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A Lion’s eye on the Bulls and Bears

“In India, companies may fall sick, but promoters rarely do!”

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December 2008

Satyam Independent Director should attend one of his own courses!

Last Night I was amused and then rather angry to hear Prof M Rammohan Rao,an Independent and Non Executive Director on the Board of Satyam Computer Services Ltd

He was defending the decision taken by them for Satyam to acquire Promoter related Maytas Companies

Menaka of CNBC TV asked him which was the lesser of the Devils

  • Entering into a secondary market deal with promoter related parties where the Satyam Monies would go to these related parties directly or
  • Infusing Capital and  Investing directly into the Maytas Companies by accquiring New Shares 

Would you believe it !…Prof Rao professed that it would not have looked good for Satyam to directly invest in the Maytas Companies !…He is of the opinion that Monies directly to Promoters Sons is a better idea ! 

This Director is the Dean of ISB and as a Satyam Director earned a Commission of Rs 12 lakhs last year in addition to sitting fees of Rs 1.2 lakhs plus held 10000 Stock Options for Equity Linked Restricted Stock Units at a grant price of Rs 2 

Methinks this Dean needs to attend one of his Own Classes on Corporate Ethics and Governance at the ISB

Another Reflection…..Another Independendent and Non Ececutive Director,Prof Krishna G Palepu in addition to Commission of Rs 12 lakhs and Sitting Fees of Rs 40000 ,also received Professional Fees of Rs 79.51 lakhs from Satyam for FY 2007/8

Don’t you think such Monetised relationships will cloud the Independence of these Directors at Board Meetings ?

I mean, even if the Directors felt this Diversification was beneficial to Satyam,they surely must have realised that nearly all of Satyam’s Cash of @ US $ 1.5 billion would move out quickly to the Hands of the Promoters in this US $ 1.6 Billion Acquisition of their stake in Maytas Companies !…….Why would the Directors  have agreed to deplete Satyam of all of it’s cash !?…Defies Common Sense,Conventional Wisdom,Rationality and Logic

I have read the Conference Call transcripts to stakeholders to justify this decision as well as emails send by Satyam Founder,Ramalinga Raju to Employees and Associates after reversing the decision…..Was Delighted that SBI Mutual Fund and Templeton had the guts and courage to vehemently and voiceferously oppose Satyam’s Chairman and CFO in the Conference Call  

I too am a Satyam Minority Shareholder and I strongly advise Ramalinga Raju to keep quiet to avoid putting put his foot in his mouth and further dent “the established brand of Satyam” as he boasts of.

To appease shareholders Ramalinga Raju has now announced a Board meeting for December 29,2008 to consider Buyback of Shares

I would also advise  him to consider returning cash to shareholders through a High Special Dividend of atleast 1000 %…That would mean a dividend of Rs 20/share and an outflow of Rs 1340 crores on 67 crores shares of FV Rs 2…Even after this Satyam would yet have over US $ One Billion in Cash   read more

An American predicts a Chilling Forecast for America !

Reproducing Verbatim an interesting email received by me today….Gerald Celente predicts a very Bleak America soon…It’s scary


The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting a revolution in America, food riots and tax rebellions – all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente, the CEO of Trends Research Institute, is renowned for his accuracy in predicting future world and economic events, which will send a chill down your spine considering what he told Fox News this week.

Celente says that by 2012 America will become an undeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

“We’re going to see the end of the retail Christmas….we’re going to see a fundamental shift take place….putting food on the table is going to be more important that putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression”.

“America’s going to go through a transition the likes of which no one is prepared for,” said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis.

Celente, who successfully predicted the 1997 Asian Currency Crisis, the subprime mortgage collapse and the massive devaluation of the U.S. dollar, told UPI in November last year that the following year would be known as “The Panic of 2008,” adding that “giants (would) tumble to their deaths,” which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others. He also said that the dollar would eventually be devalued by as much as 90 percent.

The consequence of what we have seen unfold this year would lead to a lowering in living standards, Celente predicted a year ago, which is also being borne out by plummeting retail sales figures.

The prospect of revolution was a concept echoed by a British Ministry of Defence report last year, which predicted that within 30 years, the growing gap between the super rich and the middle class, along with an urban underclass threatening social order would mean, “The world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest,” and that, “The middle classes could become a revolutionary class.” read more

DLF to Borrow Rs 4000 crs to Rs 5000 crs at 30 % to 35 % interest pa from Malvinder Singh of Ranbaxy !?

NDTV Profit is reporting today unconfirmed developments that the Real Esate King DLF is to borrow Rs 4000 crs to Rs 5000 crs from Cash Rich Dollar Billionaire,Malvinder Singh who sold his Ranbaxy stake for Billions of Dollars to Dai-ichi of Japan recently

The alarming note is not the quantum of Borrowing but the reported Interest Rate of 30% to 35% pa !

Taking Extremes,if this Borrowing goes through,DLF will be bearing a very high Interest outflow of a Minimum Rs 1200 crs (30% of Rs 4000 crs) to a maximum of Rs 1750 crs (35% of Rs 5000 crs)

This is simply crazy !…just reflects the reality that there is such a huge ongoing credit contraction and Corporates are simply not getting access to Big Scale Funds from regular financing sources of Banks and Institutions

The Realty Sector is facing a Demand Ebb on one hand and a Huge Life Threatening Credit Contraction on the Other…..A Further Fall across the Board in Real Estate Prices Nationwide seems inevitable in these circumstances

There will be big consolidation as smaller builders and developers who joined the Bandwagon in the past few years will have no alternative but to forcibly sellout as their financiers will exert even more pressure 

Shares Prices of Real Estate Scrips have already crashed over 90% from Highs this Year…How much more can they fall !…this will depend on the Quantum of Debt these Companies Carry and the extent of default in servicing it

Satyam joins a growing Dubious List of Self Serving Promoters that include Lok Housing,Sterlite and Jaiprakash

My Blog has this Tag Line on the Home page

” In India,Companies may fall Sick,but Promoters rarely do !”

