It seems that the rumour mills have been busy churning out mails pointing to more companies susceptible to management frauds. These mails include some real big names too! At first I gave them a hard thought, then, I felt the best thing would be raise the bar when it comes to selecting stock investments in terms of "management teams". "Once smitten, twice shy! "

Now why would a leading infrastructure construction company like L&T buy stake in Satyam?!! A question which definitely needs answers to understand the investment idea behind this move by L&T. L&T has a software arm called L&T infotech with a sales base of over 1500 Cr. This makes a good case for investment in a software company. On the face of it I was inclined to think that this software subsidiary will be mainly catering to the in-house needs of L&T for its infrastructure projects. But a closer look at statements reveals that the bulk of the business come from the BFSI segment (banking and financial services) at 32% as on FY08. The existence of the software subsidiary justifies the move of the management to acquire Satyam, but the management has definitely treaded dangerous waters risking investigation in its multiple deals for purchase of Satyam equity in open market and a possible roadblock in further crystallizing the whole investment into a more meaningful business venture. I would infer that yes, the move to acquire a software biz was perhaps justified, but why Satyam? This definitely raises some concerns. The current recession could very well have presented more opportunities to L&T for an investment to expand its software biz.
Anyway, we shareholders are as always left to the whims and fancies of the board!!