Independent auditor given more time to submit Satyam report
HYDERABAD, Jan 05, 2013 (Mint - McClatchy-Tribune Information Services via COMTEX) --
Brahmaiah and Co., the independent auditor designated by the Andhra Pradesh high court to scrutinize the scheme of amalgamation of information technology (IT) services providers Mahindra Satyam and parent Tech Mahindra Ltd, has been given more time to prepare its report.
The Hyderabad-based auditing firm has not yet commenced the process and is working on the terms of reference, the court was informed on Friday.
Judge Sanjay Kumar asked the independent auditor to work with the official liquidator and finish the process by 30 January, the next date of hearing.
The court in December gave the auditor four weeks to determine how the share swap ratio of the two IT firms had been arrived at, after a group of minority shareholders of Satyam Computer Services Ltd, rebranded Mahindra Satyam, questioned the valuation process.
The minority shareholders objected to the 2:17 share swap ratio -- two shares of Tech Mahindra for 17 shares of Satyam Computer -- determined by the company management, and filed a petition asking the court to look into it.
They, however, were not opposing the merger that will produce a $2.4 billion (around Rs.13,150 crore today) entity, and possibly the sixth largest company in the Indian IT landscape dominated by Tata Consultancy Services Ltd, Cognizant Technology Solutions Corp., Infosys Ltd, Wipro Ltd and HCL Technologies Ltd.
Mahindra Satyam announced it would merge with Tech Mahindra, the IT arm of the Mahindra group, on 21 March last year. Ernst and Young Pvt. Ltd and KPMG India Pvt. Ltd advised the two firms on the share exchange ratio.
The merger has been cleared by various bodies, including the Competition Commission of India, BSE, National Stock Exchange, the Bombay high court, and is pending in the high court of Andhra Pradesh.
The court has clubbed the merger petition filed by Mahindra Satyam with the petition of the minority shareholders.
The first signs of dissatisfaction among minority shareholders over the swap ratio emerged at a special annual general meeting convened on the orders of the Andhra Pradesh high court on 8 June. Although some shareholders described the swap ratio as "unfair" and "skewed in favour of Tech Mahindra", the merger was passed with 99.71% votes in favour of the amalgamation at the time.
Tech Mahindra bought Satyam Computer in a government-overseen auction in April 2009 after the latter's founder B. Ramalinga Raju confessed to cooking the accounts to the tune of Rs.7,136 crore over several years, triggering a flight of employees and a wave of client defections. The company has since recovered, attracting new and old clients, and has expanded business volumes.
Satyam Computer rose 0.23% to Rs.108.30 on BSE, while the benchmark Sensex gained 0.1% to close 19,784.08 points.
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