Apr 20, 2009|
Feudalism rocked Satyam
Stockmarkets across Asia have started off the week on a mixed note. While gains are seen in China and Hong Kong, stocks in Japan and Singapore are trading in the red currently. This comes after a successful culmination of last week’s proceedings, when Asian markets had climbed for the sixth consecutive week, the longest streak of gains in more than two years.As far as the Indian markets are concerned, while the BSE-Sensex (consisting of large cap stocks) has gained over 35% since its lows in the first week of March, the BSE-Midcap and Smallcap indices have gained even higher - up 36% and 38% respectively during this period.
But, is the worst behind us? Click here to let us know
Last week, as you know, was an important one for the Indian IT (information technology) industry and investors in it. While on one hand, Infosys laid the ground with its FY09 results and a petered down FY10 estimates, Tech Mahindra went on to win the bid for the beleaguered Satyam by offering to pay Rs 58 per share for the fraud-hit IT company.
Today’s Economic Times carries an interview with Mr. Keshub Mahindra, the Group Chairman of Mahindra & Mahindra, which is the promoter company of Tech Mahindra. Mr. Mahindra has outlined his belief that his company has got away with Satyam at a ‘walk-away’ price given the tremendous value addition this deal can create for shareholders in the long run. He said, "We could have bid lower. But I want to say it once more that it was a strategic decision and not a speculative one. It provided us with a platform to align the businesses of Tech Mahindra and Satyam."
We are of the belief that while this win will help Tech Mahindra in diversifying its software services business to a much wider canvas as also reduce its revenue concentration (BT currently forms around 60% of the company’s revenues), the questions that arise are numerous. Will Tech Mahindra be able to absorb and manage a company more than double its size? And will it be able to manage the cockroaches that are yet to come out of Satyam’s cupboards, especially given the uncertainty surrounding its actual numbers, and the fate of the numerous suits filed against the company in foreign courts?
Anyways, in an another interview with the same newspaper, Mr. N.R. Narayana Murthy, the founder chairman of Infosys, now a close competitor of Tech Mahindra, says that a feudal structure was responsible for the collapse of Satyam. "What happened in Satyam is that it was a huge scandal. Nobody could stand up and say, what is happening is wrong. Even those who thought what was happening was wrong did not have the courage and were not in an environment to say that it was wrong," believes Mr. Murthy, and rightly so.
More Views on News
Jun 10, 2017
Forty Indian investing gurus, as worthy of imitation as the legendary Peter Lynch, can help you get rich in the stock market.
Aug 19, 2017
Ever heard of Lindy Effect? Find out how you can use it to pick timeless stocks.
Aug 18, 2017
Buying the index now will hardly help make money in stocks even in ten years.
Aug 18, 2017
Donald J Trump, a wrasslin' fan, took a 'Holy Sh*t!' blow on Tuesday.
Aug 17, 2017
PersonalFN simplifies the mutual fund account statement for you.
More Views on News
Aug 7, 2017
The data tells us quite a different story from the one the government is trying to project.
Aug 10, 2017
Don't miss these proxy bets on growing companies or in a few years you will be looking back with regret.
Aug 8, 2017
Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...
Aug 12, 2017
The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.
Aug 7, 2017
Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...
Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement. LEGAL DISCLAIMER:
Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here
. The performance data quoted represents past performance and does not guarantee future results.SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: firstname.lastname@example.org. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407