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THE TRIBUNE SPECIALS
50 YEARS OF INDEPENDENCE

TERCENTENARY CELEBRATIONS
B U S I N E S S

Satyam Saga
As probe begins, Maytas likely to take a big hit
Stock goes off Sensex
Mumbai/Hyderabad/Delhi, January 8
A special team of the Securities and Exchange Board of India, headed by its southern region general manager A Sunil Kumar, today began the investigation into the Satyam fraud at the IT firm's headquarters in Hyderabad.

Hyderabad Metro Rail project in limbo
Hyderabad, January 8
A question mark hangs over the fate of a string of projects handed over to the companies belonging to the family members of B Ramalinga Raju, who quit Satyam Computers under the shadow of largest-ever fraud in India’s corporate history. The immediate impact is likely to be felt on the prestigious Rs 12,000-crore Hyderabad Metro Rail project bagged by Maytas Infra, owned by Raju’s son.

Two US firms file lawsuit
New York, January 8
Two US-based law firms - Izard Nobel LLP and Vianale & Vianale LLP - have filed class action lawsuits against Satyam Computer on behalf of shareholders of the software services firm's American Depository Receipts.



EARLIER STORIES




People walk past the Bank of England in central London on Thursday. The Bank of England cut borrowing costs by 50 basis points to 1.5 per cent as expected on Thursday, a record low, amid signs that Britain is heading for a deep recession.
People walk past the Bank of England in central London on Thursday. The Bank of England cut borrowing costs by 50 basis points to 1.5 per cent as expected on Thursday, a record low, amid signs that Britain is heading for a deep recession. — Reuters

Industrialists’ wish list for industrial policy
Chandigarh, January 8
The doyens of industry yesterday outlined the specifics of how they would like the new industrial policy of Punjab to shape up. Withdrawal of entry tax, converting agri parks into export zones; and having an industry-friendly land policy — these were the demands made by the corporate biggies, as Punjab sets the ball rolling for implementation of its new industrial policy.

L&T burns fingers in Satyam
Mumbai, January 8
Larsen & Toubro has badly burnt its fingers after trying to corner shares in the troubled Satyam Computers. The company revealed today that it had purchased nearly four per cent shares of the company after the stock crashed following the bid to take over Maytas Infrastructure and Maytas Properties owned by the promoters.

Sun rejects Taro’s offer
New Delhi, January 8
Sun Pharmaceuticals has rejected Israeli firm Taro Pharmaceutical's proposal to increase the offer price of its shares to $15 a piece for their failed merger saying the overseas firm was not worth so much.







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Satyam Saga
As probe begins, Maytas likely to take a big hit
Stock goes off Sensex

Mumbai/Hyderabad/Delhi, January 8
A special team of the Securities and Exchange Board of India, headed by its southern region general manager A Sunil Kumar, today began the investigation into the Satyam fraud at the IT firm's headquarters in Hyderabad.

The Bombay Stock Exchange today said it would replace Satyam Computer with Sun Pharmaceutical in its benchmark index Sensex with effect from January 12. Satyam would also be removed from various other indices like BSE-100, BSE 200, BSE-500 and BSE Teck and BSE IT index

The market regulator had ordered a probe into the financial fraud after the company's chairman, B Ramalinga Raju, disclosed that Satyam's balance sheet was totally manipulated with inflated numbers.

The SEBI team is also believed to have visited the Hyderabad office of PriceWaterhouse-Coopers (PwC), the auditor of India's fourth-largest outsourcing firm, sources said.

When contacted, a PwC spokesperson denied this saying "no SEBI member has visited any of our offices so far." Meanwhile, some of the key clients of Satyam Computers are understood to be meeting in Hyderabad today to assess the current status of the troubled IT-major and to review their projects with the company.

Meanwhile, the government today ordered probe into the books of accounts of eight subsidiaries of Satyam Computer Services, whose head B Ramalinga Raju admitted that the company was declaring forged accounts.

The inspection would be conducted as per the provisions of Section 209A of the Companies Act, Corporate Affairs Minister Prem Chand Gupta told reporters today.

