Sheer 'Bad Luck' Could Not Get Satyam: L&T Chief

New Delhi: Ready to list L&T's "second baby" in the stock market with an IPO of its Infotech division, the group's executive chairman, A M Naik, has said it was nothing but "bad luck" that it could not acquire the erstwhile Satyam Computer despite being early to accumulate the shares.

Satyam was eventually acquired by Mahindra Group in a government-initiated auction after a massive accounting fraud came to light in January 2009 at the then fourth largest IT firm of the country. L&T was another major group interested in acquiring Satyam at that time.

Soon after Satyam's founder and then chairman Ramalinga Raju made public years of over-stating of various financial parameters, the company's shares also went into a free fall, prompting L&T to accumulate shares at lower levels.

Within minutes of Mr Raju's disclosure becoming public on January 7, 2009, Satyam shares fell to as low as Rs 6.30 amid a huge selloff by panicky investors, which was more than Rs 500 below the peak price of about Rs 525 scaled less than a year ago in May 2008.

Recalling the Satyam saga and L&T's keen interest in acquiring that company at that time, Mr Naik said, "The real story is we were too early to get into Satyam. When Satyam price started crashing, we started buying. We started buying at Rs 210 or something. We bought at Rs 125 and our average price came to Rs 80 something."

Referring to the auction, Mr Naik said L&T estimated that the price at which it would go will be around Rs 55-60 and it decided to quote.

"But, we had a sizeable equity already at the average of Rs 80 and in order to come down to Rs 55-57, we needed to quote only Rs 47 to average a price of Rs 58. Mahindra had not bought a single share (earlier) and they started when they wanted to bid. So, they bid at Rs 57-58."

"For bidding at Rs 56, with almost 25 per cent equity at Rs 80-82 price, the average came down to Rs 47, so our bid came at Rs 47," he said.

Mr Naik further said, "Mahindra entered late and they had no baggage of Rs 88 and therefore they could get it. So it is a matter of luck in a way and our over-enthusiasm to acquire Satyam before anybody else getting in..."

Adding that he was sounded out by the government as well to get into Satyam, Mr Naik said, "By that time, we were sitting with Rs 80 average price. I assured them that I will. Until then, Mahindra was not in the picture and it was going as a single bid. It was just that it was our bad luck (in the end)."

Notwithstanding the Satyam episode, L&T went on to create a major IT business company with L&T Infotech emerging as the country's 6th largest IT firm with a turnover of nearly $900 million and staff count of over 20,000 persons.

Mr Naik said the target is to double the revenue to $2 billion in the next 3-4 years, while the eventual aim is to make L&T "number one" in the IT and technology services business, as is the case for the group in all other businesses.