A look at Tech Mahindra’s winning bid for Satyam Computers

Recently Tech Mahindra won the bidding auction for a majority stake in Satyam Computer Services Ltd. which has been seeking some rescue since it was hit by the country’s biggest accounting fraud. Tech Mahindra outbid the other two bidders: engineering giant Larsen & Toubro (L&T) and International distressed fund investor WL Ross and Co. While Tech Mahindra bid at Rs 58/share L&T and Ross were distantly behind at Rs 45.90 and Rs 20 /share respectively. The reason for such low bid by WL Ross & Co. is cited by many that it lost interest as its partner for the bidding Cognizant Technology Solutions withdrew from the bid. As the next bidder was at less than 90% of the highest bid value Tech Mahindra was easily declared the winner.

Tech Mahindra has to pay Rs 1756 crore ($351 million) for 31 % preferential allotment of new shares. Later it has to make open offer for further 20 % at Rs. 58 /shares. If the open offer does not get fully subscribed, Tech Mahindra will have the option of going for a second preferential issue and raise its stake to 51 % to become the majority shareholder. Overall it will be investing Rs 2880 crores to get the 51% stake. This deal values the fraud-hit Satyam Computers at about Rs 5,665 crore ($1.1 billion).

Tech Mahindra will require Rs 2880 crore to sail through this deal smoothly. Moreover it may have to immediately invest for operating expenses of Satyam which according to some analysts could go up to Rs 1000 crore. In its balance sheet Tech Mahindra has about Rs 700 crore in cash. It will be looking for debt financing for the rest of the acquisition value. This is likely to put stress on its balance sheet which as on Mar 2008 had total asset value of Rs 1323 crore.

About Tech Mahindra
“Tech Mahindra is a leading provider of solutions and services to the telecommunications industry, majority stake owned by Mahindra & Mahindra Limited, in partnership with British Telecommunications plc. With total revenues of Rs 37,66 crore in the year ended March 31, 2008, Tech Mahindra is India’s 6th largest software exporter, and serves telecom service providers, equipment manufacturers, software vendors and systems integrators. Tech Mahindra solutions enable clients to maximize returns on IT investment by achieving fast time to market reduced total cost of ownership and high customer satisfaction. Tech Mahindra achieves this through its domain and process expertise, distinctive IT skills, research and development, proven innovative delivery models and approach to off shoring.”

About Satyam
“Satyam (NYSE: SAY) is a leading global business and information technology services company, delivering consulting, systems integration, and outsourcing solutions to clients in 20* industries and more than 65* countries.”
* Figures as of September 30, 2008


Before Satyam's scandal was disclosed in January, Satyam was ranked India's fourth-largest outsourcing firm and Tech Mahindra was sixth-largest.

FII sold heavily in mid January crash

While the Mutual Funds started selling in the initial days of the previous week, they started pumping in the money during the fall of the stocks. FIIs on the other hand were about neutral in the week before but they suddenly started selling off heavily each day and even on last few days of the week when the sensex gained significantly, FIIs were net sellers to the extent of more than 1000 crores of rupees. Though the last day selling was very less compared to previous three days in which they sold about 2500 crores worth of stocks each day.

Is India's growth rate slowing down?

India touched GDP growth rate of 9% last financial year. It is a big achievement for the country and initially people were apprehensive of sustaining over 8% growth rate for reasonable time. For the last three years India has continued to grow at more than 8% and last year it recorded 9.3% growth. All the while people have been talking of signs of heating of the economy. This fiscal year the growth has slowed down a bit but is still above 8% level. This slowdown has been indicated by Reserve Bank of India (RBI). According to the report a slowdown in the growth of demand has led a slow down in the growth of sales in the first half of 2007-08.

According to Moody's India's growth rate will come down to 8% in 2008 due to the tighter monetary policies taken by RBI to curb inflation. Goldman Sachs has also lowered India's growth to 7.8%.

Recession in United States of America is not likely to have any significant effect on the India's GDP growth as it is mainly domestically driven growth and the fundamentals are very strong.

The growth in the industrial production numbers jumped significantly in 2006-07 which had a major contribution in the GDP growth rate. Now, since the demand had decreased because of rising interest rates the industrial production index is feeling the direct pinch and has recorded slower growth. Automobile sales has shown very little growth over last year and the housing activities have also shown a slowdown.

Though these activities appears to put a lot of pressure on growth rates and may even be successful in short run. India's story is a long term and it has just started. One can easily bet on the long term growth prospects of the country.

World's most powerful business person 2007 (Fortune)

Steve Jobs,
Chairman and CEO, Apple














Rupert Murdoch,
Chairman and CEO, News Corp.











Lloyd Blankfein,
Chairman and CEO, Goldman Sachs









Eric Schmidt, Larry Page, and Sergei Brin,
CEO; President, Products; President, Technology;
Google








Warren Buffett,
Chairman and CEO, Berkshire Hathaway











Rex Tillerson,
Chairman and CEO, Exxon Mobil










Bill Gates,
Founder, chairman of Microsoft



Source:Fortune Magazine

Top 10 most innovative companies of the world

The top 10 most innovative companies of the world according to BusinessWeek-Boston Consulting Group survey 2007 are:

2007 Rank	Company Name	Head Quarter, CITY	COUNTRY
1	APPLE	Cupertino, CA	USA
2	GOOGLE	Mountain View, CA	USA
3	TOYOTA MOTOR	Toyota	Japan
4	GENERAL ELECTRIC	Fairfield, CT	USA
5	MICROSOFT	Redmond, WA	USA
6	PROCTER & GAMBLE	Cincinnati, OH	USA
7	3M	St. Paul, MN	USA
8	WALT DISNEY CO.	Burbank, CA	USA
9	IBM	Armonk, NY	USA
10	SONY	Tokyo	Japan

Source: Business Week

Banks may freeze ARMs as sub-prime aid measure

Treasury Secretary, Fed and leading banks and lenders of sub-prime loans are reportedly working on some plan to extend the teaser rates on mortgages which were scheduled to be reset at higher levels in the coming months. Till now no formal agreement has been reported but things are expected to be made public by next week.

