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| In Raju's hometown, big panic for small investors | |
| BS Reporter / Hyderabad January 9, 2009, 0:39 IST | |
 Satyam founder B Ramalinga Raju’s revelations of accounting fraud are giving sleepless nights to small investors in the East and West Godavari districts of Andhra Pradesh.
Investors in West Godavari, Raju’s native district, had bought shares of the company through loans and using their savings of many years. Through the period of enviable growth the company showed, the investments multiplied.
“Many companies have invested in Satyam as well as in Maytas Infra and Maytas Properties (the two companies owned by the Raju family which Satyam proposed to acquire for $1.6 billion) especially from Eluru, Tadepalligudem, Bhimavaram, Tanuku, Palakollu, Narasapuram and Jangareddigudem towns in the two coastal districts through stock-broking firms believing them to give huge returns,” a stock broker told Business Standard, on the condition of anonymity.
According to information available with the stock-broking firms, traditional investors in the East Godavari district trade anywhere between Rs 100 crore and Rs 120 crore every day.
“Of this, Satyam’s share would be about 5 per cent (buying and selling of 50 million shares). With Satyam’s share price plummeting to about 80 per cent yesterday, investors who bought the company’s shares lost about Rs 3.5 crore on a single day, while those who invested between Rs 10 crore and Rs 12 crore and held the stock, lost Rs 7-9 crore. Together, they lost over Rs 10 crore in Satyam yesterday,” the stock broker said.
A worried P Veerabhadra Raju, who owns 5 acres of mango and cashew groves in East Godavari, said, “We never expected the Satyam stock would nosedive for all the wrong reasons.
“I had bought 1,500 shares of Satyam at Rs 480 per share in 2007, thinking that they will offer value for us in the medium to long-term. With yesterday’s disclosures, the share price dropped to Rs 40. I don’t know what will happen and whether to hold the shares or sell them,” he said.
ASN Raju, regional manager (Andhra Pradesh) of Networth Stock Broking, said the traditional investors (approximately 6,000) in these two districts now have no other option left than to wait for the stock price to go up. “And, it is unlikely to happen in the near term,” he said.
Selling the shares seems an unlikely possibility.
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