Ernst & Young did Maytas Properties Valuation of Rs 6523 crs in just one Day !?

Just read a very interesting update on Maytas Properties in todays’ edition of Financial Express

Maytas Properties is facing the prospects of the Government taking it over the Board,just as they did for Satyam

The matter was being heard by the Company Law Board (CLB) and the company’s counsel suggested that the Government could appoint an observer or a Director on the Board…This was opposed by the Deputy Director,who represented the Government…He wants the Government to take over the Whole Board and thus the Company itself.

The Deputy Director made some interesting arguments on the Ernst & Young (E & Y) Valuation of Rs 6523 crs of Maytas Properties

  • There was a clear nexus between Father,Ramalinga Raju of Satyam, and Son,B Rama Raju,of Maytas Properties as they had relied on the E & Y Valuation to justify Satyam’s Proposal to takeover Maytas
  • This Valuation is Hollow as Maytas,as per government knowledge, has no land bank and has just a turnover of Rs 22 crs but the valuation was done at Rs 6523 crs
  • Government Alleges Fraud in the Valuation….E & Y has said in it’s Valuation report that they have valued all Maytas’s 31 projects in Chennai     ,Hyderabad,Bangalore and Nagpur and except for the Electronic City Project in Bangalore,land has been acquired
  • The fact is that Maytas Properties does not have any land.Some of it’s subsidiary companies have Development Rights,not lands….so the only asset the subsidiaries have are these rights
  • CLB Chairman,S Balasubramanian enquired whether E & Y did the Valuation in a Week..to which the Deputy Director replied ” No,the Valuation was done in a day only.”

So we have Two of the Big Four Accounting Firms facing bigtime flak in this sordid Satyam Saga…Price Waterhouse as Satyam auditors and Ernst & Young as Maytas Properties Valuers

What’s going to come out next !   

Satyam-Maytas Scam : Revealing Minutes of the crucial December 16,2008 Board Meeting to discuss and approve the acquisition proposal

The Minutes of the Crucial December 16,2008 Meeting of the Board of Directors of Satyam to discuss and approve the Maytas acqusition proposal are now in public domain

Phew ! I read the Twelve pages of the Minutes and can only say this !

NONE IN THE BOARD WAS ABOVE BOARD !

The way the Meeting Progressed from 4 pm and the nature of the various presentations that were made and the Information and explanations given by Top Management and Working Directors…all actually provide answers to some very vital questions that are being raised on

  • Complicity of Ram Mynampati,President and Whole-Time Director who made a presentation on the need to diversify from just being a core IT Company…His contradictory stance and feigning that he was in the Dark can be countered strongly
  • Complicity of Srinivasu Satti,Head (Mergers and Acquisitions) and who made the presentation to explain and justify the Maytas Proposal…He had to know !
  • Complicity of V Srinivasa,CFO…his justifications,information and explanations were taken at face value by the Independent Directors,when some very very basic queries automatically come to the mind when you hear V Srinivasa….I’m sure Independent Directors too would have had such queries race through their mind…why did they fail to voice them ! ?  
  • Dereliction of Duty and Prior Awareness of Maytas Deal by each and every Independent and Non Executive Director…They failed to raise even basic queries on Structuring,Financing,Leveraging and Valuation of the Deal…Queries that they raised were simply too general and they failed to get into specifics,like they should have
  • Controversial Valuation of Maytas Properties by Ernst & Young and the existence of a Non Disclosure Agreement with them

I shall endeavour to blog and justify each point above seperately in the days to come