Satyam accuses Raju of hampering merger
Former chairman and his kin accused of trying to scuttle its proposed merger with Tech Mahindra using IL&FS as a front
Hyderabad: Satyam Computer Services Ltd on Thursday accused its former chairman B. Ramalinga Raju and his relatives of trying to scuttle its proposed merger with Tech Mahindra Ltd, using Infrastructure Leasing and Financial Services Ltd (IL&FS) as a front.
add_main_imageIL&FS is opposing the merger of the two firms on behalf of its entity, Ekdanta Greenfields Pvt. Ltd, which is seeking recovery of ₹ 23 crore, inclusive of interest, owed to it. Ekdanta, along with 36 other companies, allegedly lent various sums to Ramalinga Raju when he was at the helm of Satyam.
Raju confessed in January 2009 to cooking the company’s books over several years, plunging the company into a crisis.NextMAds
The firm was bought by Tech Mahindra in a government-overseen auction and rebranded Mahindra Satyam, which has classified a sum of ₹ 1,230.40 crore under a suspense account in its balance sheet. The 37 unsecured creditors are claiming this disputed amount as theirs.
“Rajus needed a front to fight this litigation…Ekdanta appears only as a front for Raju,” Satyam’s senior counsel S. Ravi told the Andhra Pradesh high court, adding that all the 37 unsecured creditor companies are acting in concert as a single entity.
Satyam’s lawyer said the 36 unsecured creditors are riding on Ekdanta’s petition to hinder the merger of the two companies and pointed to the almost identical lines of argument of IL&FS and other unsecured creditors in the court.
The Andhra Pradesh high court is hearing various petitions related to the merger of Tech Mahindra and Mahindra Satyam and has clubbed the petitions of the purported creditors and minority shareholders with the merger petition.
Tech Mahindra and Mahindra Satyam announced their intention to merge on 21 March last year, an exercise aimed at creating a $2.4 billion entity, probably the sixth largest in the Indian information technology sector.
Highlighting how Tech Mahindra acquired a controlling stake in Satyam through an international bidding process and restored it to health, Mahindra Satyam’s counsel Ravi said the Raju family would have the “last laugh” if the amalgamation was allowed to be hampered in any way.sixthMAds
A lawyer representing 36 creditor companies strongly opposed the arguments of the Mahindra Satyam advocate, saying the managements of none of the companies are related to Raju. “Ramalinga Raju, or former directors of Satyam, were never on boards of my companies,” lawyer S. Niranjan Reddy said.
IL&FS has been refuting Mahindra Satyam’s allegations from the start. “There was nothing new in Mahindra Satyam’s argument and it is only a diversionary tactic,” a company spokesperson said on the phone.
Mahindra Satyam’s counsel assured the court that Satyam’s merger with Tech Mahindra will not in any way affect the ongoing investigations by the Central Bureau of Investigation (CBI), the Serious Fraud Investigation Office (SFIO) and the Enforcement Directorate into the Satyam scandal.
He also pointed out that it had the nod of 98% shareholders, including foreign financial institutions, Indian financial institutions, Life Insurance Corp. of India, and pension funds from the US. He further clarified that the reference financial period for arriving at the merger swap ratio was the December 2011 quarter, and not March 2011 as has been alleged.
Some minority shareholders of Satyam are objecting to the swap ratio—two shares of Tech Mahindra for 17 of Satyam Computer—determined by the company management, and have questioned the reference date fixed for arriving at the ratio.
The scheme of amalgamation has been cleared by various bodies including the Competition Commission of India, BSE Ltd, the National Stock Exchange and the Bombay high court, and is pending only in the Andhra Pradesh high court. The Bombay high court sanctioned the merger application of Mahindra Satyam and Tech Mahindra subject to approval by the AP high court.
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