Click to play videoNew Delhi: Corporate governance at Satyam Computers, India's fourth largest IT giant, is being questioned after promoter R Ramalinga Raju tried to buy his sons companies using Satyam money.
Investors gave thumbs down and got the $1.6 billion deal to acquire Maytas Properties and Maytas Infrastructure scrapped.
The company lost more than $2 billion abroad as its share price plunged. Even in India its share price dropped more than 30 per cent.
Ramalinga Raju tried to explain paying the money to the two promoters in Maytas.
"I would like to make this clear to every one that reason we are calling off the deal is totally on account of the fact that the reaction of some of the investors to the diversification has not been favourable," Ramalinga Raju, Chairman of Satyam Computers, says.
Meanwhile, reactions from both investors and India Inc to the deals have been severe.
"They should have never done that to start with without getting a larger support from share holders," says Rajeev Chandrashekar, President, Federation of Indian Chambers of Commerce and Industry (FICCI).
"I really cannot understand the synergy between a software services company and real estate infrastructure business," says Madhu Kela, Head of Equities at Reliance Mutual Fund.
This is not the first time that Satyam's corporate governance is being questioned.
In the beginning of this financial year it allegedly manipulated books to meet targets.
It also raises questions about boardroom democracy.
How can a promoter with eight per cent stake get a deal like this passed? But the U-turn makes its clear that the shareholder is still king.
(For updates you can share with your friends, follow IBNLive on Facebook, Twitter, Google+ and Pinterest)
 |
|
 |
 |
 |
|
More on IBNLive Right Now
TOP NEWS
MOST SHARED
PHOTOGALLERY
