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Day: January 27, 2009

Larsen’s CMD, Mr A M Naik tries to justify increasing stake to 12% in Satyam

4 Comments / Bulk Deals, Chuckle !, Controversies, Corporate Governance, Information Technology, Infrastructure, Insider Trading, Interesting New Words, Investing Themes, INVESTOR MISTAKES, Reflections, Satyam : The Sordid Asatyam Saga, STOCKS, VALUATION / By

This is a gist of the Conference call that Larsen organised today to justify and clarify the 12% stake in Satyam

  • L&T management clearly stated that L&T is no longer just an E&C company. It’s businesses span a range of activities in manufacturing as well as services, including heavy engineering, manufacturing,  power, process engineering and financial, IT and engineering services.
  •  L&T Infotech, with revenues of US$400mn in FY08, has been in the IT services business for 10 years and hence, the acquisition of a stake in Satyam is not an unrelated diversification for L&T.
  • L&T acquired the 1st tranche of 3.95% stake in Satyam after the announcement and subsequent cancellation of the proposed acquisition of Maytas Infra and Maytas Properties by Satyam, but before the news of fraud by Ramalinga Raju was announced. The average market price of Satyam at which the stake was acquired was Rs 174/share.
  • The 2nd round of acquisition of ~8.09% was completed on January 23, 2009 at an average price of Rs 34.share. L&T now holds a 12.04% stake in Satyam, at an average price of Rs80/share.
  • The initial stake was acquired with an intention to form a strategic alliance with Satyam for targeting clients jointly, especially in areas where L&T Infotech and Satyam were competitors.
  • On disclosure of the fraud by the ex-Chairman of Satyam, L&T decided to increase its stake with a view to preserve the value of the already acquired stake and to have a say in any major action the new Board of Satyam would decide about the company’s future
  • L&T’s decision to acquire the additional stake was based on its assessment (and feedback from various stakeholders in Satyam) of Satyam’s demonstrated track record, trained manpower and valuable client relationships.
  • L&T believes that major clients are unlikely to terminate contracts for two reasons – one, most clients are satisfied with Satyam’s services and would likely continue if issues of governance etc are addressed wby the new Board and two, the prohibitive costs of transition to new vendors.
  • L&T’s decision to increase its stake was also in part, influenced by the knowledge gained that Satyam did not have any debt on its books and all its properties were mortgage free and that Satyam has in its possession, 250 acres of land with clear titles.
  • On potential/contingent liabilities, L&T management is reasonably confident of no material impact of the UPaid case on Satyam. However, the management is yet to assess the impact, if at all, the class action suits filed against Satyam in the USA.
  • L&T has acquired the 12.04% stake in Satyam through L&T Capital, which is the designated vehicle for acquisition of all such strategic stakes.
  • The other strategic acquisitions made by the company in the recent past include NIIT Technologies (~5% stake to access markets in Europe where NIIT has a strong presence) and Kalindee Rail Nirman Engineers (~14.5%, to leverage Kalindee’s capabilities in EPC and allied services for Railways).
  • The management clarified that the Satyam acquisition, being strategic in nature, L&T Capital will not be providing for any MTM losses in its books.
     
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    Connection between having ‘No Wisdom’ and an unshaven and unkempt white stubble !

    2 Comments / Chuckle !, Reflections / By

    It’s been a long three day weekend and I have been just too lazy to shave

    Wife commented on my unshaven and unkempt white stubble….” Why is it that you have Black Hair on your Head, but your Stubble is White ! ?

    She answered it herself, rather tongue in cheek, I might add, “You seem to be following the “Bottom Up Approach” and Wisdom has yet to reach your Brain !”  

    Very Funny! My Dear!…but thanks for atleast recognising I have one!… Just Last week you dismissed me, saying “You have No Brains!” when I wrote your Name on my arm and showed it off to all !….. After all it was you who provoked me to be inspired by the Love and Passion that Saif Ali Khan demonstrated for Kareena by tatooing her Name on his arm !…. What did I do wrong ?.. You had made me erase ‘Kareena’ when I did exactly what Saif had done !

    I tell her, that with this state of Markets it’s more of a ‘Bottoms Up’ Approach… the ‘s’ in ‘Bottoms’ makes that huge difference and it’s not to say ‘Cheers !’… it’s more a  ‘Ghazal’ling Blues sort of ‘Bottoms Up’

    Let me tell all of you ! Marriage is the Only War where you have to sleep with the Enemy !

    Happy Republic Day to all Indians all around this Lovely planet Earth

    Leave a Comment / Interesting News Sightings, Reflections / By

    We celebrate our Republic Day today,January 26, 2009…. Proud and Privileged and Blessed to be born a Free Indian and Live and Feel and Sense and Breathe this Beautiful Country from it’s Cosmopolitan Heart, Mumbai

    Spend a Quiet and Reflective Day,listening to a host of Patriotic Songs and Inspiring Speeches by Visionary Indians and contemplating what lies ahead for all of us in 2009 and beyond

    As every year, also viewed ‘Live’ on TV, the Impressive Republic Day Parade in New Delhi… our PM too did the same, as he is recuperating in the Hospital after an urgent second By pass heart Surgery.

    As the Day ends, stand up to ‘Attention’ as our National Anthem reverberates all around us ” Jana Gana Mana Adhi Nayak Jaya He !……..”

    Yes!, you too!, Mr Shashi Tharoor… I know you mean well, but do take that right hand off your Heart as the Anthem Plays…. It Commands Decorum and Great Respect and standing at full Attention!…… Mr Tharoor, perhaps you can express your warm sentiments from your Heart when ‘Vande Mataram…. Maa Tujhe Salaam!’ is being sung…. I’ll support you wholeheartedly   

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