Faced with a virtual revolt from various stakeholders, including the very same independent directors who had cleared the controversial Maytas buyout proposal, the Rajus of Satyam Computers are actively considering inducting a strategic partner and selling out their shares in the $ 2-billion IT company.
Late on Saturday evening, the company while postponing its board meeting from December 29 to Jan 10, announced the appointment of DSP Merill Lynch to advise on "strategic options to enhance shareholder value." A company release also talked of a "possible dilution of promoters' stake in the company." Analysts said that these two points when read together could mean that the Rajus are looking at an exit route and bringing in other investors. "The promoters own only 8.6 per cent of the company's shares. That is very low. Dilution could mean that they go out," averred Monotosh Sinha, executive director of Centrum Capital.
Satyam will also recast its board of directors: some board members are expected to exit, while some new faces could come on board. The Satyam release suggested that the next board meeting will consider "measures to strengthen the company's goverance structure, including the size and altering the composition of the board." Facing flak from all quarters, ISB dean M Rammohan Rao, who chaired the controversial meeting that okayed the Maytas deal, is expected to leave the board. But father of Pentium, Vinod Dham, who told TOI that he had asked for a special board meeting to consider all matters pertaining to the company is expected to continue and play a pivotal role. "He is a well-known name in technology circles in the US. And the stockmarket there would react positively to his continuance on the board," an analyst pointed out. Dham, along with Harvard Business School professor Krishna Palepu, is expected to physically attend the board meeting: in the past, the two usually participated through video conferencing.
Sources expected that if the sell-out by Satyam does not happen or till such times that it happens, B Rama Raju, the co founder and brother of Ramalinga Raju and managing director of the company, will step down from his executive position and make way for a salaried professional as managing director. "He will continue as a non executive director," sources averred. Similarly, it is expected that Ramalinga Raju might himself become a non executive chairman of the Satyam board.
IBM likely to takeover Satyam?
Stories about the disinclination of the Rajus to continue with Satyam Computers have been doing the rounds for the last two years with the constant buzz being that IBM would possibly takeover the company. “Though constantly denied, the fact that these tales persisted only shows that there cannot be smoke without fire,” says a top Hyderabad businessman known to Ramalinga Raju for long.
Raju who started off his entrepreneurial career in the construction business has a fascination for the real estate and related industry, say people who know him. This is precisely the reason why Maytas (which is Satyam spelt in reverse) was spawned by Ramalinga Raju a few years ago. Maytas has now grown big and comprises Maytas Infra and Maytas Properties. The former’s order book is over Rs 12,000 crore besides the Hyderabad Metro Rail project.
Satyam Computers has reserves of Rs 8500 crore. “All indications are that they want to exit, but by selling out they will lose control of this money. That is why I cannot figure out why they want to sell out,” a chief financial officer of a top corporate told TOI. “Unless you see it as an instance of the promoters being potentially forced out of the company by the shareholders. But nothing similar has happened in India before,” said Amitabha Guha, former deputy managing director of SBI.
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