year after year.
5. 32% revenue coming from New & Emerging vertical : Satyam has diversified and expanded is industry depth.
6. Deepest Fortune 500 client penetration 185, Total 690 clients. Clients continue to support Satyam in spite of the issues that have surfaced in last 10 days. Company has as many clients as Infosys and strong fundamentals then why worry?
7. Company has the largest cash reserve to revenue ratio in IT industry as a result of company employees under management direction … why question it now?
8. Client delight index is a 4.5 out of 5, client retention is 98% – clients are an asset – do not loose sight of the fact and do not slight Satyam and management for just one aberration – this is an organization and not just a script on the BSE/ NYSE.
Infosys Acquiring Satyam would be good for India?
How about Infy acquiring Satyam. Infy is good in Banking, Satyam is good @ ERP. Satyam has good Engineering Services, Infy has good Telecom presence.
This would be a win-win situation as the consolidation would help the new entity to venture into new spaces
HP to Acquire stake in Satyam
After EDS HP is now eyeing on Satyam
such a bad turn of events first Matyas, then world bank and now a fraud. Time never remains the same from astrosolve.com
R C Shekaran! I hope this time you need to eat you words!
Post a Comment