Mahindra-Satyam shares rally after hitting four-month low
Accounting fraud that hit the company earlier could be much bigger
Bangalore: Mahindra-Satyam shares fell to a four-month low on Thursday, before recovering, on concerns over its outlook after Indian investigators filed new charges over accounting fraud that hit Satyam earlier this year.
"Investors are playing a blind game until the audited numbers are out. There could be more skeletons hidden in the closet," said HDFC Securities' head of private client group V.K. Sharma, who is advising clients to stay away from the stock until there is further clarity.
The stock topped the volume chart, with about 30 million shares traded, nearly three times its average daily volume over the past 90 days. It ended up 2.4 per cent at Rs92.75 (Dh7.31).
Mahindra Satyam, earlier known as Satyam Computer Services, was acquired by Tech Mahindra in April after the company was hammered by India's biggest corporate fraud, which came to light in January.
V.V. Lakshmi Narayana, deputy inspector general of India's Central Bureau of Investigation, said the extent of the fraud at Satyam could be much larger than the Rs71.36 billion that founder Ramalinga Raju had confessed to in a letter in January.
"All investigations into the accounting and auditing part of the business have been completed, and we are now going to look into the money diversion from the company," Narayana, who is part of the team probing the fraud, said from Hyderabad.
"Whatever Raju said is not the complete reality."
Fraud estimates
Narayana said the agency estimated losses suffered by investors in the wake of the fraud could be up to Rs140 billion.
Mahindra Satyam, which has about 35,000 employees, hoped to restate its accounts by the middle of next year, Atul Kunwar, president of its global operations, said on Wednesday.
Vaibhav Sanghavi, director of Ambit Capital, said, "It's very difficult to assess the situation until the audited numbers are out." Officials at Mahindra Satyam did not respond to requests for comment. A Tech Mahindra spokesman declined comment.
Shares in Tech Mahindra, a unit of tractor and utility vehicles maker Mahindra & Mahindra, ended down 1.2 per cent, having earlier fallen as much as 6.5 per cent to a three-month low.
Kunwar also told the Reuters India Investment Summit on Wednesday that customer attrition had stopped and the company did not need price cuts to win new deals.
On Tuesday, the CBI said it had filed a supplementary charge sheet containing new allegations against Raju and nine others associated with the outsourcing firm.
New charges included that revenues had been inflated by Rs4.3 billion by creating fake invoices and customers, and that forged board resolutions were used to get loans worth Rs12.2 billion.
On Thursday, Bharat Kumar, a lawyer for Raju said he could not comment as he had not received a copy of the additional charge sheet the investigating agency had submitted to the court.
