Larsen & Toubro (L&T), a key investor in Indian outsourcer Satyam Computer Services, is considering selling its stake, citing a lack of information on company's performance, financial and otherwise.
The submission of Satyam's re-stated accounts to the government has been frequently postponed, and is now scheduled for June 30.
Satyam was plunged into a financial crisis in January last year after its former chairman and founder, B. Ramalinga Raju disclosed that the company's revenue and profit had been inflated for several years. A board subsequently appointed by the Indian government ordered the company's accounts be re-stated, and also decided to invite bids to select a strategic investor in the company.
Tech Mahindra, another Indian outsourcer, acquired a dominant 43 percent stake in the company last year. L&T was among those companies who were interested in taking control of Satyam, as it has its own IT services business.
L&T's chief financial officer Y.M. Deosthalee said that L&T is considering selling its stake in Satyam, Indian TV channel CNBC TV-18 reported on Tuesday. "We at least need the financials of the last two-three quarters to get an indication of where the company stands right now," he told the TV channel.
A spokesman for L&T confirmed that Deosthalee had made the remarks to CNBC TV-18. A Satyam spokesman declined to comment on the report.
L&T's decision to sell its equity in Satyam is not likely to influence the outsourcer's customers, said Sudin Apte, a principal analyst at Forrester Research. L&T's exit from Satyam was in a way inevitable as its earlier attempt to acquire management control over Satyam had failed, he said.
As Satyam's share price has gone up, the company will be looking at an opportunity to make a profit, Apte said. L&T holds about 4.8 percent of the equity in Satyam.
Satyam was always expected to take time to re-state its accounts, Apte said, but it would help customers if the new management had released at least some indications of operating performance for the period after it took charge at the company, he added.
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