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Satyam Computer Services is staring at a big hole in its books, due to falsification of accounts over a number of years, by its promoters. Even as the seriousness and extent of the problem will emerge over the next few weeks, the company could even be staring at bankruptcy, unless a quick bailout is arranged.
The reason for the possible dilution of Satyam Computer Services has become clear now. Satyam’s promoter has said that the entire stake held by SRSR Holding Pvt Ltd (a promoter group holding company) has been pledged to institutional lenders. Since the share price has been declining, these lenders have been selling shares to cover the margin shortfall.
In yet another move to retain focus on its core business of consumer products, Hindustan Unilever announced a move to license the Lakme and Ayush brands to a subsidiary Lakme Lever Private Limited. The press release does not say it explicitly but clearly HUL seems to think that therapy centres and beauty salons are not its forte.
Taro Pharmaceutical Industries has rejected Sun Pharmaceutical’s revised offer price (disclosed yesterday by Sun Pharma) as too low. It has said that Sun Pharma rejected its offer of a face to face meeting, made on December 30, and instead chose to go public with the offers, which were to be confidential. Apparently, Sun Pharma refused to meet unless Taro made a counter offer first.
On Friday, January 2, 2008 the RBI relaxed prudential norms for recognition of bad loans by banks. The move will allow banks to hide their bad loans for a much longer time, even as they hope that the borrowers’ economic condition improves and they pay back or recover their dues through other means.
Wind power company Suzlon Energy’s is selling part of its 71.3% stake in Hansen Transmissions, a gearbox maker for wind turbines. Ecofin, a London-based investment company that claims to specialise in global utility and infrastructure sectors, will buy a 10% stake in Hansen from AE-Rotor Holding BV, a subsidiary of Suzlon. It will now have an 11.62% voting and economic interest in Hansen, indicating it had a small stake earlier too.
The government is readying for elections. It has announced the final round of its fiscal stimulus package. With no signs of the measures taken till now leading to a recovery, the government is throwing everything it can at the slowdown. And, then it will leave the next government to clean up the mess –falling tax revenues, growing fiscal deficit and an economy that refuses to be kickstarted.
Enough money has been thrown at banks, industry and consumers. But none of them are showing any interest in it. The RBI has given Rs 300,000 crore in additional liquidity to the banking system, which seems like a lot that has achieved very little other than preventing a financial sector crisis. But now that banks are safe, what’s the guarantee one more round of lollies will force demand out of its hiding?
Software services provider Satyam Computers has postponed today’s board meeting to consider a buyback. Its chairman, B. Ramalinga Raju said that considering the questions that have been raised in the past two weeks, the need for them to be properly addressed and considering the interests of stakeholders, the company is broadening the scope of deliberations beyond a buyback.
Continue ReadingSebi has issued a consent order, accepting HDFC Bank’s application to settle the case filed against it in the IPO scam. It has paid Rs 1 lakh as part of the consent procedure. The Sebi order says that it had launched an investigation into share dealings in shares issued through IPOs during 2003-05.