The subsidiaries, whose accounts will be verified by the government, are Maytas Properties, Maytas Infrastructure, Satyam BPO, Nipuna Services, Knowledge Dynamics, Nitor Global Solutions, Ca Satyam ASP and Satyam Venture Engineering Services.

In yet another development, ICAI said it would serve a show-cause notice on PricewaterhouseCoopers (PwC) in a week after collecting information from SEBI and Registrar of Companies, and action against CAs can be expected in 2-3 months if found guilty.

"We have written to SEBI. We are writing to RoC for collecting facts on Satyam. We are likely to issue show-cause notice in a week's time," ICAI president Ved Jain said here.

He said the institute would expedite the process this time and would be in a position to take action against CAs, if found guilty. CAs, found either negligent or party to the fraud, could face a life-time ban on practising, Jain said.

Meanwhile, industry chamber CII said today that Satyam's disgraced chairman B Ramalinga Raju has been removed from all key positions of the body, following his disclosure of a multi-billion dollar fraud in India's fourth largest IT firm. — Agencies

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Hyderabad Metro Rail project in limbo
Suresh Dharur
Tribune News Service

Hyderabad, January 8
A question mark hangs over the fate of a string of projects handed over to the companies belonging to the family members of B Ramalinga Raju, who quit Satyam Computers under the shadow of largest-ever fraud in India’s corporate history.

The immediate impact is likely to be felt on the prestigious Rs 12,000-crore Hyderabad Metro Rail project bagged by Maytas Infra, owned by Raju’s son.

The crisis in Satyam has come as a double whammy for Maytas Infra, which was already struggling to mobilise resources from the market, to execute the Metro Rail project.

Satyam’s botched bid to buy Maytas Properties and Maytas Infra, both owned by his sons, for $1.6 billion had triggered the crisis leading to the disgraceful exit of Raju from the country’s fourth largest software company he had floated 21 years ago.

The two infrastructure and construction companies have bagged several projects covering irrigation, ports and infrastructure sectors.

Meanwhile, the chairman of Maytas Infra R C Sinha today resigned from the company citing “personal reasons”. Ramalinga Raju’s second son Teja Raju is the vice-chairman and chief executive of Maytas Infra while his first son Rama Raju runs the realty firm Maytas Properties.

More troubles are ahead for Maytas Infra as it urgently needs to raise Rs 1,200 crore for meeting the requirements of the Metro Rail and other projects over the next two years. With doubts being raised over the authenticity of the balance sheet of this company too in the wake of Raju’s confession to fudging figures in Satyam, it may find the going tough in raising the resources from the market.

Even before the Satyam scandal broke out, the Metro Rail project had landed in a controversy with Delhi Metro Rail Corporation chief E Sreedharan raising serious doubts over it, saying it “smelled a political scam”.

Sreedharan, widely seen as a pioneer in developing metro rail concept in the country and responsible for building Delhi Metro network, had strongly criticised the way the Hyderabad Metro project has been handed over to a private developer.

Maytas had also bagged Kakinada port project, along with several irrigation projects in the state. Now, there are fears that implementation of these projects may slow down.

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Two US firms file lawsuit

New York, January 8
Two US-based law firms - Izard Nobel LLP and Vianale & Vianale LLP - have filed class action lawsuits against Satyam Computer on behalf of shareholders of the software services firm's American Depository Receipts.

"A lawsuit seeking class action status has been filed in the United States District Court for the Southern District of New York on behalf of those who purchased the ADRs of Satyam Computer between January 6, 2004 and January 6, 2009," Izard Nobel LLP said in a statement.

Another law firm Vianale & Vianale LLP has also announced that it has filed a class action lawsuit on behalf of purchasers of the American Depository Shares of Satyam Computer during the Class period January 6, 2004 through January 6, 2009.

Trading on Satyam ADRs was suspended yesterday after it plunged by over 90 per cent to $0.85 in pre-market trade in US following Satyam founder and chairman B Ramalinga Raju's confession to a Rs 7,800-crore fraud in the company.

