Post-crisis, Sebi tightens rules

Mumbai, Dec. 15: The Satyam scam saw the Sebi act with lightening speed to bring in regulations that could strengt-hen the market and spare investors another Satyam scam as far as possible.

As Sebi whole-time director, Mr M.S. Sahoo, said cryptically, “We felt it was necessary to save the injured rather than apprehend the culprits.”

Sebi worked in unison with the company affairs ministry to save Satyam as a going concern and later enable a suitable suitor to take it over. There were many firsts and unchartered territories for both the company affairs ministry and Sebi to manoeuvre in. One of these was government’s intervention to supersede the Satyam board and appointed its own nominees. Of all the actions taken by Sebi, the most significant was the February 2009 amendment to the Sebi takeover regulations to facilitate a takeover of Satyam-like companies.

According to Sebi’s earlier regulation an investor who acquires 15 per cent of a company needs to make an open offer for another 20 per cent at a price which is not less than the average share price of previous six months. But in Satyam’s case, this rule meant a buyer who had acquired 15 per cent stake would have to make an open offer at much higher price than its current market price. Recognising the abnormal situation, Sebi decided to amend the regulation.

Also, Sebi on January 21, 2009 made it mandatory for the promoters to disclose the details of the pledged shares of listed entities.

They will also have to declare the same while declaring the quarterly results. This would help investors who will be alerted about the machinations of the promoters.

Sebi also started peer review audit after the PricewaterHouse auditors failed to detect the fraud year after year in the accounts of Satyam.

The company affairs minister, Mr Salman Khurshid, said that he would consider the possibility of introducing the provision for class action suit so investors can sue the promoters.

Fact file

* Satyam is back in client winning mode proving wrong all those wrote its obituary.

* It will soon win two or three big orders to give it a much needed financial cushion.

* Operating margins during Raju’s days were dismal. Mahindra’s brought it back to industry level.

* Raju used to keep larger bench. Mahindra’s cut the execessive flab to reduce operating costs.

* Satyam of the Raju era was flamboyant. Mahindra shut down unnecessary offices.

* The strengths of TechMahindra and Satyam were synchronised to add communications solutions.

* The management has stepped up its customer interaction, increasing trust quotient.

* Satyam got new faces at senior levels bringing
in new ideas and transparency.

* Unlike Raju’s Satyam, Mahindra Satyam encourages youngsters to take up leadership skills.

WHO WON

* Mahindra and Mahindra who got 31% of Satyam for Rs 1,757 crore at Rs 58 per share. They were the highest bidders.

* L&T: The infra major sold 27.2 million shares at Rs 112.50 and earned a total of $66 million.

* H.J. Securities bought Satyam’s 75,06,169 shares at a rate of Rs 59.99 on January 7 when Raju made his confession and sold the same number of shares at Rs 61.50 on the same day earning a profit of Rs 95 lakh.

* OPG securities Pvt. Ltd. bought 34,13,917 shares of Satyam at Rs 74.30 and sold all of them at Rs 75.10, earning about Rs 1.80 per share or a total of Rs 60 lakh in one day.

WHO LOST

* Retail investors, CBI say, have lost Rs 14,000 crore. Neither the National Consumers Redressal Forum nor the Supreme Court entertained the appeal of the Midas Touch Investors Association to get compensation for the investors who lost when the shares of Satyam dipped to one digit on the day that Ramalinga Raju confessed to the fraud.