Treasury Department spokeswoman Jennifer Zuccarelli said; “We’ve all agreed that there should be some sort of standardized approach to reaching more homeowners faster,...”

Earlier Federal Reserve Chairman Ben Bernanke has hinted of another cut in interest rate to prevent economy from recession.

Recently a magazine reported Treasury Secretary Henry Paulson’s remark "We'll have broad agreement on criteria that will make it easier to modify mortgages in the volumes we need,...".

This comes at a stage when the foreclosures in this year have already reached about double of last year. A increase in the period with teaser interest rates will provide relief to the home loan takers who may find difficult to pay the increased installment.

Probably in the meeting the concerned authorities may be figuring out a mechanism to selectively give the interest rate rebate to those with good repayment history.

The parties attending the meeting were Treasury Secretary, Fed regulators, officials from OTS (Office of Thrift Supervision), bank executives from Citigroup, JPMorgan Chase & Co., Wells Fargo & Co.’s amongst others.

According to an estimate, about 2 million house owners whose rates are going to be reset and may face foreclosures in 2008 if defaulted.

World's most costly / expensive cities in 2007

According to a survey done by Mercer, the leading HR consulting firm, across 143 countries of the world comparing the cost of over 200 items including basic items like housing, food, clothing etc. the top 10 most expensive cities of the world are:

March, 07	March, 06	City	Country	March, 07	March, 06
1	1	MOSCOW	Russia	134.4	123.9
2	5	LONDON	United Kingdom	126.3	110.6
3	2	SEOUL	South Korea	122.4	121.7
4	3	TOKYO	Japan	122.1	119.1
5	4	HONG KONG	Hong Kong	119.4	116.3
6	8	COPENHAGEN	Denmark	110.2	101.1
7	7	GENEVA	Switzerland	109.8	103
8	6	OSAKA	Japan	108.4	108.3
9	9	ZURICH	Switzerland	107.6	100.8
10	10	OSLO	Norway	105.8	100

The rightmost columns list the cost of living index relative to New York, US as base with 100 points. Mercer has ranked 50 cities and the complete list can be accessed at their website(link given below in source).

Source: Mercer

Top 10 financial cities of the world

The top 10 financial hubs of the world according to a survey by Mastercard in June 2007. The ranking was based on six parameters: Financial flows, ease of doing business, economic stability, legal and political framework, volumes of business, and knowledge creation and dissemination. The ranking was given to 50 cities, the top 10 list goes like this...

Rank	City
1	London
2	New York
3	Tokyo
4	Chicago
5	Hong Kong
6	Singapore
7	Frankfurt
8	Paris
9	Seoul
10	Los Angeles

Source: City Mayors Economics

FINRA imposes fine of $300k on Wachovia Capital Markets

The Financial Industry Regulatory Authority (FINRA) has censured and fined Wachovia Capital Markets LLC, a division of Charlotte-based Wachovia Corporation, with $300,000 for violation of FINRA's research analyst conflict of interest disclosure.

"This case strikes at the heart of FINRA's research-disclosure program, which was put into place in 2002 in part to combat incentives that could lead to biased research," says Susan Merrill, FINRA executive vice president and chief of enforcement."These critical reforms require firms to provide investors with information about actual and potential conflicts of interest that could influence analysts' conclusions about investing in publicly traded companies. Wachovia failed to ensure that certain of its research reports contained this vital information."

Source: The press release can be accessed at :2007NewsReleases/P037532

For more information, please visit www.finra.org.

About FINRA:

The Financial Industry Regulatory Authority (FINRA) is the largest non-governmental regulator for all securities firms doing business in the US. FINRA watches over about 5,100 brokerage firms, 174,000 branch offices and more than 675,000 registered securities representatives.

It was created in July 2007 through the consolidation of NASD and the member regulation, enforcement and arbitration functions of the NYSE. It has approximately 3,000 employees and operates from Washington, DC, and New York, NY, with 15 District Offices around the country.

"The creation of FINRA is the most significant modernization of the self-regulatory regime in decades," said Mary L. Schapiro, Chief Executive Officer of FINRA. "With investor protection and market integrity as our overarching objectives, FINRA is an investor-focused and more streamlined regulator that is better suited to the complexity and competitiveness of today's global capital markets."

Sensex crosses 20k and Ambani crosses Gates

Mukesh Ambani, of Reliance Industries Ltd, became the world's richest man on 29 October, overtaking Microsoft's Bill Gates and Mexican Carlos Slim Helu. The feat was achieved because of the strong rally which the stocks of Ambani's Reliance Industries has been witnessing since last month. The Reliance Industries Ltd stock has risen more than 60% in past few months and has helped Bombay Stock Exchange's 50-stock index Sensex to cross 20,000 points and take Mukesh Ambani's net worth to $63.2billion just piping Helu and Gates who are a little behind at around $62.29bn each. Ambani holds more than 50% shares of Reliance Industries.

Estimates of the wealth of the top five richest person of the world are:

Mukesh Ambani - $63.2 billion
Carlos Slim Helu - $62.3 billion
Bill Gates - $62.3 billion
Warren Buffett - $55.9 billion
Lakshmi Mittal - $50.9 billion