How do we get Retail Investors to come back into our Stock Markets  when we have self serving Promoters running Riot with Shareholders Funds !

Satyam joins this growing list of Companies where Promoters take for granted all shareholders and are purely self serving…Check out earlier Blogs today for their blatantly immoral and outright unethical decsion that Satyam would buy out Promoter stakes in Maytas Companies

Markets have been truly unforgiving to such Companies…..Gandhis of Lok Housing,Gaurs of Jaiprakash Group,Agarwals of Vedanta Sterlite Group have all felt the ire of Shareholders for self serving decisions taken by them that violate norms of Corporate Governance…Their Share Prices have collapsed this year from 60 % to 95 %….Shareholders have thrown out their holdings after losing trust in Promoters

Rajus of Satyam too are on track to face such a calamity even though they have reversed this controversial decision overnight…The Trust is gone overnight too !…From Rs 225 yesterday,Satyam has crashed over 25% to levels of Rs 165

Another Danger is that even existing clients that Satyam Serves will not trust this Company and it’s Promoters easily again…The Impact of this could be severe loss of Business and Growth Prospects…New Clients will not be forthcoming

Also Employees will move away,being demoralised and demotivated by such unethical behaviour from the Promoters

So we should see an immediate exodus of Shareholders first followed by Employees and Clients in Satyam

Joke of the Day !…..Satyam has won several awards for Corporate Governance


Satyam has won the Golden Peacock Global Award for Excellence in Corporate Governance for 2008…..This award was given recently on September 23, 2008

Relations Global Rankings (IRGR) rated Satyam as the company with Best Corporate Governance Practices for 2006 and 2007.

It also won the Golden Peacock Award for Excellence in Corporate Governance from the Institute of Directors in New Delhi in 2002

One thing is for Sure….Satyam is unlikely to win any such recognition awards in the Future  after Founder Chairman,B Ramalinga Raju blundered big time in announcing the Maytas Acqusition yesterday…It was seen as a Bail-out for his Sons !…Even though he reversed the Decision overnight the Damage had been done….Check out an earlier Blog today on this

Satyam becomes Asatyam as Founder Ramalinga becomes Ravana !

Holding less than 10% of Satyam’s equity,Founder Chairman,B Ramalinga Raju,got a Board Resolution passed to buy out 51 % of the Equity in his Son’s Companies Maytas (Satyam spelled backwards !) Infrastructure and a 100% Stake in Maytas Properties for a whopping aggregate of US $ 1.6 Billion or nearly Rs 8000 crs !

As if Satyam’s Cash Reserves are his fathers properties to buy out those of his Sons  !

This is nothing short of a Financial Rape of All Shareholders of Satyam by it’s Promoters

Ramalinga became Ravana with just this one blatantly immoral and unethical announcement even though he has tried to justify it

Even though he reversed it overnight under severe Institutional pressure,he does not become Rama again !

What the hell were the Board of Directors doing when passing such an acquisition !?…Is there is no genuine Independent Director on Board !? Mr Raju says it was a unanimous Board decision

Have a look at the Satyam Board…There are Nine Directors,of which Five are designated as Independent and Non Executive Directors and include world reknown names of Vinod K Dham of Intel and Prof M RamMohan Rao,Dean of ISB….I do not know whether  these Directors were present at the Meeting that decided the Maytas Acquisition…The 2007/8 Annual Report states of Four Meetings held in 2007/8, Mr Dham attended one in person and participated through Video Conference in the remaining three … we can assume video conferencing facility continues in this Financial Year 2008/9 and that Mr Dham attended this crucial meeting too through Video Conference

Companies Act needs to be amended strongly to deny promoters holding such a low level of Shareholding (8.74 % in Satyam) to “siphon” off large funds of the Company (US $ 1.6 Billion or @ Rs 8000 crs ) through only a Board meeting without seeking shareholders approval through an EGM or at the AGM

Satyam has become Asatyam overnight and this morning it’s share price reacted 28% to drop to Rs 162

Shareholders were shell shocked and FIIs and Domestic Institutions were fast to condemn this moving out of cash of Rs 8000 crs from Satyam to it’s Promoters who own the Maytas Companies

Satyam is tarnished overnight and the trust lost in a day will takes years to regain,if at all…all because of Poor Corporate Governance and the daylight Robbery attempted to be committed by the Founder,B Ramalinga Raju also now known as Ravana

The basis for the US $ 1.6 Billion Valuation of Maytas Companies has not been disclosed,although Mr Raju came on TV and, was clearly uncomfortable when fielding questions, disclosed that a Big Four Accounting Firm’s help had been taken !….The Valuation is as huge as that of Unitech !…Could this Big Four Firm be it’s auditors,Price Waterhouse !?…if you recollect This same auditing Firm was banned by RBI for several years from auditing Banks after it’s disastrous Audit of Global Trust Bank where it failed to notice and therefore did not bring out the huge Financial Hole in the Listed Bank which led to it’s collapse. read more

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