The Hindu : Business : Satyam Computer: receivables should be considered for further action

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Wednesday, Jan 14, 2009
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Satyam Computer: receivables should be considered for further action

K. T. Jagannathan

‘A rational approach can be to sell Satyam either in divisions or in full’.

CHENNAI: The shares of Satyam Computer Services have moved up by over 40 per cent since Monday. Satyam ended Tuesday at Rs. 31.05 on the National Stock Exchange, up from Rs. 23.75 on Friday. On the Bombay Stock Exchange (BSE), it closed at Rs. 31.25 on Tuesday.

Given the developments of the past few days, market pundits fear heavy speculation in Satyam shares. Since the shares of Satyam also come under the futures and option (F&O) segment, no circuit-breaker is applied to curb excessive speculation.

“Every new development in this episode could trigger volatility in share prices,” says P. H. Arvindh Pandian, a leading corporate lawyer. Stock market experts feel that the exchange authorities and the Securities and Exchange Board of India (SEBI) should suspend trading in Satyam shares.

“This will avoid speculation,” they argue. They feel that investors could be given the option to buy and sell in the interim period before the suspension takes effect. Any outstanding position could be squared up at a weighted average price by the exchange authorities. Trading could be allowed after normality is restored.

“A rational approach could be to sell Satyam either in divisions or in full, which could save the employees, their business and also credibility of IT industry and ensure confidence in the Indian legal system,” says Mr. Pandian, who specialises in mergers and acquisitions. “Efforts must be made to ensure that in all action taken against Satyam — either through Class Action initiated before the U.S. courts or in other countries, and future action against Satyam and its erring promoters — only its receivables or sale consideration and other investments in its subsidiaries be the subject matter of further action based on investigations,” he points out.

Even if liquidation is initiated, it will take years for the case to finish under the Indian corporate laws. The Class Action initiated in the U.S. could be completed in 3-4 years, exposing Satyam for all claims by various parties on its present assets, business and receivables.

“Hence, if the divisions/the full entity is completely disposed of by this board, which enjoys credibility, for a true and fair value, no questions would be raised.

“This would more than help the shareholders to receive some fair value for their investments and for further purchase of shares by the gullible investors,” Mr. Pandian reasons.

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