HYDERABAD: The price of the beleaguered Satyam Computer share plunged by 19% on Wednesday, hitting a 52-week low of Rs 114.65, but narrowed down
the losses by closing higher at Rs 134.95 on the Bombay Stock Exchange. This was in the wake of the news on Tuesday that the World Bank had barred the company from all its contracts for eight years.
At Wednesday's closing price, the stock has lost 75% of its value from its May 2008 peak of Rs 544. For promoter Ramalinga Raju and his family members, who hold 8.61% (5,80,05,946 shares) in the company, this means a loss of a whopping Rs 2,373 crore in market capitalisation in just eight months.
On Wednesday, Raju and his family members were only worth Rs 783 crore by their shares__a far cry from the Rs 3,155.52 crore in May.
Satyam shares quoted at Rs 236.60 on December 16, when the company made its abortive attempt to acquire Maytas Infra and Maytas Properties. On December 17, the share value dipped to Rs 158.05. The weakness continued, and the share lost another 15 per cent touched a 52-week low on Wednesday.
Many analysts feel that the continued presence of Raju may have a negative impact on the company, as investors will lose confidence in a promoter who has himself lost so much wealth. These analysts are, however, aware that in India it is rare for a promoter group to get pushed out of the management of its own company. ``Like the World Bank, other prospective clients might also walk away from Satyam, so the company may not only lose future contracts, but also have a problem with renewals,'' says Ashutosh Gupta, vice-president, investment research, Evalueserve.
Market analysts say Ramalinga Raju and his team will have to work extremely hard to rebuild the confidence they have lost. ``Destruction of wealth is a part of collateral damage of any company, but the events of the past two weeks could certainly have been avoided. Trusting those same hands who led the company to its current low will be a difficult task,'' said Gaurav Dua, head of research at Sharekhan.
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