NYSE in a statement yesterday had said that "NYSE Regulation is currently evaluating the news relating to Satyam and will closely monitor further developments. The security will remain halted until further notice".

Also yesterday, India's Corporate Affairs Ministry and market regulator SEBI announced that the episode would be probed and action taken against the perpetrators of the fraud that entails inflating profits and creating fictitious assets.

While the government said the entire issue would be referred to the Serious Fraud Investigation Office, SEBI described it would act in tandem with the ministry.

"I am now prepared to subject myself to the laws of the land and face consequences thereof," Raju said in a letter, while announcing his resignation. — PTI 

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Industrialists’ wish list for industrial policy
Ruchika M. Khanna
Tribune News Service

Chandigarh, January 8
The doyens of industry yesterday outlined the specifics of how they would like the new industrial policy of Punjab to shape up. Withdrawal of entry tax, converting agri parks into export zones; and having an industry-friendly land policy — these were the demands made by the corporate biggies, as Punjab sets the ball rolling for implementation of its new industrial policy.

Power availability and infrastructure were the main areas of concern, as was the competitiveness of concessions to be offered by Punjab vis-ŕ-vis other states. The state government officials led by chief secretary, Ramesh Inder Singh, did say that they were offering reforms in the tax structure. But, the industry was unison in its demand — you cannot keep us here merely on emotions, pleading that we should invest here as we are Punjabis.

Talking to TNS here yesterday, after meeting the officials at CII, S P Oswal, chairman and managing director of Vardhman Textiles, said since 20 per cent of industrial production in Punjab was in the textile sector, the state government would have to take proactive steps to give a fillip to this sector. He said in a power-deficient state like Punjab, the cross-subsidy of power to agriculture was uncalled for.

Vinayak Chatterjee, chairman, Feedback Ventures, felt that Punjab needed to do more in creating urban infrastructure. “Though Punjab has done well in infrastructure space, I recommended that the new industrial policy should extend the public-private partnership model to urban infrastructure, electricity distribution and find more innovations of PPP in rural infrastructure, irrigation system, cold chain and upgrading of mandis.”

Rakesh Bharti Mittal, vice-chairman of Bharti Enterprises, said if the government hoped to add value to its agricultural growth, it would have to create separate land bank for agri corporates.

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L&T burns fingers in Satyam
Shiv Kumar
Tribune News Service

Mumbai, January 8
Larsen & Toubro has badly burnt its fingers after trying to corner shares in the troubled Satyam Computers. The company revealed today that it had purchased nearly four per cent shares of the company after the stock crashed following the bid to take over Maytas Infrastructure and Maytas Properties owned by the promoters.

Company officials have been quoted as saying that L&T bought shares in Satyam Computers over 10 days till Tuesday. No purchases were made after Satyam's chairman Ramalinga Raju confessed to falsifying the accounts of the company.

L&T's stake in Satyam was bought through L&T Capital, the investment arm of the group. The construction major owns a wholly-owned subsidiary called L&T Infotech and company officials had earlier felt that Satyam could be a strategic fit. L&T's four per cent stake in Satyam at Wednesday's closing price of Rs 39.95 per share — after crashing more than 77 per cent in a single session — would be worth around Rs 107 crore.

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Sun rejects Taro’s offer

New Delhi, January 8
Sun Pharmaceuticals has rejected Israeli firm Taro Pharmaceutical's proposal to increase the offer price of its shares to $15 a piece for their failed merger saying the overseas firm was not worth so much.

"Taro Board knows that its proposal of $15 per share is way beyond what the company is worth with no audit numbers for three years and with prior year restated numbers to be further restated," Sun Pharma chairman and managing director Dilip Shanghvi wrote in a letter written to Taro chairman Barrie Levitt.

Sanghvi was responding to a letter by Levitt, who had asked Sun to pay $15 per share, while rebuffing Sun's sweetened offer of $9.5 per share, against the initial offer of $7.75 a piece.

Accusing Taro of delaying the transaction, Shanghvi said in the last 30 days Sun Pharma has not received even a single worthwhile proposal from the Israel-based firm for this purpose. — PTI

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