Left calls for Satyams Rammohan Raos head

Satyam corporate governance issues have attracted its fair share of jabs from political leaders too. Yesterday, left MP Abani Roy in a letter to Mahmohan Singh demanded Satyam's independent director Rammohan Rao to be removed from crucial selection committees.
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Dec 27, 2008, 11.53 AM | Source: CNBC-TV18

Left calls for Satyam's Rammohan Rao's head

Satyam corporate governance issues have attracted its fair share of jabs from political leaders too. Yesterday, left MP Abani Roy in a letter to Mahmohan Singh demanded Satyam's independent director Rammohan Rao to be removed from crucial selection committees.

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Left calls for Satyams Rammohan Raos head

Satyam corporate governance issues have attracted its fair share of jabs from political leaders too. Yesterday, left MP Abani Roy in a letter to Mahmohan Singh demanded Satyam's independent director Rammohan Rao to be removed from crucial selection committees.

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Satyam 's corporate governance issues have attracted its fair share of jabs from political leaders too.

 

Yesterday, Left MP Abani Roy, in a letter to Prime Minister Mahmohan Singh, demanded Satyam's independent director Rammohan Rao to be removed from crucial selection committees.

 

Rammohan Rao is Satyam’s non-executive independent director, Indian School of Business’ Dean and member of selection committee for Deputy Governor of Reserve Bank of India, Chairman of Sebi and Chairman of TRAI.

 

Abani Roy said it was an “irresponsible role of conduct” and his removal would restore crediblity of such committees of these chair positions.

 

While political leaders are taking a potshot at Satyam, investors are closely watching Monday's board meeting. CNBC-TV18’s Research Analyst Raja Rajeshwari reports.

 

Here is a verbatim transcript of Raja Rajeshwari's comments on CNBC-TV18. Also watch the accompanying video.

 

The much awaited Satyam's board meeting is coming near and on Monday, December 29, we will know what kind of buy back it is likely to be, the modus operandi and the price it's likely to take.

 

The markets will watch out for the buyback, if there will be more resignations, if there will be any credibility building moves and if more resignations will come after Mangalam Srinivasan’s.

 

In case of buyback, buyback is a function of the networth, and for 10% buyback it can start off immediate without shareholder approval. But 25% of the networth buyback would mean that an EGM approval would be required.

 

The networth as of March 2008 was at Rs 7,239 crore. So 10% works to Rs 723 crore and 25% buyback works to Rs 1809 crore with shareholders approval.

 

Various Permutation and Combinations

Price         No of shares (cr)   % shares

250                  2.9                4.3%

200                  3.6                5.4%

190                  3.8                5.7%

180                  4.0                6.0%

170                  4.3                 6.3%

168                  4.3                 6.4%

165                  4.4                 6.5%

160                  4.5                 6.7%

 

Between Rs 180 to Rs 200, one can pick close to 5-6% equity shares minimum because if it is an open market transactions then the management will come and fix a maximum price and the buyback will be done below that.  

 

Market participants view's divided on modus operandi because there is also an option of tender offer which has not been used much. But it will give out a very strong signal that the management is indeed looking at definitively using their cash. In the case of open market buyback, a maximum price will be fixed and the board and the management is not under any obligations to buy from the market.

 

Open market buyback have failed to enthuse shareholders in the past with case in point Reliance Infra and DLF.

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