L&T begins due diligence to buy Satyam

HYDERABAD: Engineering firm Larsen & Toubro (L&T), which holds a 12% stake in Satyam Computer Services, began its due diligence on Saturday to value the scandal hit IT firm.

The company, perceived to be the strongest and most serious contender for Satyam, was among the seven suitors short-listed for Satyam by the government appointed board.

L&T has a software business arm L&T Infotech. The acquisition of Satyam will help the company expand globally and enter the league of big firms such as Infosys, TCS and Wipro.

Y.M. Deosthalee, whole-time director & chief financial officer of L&T, also incharge of Larsen & Toubro Infotech Limited and his team were at the Satyam headquarters today to do the due diligence.

Satyam���s chief executive officer A S Murty and his team briefed L&T on Satyam���s business and its revenue streams. The bidder was also given a list of fixed assets of the company and its order book position from top clients. The Satyam board led by Chairman Kiran Karnik and other members were present at the meeting.

L&T had Rs 1,560 crore cash and bank balances on its books at the end of March 2008 and Rs 193 crore investments in government securities. The company is interested in buying Satyam to bolster revenues from the IT services business.

The process of due diligence by bidders began on Saturday, with IT services firm Tech Mahindra getting an information pack on Satyam.

Other qualified bidders include B K Modi promoted Spice Group, IBM, Apax Partners another MNC and a private equity firm. But B K Modi on Friday threatened to pull out of the race, citing lack of transparency in the bidding process.

But the uncertainty on Satyam���s financial position and legal liabilities have discouraged several firms from bidding. The firm, once ranked as India���s fourth-largest software exporter, has been struggling for survival after its disgraced founder B Ramalinga Raju confessed to perpetrating a Rs 7,000-crore financial fraud.