Mumbai: India’s Larsen and Toubro Ltd has no plans to buy more shares in Satyam nor sell a 3.95% stake it bought earlier this month, its chairman said, sending its shares down as much as 14.8%.
“We have no intention of buying or selling at this point in time,” A M Naik said on television channel CNBC TV18.
His comments came after shares in Satyam Computer Services slumped more than 70% early on Friday when trading resumed after a holiday, following an almost 80 percent plunge on Wednesday after the chairman of the outsourcer said profits had been overstated for years.
Naik said Larsen, which has a small outsourcing unit, had bought the holding in the hope of forming a strategic alliance.
“When we invested our idea was to strike some sort of go-to-market strategy, some sort of strategic alliance if it was possible,” he said.
Satyam shares had been under pressure since mid-December after a botched attempt to buy stakes in two construction firms in which the outsourcers’ founders held stakes and after a World Bank decision to bar the company from any of its business.
Larsen shares were trading down 8% at Rs713, after falling as low as Rs661.1, while Satyam was down 45.4% at 21.80 off a low of Rs11.50. The main BSE index was down 2%.
Naik said it was premature to write off the Satyam investment, which was acquired in the first week of January.
“I think it is just a speculation today to say it’s a loss because the company has a good residual value,” he said, without disclosing how much Larsen had paid for the stake.
With regulatory authorities investigating the company’s books following the shocking revelations, Naik said it would take some weeks for the real value of Satyam to emerge.
Naik would not rule out the possibility of an alliance if Larsen saw intrinsic value in Satyam after all the liabilities, including lawsuits, were factored in.