Have cake, Will eat...

It was indeed out of the blue; the analysts tracking this firm were taken completely by surprise. Given the fact that Satyam was recently awarded for corporate governance, it was probably foot-in-the-mouth time for the promoters.

Satyam's decision to acquire infrastructure firms owned by sons of the promotor through cash payout has been widely criticized, what with the stock taking a major blow, down from INR 226 to 162 per share. Within a day, ~30% of shareholder's value in terms of market capitalization was wiped out. Exemplary shareholders' activism and subsequent annulling of the acquisition decisions has done little to support the stock price, at least in the domestic market.

Views of independent directors were largely ignored; leave aside the fiduciary duty of the board to the shareholders' in terms of related party transaction disclosures. As one analyst rightly pointed out, if the infrastructure sector growth story and diversification were indeed the drivers behind the deal as claimed by Satyam's top management, probably a merger through share-swap rather than cash acquisition could have been done, which would have helped Satyam's promoters avoid the furore.

Something here doesn't make sense. Satyam's promoters aren't that naive - such an acquisition was bound to evoke the negative reaction as it has. Then why did they go ahead with this announcement, trying to distribute Satyam's cash within the promoters through these acquisitions? One might wonder as to whether the buyback announced now is yet another covert way to transfer value to the promoters on the expense of other shareholders - what with the stock price taking a hammering, any buyback at this juncture would help the promoters consolidate their stake with less-than-ideal cash transfer to those who surrender their shares. Notably, the promoter's stake in Satyam is mere 8%; as such a dividend payout would have fetched little to the promoters. If returning cash to the shareholders is indeed the objective now, why not announce a hefty dividend instead.

Or perhaps they would consider the dividend once the buyback increase promoters' stake. Till then, watch out for the promoters further increasing share through secondary market trading.

P.S. Now that the entire Satyam story is out, turns out my call was rather on one end of the spectrum, the other being what turned out to be the reality- the Maytas acquisition seems to be the last ditch effort from the promotors to replace fictious assets by real assets. Well, there indeed was a hidden motive this related party transaction - but not shoring up promotor's stake leveraging the now battered stock price. Long live PwC :)

NYT Blooper!

They put me, of all people, in print!

...with a story on something to do with recession and India! I guess I was the editor's choice of the day :P They would print anything these day :)

Someone told me about this long back, but had somehow forgotten. A friend forwarded the link today - it was on the front page in the print, myself not sure about that though

(And I thought India TV was the only one when it came to sensational journalism :P)

Singapore Trip - 1

I am in Singapore these days, on a two weeks trip on an academic project. While its a short duration trip, I will try and cover as much as possible and keep the blog updated.

We are a bunch of 22 students, assigned to different projects with companies in Singapore. The Air India flight landed in the Singapore airport early in the morning. The bus ride from the airport to YMCA (where we are putting up) gave us a sneek preview of the beautiful landscape in which Singapore is set. It is an island microstate, with a total area of ~700 km-square, as wikipedia tells me. The ride was short, around 20 odd minutes, and the YMCA place turned out to be pretty nice considering the constraints of the modest budget this tudent trip was organized under.

On the first day, we went to this place called Little India. Indeed, it seemed to be a really small place with Indians and Pakistanis crammed up together, with some Sri Lankans thrown in for good measure. The place was crowded and smelled bad; with junta seeming to have little regard for traffic laws - quite strange for Singapore. Still, it felt quite closer to home in a weird way :). We visited Mustafa, this huge shopping complex where you could find anything and everything at relatively cheaper prices. One of my friends got USD exchanged for SGD, surprisingly the exchange rate offered there was much more attractive than the other places we had tried before. God knows how we Indians do it, but we always seem to be one step ahead when it comes to saving money. Dinner was a quiet affair, with everyone settling for some nice biryani. Restaurants were plentiful, with many advertising their regional cuisine speciality - India seems to be the only country who doesn't have one single "Indian" cuisine for the world, rather a diverse array of the same.

We reported to our respective offices the next morning. Mine turned out to be a startup in Out-of-Home Media, a promising new-age advertising concept rapidly gaining ground in India as well. A few hours went by exploring various parts of Singapore looking for the LCD screens this firm employed in its business, to get a first-hand feel of this form of advertising business. Felt good :)

The evening was spent in Boat Quay, a nice riverside place with a string of restaurant flanking one side. We ordered a couple of lasagnes in an Italian joint and just enjoyed the view. Instead of taking a subway train back to YMCA, we decided to walk back, stopping briefly on a Starbucks on the way to grab a coffee.

Will put up some pics as soon as I am able to get them on the lappy.