Satyam Computer Diversifies Into Real Estate Business

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Satyam Computer Services Ltd (NYSE:SAY), a leading Business and Information Technology services provider, today announced that its Board of directors has approved the proposals to acquire 51% stake in Maytas Infra Ltd and 100% stake in Maytas Properties Ltd.

"The two acquisitions pave the way for accelerated growth in additional geographies and market segments such as transportation, energy and several infrastructure sectors for the core IT business." said Satyam Chairman and Founder B. Ramalinga Raju."This would de-risk the core business by bootstrapping a new business vertical in Infrastructure. This market segment can mitigate the risks attributed to developed markets and traditional verticals that are likely to be impacted by the recessionary economy. The established brand of Satyam can further enhance the penetration into emerging markets and within the infrastructure industry. The two companies being acquired in a challenging market offer potential for significant upside in future.

" The toal outflow for both the acquisitions is expected to be US$ 1.6 billion comprising of US$ 1.3 billion for the 100% stake in Maytas  Real estate Properties and US$ 0.3 billion for the 51% stake in Maytas Infra. The acquisition of Maytas Properties would be immediate. In the case of Maytas Infra, Satyam will acquire 31% from the promoters and make an open offer for additional 20% from the public given that the company is a listed entity on the domestic stock exchanges. While the price proposed to be paid to promoters is Rs 475 per share, the price for the open offer has been approved to be Rs 525 per share and is subject to change in line with SEBI regulations.

Satyam reiterates its continued thrust and emphasis in the global IT and IT enabled services. The company will continue to invest in strengthening the global partnerships with elite customers.Mr. Raju added, "We are confident that the combined entity will deliver greater shareholder value in an otherwise challenging environment. We are also convinced that the integrated organization would be stronger and more diversified to deal with the uncertainty of the market."

The Satyam Computer stock closed the day at Rs.226.50, up by Rs.1.10 or 0.49%. The stock hit an intraday high of Rs.231.90 and low of Rs.222.25.The total traded quantity was 513502 compared to 2 week average of 697158.

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Relief For Battered Realtors May Come Soon

General | By mahendra | 2008 Trackbacks (0) Comments (1)   

The urban development ministry has drafted a bailout package for the real estate industry, which would be shortly sent to the finance ministry for consideration. The ministry has called for relaxation in norms for foreign loans so that realty companies can tide over the liquidity crunch, urban development secretary M Ramachandran said on Monday. The note has also urged the finance ministry to consider other sops like rescheduling of total debt of the real estate industry and reduction in home loan rates for affordable houses. “We have included some of the demands from the National Real Estate Development Council (Naredco) in the note.

Once the finance ministry clears the package, it will go for Cabinet approval,” Ramachandran said. Naredco has asked for a reduction in the interest rate on home loans by at least 3-4 %. The rate of interest on home loans has drastically gone up from around 7.75% in 2004 to around 12.75% now. Almost 90% of home buyers opt for loans to buy homes. But with the hardening of interest rates, and liquidity crunch in the market, demand for houses has been hit. The council has also asked for rescheduling of bank debt to real estate developers with a moratorium of one-two years. The total debt of the real estate is to the tune of Rs 25,000 crore, a Naredco statement said.

The industry body has also asked for an easing of norms for foreign loans and declaration of ongoing projects as NPAs. Meanwhile, to bring about correction in the property prices, the Naredco has asked its members to cut prices by reducing costs, cutting profit margins, reducing advertising and brokerage costs. Its members include DLF, Ansal API, Unitech, Parasvnath Developers, Sobha developers and several other realty companies. There are several factors working against the Indian real estate sector. Banks are getting jittery over loan disbursals to real estate developers. Even if the developers manage to get loans from banks, they are hardpressed to keep more collateral with the banks. To further aggravate the situation, the property market has also been witnessing a drop in PE fund flow.

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