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Satyam Computer: Sizeable cash infusion

The inflow of $49.3 millions for Satyam Computer Services as a result of the sale of 1.6 per cent stake in its subsidiary Satyam Infoway may improve the profitability levels if it is used to retire the debt contracted by the company.

The deal as such values Satyam Infoway at close to $3 billions. The sale has been made to the Government of Singapore Investment Corporation (GSIC). The company still has a stake of 54.7 per cent (valued at $1.69 millions based on the pricing in this dea l) in Satyam Infoway. What is also of interest is that the deal gives GSIC an option to sell the shares back to Satyam Computer in the event of non-listing of Satyam Infoway shares on the Indian stock exchanges by September 30, 2001. With likely improvem ent to profitability if the funds are used to reduce the debt burden, the development may lead to firm trends in the stock in the near term. -- BL Research Bureau