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S. Shanker

Mumbai, Aug. 5 Engineering and construction major Larsen and Toubro has sought the Securities and Exchange Board of India’s approval to sell its stake in IT services company Mahindra Satyam.

L&T will be able to exit the stock only after October 14 as all the bidders for Satyam had to agree in April to a six-month lock-in for investments made in the company.

L&T has 8.34 per cent in Mahindra Satyam, which it acquired in two tranches — four per cent in December 2008 and about eight per cent on January 23, 2009. L&T’s holding in Satyam got diluted after the issue of fresh shares to Tech Mahindra.

Its total investment of around Rs 600 crore is now worth over Rs 840 crore.

On Wednesday, the Satyam stock closed at Rs 112.95 on the BSE, up five per cent over the previous close. L&T bought the shares at an average price of Rs 79 over a two-month timeframe.

A senior L&T official said the SEBI approval was only an “enabling arrangement” the company was keen on securing and no immediate timeframe had been set to sell off the stake. “The market is up and we will wait and take a call,” he said.

Indications are that the company is inclined to exit because it no longer sees the Satyam holding as a “strategic investment” because it has no role in the company with the Mahindras clearly in the driver’s seat.

This goes hand-in-hand with what L&T’s Chief Financial Officer, Mr Y. M. Deosthalee, had said in April on the company treating its stake as strategic during the lock-in period and would take a call only on expiry of the deadline.

In December 2008, L&T Capital, a subsidiary of L&T, picked up a 3.95 per cent stake in Satyam, a little before Satyam’s founder-chairman, Mr Ramalinga Raju, made his dramatic disclosure on January 7. The purchase was estimated to be Rs 418 crore at an average price of Rs 157 a share.

On January 23, 2009, L&T further hiked its stake to 12.04 per cent by buying over five crore Satyam shares worth Rs 176.42 crore in separate bulk deals.

The engineering behemoth bought 3.9 crore Satyam shares on the NSE at an average price of Rs 34.52 and 1.18 crore shares at an average price of Rs 35.07 on the BSE.

The company said the stake hike was to average out its earlier purchase of about four per cent.

Not surprisingly, at the time of bidding for Satyam, L&T was considered a front-runner for acquiring Satyam as it seemed to have a strategic fit with its software services arm, L&T Infotech.

However, the L&T top management came under considerable flak for its acquisition of the Satyam stock.

The Satyam scrip plunged to a low of Rs 6.30 per share on the NSE and Rs 11.50 per share on the BSE on January 9, two days after Mr Raju’s confession. In L&T’s March quarter financial results, the company provisioned Rs 186.28 crore with respect to L&T Capital’s investment in Satyam Computer as the scrip tanked on the bourses.

Eventually, L&T’s bid price of Rs 45.90 proved far below what Tech Mahindra quoted, Rs 58 a share.

Tech Mahindra’s spokesman and Director-Marketing, Mr Prasenjit Roy, said the company would not like to comment on the issue.

More Stories on : Engineering | Stocks | Larsen & Toubro Ltd | Satyam Computer Services Ltd | Regulatory Bodies & Rulings

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