Will exit Mahindra Satyam at opportune time: L&T

Q: I will take the opportunity to ask you since everybody has commented on L&T's stance on whether it is eligible to sell its stake in Satyam or not. At a board level have you taken a decision in principle on L&T whether you want to sell your stake at all whether permitted or not is step two, has step one being taken?

A: There has been no decision to sell the stake. It is only some kind of an enabling situation which we want to create and that is also arising out of the post acquisition events because they made an open offer and in that lot of information is available in the market. So considering that we thought that we need not bound by the agreement which we have signed. So it's only an enabling provision, there has been no decision at the board level and there has also not been any decision at the management level as well, so I made it abundantly clear that we have not decided to sell.          

Q: I am asking because earlier the L&T has said that it is a strategic stake in Satyam as you see it, does it still remain in your eyes a strategic stake that you have taken or since you are making a 25% return now at current prices on your Rs 80 acquisition price, you may consider booking profits or capital gains?

A: When we acquired the stake, it was definitely strategic and we demonstrated that when we participated in the process announced by the board that we definitely had a long-term strategic interest. However, post the transaction, it is little less strategic now, and therefore, at an opportune time we will exit. But that doesn't mean that we are in a hurry to dispose-off the stake. We can wait. There is absolutely no hurry at all. I am sure that they will create value in this company which is evident now and so we are willing to wait. The only important point is that the agreement, which we have signed, is standstill agreement. In our view it doesn't have much importance now. That is the only point we are making. So there is no decision to sell and today it is not so much of a strategic stake because in no way we are going to claim anything in that company.

Q: For L&T's purposes now, Satyam is purely a financial holding or are you monitoring at a management level the business turnaround at Satyam in any significant manner?

A: No, at the management level, we are not monitoring. It is a portfolio kind of an investment now, got converted to that level after we lost out but today even that portfolio stake. There is no hurry to get out of it.

Q: We spoke about L&T Finance's money raising programme and I asked you last time as well about all that talk in the market about L&T needs to raise any capital. Whether debt or equity has there been any board or management level discussion on L&T raising any kind of equity capital through whatever instrument?

A: We have been raising money from time to time. We raised debt, we are in the market almost every three-four months for raising some kind of a debt. We have not decided anything about equity issuance at this point in time. It will all depend on how situation develops in the country; if we see some activity level going up, one point is very clear that L&T will need money. We are expanding not only in manufacturing, we are also expanding in development project business. So we will have to invest in this government public private partnership programme plus we are investing in ship building and power and some of those initiatives which we are aware of.

We definitely will require money. The question is how quickly because lot of things got slowed down in the second half of 2008-2009. Today the situation seems to be a little more optimistic. But at the same time we need to see some activity on the ground which we are seeing in some way because some order booking has picked up now. We hope to get some good jobs, growth in the hydrocarbon sector as well as in the power sector in the near future. We have already announced one big job last week from Oil and Natural Gas Corporation (ONGC). So if we see that the activity level picks up, we will take a call. But at this point in time, there is no decision.