Satyam tight-lipped on who valued Maytas Properties; director says he gave ‘formula’

HYDERABAD: An independent member of the embattled Satyam Computer Services��� board on Monday sought to justify his role in the Maytas fiasco but the company itself remained tight-lipped on the key question of who valued the realty firm it sought to buy.

Satyam did not respond to a specific query on who advised it on the deal, but the board���s December 16 resolution says that it could invest ���up to Rs 6,400 crore to acquire Maytas Properties and (Maytas Properties) may be valued by the company (Satyam) in consultation with bankers, consultants and other intermediaries pursuant to the applicable statutory and regulatory requirements.���

���The board accorded approval to the deal to buy Maytas Properties subject to riders. On my part, I gave a specific formula to ensure that the valuation was fair and transparent,��� TR Prasad, independent director on the IT company���s board and former Cabinet secretary told ET on Monday.

Prasad said he advised that the valuation of Maytas Properties be conducted in three distinct categories. The valuation should be based on actuals for completed projects in alignment with the current market, realisation for work-in-progress and on the basis of government notified market value for land awaiting development, he said.



He added that ���if the final valuation of Maytas Properties as proposed above is significantly higher than the aggregate of the above three valuations, full and proper justification should be provided to the satisfaction of the board,��� according to an extract from the minutes of the meeting of the board of directors of Satyam Computer Services.

Last week, the board gave the nod to Satyam to buy two firms ��� Maytas Infra and Maytas Properties ��� founded by the family of its promoter and chairman Ramalinga Raju for $1.6 billion. But the deal was called off within a few hours after shareholder rebellion and accusations of poor corporate governance.

While Raju has said that the valuation was undertaken by ���one of the big four��� auditing firms, Ernst & Young, PricewaterhouseCoopers, Deloitte and KPMG have all denied involvement.

Prasad said that the board went by Sebi norms while clearing the proposed acquisition of Maytas Infra, a listed entity, for $300 million. The seven directors ��� M Ram Mohanrao, Ram Mynampati, Mangalam Srinivasan, Krishna G Palepu, Vinod Dham, TR Prasad, VS Raju and Mr Rao ��� entered into what has been described as a ���threadbare��� discussion on the proposal, including the fact that it was a related party transaction.

Palepu, a professor of business administration at the Harvard Business School, and Mr Dham, the 'father of the pentium chip,' participated through a conference call.

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