The concern was palpable in the motley crowd of just around 150 shareholders gathered at the Sri Satya Sai Nigamagamam, a function hall in the suburban neighbourhood of Srinagar Colony in Hyderabad. The shareholders had come to attend the first annual general meeting (AGM) of Mahindra Satyam since the scandal broke out in Satyam Computer Services, its earlier avatar under B Ramalinga Raju where in January 2009 he wrote the famous letter about the books being cooked in the company.
On Tuesday, December 21, the few shareholders keen to track the fate of their investments in the company turned up with number of questions at the company's AGM for 2008-09 and 2009-10. They did not leave any opportunity to question the new management for the first time.
The most vociferous and articulate were the concerns expressed by G N Ravi, a retired marine engineer: "The shareholders of Mahindra Satyam fear premature merger with Tech Mahindra," says Ravi, who has been buying and selling shares of the company for sometime now and has been tracking the company since 1985.
He and others, say this with good reasons: Mahindra Satyam has been a scam-ridden company and its finances are yet not fully clear and therefore will not attract investment by the Foreign Institutional investors or the FIIs. And, the argument goes, no stock price will rise in the Indian context if the FIIs do not invest. At the moment, even if the company resolves all its issues including litigations relating to the class action suits in the US, which it has not done so far, still the share price will not rise as one does not know whether the books will be in the " positive or negative territory " after this.
Some shareholders say that while no merger should take place till the accounts are clear, this argument should not be construed, they point out, as a signal to initiate the merger exercise once the accounts are clear. This alone is not enough, they say. For other than this, they feel it is equally important that the share value of Mahindra Satyam should come up to its natural level (today at around Rs 63).
Shareholders like Ravi, Shantilal C Shah and others present at the AGM felt this was critical. Ravi infact argues that C P Gurnani, the CEO of Mahindra Satyam and some of the others in the top management have maintained that the combined entity of Mahindra Satyam and Tech Mahindra will be a $5 billion entity in three years starting March 31, 2010.
The shareholder argument therefore is that if by 2013, we are looking at a $ 5 billion entity then given that Tech Mahindra has largely British Telecom as its client and in case it withdraws or remains with Tech Mahindra, even then, at least 60 to 70 per cent of the total income of the $ 5 billion entity should be coming from Mahindra Satyam given its varied competencies.
Therefore, they insist that the Mahindra management wait till such time that Mahindra Satyam can leverage that and thereby ensure that its shareholders get "a deserving value" for the shares in the company when the merger does actually take place.
They were not satisfied by Mahindra Satyam Chairman Vineet Nayyar's response that any merger decision will have to happen only with the approval of the shareholders at the AGM. Responding to this, a shareholder pointed out: "This is just an eyewash as majority of the shares are held with the management and the minority shareholders like us will have no say and there will only be a technical formality of getting a resolution on merger passed at the AGM."